Juratowitch v Iannotti (No.2)
[2009] FMCA 1274
•24 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| JURATOWITCH v IANNOTTI (No.2) | [2009] FMCA 1274 |
| BANKRUPTCY – Reasons for Judgment disposing of matters outstanding from earlier interim Judgment. |
| Bankruptcy (Estate Charges) Act 1997 Bankruptcy Act 1966, s.30 |
| Applicant: | DANIEL PETER JURATOWITCH (AS TRUSTEE OF THE BANKRUPT ESTATES OF ANTHONY IANNOTTI AND JOSIE IANNOTTI) |
| Respondent: | ANTHONY IANNOTTI (AS TRUSTEE OF THE IANNOTTI FAMILY TRUST) |
| File Number: | MLG 644 of 2009 |
| Judgment of: | Burchardt FM |
| Hearing dates: | 27 November 2009 & 11 December 2009 |
| Date of Last Submission: | 11 December 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 24 December 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr P. Fary |
| Solicitors for the Applicant: | B2B Solicitors |
| The Respondent: | No appearance |
ORDERS
The applicant be authorised and directed to distribute the $277,087.81 held by him as follows:
Funds Available $277,087.81
Cheques required to be drawn
PKF Expert Report $16,500.00
Legal Fees – Trust $34,824.95
Trustee’s Remuneration – Trust $ 9,305.18
Trustee’s Disbursements – Trust $ 625.00
Australian Taxation Office – Trust $84,459.20
Ann Iannotti – Trust $34,435.98
Realisation Charge – Josie $ 1,126.14
Legal Fees – Josie $ 4,939.14
Trustee’s Remuneration – Josie $15,852.54
Australian Taxation office – Josie $10,257.60
Realisation Charge – Joint $ 4,002.05
Legal Costs – Joint $ 9,871.12
Trustee’s Remuneration – Joint $39,660.28
C.L.E.T.S. – Joint $ 2,633.37
Ford Credit Australia Limited – Joint $ 1,016.38
Peter & Judy McDowell – Joint $ 1,538.25
Silver Star Fashions Pty Ltd – Joint $ 1,310.18
Commonwealth Bank of Australia Limited – Joint $ 137.42
Duncan Basheer Hannon – Joint $ 4,134.83
Unallocated Distribution (retained by Trust) $ 458.20
Funds Available
$277,087.81
Save for the payment to PKF of $16,500.00, the applicant be directed not to make such distribution until 30 days have elapsed from the making of this order.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 644 of 2009
| DANIEL PETER JURATOWITCH (AS TRUSTEE OF THE BANKRUPT ESTATES OF ANTHONY IANNOTTI AND JOSIE IANNOTTI) |
Applicant
And
| ANTHONY IANNOTTI (AS TRUSTEE OF THE IANNOTTI FAMILY TRUST) |
Respondent
REASONS FOR JUDGMENT
Introductory
These Reasons for Judgment follow my Reasons for Judgment issued on 27 November 2009 and should be read in conjunction with them.
When I handed down judgment on 27 November 2009 I canvassed a number of issues with counsel. Those discussions lead to the filing of two further affidavits by the applicant, together with an affidavit of service and a further subsequent minute of the orders that the applicant proposes.
In the interim the Court has received an undated letter from Mr and Mrs Iannotti which runs into two pages, the date of which can only be identified from a clearly erroneous facsimile transmission record on the top of the page being June 21, 2007.
The Issues
As I explained to counsel on 27 November 2009, I thought that the position adopted by the trustee was to an extent erroneous. The trustee became seized of assets following the sale of the property formerly owned by the trust in Adelaide and should have used those funds first to discharge the creditors of the trust.
I pointed out that the debt owed by Mr Iannotti to the trust self-evidently fell away as it was overtaken by his bankruptcy.
I furthermore pointed out that the item in the Iannotti Family Trust accounts described as “loan-various” in the sum of $95,423 was no longer of any moment. Such creditors as there may have been, and they have never been identified, have not come forward following advertising by the trustee and could in my opinion properly be simply written off.
There were various other matters raised by my judgment, including the extent to which payments should be made including:
a)payments which reflected work not in relation to the trust but in relation to the bankrupt estates; and
b)the extent to which charges arose pursuant to the Bankruptcy (Estate Charges) Act 1997.
I have also made it clear both in my Reasons for Judgment and in the interchanges with counsel on 27 November 2009 that I thought this process was in danger of becoming unduly protracted and complex and that I proposed to use the overarching powers in s.30 of the Bankruptcy Act 1966 (“the Act”) to impose an expeditious and hopefully efficient solution.
The Position of the Iannottis
The Iannottis had written to the Court on 14 September 2009 raising a number of issues. The orders initially proposed by the trustee were designed in part to address the matters they raised.
It is clear, however, from the affidavit of Mr Juratowitch filed on
10 December 2009 that those issues had been overtaken by events. On 9 November 2009 Mr Juratowitch wrote to the Iannottis, the letter being DPJ-4 of his affidavit. The matters expressed in that letter, in my view, are an appropriate and comprehensive response to the concerns raised by Mr and Mrs Iannotti. I note that Mr and Mrs Iannotti have not replied to that letter.
What the Iannottis have done is to send the undated letter to which I have referred. Unfortunately the matters expressed by Mr and Mrs Iannotti are by and large in very general terms and clearly do not give rise to any further controversy before the Court. I note that in paragraph 1(b) the Iannottis asserted “the Trustee have acted on their own ability and discarded the legal procedure towards the matter”. I agree with that submission and have indeed found to that effect in my Reasons for Judgment. Nonetheless, as I have earlier observed, the trustee acted without challenge by Mr and Mrs Iannotti either on their own behalf or as the trustee of the trust. Furthermore and in any event, the way the matter is now going to be dealt with is consistent with what would have been proper if the trustee had acted in an appropriate way originally.
The New Affidavits Filed by the Applicant
The affidavit of Demian Walton filed on 10 December 2009 simply sets out the legal fees that have been charged in relation to this proceeding. They all appear to me to be appropriate levels of charges.
The affidavit of Mr Juratowitch filed on 10 December 2009 confirms a number of matters. It is clear that:
a)the trustee has repaid into the account in which the balance of proceeds of sale of property is held amounts reflecting work that had been performed in respect of the bankruptcy and not in respect of trust affairs;
b)as earlier described, Mr Juratowitch had investigated the matters arising from Mr Iannotti’s letter dated 14 September 2009;
c)Mr Juratowitch was only claiming a reduced amount for renumeration in the light of Mr Turner’s report; and
d)a revised flow of funds chart had been prepared in the light of my Reasons for Decision.
I find on the basis of Mr Juratowitch’s affidavit and Mr Turner’s opinion that the fees charged by Mr Juratowitch are fair and reasonable in the circumstances.
Further Findings and Disposition of the Matter
In my opinion the flowchart now prepared by Mr Juratowitch, which is proposed to be reflected in the final orders of the Court submitted by the applicant, is indeed an accurate and proper one. It reflects my Reasons for Judgment and in my view, reflects the operation of the Bankruptcy Act and in particular s.110 thereof. From the second page of the flowchart, it is apparent that the approach now adopted by the trustee accurately reflects, in my opinion, the funds available to the trust and the proper payment of trustee creditors.
The subsequent pages, in my view, accurately reflect the appropriate dealing with the remaining assets of the trust that devolved to Josie Iannotti and to the joint estate of Mr and Mrs Iannotti as required by law.
I note that although service was effected late, Mr and Mrs Iannotti were served with the affidavits of Mr Juratowitch and Mr Walton on
10 December 2009. No contact was made with the Court by Mr or Mrs Iannotti prior to the hearing, nor has any contact been made thereafter. The undated letter received from Mr and Mrs Iannotti suggests that they would have been unable through ill-health to attend or otherwise participate in any event.
In the light of the way the matter is now dealt with I am satisfied that the appropriate charges are made under the Bankruptcy (Estate Charges) Act.
Finally, I should note that counsel for the applicant trustee, Mr Fary, expressed some concern about a particular paragraph of my earlier judgment. At paragraph [46] of my Reasons for Judgment I said:
“I note that in oral submissions, counsel for the trustee indicated that the trustee was seeking appointment of the trustee as trustee of the family trust, rather than confirmation that the trustee already is, by operation of law, the trustee of the family trust.”
Counsel expressed concern at this paragraph. He asserted that he had never intended to, and indeed never did advance any such submission. He asserted that it was his recollection that he had at all times adopted the position merely that such capacity to deal with the trust and its assets devolved to the trustee in bankruptcy only pursuant to the right of indemnity of the bankrupt and the associated lien.
Rather than distress counsel by maintaining a position which is open to question, I would wish to record formally that there must have been some misunderstanding between us. It would be more accurate to say that the position of the applicant trustee in bankruptcy was that assets of the trust were available to him to satisfy any obligations on the part of Mr Iannotti that he had become liable for in his role as trustee. It was never the trustee’s position that he himself became trustee of the trust.
Conclusion
I have prepared draft orders in the form proposed by the trustee, which in my view accurately reflect my earlier Reasons for Judgment and the operation of the Act.
This has been as counsel observed a peculiarly messy and complicated case. It has been hampered by the absence of an effective contradictor at all points, most particularly at the point when the original trustee, wrongfully in my view, moved to sell the property. Nonetheless, the ultimate outcome does in my view properly reflect the operation of law to the facts as I have found them to be and for those reasons I am minded to make the orders I have described.
Out of abundant caution, I will hear from counsel before making the draft orders.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate: Ms B. Evans
Date: 24 December 2009
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