Jess (Trustee), in the Matter of Pekar (Bankrupt) v Pekar
[2022] FedCFamC2G 218
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Jess (Trustee), in the Matter of Pekar (Bankrupt) v Pekar [2022] FedCFamC2G 218
File number(s): MLG 1488 of 2021 Judgment of: JUDGE SYMONS Date of judgment: 7 April 2022 Catchwords: BANKRUPTCY – application for review of a registrar’s decision – whether respondent requires litigation guardian –respondent not capable of understanding or giving instructions in the proceeding – husband prosecuting proceedings in wife’s name without authority – abuse of process— application dismissed Legislation: Evidence Act 1995 (Cth) s.79
Federal Circuit and Family Court of Australia Act2021 (Cth), s. 214
Federal Circuit Court of Australia Act 1999 (Cth) s. 88Q
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr. 11.07,11.08,11.09, 11.10, 11.11
Federal Circuit and Family Court of Australia (Division 2)(Bankruptcy) Rules 2021 (Cth) r 4.06
Cases cited: Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
L v Human Rights and Equal Opportunity Commission (2006) 233 ALR 432; [2006] FCAFC 114
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21
Dunghutti Elders Council (Aboriginal Corporation)RNTBC v Registrar of Aboriginal & Torres Strait Islander Corporation (No 4) (2012) 200 FCR 154; [2012] FCAFC 50
Holden, as Trustee of the Bankrupt Estate of Pekar v Pekar (No. 6) [2020] FCCA 3385
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28
Division: Division 2 General Federal Law Number of paragraphs: 63 Date of last submission/s: 7 March 2022 Date of hearing: 24 January 2022 Place: Melbourne Solicitor for the Applicants Rothwell Lawyers Respondent In person ORDERS
MLG 1488 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MATTHEW JAMES JESS AND MATTHEW KUCIANSKI (AS THE JOINT TRUSTEE OF THE BANKRUPT ESTATE OF FIMA PEKAR)
ApplicantAND: IDA PEKAR
Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
7 APRIL 2022
THE COURT ORDERS THAT:
1.The respondent’s application for review filed on 18 November 2021 and the interim application filed on 23 December 2021 be dismissed.
2.Mr Fima Pekar pay the applicants’ costs of and incidental to the application for review and the interim application on a party party basis.
3.The directions hearing listed 16 June 2022 be vacated.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE SYMONS:
BACKGROUND
On 28 October 2021, a registrar of this Court made a sequestration (and related costs) order over the estate of the respondent, Mrs Ida Pekar (“Mrs Pekar”).
On 18 November 2021, an application for review of the sequestration order was filed, ostensibly by Mrs Pekar. The review application was listed for hearing on 21 December 2021.
On 8 December 2021, Mrs Pekar filed an application for an adjournment of the review application supported by an affidavit made, ostensibly, by Mrs Pekar. The affidavit said:
(1)The ajurment (sic) is sought is related to my psychiatric dissobility (sic).
(2)I intend to seek a psychiatric assessment whether I’m capable to make any legal or financial desissions (sic) and to seek an order discharging the bankruptcy.
On 13 December 2021, I made an order, by consent, adjourning the review application to 16 June 2022 for directions.
On 23 December 2021, an interim application (marked “urgent”) was filed, ostensibly by Mrs Pekar. In the application, the following interim orders were sought:
(1)Stay of execution of the sequestration order until the application of review of the order is heard and determent (sic) by the court.
(2)An order for the respondents to unfreeze my bank account.
In an affidavit filed in support of the interim orders and made, ostensibly, by Mrs Pekar, it was said (amongst other things), that:
(1)…
(2)On 30 October 2021 the respondent froze our bank account in the NAB, which is the only bank account we have with any financial institution.
(3)The action by the respondent in effect means, that we have been left with no money to fund our day to day living expenses.
(4)The account is a retirement account and is the only income we have, in our old age pension, which is paid by Department of Social Security and goes directly into this account.
(5)a result of the respondent conduct, for approximately two months, we cannot afford to buy food, pay for rent and buy medication prescribed to treat my mental health related illness (Exhibit 2).
(6)Due to my state of mind arising from my illness, I am not fit to attend any hearing, therefore I ask that the application and any orders arising from the application to be made in Chambers without oral hearing by the parties.
Exhibit 2 to the affidavit was a letter from Dr Lina Landa of Carnegie Medical Clinic dated 26 November 2021 in which Dr Landa set out what was described as Mrs Pekar’s “medical history and medications list” and noted that Mrs Pekar “attends the clinic for her ongoing medical problems on the regular basis”. Amongst the medical conditions identified were “Depression- major” and “Anxiety”.
The interim application was listed before me on 24 January 2022 and what transpired during that hearing was the catalyst ultimately, for this decision.
PROCEEDINGS ON 24 JANUARY 2021
The hearing on 24 January 2022 was conducted using Microsoft Teams technology. On this date, the applicants, who are the joint trustees for the bankrupt estate of the respondent’s husband, Mr Fima Pekar, were represented by solicitor Mr Blaskovic.
The applicants had, on 20 January 2022, filed an affidavit of Matthew Kucianski sworn on 20 January 2022 in which Mr Kucianski identified the following concerns:
First, as the NAB Bank Account, the subject of the respondent’s application for interim orders, was not frozen by the applicants but instead, by the trustee in bankruptcy for Mrs Pekar (Mr Juratowitch), the application was misconceived and capable of constituting an abuse of process.
Second, and relatedly, the applicants would incur unnecessary costs in responding to the application which would be borne by the bankrupt estate of Mrs Pekar and would further diminish the likelihood that there would be a dividend paid to the creditors.
Third, there appeared, in any case, to be no proper basis for a stay of the sequestration order disclosed by the respondent.
These same concerns were also identified and addressed in an affidavit of Mr Blaskovic in which he, amongst other matters, deposed to conversations with Mr Pekar on 17 December 2021 and 17 January 2022 in which he (Mr Blaskovic) informed Mr Pekar repeatedly that the applicants did not freeze the NAB Bank Account and that it was Mr Juratowitch who caused this to be done. Mr Blaskovic also deposed that during the conversation on 17 January 2022, Mr Pekar had told him that he and the respondent had opened another bank account to which they had directed payment of pension funds.
The applicants also identified a further, more fundamental concern, regarding the capacity of Mrs Pekar to prosecute, provide instructions with respect to, and participate in any proceeding in this Court.
Related to this concern, when the hearing commenced, the respondent did not join the Teams meeting. Instead, Mr Pekar (who participated by phoning into the hearing rather than using the audio-visual link) announced that he appeared “on behalf of” his wife (the respondent). I sought the attitude of the applicant on whether it was appropriate for Mr Pekar to make submissions on his wife’s behalf. The applicants acknowledged that historically (in other proceedings before this Court and the Federal Court) leave had not been opposed but submitted that this was in circumstances where the capacity of the respondent had not been brought into question. The applicants submitted that there was a serious question now as to the capacity and competence of the respondent, arising from the affidavit material filed in the proceeding, to both bring the instant application and to give instructions to anyone, including Mr Pekar. The applicants submitted that in these circumstances, it would be premature to deal with the respondent’s interim application, unless and until the question of her capacity had been resolved, including, if necessary, by the appointment of a litigation guardian.
In circumstances where the capacity of the respondent to conduct proceedings was clearly put in issue, and where my very limited exchanges with the respondent (who later joined the phone line with her husband) did not inspire me with confidence that she sufficiently understood the matters being agitated, I made orders on that day in the following terms:
(1)On or before 21 February 2022, the respondent file and serve a medical report on affidavit directed at her capacity to participate in proceedings in this Court, to understand the nature of those proceedings, to provide instructions and to conduct those proceedings.
(2)In the event the respondent fails to comply with order 1, the Court may dismiss any extant proceeding, including the application for review filed 18 November 2021 and the interim application filed 23 December 2021 or make an order for the appointment of a litigation guardian.
(3)Should either party wish to make submissions concerning the appointment of a litigation guardian, such submissions should be filed and served on or before 28 February 2022.
(4)The matter otherwise remains listed for a directions hearing on 16 June 2022.
MATERIAL FILED CONCERNING THE RESPONDENT’S CAPACITY
On 16 February 2022, an affidavit sworn by Mr Pekar was filed in the proceeding. The affidavit was identified as being filed on Mr Pekar’s (and not the respondent’s) behalf. In this affidavit, Mr Pekar deposed as follows (reproduced in full):
I Fima Pekar the husband of the respondent for over 50 years, make this affidavit in order to inform the court of the medical condition and the legal bases related to the involving of my wife in proceeding in a matter of which she had no involvement or knowledge and I say the following:
On the legal bases of the matter before the court
(1)My wife has been dragged in to court proceeding by heinous conduct of the applicants and the lawyers representing the applicants in a legal matter of which she was never even aware, never understood, and does not have mental composite to understand it at present and future.
(2)The proceeding [MLG 932/2015] has been brought against her by applicants related to section 120 of the B.A. (undervalued transaction) and arise from the following events
(i)In 2012 concerns about the well being of my wife if I will no more able to take care for her made me to make a decision to transfer my share of the family house to my wife, so she could have a roof over her head no matter what.
(ii)To avoid any suspicion which could trigger a medical episode, I have not informed the respondent of the transfer, believing that such a decision will be in her best interest.
(iii)I cannot underestimate the importance of my following statement
(iv)At the time on which the transfer was made, I had no liquid debts, the only debts provable in bankruptcy, or any taxed orders for cost against me which also are the only costs provable in bankruptcy.
(v)Therefore I had no reason other than the reason stated above to initiate the transfer.
(vi)The applicant thought and obtained an order from this court that the transfer was void against the applicants, which rises a legal question as to why my wife was named by the applicant as respondent in that proceeding [MLG 932/2015]
(vii)I was the transferor and I had to be named as the respondent in these proceeding my wife was not even aware at that time that the transfer occurred.
(viii)I had no idea, that such a transfer could be declared void by the court, otherwise I would never went ahead with it, instead of bringing a piece of mind, it brought nothing but trouble
(ix)Two years later I was made bankrupt with all legal and financial consequences arising from bankruptcy
(x)All but all affidavits signed by the respondent presented in the proceeding have been written by me, and signed by her without reading or understanding the substance of the affidavits
(xi)I represented her at all hearings in the proceeding brought by the applicants
(3)Due to our illiteracy in law we have not been aware, that in accordance with the rules of this court (9.62) the respondent could not defend the application by the applicant without a litigating guardian due to her mental illness
(4)If that rule had been complied with the outcome of the proceeding would be different
(5)Medical grounds for the affidavit before the court
(6)The respondent just recently has been released from a psychiatric institution in which she spend 10 days 6.01.2022 till 18.02.22 and at present is under care of a psychiatrist who monitors her well being with a schedule next appointment on 3.03.2022
(7)There is no way, that she will be able to take part in any court proceeding for the rest of her life
(8)The respondent was diagnosed with a mental disability as far back as 2004 which is 18 years ago, and it was no visible progress in her illness for the past 18 years, which suggest, that she will be ill for the rest of her life
(9)The severity of the illness which had a self harm element in the diagnoses led to mine appointment as a full time career (sic) of the respondent, despite the fact, that I myself suffer from a number of mentally related illnesses
(10)For nearly 20 years I care for her 24/7 because she is not able to cop (sic) with simple day to day requirement in daily day to day living
(11)The applicants were well aware of her medical condition, as well as of the fact, that at the time of the proceedings we could not afford legal representation, her age, non English speaking background, and used all these facts to their advantage
(12)The appointment of a legal litigator in my opinion will achieve nothing due to the fact, that she cannot and will not ever be able to understand the neither of the proceeding and give instruction to legal litigator, she has grate (sic) difficulty to understand simple things
(13)I have no intention to apply for any orders, and as I have stated above, the reason for this affidavit to make the court aware, that the court is dealing with an invalid and the only way to prevent a tragic event is to shield her from further court proceedings
(14)I also wish to remind to court, that under the rule 1.32 of this court, the court can make any orders considered by the court to be in the interests of justice
(15)Finally court any argument by the applicants, that I have been declared by this court as vexatious litigant, and therefore the court must not accept this affidavit must be dismissed by the court, I litigate nothing, and have a duty of care own to the respondent, to provide to court the facts outlined in this affidavit
A second affidavit was also provided by the respondent in purported compliance with my orders made on 24 January 2022. In this affidavit which is unsigned and undated but said to be prepared by Mr Pekar, the deponent (in this case identified as Mrs Pekar) states:
The deponent of this affidavit does not understand the proceeding due to her mental illness (see doctor’s report attached to this affidavit).
The affidavit attached a letter dated 7 February 2022 prepared by Dr Mark Schiff, consultant psychiatrist. Dr Schiff’s letter stated (relevantly) in respect of the respondent that:
I had reviewed Ida over a prolonged assessment on 2 February 2022 as well as discussed her presentation with public hospital psychiatrist leading up to that. She has a history of a previous severe affective illness against the background of personal adversity, has been treated for it in the past and is currently engaged with myself and her long-standing GP, being compliant with her treatment.
It is my opinion that Mrs Ida Pekar continues to suffer from Major agitated depression with most severe anxiety/panic and secondary severe cognitive disability. The combination of above symptoms does preclude her from participating in legal proceedings as she would not be able to provide instructions or comprehend the nature of inquiry even if she’s assisted by an interpreter and legal aid.
At this stage and in the observable future she’s not/is not expected to be stabilised and it is difficult to predict when she will regain the cognitive capacity and focus that will enable her to proceed with relevant legal matters.
APPLICANTS’ SUBMISSIONS CONCERNING THE APPOINTMENT OF A LITIGATION GUARDIAN
In accordance with the orders of 24 January 2022, the applicants on 28 February 2022 filed written submissions that were directed at the question of the respondent’s capacity and the appointment of a litigation guardian.
The applicants submitted, having regard to the opinion expressed by Dr Schiff, that the respondent satisfies the requirements under the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (“the Rules”) of a person who needs a litigation guardian in relation to a proceeding.
The applicants submitted however that it was not open to the Court to make an order appointing a litigation guardian for the respondent because a “willing guardian” had not been identified and, to the extent that Mr Pekar might volunteer himself, his appointment would not be appropriate in circumstances where:
1.Mr Pekar is a vexatious litigant and there is a real risk that he would use such appointment to commence or continue vexatious proceedings against the Trustees, albeit in his wife’s name.
2.Mr Pekar has admitted to commencing these proceedings without Mrs Pekar’s knowledge and to procuring Mrs Pekar’s signature on affidavits filed in this proceeding, without Mrs Pekar reading or understanding these affidavits; and
3.Mr Pekar has previously applied to the Court in proceeding VID 81 of 2017 for such an appointment, which application was dismissed by Justice Tracey. Further, although this present application was brought in the name of Mrs Pekar, it may be inferred, having regard to the admissions made by Mr Pekar in this proceeding, that it was he who engineered the application.
The applicants submitted that the maintenance of this proceeding would allow Mr Pekar’s “egregious conduct” to continue, to the detriment of the Trustees, the Court, Mrs Pekar and the interests of justice generally.
The applicants made the further submission that Mr Pekar’s conduct justified the making of an order against him that he pay the Trustee’s costs of the proceeding on an indemnity basis.
RESPONDENT’S SUBMISSIONS
On 3 March 2022, I had my associate send, by express post to the respondent’s address for service, the following letter addressed to both the respondent and Mr Pekar
MLG1488/2021 – MATTHEW JAMES JESS AND MATTHEW KUCIANSKI AS THE JOINT TRUSTEE OF THE BANKRUPT ESTATE OF FIMA PEKAR v IDA PEKAR
We refer to the Application for review of a Registrar’s Decision filed 18 November 2021 and the submissions and affidavit material that was filed by both parties in the above matter, pursuant to orders made by Judge Symons on 24 January 2022:
This material includes:
(a)Evidence from Dr Mark Schiff that Mrs Ida Pekar is precluded from participating in legal proceedings and is unable to provide instructions or to comprehend the nature of the proceeding, even with the benefit of an interpreter or legal assistance; and
(b)Evidence that Mrs Ida Pekar has neither read nor understood the substance of any affidavit filed in the proceeding and that all such affidavits have been prepared and signed by Mr Fima Pekar, notwithstanding that Mrs Pekar (and not Mr Pekar) is the respondent to the proceeding and applicant for review.
Having regard to this material and the matters identified above, the Court may form the view ultimately that the application for review and related application for a stay, having been filed without instructions from Mrs Pekar and prosecuted by an individual who has been declared a vexatious litigant under s 88Q of the Federal Circuit Court of Australia Act 1999 (Cth) (“the FCC Act”), constitute an abuse of process and should be dismissed on that basis. The Court may also form the view ultimately that reflecting the circumstances in which both applications were filed and continued, Mr Fima Pekar should be ordered to pay the costs of the applicants arising from the applications, on an indemnity basis.
You are invited to provide a response in writing to the matters raised above. Should you choose to do so, your response must be filed with the Court and served on the applicants by no later than 18 March 2022.
The Court did receive a response to this invitation which took the form of a two-page submission dated 7 March 2022, prepared, and signed by Mr Pekar. The submission contained an acknowledgement of the issues identified in the letter from the Court reproduced above.
On the question of whether his involvement in the proceeding might involve an abuse of process given his status as a vexatious litigant, Mr Pekar submitted that the order made under s 88Q of the FCC Act precluded him personally from lodging any application with the Court but did not preclude him from making an application in which he played no direct role.
Mr Pekar submitted that this Court and the Federal Court had allowed Mr Pekar to represent his wife in proceedings [2020] FCCA 3385 and [2017] FCA 596 respectively, notwithstanding Mr Pekar was the subject of an order made under s 88Q.
On the question of whether it would be appropriate for the Court to appoint a litigation guardian, Mr Pekar submitted that having regard to the opinion of Dr Schiff, the respondent was not capable of making any legal or financial decision or participating in any proceeding “even with help from a legal litigant” so that this option was not available to the Court.
Mr Pekar also made submissions directed at the question of costs which I will address later in this decision.
THE LAW – APPOINTMENT OF LITIGATION GUARDIAN
Chapter 1, Part 11, Division 11.2 of the Rules identifies the circumstances in and process by which, a litigation guardian may be appointed for a person. The Division provides (so far as is relevant):
11.07 Person who needs a litigation guardian
(1)For the purposes of these Rules, a person needs a litigation guardian in relation to a proceeding if the person:
(a)does not understand the nature and possible consequences of the proceeding; or
(b)is not capable of adequately conducting, or giving adequate instructions for the conduct of, the proceeding.
(2) Unless the Court otherwise orders, a minor is a proceeding is taken to need a litigation guardian in relation to the proceeding.
11.08 Starting, continuing, defending or inclusion in proceeding
(1) A person who needs a litigation guardian may start, continue, respond to or seek to be included as a party to a proceeding only by the person’s litigation guardian.
(2) The litigation guardian of a party to a proceeding:
(a) must do anything required by these Rules to be done by the party; and
(b) may do anything permitted by these Rules to be done by the party.
11.09 Who may be a litigation guardian
A person may be a litigation guardian in a proceeding if the person is an adult and has no interest in the proceeding adverse to the interest of the person needing the litigation guardian.
11.10 Appointment of litigation guardian
(1) The Court may, at the request of a party or on its own initiative, appoint or remove a litigation guardian or substitute another person as litigation guardian in a proceeding in the interests of a person who needs a litigation guardian.
(2) A person becomes a litigation guardian if the person consents to the appointment by filing an affidavit of consent in the proceeding.
(3) The Court may remove a litigation guardian at the request of the litigation guardian.
There are many decisions of this Court and the Federal Court that have considered the circumstances in which a litigation guardian might be appointed and the obligations that attach to the appointment. These decisions emphasise that the decision to appoint a litigation guardian is a matter of significance given that it displaces the presumption that an adult person is capable of managing their own affairs and deprives the individual, for whom the appointment is made, of any future role in decision making around the conduct of the relevant litigation (see, for example, the discussion at [23]-[27] in L v Human Rights and Equal Opportunity Commission [2006] FCAFC 114).
Most of these decisions concern themselves with applications for a litigation guardian that are made in the running of a matter, where questions of competency have emerged after the application has been filed. In this case, although the question of competency was squarely raised after proceedings commenced, the material before the Court suggests that the respondent might not have been competent to bring this application in the first place and in fact (perhaps confirming this to be the case) did not authorise or have knowledge that the proceeding had been commenced. In other words, that the respondent was a person who, according to the Rules, could only have started the proceeding through a litigation guardian.
However, even accepting this to be the case, in circumstances where the substantive review application has been on foot now since November 2021, the Court must determine whether the respondent should be permitted to continue the application, including, if necessary, through the appointment of a litigation guardian.
CONSIDERATION
The first question that arises for determination is whether, for the purposes of the Rules, the respondent is a person who needs a litigation guardian. A person will assume this status upon satisfaction of one or both of the conditions identified in rule 11.07(1).
The Court has before it a letter provided by Dr Schiff dated 22 February 2022. This letter addresses directly and specifically the matters identified in both sub-paragraphs of rule 11.07(1) in that it contains an opinion that the respondent lacks the capacity now, and prospectively, to participate in legal proceedings, to understand such proceedings or to provide instructions for their conduct. Dr Schiff identifies the reasons for this opinion, from a diagnostic point of view and although he does not explain how his field of specialised knowledge (here, psychiatry and neurology) applies to the facts observed to produce the opinion, I am satisfied that the opinion offered is one that satisfies the requirements of s 79 of the Evidence Act 1995 (Cth), including having regard to the following passage from the plurality’s reasons for judgment in Dasreef Pty Ltd v Hawchar [2011] HCA 21 at [37]:
It should be unnecessary, but it is nonetheless important, to emphasise that what was said by Gleeson CJ in HG (and later by Heydon JA in the Court of Appeal in Makita (Australia) Pty Ltd v Sprowles24) is to be read with one basic proposition at the forefront of consideration. The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita25, that "the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of ‘training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded". The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying "specialised knowledge" based on his or her "training, study or experience", being an opinion "wholly or substantially based" on that "specialised knowledge", will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered.”
I consider, based primarily on the opinion of Dr Schiff, that the respondent is a person who needs a litigation guardian to continue her review proceeding brought against the applicant trustees. I am further fortified in this view by my own, albeit limited, observations of the respondent during the hearing that took place on 24 January 2022 and the observations made by Mr Pekar that are to the effect that his wife is not capable of understanding or giving instructions with respect to, this proceeding.
The next issue that falls for determination is whether the Court should make an order for the appointment of a litigation guardian for the respondent. In this respect, neither the applicants nor the respondent moves for such an appointment and the Court is not aware of any person who has indicated a preparedness to accept or provide their consent to such an appointment. Mr Pekar expressly disclaims the need for the appointment of a litigation guardian. It can be inferred from the stance that he has adopted that he does not consent to his appointment to the role.
The applicants submit that the absence of a willing, identifiable, litigation guardian forecloses the question of whether an order for appointment should be made by the Court. However, this is not necessarily so, as it remains open to the Court to make an order, having recourse to rule 11.11 of the Rules to achieve the same result, in the absence of a volunteer. Rule 11.11 provides:
11.11 Manager of the affairs of a party
(1) In this rule:
“manager of the affairs of a party” includes a person who is authorised by or under a Commonwealth, State or Territory law to conduct legal proceedings in the name of, or for, a person who needs a litigation guardian.
(2) A person who is the manager of the affairs of a party is entitled to be the litigation guardian in any proceeding to which the authority extends.
(3) The Attorney-General may appoint in writing a person to be a manager of the affairs of a party for the purposes of this rule, either generally or for a particular person.
(4) A manager of the affairs of a party becomes a litigation guardian of a person who needs a litigation guardian in a proceeding if the manager of the affairs of the party files an affidavit of consent in relation to the person.
This provision has been used in this Court to make orders for the appointment of a litigation guardian, accompanied by a request to the Commonwealth Attorney-General to appoint a person to be a manager of the affairs of the person to give effect to this appointment. However, recourse to this provision necessarily involves the expenditure of public funds and the use of public resources. Just because the provision exists does not mean that it should be called on in all cases. The Court should proceed with some caution, especially in a case such as this, where the history of the proceeding and the legal status of those who seek to prosecute it, assumes a special significance.
The proceeding – by which I mean the substantive review application and the application for interim relief – was commenced by Mr Pekar, purportedly on his wife’s behalf but in circumstances where (by his own admission) Mr Pekar was acting without his wife’s instructions or authority. Further, and significantly, Mr Pekar filed three affidavits in this Court that were identified as having been made by the respondent but which in fact (again, by Mr Pekar’s admission) were made by him. The circumstances in which the respondent’s signature came to appear on these documents is not clear. To describe this situation as unsatisfactory would be a gross understatement.
Mr Pekar is no stranger to this Court. Reflecting this, on 7 June 2017, Judge Hartnett (as her Honour then was) made an order under (what was then) s 88Q(2)(b) of the Federal Circuit Court of Australia Act1999 (Cth) that Mr Pekar is prohibited from instituting proceedings in the Federal Circuit Court of Australia (as it then was) other than proceedings under the Family Law Act 1975 (Cth).
The questions which confront the Court now are whether, as the applicants submit, the proceeding commenced, in name only by the respondent, is properly to be regarded as a vehicle through which its architect (Mr Pekar) seeks to subvert the restrictions that would otherwise apply to his bringing proceedings in this Court and whether, if this is the case, what consequence (if any) this should have for the continuation of the instant proceeding which can only continue (in the face of the findings recorded at [38]) through a litigation guardian.
Although there is an obvious relationship between the interests of Mr Pekar and the respondent, based on their spousal relationship and the intersection of their respective assets and bankruptcies, there is nonetheless an emphasis in the material filed by Mr Pekar (ostensibly on his wife's account) in this proceeding on matters that relate directly to him. For example, in his affidavit filed on 16 February 2022 (refer [18] above), Mr Pekar seeks to revisit the action taken by him to transfer his share of the family house to Mrs Pekar and his motivation for doing so, in the context of his own sequestration proceeding.
In Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at [25], the majority of the High Court said as follows:
Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute.
I consider that in this case, the prosecution of the proceeding by Mr Pekar is capable of both operating oppressively to a party (here the applicant creditors) and bringing the administration of justice into disrepute.
There is evidence before the Court, which I accept, that Mr Pekar brought and then persisted with, the interim application for a freezing order in circumstances where he had knowledge that the applicant creditors were not the proper respondent to such an application. The applicants have been burdened with the expense – both from a cost and resource perspective – of responding to this application. Further, the substantive review application – although correctly naming the applicant creditors – is founded upon the assertion that the respondent was not served with a “sworn affidavid (sic) which created the bases for the “sequestration order” against my estate” and which “deprived [the respondent] the opportunity to lodge any objection to it” (refer affidavit of the respondent filed on 18 November 2021).
However, the affidavit referred to by the respondent (being an affidavit filed on 27 October 2021) was either the affidavit of search or affidavit of debt that the applicant creditor was required to file (but not serve) pursuant to rules 4.06(3) and (4) of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (“the Bankruptcy Rules”). Neither affidavit elaborated the basis for the sequestration order so that the opportunity allegedly denied to the respondent did not arise. In any case, the respondent had identified her objections to the proposed sequestration order in various affidavits and submissions filed ahead of the hearing that took place on 28 October 2021. It appears that the substantive application is without merit.
The character of the substantive application and the reality that it is being driven by Mr Pekar, leads me also to conclude that to allow it to continue (through the appointment of a litigation guardian facilitated by the Attorney General’s Department) would bring the administration of justice into disrepute. The Court’s processes should not be used in this case to give further ammunition to a claim that is without merit, and which is being prosecuted by an individual who is subject to restraints that reflect a history of vexatious litigation.
Further, there is no suggestion in any of the material, that anybody, aside from Mr Pekar, has suggested that it would be in the respondent’s interest to bring (or maintain) this (or any) proceeding. Indeed, Mr Pekar himself, in his affidavit filed on 16 February 2022, appears to accept that it would be inimical to the respondent’s interests that she have any further involvement in court proceedings.
In these circumstances, I will order that the application for review filed on 18 November 2021 and the interim application filed on 23 December 2021 be dismissed.
COSTS
As noted above, the applicants seek an order that Mr Pekar pay their costs on an indemnity basis. Mr Pekar resists such an order. In his submissions filed on 7 March 2022, Mr Pekar states as follows:
In relation to any potential costs orders sought against me by the applicant it is not clear what cost could be awarded to the applicant taking in to account the following “Question of law”
i)The application dated 18.11.2021 is an administrative application arising from the fact that the applicant have not served on us documents filed with the court as required by courts rules therefore I do not believe, that I have pay costs arising from breaching the courts rules by the applicant.
ii)The application dated 23.10.2021 resulted in consent order without any hearing, or filing any document with the court therefore I cannot understand what cost and for what the applicant is seeking.
Based on all statements above, the application for cost against me has no merits and must be dismissed by the court.
The normal course is that the applicants’ costs should be paid out of the bankrupt estate of the respondent. However, pursuant to s 214(3) of the Federal Circuit and Family Court of Australia Act2021 (Cth), the Court is granted a discretion to award costs subject to the application of any specific rule of the Court. Part 13 of the Bankruptcy Rules authorises the application of the Federal Court Rules2011 (Cth) as the means by which costs are to be calculated in the bankruptcy jurisdiction other than if a short form bill of costs is submitted.
Accordingly, given the broad and unfettered nature of the discretion, it is open for the Court to award indemnity costs and, in an appropriate case, make such an award against a person who is not a party to the proceedings concerned.
In Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at [23]-[24], Justice Shepherd identified a number of circumstances in which a court, in the proper exercise of its discretion, might depart from the normal practice of making an order which has the effect of providing for taxation on a party and party basis.
(a)the making of allegations of fraud knowing them to be false;
(b)the making of irrelevant allegations of fraud;
(c)evidence of particular misconduct that causes loss of time to the court and to other parties;
(d)the fact that the proceedings were commenced or continued for some ulterior motive or with wilful disregard of known facts or clearly established law; and
(e)the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.
Essentially, there must be some form of egregious misconduct or act of exceptional or reckless imprudence, which has led to the prolongation of proceedings with a concomitant increase in the exposure of other parties to costs.
Similar considerations relate to an award of costs against a third party. There must be a connection between the conduct of the third party concerned and the costs incurred by the party claiming them and the circumstances involved in the case must be exceptional: Dunghutti Elders Council (Aboriginal Corporation)RNTBC v Registrar of Aboriginal & Torres Strait Islander Corporation (No 4) (2012) 200 FCR 154.
It has become apparent, including because of admissions made by Mr Pekar, that this proceeding was commenced and maintained as a result of actions taken, and decisions made, solely by Mr Pekar, without recourse to the respondent. In these circumstances, notwithstanding that Mr Pekar might have understood that he was acting on his wife’s behalf and that, misguidedly, his actions were authorised, I consider it appropriate that Mr Pekar (and not the respondent) assume responsibility for the costs that have accrued to the applicants as a result of responding to the review application and application for interim relief.
As to the nature of these costs, while I accept that the entire proceeding is essentially misconceived and might, on that basis, justify a departure from the usual costs order, I consider that in circumstances where Mr Pekar is self-represented that some greater circumspection is required.
It is true that Mr Pekar proceeded to file the interim application, naming the applicants, despite being on notice that (at least one aspect of it) was misconceived against them. It is also the case that Mr Pekar filed affidavits in this Court ostensibly in the name of the respondent but which, he now admits were filed without Mrs Pekar’s knowledge and which bore the respondent’s signature, despite (on Mr Pekar’s understanding), the respondent not reading or comprehending their content. Apart from anything else, this conduct concealed the true nature of the proceeding and was liable to mislead both the applicants and the Court.
However, despite these actions, I am not persuaded that Mr Pekar, by this conduct, intended deliberately to either prolong or obfuscate the proceeding and instead was operating under the misguided belief that he was entitled to bring a proceeding in his wife’s name, notwithstanding she lacked capacity to provide instructions and that Mr Pekar had not been authorised by the Court to do so. It is the reality that Mr Pekar has historically been permitted by this Court and the Federal Court (exercising its bankruptcy jurisdiction) to represent the respondent without any great analysis of the propriety of this course or without any objection being taken to this occurring (see, for example, Holden, as Trustee of the Bankrupt Estate of Pekar v Pekar (No. 6) [2020] FCCA 3385 at [1]). Mr Pekar can be under no illusion that this approach will be countenanced in the future.
I shall order that Mr Pekar pay the applicants’ costs of and incidental to the application for review filed on 18 November 2021 and the interim application filed on 23 December 2021 on a party and party basis.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons. Associate:
Dated: 7 April 2022
8
0