Krongold v Krongold

Case [2023] FedCFamC2G 871

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Krongold v Krongold [2023] FedCFamC2G 871

File number(s): MLG 1155 of 2023
Judgment of: JUDGE MANSINI
Date of judgment: 28 September 2023
Catchwords: BANKRUPTCY – application for review of Registrar’s sequestration order – dismissed on default of the review applicant.
Legislation:

Bankruptcy Act 1966 (Cth) ss.43, 52

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss.7, 190, 254, 256

Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) rr.1.04, 7.05

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021(Cth) rr.13.04, 13.05, 13.10, 21.03(2)

Cases cited:

Bates v Bechara (No 2) [2021] FCCA 1809

Low v Barnet (Trustee) [2017] FCAFC 60

Re McMaster; Ex parte McMaster (1991) 33 FCR 70

Division: Division 2 General Federal Law
Number of paragraphs: 56
Date of hearing: 29 August 2023 and 5 September 2023
Place: Melbourne
Counsel for the Applicant: Ms R Malone
Solicitor for the Applicant: White Cleland
The Respondent: No appearance
Interested Party: No appearance

ORDERS

MLG 1155 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

MAHIMA KRONGOLD
Applicant
AND:

DENNIS KRONGOLD
Respondent
AND: PETR VRSECKY AND PAUL ANTHONY ALLEN AS JOINT TRUSTEES OF THE BANKRUPT ESTATE OF DENNIS KRONGOLD
Interested Party

ORDER MADE BY:

JUDGE MANSINI

DATE OF ORDER:

28 SEPTEMBER 2023

THE COURT ORDERS THAT:

1.Pursuant to rule 13.05(1) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), the application for review of a Registrar’s decision filed on 21 August 2023 be dismissed on default of the Review Applicant (Mr Dennis Krongold).

2.Costs be reserved.

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 MANSINI

IN SUMMARY

  1. This matter relates to an application for judicial review of a sequestration order.

  2. For the reasons that follow, I have determined that the application for review is dismissed for default and costs be reserved.

    CONTEXT

  3. The following factual and procedural context is prepared having regard to the materials on the Court’s file and, as will appear, was not challenged in these proceedings.

  4. The matter involves the following parties and interested persons:

    (a)Ms Mahima Krongold is the Applicant Creditor in the originating bankruptcy proceedings and, by the creditor’s petition dated 29 June 2023, is owed a judgment debt(s) pursuant to a family law proceeding.

    (b)Mr Dennis Krongold is the named Respondent Debtor in the originating bankruptcy proceedings and was declared bankrupt by the sequestration order of 10 August 2023. Mr Krongold is the Review Applicant in these…

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Krongold v Krongold [2023] FedCFamC2G 871
Case
[2023] FedCFamC2G 871
Decision Date

CaseChat Overview and Summary

The case of Krongold v Krongold involved a dispute regarding a sequestration order under the Bankruptcy Act. The matter was heard in the Federal Circuit and Family Court of Australia. The primary issue before the court was whether Mr Krongold was in default under the General Federal Law Rules, which would impact the proceedings related to the sequestration order.

The court was required to determine if Mr Krongold was in default as defined by rule 13.04 of the General Federal Law Rules. This involved examining whether Mr Krongold had failed to comply with specific procedural requirements, such as filing and serving necessary documents, or prosecuting the proceeding with due diligence. The court also had to consider the implications of being in default under rule 13.05 of the General Federal Law Rules, which allows for various orders, including the possibility of staying or dismissing the proceeding or entering judgment against the respondent.

The court found that Mr Krongold was indeed in default based on his failure to comply with several procedural obligations. These included not filing and serving necessary documents and not prosecuting the proceeding with the required diligence. Given this determination, the court concluded that it had the authority to make orders under rule 13.05 of the General Federal Law Rules, potentially leading to the dismissal of the proceeding or the entry of judgment against Mr Krongold. The court's decision hinged on the clear evidence of non-compliance with the procedural rules and the importance of enforcing these rules to ensure the integrity of the legal process.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Rule 7.05 of the Bankruptcy Rules provides:Review of a Registrar’s decision(1)This rule applies in relation to an application under subsection 256(1) of the Act for review of a decision by a Registrar to make a sequestration order against the estate of a debtor (the bankrupt).Note:For the form of the application and the time for filing the application, see rule 2.02.(2)The application must be served on the trustee at least 7 days before the date fixed for the hearing of the application.(3)The applicant must give notice of the application to each person known to the applicant to be a creditor of the bankrupt.(4) The notice must be in accordance with Form B12.(5)The applicant must serve the notice on each creditor at least 7 days before the date fixed for the hearing of the application. In the absence of a specific time for hearing in the Bankruptcy Rules, r.21.03(2) of the GFL Rules is engaged and requires this Court to hear applications for review of a Registrar’s order as soon as possible and, unless it is impractical to do so, within 14 days after the date of filing. The de novo character of the Court’s review jurisdiction requires, in a case involving a sequestration order, that the judge hearing the review be satisfied as to the matters referred to in s.52 of the Act. It is for the creditor to prosecute their petition on review: Bates v Bechara (No 2) [2021] FCCA 1809 at [164]-[165]. There being no equivalent in the Bankruptcy Rules, where a party to proceedings is in “default” then r.13.05 of the GFL Rules sets out the orders the Court may make. Relevantly:Orders on default(1) If an applicant is in default, the Court may order that:(a)the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or(b)a step in the proceeding be taken within the time limited in the order; or(c)if the applicant does not take a step in the time mentioned in paragraph (b)—the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant.(2) If a respondent is in default, the Court may:(a)order that a step in the proceeding be taken within the time limited in the order; or(b)if the claim against the respondent is for a debt or liquidated damages, grant leave to the applicant to enter judgment against the respondent for: (i)the debt or liquidated damages; or(ii)if appropriate, costs; or (c)if the proceeding was started by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleading – give judgment against the respondent for the relief that:(i) the applicant appears entitled to on the statement of claim; and (ii) the Court is satisfied it has power to grant; or(d)give judgment or make any other order against the respondent; or(e)make an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time limited in the order. A party is in default, for the purposes of r.13.05 of the GFL Rules, in the following circumstances as provided by r.13.04 of the GFL Rules: (a)For an applicant, if they fail to comply with an order of the Court in the proceeding, file and serve a document required under these Rules, produce a document as required by Part 14, do any act required to be done by these Rules, or prosecute the proceeding with due diligence; and(b)For a respondent, if they have not satisfied the applicant’s claim and failed to give an address for service before the time has expired, file a response before the time for the respondent doing so has expired, comply with an order of the Court in the proceeding, file and serve a document required under these Rules, produce a document as required by Part 14, do any act required to be done by these Rules, or defend the proceeding with due diligence. IS MR KRONGOLD IN DEFAULT?

Ratio Decidendi

Legal Principle Established

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