Krongold v Krongold

[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 proceedings.

   (c)Mr Petr Vrsecky and Mr Paul Anthony Allen are the joint trustees of the bankrupt estate of Dennis Krongold (Trustees in Bankruptcy) and were appointed upon the sequestration order made on 10 August 2023.

   The originating bankruptcy proceedings

5. On 29 June 2023, Ms Krongold filed an originating application by way of creditor’s petition which specified that Mr Krongold owed a debt of $180,577.73, on account of his failure to pay costs ordered in a judgment of Division 1 of this Court on 6 March 2023 (in the amount of $176,010.00) and costs ordered in the appeal judgment (in the amount of $750.00) and interest on the primary judgment calculated for the period 4 April 2023 to 29 June 2023 (in the amount of $3,817.73).

6. On the face of the petition, on 4 June 2023 Mr Krongold was personally served with a bankruptcy notice which specified a debt in the amount of $179,305.15 (the interest on the primary judgment being less at 1 June 2023 which was the date of issue of the bankruptcy notice). The petition also recorded that Mr Krongold had committed an act of bankruptcy within 6 months before the presentation of the creditor’s petition because he failed to comply with the bankruptcy notice on or before 26 June 2023 – he had not paid the debt and had not satisfied the Court that he had a counter claim, set off or cross demand equal to or more than the sum claimed in the bankruptcy notice.

7. Also on 29 June 2023, Ms Krongold filed an affidavit of search which annexed a process server’s affidavit which deposed that personal service of the bankruptcy notice was effected on 4 June 2023; and further deposed to searches which disclosed that no application for an extension of time had been made in relation to the bankruptcy notice nor had an extension been granted, and no application had been made to set aside the bankruptcy notice nor had Mr Krongold secured the payment of the debt or compounded the sum in the bankruptcy notice.

8. Also on 29 June 2023, a signed consent to act as trustee by the Trustees in Bankruptcy was filed by Ms Krongold.

9. On 28 July 2023, Ms Krongold filed: an affidavit evidencing service of the creditor’s petition, which it was deposed had been effected personally on 20 July 2023; and an affidavit evidencing service of a statement of costs and disbursements on Mr Krongold.

10. On 31 July 2023, Mr Krongold filed a notice of appearance and a notice stating grounds of opposition to the creditor’s petition.

11. On 1 August 2023, Mr Krongold filed an affidavit which annexed exhibits A-F. Mr Krongold deposed to having been in hospital during the time that an application to set aside the bankruptcy notice was due to be filed.

12. On 3 August 2023, a Registrar of this Court adjourned the hearing of the petition to 10 August 2023.

13. On 10 August 2023, absent an appearance by or on behalf of Mr Krongold, a Registrar of this Court made a sequestration order pursuant to s.43 of the Bankruptcy Act 1966 (Cth) (Act), in the following terms:

    THE COURT ORDERS THAT:

    1. The estate of Dennis Krongold is sequestrated under the Bankruptcy Act 1966 (Cth).

    2. The applicant’s costs are fixed in the sum of $7,908.50 and are to be paid from the respondent’s bankrupt estate in accordance with the Bankruptcy Act 1966 (Cth).

    THE COURT NOTES THAT:

    A. The date of commission of the act of bankruptcy is 26 June 2023.

    B. A consent to act as trustee signed by Petr Vrsecky and Paul Anthony Allen has been signed pursuant to s 156A of the Bankruptcy Act 1966 (Cth).

    These review proceedings

14. On 18 August 2023, Mr Krongold lodged: an application for review of the Registrar’s decision of 10 August 2023, an affidavit and a notice to creditors of application for review of the Registrar’s decision to make a sequestration order. The application listed the same postal and email addresses for service as Mr Krongold had provided on the notice of appearance filed in the original proceedings before the Registrar. The documents were accepted for filing in accordance with the procedural rules of the Court on 21 August 2023. By these review materials, Mr Krongold sought:

    1. To rescind sequestration of the estate of Dennis Krongold under the Bankruptcy Act 1996 (Cth).

    2.Rescission of the costs in respect of the applicant's costs in the sum of $7,908.50 to be paid from the respondent's estate in accordance with the Bankruptcy Act 1966 (Cth).

    3.        The court to note:-

    (a)That the debtor has committed no act of bankruptcy on 26th June 2023 or any other date prior or subsequent thereto.

    (b)That no consent to act as trustee has been signed pursuant to s 156A of the Bankruptcy Act 1966 (Cth).

    (c)That it has received all relevant documentation in a timely manner as noted hereunder:-

    (i)        Form B4 - Notice of Appearance

    (ii)Form BS - Notice stating grounds of opposition to application, interim application or petition

    (iii)Affidavit - with accompanying Exhibits A - F General Federal Law & Migration proceedings - Dennis Krongold - Applicant

    (iv)Exhibit A- Letter to Her Honour Justice Johns dated 21st June 2023 from Ms L. Thynne on behalf of the applicant in relation to application to set aside Bankruptcy Notice and advising the respondent is in hospital and unable to attend to any matters.

    (v)Exhibit B - letter to Appeals Judicial Registrar Thomas dated 22nd June 2023 with a copy to White Cleland Pty Ltd from Ms L. Thynne on behalf of the applicant in relation to application to set aside Bankruptcy Notice advising the respondent will be claiming an offset and/or cross-claim way in excess of the debt displayed on the Bankruptcy Notice. This letter also advised that the respondent is in Hospital and unable to address any matters.

    (vi)Exhibit C - Email to Ms Lucy Thynne from Alexandra Taylor, White Cleland Pty Ltd dated 23rd June 2023 requesting authorisation from Ms Thynne to act on behalf of Mr Krongold.

    (vii)Exhibit D - Email to Ms Alexandra Taylor, White Cleland Pty Ltd dated 23rd June 2023 from Ms Thynne advising that authorisation to act on behalf of Mr Krongold would be sent as soon as possible, as Mr Krongold was in hospital at the time.

    (viii)Exhibit E - Letter to White Cleland Pty Ltd dated 4th July 2023 from Mr Dennis Krongold in relation to application to set aside Bankruptcy Notice and advising that Ms Lucy Thynne be authorised to deal with all matters relating to this case. The respondent was unable to effect the counter claim/set-off/cross demand in the action or proceeding, in which the judgment or order in respect of which this Bankruptcy Notice has been issued and was obtained.

    (ix)Exhibit F - Letter to White Cleland Pty Ltd dated 4th July 2023 from Mr Dennis Krongold in relation to application to set aside Bankruptcy Notice and advising that Ms Lucy Thynne be authorised to deal with all matters relating to this case. The respondent was unable to effect the counter claim/set-off/cross demand in the action or proceeding, in which the judgment or order in respect of which this Bankruptcy Notice has been issued and was obtained.

    (x)       Refer Affidavit of today's date (15th August 2023).

    (d)Exhibit G - Letter dated 8th August 2023 to Federal Circuit and Family Court of Australia advising the respondent, Dennis Krongold's inability to attend Court on 10th August 2023.

    (e)Exhibit H - Letter dated 8th August 2023 to White Cleland Pty Ltd acting on behalf of the applicant, Mahima Krongold, advising the respondent, Dennis Krongold's inability to attend Court on 10th August 2023.

    4.To review all the Orders as per Registrar Curnow's Orders of 10th August 2023.

    5.To allow the respondent and his accountant to produce all the necessary documentation evidencing a debt by the creditor to the debtor which is equal to or larger than the debt claimed by the creditor, pursuant to Orders of the Honorable Justice Sharon Johns in the Federal Circuit Family Court Of Australia on or around 6th March 2023 and the matter of this debt was unable to be pursued in the Court Hearing in which the Court Orders of 6th March 2023 were made, in line with Section 5 of the Notice of Bankruptcy.

    6. To allow a 90-day period from 18th September 2023 (refer attached copy of Dr Christopher Yeo's 'Medical Document' letter dated 10th August 2023) to allow the respondent and his accountant to locate, organise, prepare and present all salient documentation confirming a debt by the applicant/creditor, Mahima Krongold, to respondent/debtor, Dennis Krongold, equal to or greater than that debt claimed by the applicant, pursuant to Her Honor Justice Johns' Orders of on or around 6th March 2023.

    7.No further Court/Directions Hearing to be set down prior to 18th September 2023 (refer attached copy of 'Medical Document' letter from Dr Christopher Yeo dated 10th August 2023).

    (sic.)

15. On 21 August 2023, programming orders issued in chambers which listed the review application for hearing on 29 August 2023 and required: Mr Krongold to file and serve an outline of submissions and any further evidence on which he relied by 23 August 2023; Ms Krongold to file an outline of submissions and any further evidence on which she relied by 25 August 2023; and Mr Krongold to file any material in reply by 28 August 2023. The final programming order afforded the parties liberty to apply. The 21 August 2023 orders also included the following notation:

    AND THE COURT NOTES THAT:

    A.The review applicant is reminded of the form and service requirements contained in the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) and Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) and will be required to demonstrate such compliance at the hearing.

    B.Failure to comply with the procedural requirements of these orders, the Court’s Rules and/or failure to attend the hearing may result in the matter being dismissed or proceeding on the materials before the Court without hearing further from you.

16. On 22 August 2023, an email was sent to chambers which was signed off by “Dennis Krongold” but was not sent from the email address on record for Mr Krongold (it was sent from the email address “[email protected]”). By that email, the writer requested an adjournment of the review hearing until on or after 19 September 2023 for reason(s) expressed as follows:

    ...for reasons as disclosed in our affidavit, B3A and B12 forms of 18^th August 2023 and filed on 19^th August 2023, including but not limited to, the medical certificate of the head doctor at Cabrini Hospital in Melbourne, which indicates the wire inserted into my foot will not be removed until 4^th September 2023.

    It is therefore unlikely that I will be able to walk properly prior to some two weeks following the wire removal by the surgeon – Mr S.Tulloch.

    We respectfully affirm that the hearing date in Court, or any other medium, be adjourned until on or after 19^th September 2023, due to the nature of the debilitating side effects of the painkilling drugs I am currently taking in relation to the surgery on my foot.

    Yours faithfully

    Dennis Krongold

    Respondent

    (sic.)

17. On 23 August 2023, an email in response to the 22 August 2023 email was sent from chambers to the parties in the following terms:

    Dear party and practitioners,

    We refer to Mr Krongold’s email of 22 August 2023 below.

    Please be advised that pursuant to rule 21.03(2) of the Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021 (Cth), the Court is required 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.

    If Mr Krongold wishes to apply for an adjournment, then he is required to file an application in a proceeding along with any evidence in support and should do soon as soon as possible. The other party will then be invited to provide their views.

    Please note that, in appropriate cases, the Court may facilitate an electronic hearing by Microsoft Teams with no requirement to physically attend the Court building. If that is a request you wish to make then you should address why it is necessary and in the interests of the administration of justice.

    Further, we note that the email address used by Mr Korngold below is not the email held in the Court’s records. Please file an updated notice of address for service if your contact details have changed.

    Should you have any queries, please do not hesitate to contact chambers.

18. On 25 August 2023, an email was sent to chambers and the Court’s Registry which was signed off by “L.Thynne, For and on behalf of D.Krongold” but was not sent from the email address on record for Mr Krongold (it was sent from the email address “[email protected]”). Attached to that email was an application in a proceeding form and an affidavit. The affidavit contained one exhibit being a “medical document” of a Dr Christopher Yeo dated 10 August 2023:

    To Whom It May Concern,

    Re: Medical Document

    I am writing to certify that Mr Dennis Krongold (01/07/1946) has been under the care of the General Medical Unit at Cabrini Hospital since 26^th of July 2023 follow a fall. He complained of a painful left foot and difficulty mobilizing. Unfortunately, Mr Krongold suffered a dislocation of his 2^nd metatarsophalangeal joint. This diagnosis was delayed by several days. Mr Krongold required surgery to relocate the toe. specifically and K-wire inserted through 4 bones of the foot. Mr Krongold is allowed to partially weight bear with a heal boot and has been on potent narcotic analgesia. Which may interfere with his judgment and cognitive function.

    Mr Krongold is now at home with his family and therapy at the home (TITH) has been put in place to support his discharge as he is struggling to mobilise and negotiate stairs. which will be the case until the K-wire is removed.

    Mr Krongold has several other complications while in hospital such as conjunctivitis and lower respiratory tract infection requiring antibiotics.

    The surgical plan is to have the K-wire removed in 4 weeks and has an appointment to see his surgeon on the 4^th of September.

    Following removal of the K-wire I would expect Mr Krongold to regain his function over the next 2 weeks or so.

    Please do not hesitate to contact the General Medical Unit if you require any further information.

    Sincerely,

    Dr Christopher Yeo

    Geriatrician

    (sic.)

19. By reply email, the Court’s Registry advised that the application in a proceeding and supporting affidavit could not be accepted for filing before and unless signed by Mr Krongold.

20. Also on 25 August 2023, Ms Krongold’s legal representative sent an email to chambers and the email address on record for Mr Krongold in which they notified that Ms Krongold would be represented by counsel at the hearing on 29 August 2023 and noted a transcript of the proceeding before the Registrar on 10 August 2023 had been filed that day.

21. On 26 August 2023, an email was sent to chambers and the Court’s Registry which was signed off by “L.Thynne, For and on behalf of D.Krongold” but was not sent from the email address on record for Mr Krongold (it was sent from the email address “[email protected]”). Attached was a single page document being the final page of the application in a proceeding form with a signature and dated 25 August 2023.

22. On 28 August 2023, Ms Krongold’s legal representative sent an email to chambers and copied the email address on record for Mr Krongold which attached a submission on behalf of Ms Krongold and an affidavit respectively filed that day.

23. At 9.30 am on 29 August 2023, the matter proceeded to hearing of the review application before the Court as presently constituted. Ms Krongold was represented by counsel and no appearance was entered by or on behalf of Mr Krongold or the Trustees in Bankruptcy. At the hearing, counsel for Ms Krongold pressed that the review application be determined in her favour. It was apparent that the Court had not received an adjournment application that could be accepted as made on behalf of Mr Krongold or an adjournment application that was supported by certified medical evidence that would justify an adjournment. However, as the Court was of the view that Mr Krongold may not have understood the Court procedures and in the knowledge that the review application, if made again (at that time), would have been with the statutory timeframe, the hearing was adjourned and orders were made in the following terms:

    THE COURT ORDERS THAT:

    1.This matter is adjourned for further hearing at 10.00 am on Tuesday 5 September 2023.

    2.By no later than 12.00 pm on Friday 1 September 2023, Mr Krongold (the review applicant) must file and serve:

    a.Regarding his representation in these proceedings, any notice of address for service to be represented by a lawyer pursuant to rule 6.01 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) or any application that a non-party to the proceedings be heard pursuant to rule 2.03 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy Rules) 2021 (Cth) (Bankruptcy Rules) or as a "Mackenzie friend". Such notice or application must be made using the appropriate Court form.

    b.Regarding any request for a further adjournment of these proceedings, any such application in a proceeding is to be made using the appropriate form, supported by sworn evidence (including, to the extent of any medical reason/s, a medical certificate of an appropriately qualified doctor which explains the reason/s why Mr Krongold is unable to attend or participate in the hearing, in person, or otherwise arrange representation for the hearing on 5 September 2023).

    c.Regarding any request to attend these proceedings remotely, any such application in a proceeding is to be made using the appropriate Court form, supported by sworn evidence (including, to the extent of any medical reason/s, a medical certificate of an appropriately qualified doctor which explains the reason/s why Mr Krongold is unable to attend or participate in the hearing, in person, or otherwise arrange representation for the hearing on 5 September 2023).

    d.By no later than 4.00 pm on Friday 1 September 2023, Mr Krongold file and serve a written response to the submissions filed by Ms Krongold (the original applicant) on 28 August 2023 of no longer than 10 pages in length which addresses the matters raised therein.

    AND THE COURT NOTES THAT:

    A.In the event of non-compliance with the above orders, pursuant to rule 13.05 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), the Court may dismiss the application or determine the application as if it were undefended.

    B.Any failure by Mr Krongold (the review applicant) to comply with the requirements at Order 2 of these Orders will result in the review application being dismissed by default in accordance with rule 13.05(1) of the GFL Rules and any failure to attend the further hearing may result in the matter being determined without hearing further from you pursuant to rule 13.10 of the GFL Rules.

    C.In relation to matters of representation, Mr Krongold is directed to s.175 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) which provides conditions on entitlement to representation in this jurisdiction and to rule 2.03 of the Bankruptcy Rules which provide for the grant of leave in some circumstances.

    D.Ms Krongold (the original applicant) will be afforded an opportunity to respond to any applications made in a proceeding that are properly made in accordance with the Court’s Rules and the orders above and no party should assume that a request made will be granted unless and until a decision is made by the Court.

1. At 4.07 pm on 1 September 2023, Mr Krongold sent an email to chambers, the Applicant’s solicitors, the Court’s Registry and the Court’s bankruptcy case manager email from the address on record. Mr Krongold’s email of itself contained no attachments but appeared to be an attempt to forward an email from “[email protected]” which was sent to chambers at 3.58pm that day and contained 6 attachments as follows:

   (a)A Notice of appearance which contained Mr Krongold’s address for service and had been filed on 31 July 2023;

   (b)Application for review dated 15 August 2023 which was the same as the document that was lodged on 18 August 2023 and accepted for filing on 21 August 2023;

   (c)Notice to creditors Form B12 dated 15 August 2023 which was also lodged on 18 August 2023 and accepted for filing on 21 August 2023;

   (d)Affidavit of Mr Krongold dated as affirmed 18 August 2023 with exhibits A-H which was also lodged on 18 August 2023 and accepted for filing on 21 August 2023;

   (e)Application in a proceeding (for adjournment) dated 25 August 2023 which had not been accepted for filing; and

   (f)Affidavit of Mr Krongold dated 25 August 2023 which had not been accepted for filing.

2. At 4.12 pm on 1 September 2023, Mr Krongold sent another email to chambers, the Applicant’s solicitors, the Court’s Registry and the Court’s bankruptcy case manager email from the address on record. Mr Krongold’s email of itself contained no attachments but also appeared to be an attempt to forward an email from “[email protected]” which was sent to chambers at 4.00pm that day and contained 7 attachments as follows:

   (a)Affidavit of Mr Krongold dated as affirmed 29 July 2023 which does not appear on the Court’s record as having previously been filed (although it appears to be identical to the affidavit filed on 1 August 2023 as in the original review application); and

   (b)Exhibits A-F (separately attached) which were each attached to the original review application in these proceedings.

3. On 4 September 2023, Ms Krongold’s legal representative sent an email to chambers and the email address on record for Mr Krongold in which they notified that Ms Krongold would be represented by counsel at the hearing on 5 September 2023.

4. At 10.00 am on 5 September 2023, the hearing of the application for review was resumed. Ms Krongold was represented by counsel. No appearance was entered by or on behalf of Mr Krongold or the Trustees in Bankruptcy. At the hearing, counsel for Ms Krongold pressed that the review application be dismissed by default of Mr Krongold and sought costs. It was accepted that the consequence of this was that the review was not determined and Mr Krongold may apply on another occasion, and seek an extension of the time for filing. Judgment was reserved at the conclusion of the hearing.

5. At 6.14 pm on 5 September 2023, an email was sent to chambers and Ms Krongold’s solicitor (sent in response to the email of Ms Krongold’s solicitor of 4 September 2023) from the email address on record for Mr Krongold which stated:

   Dear Associate, 

   Mr Krongold has just become aware of this email. He has been under sedation following removal yesterday, at Cabrini of 6.5cm of metal from his foot - as advised the Honourable court and all parties on several occasions at all relevant times.

   This is just a courtesy notification acknowledging receipt of this email.

   To the best of Mr Krongold's knowledge Ms Lucy Thynne has been providing all parties with necessary/requested information/documentation - including but not limited to Applications, Affidavits, Exhibits, Attachments,Medical Certificates-all signed and witnessed by duly authorised Solicitor/Justice of the Peace; covering the relevant periods in question and in substantiation of applications made and orders sought and on the appropriate documentation.

   kind regards

   (sic.)

6. On 25 September 2023, the matter was listed for delivery of judgment to take place by Microsoft Teams.

7. On 26 September 2023, Mr Krongold sent an email to chambers and Ms Krongold’s lawyers from the address on the record that he will be attending judgment delivery by Microsoft Teams on 28 September 2023. This is the only record of any communication received from Mr Krongold or any person purporting to communicate on his behalf following the email of 6.14pm on 5 September 2023.

   STATUTORY FRAMEWORK

8. Part III, Division 2 of the Act confers broad jurisdiction on this Court in bankruptcy.

9. Upon the making of a sequestration order, a person becomes “a bankrupt” with various consequences proscribed by the statute: see s.43(2).

10. The power to make a sequestration order is a power delegated to Registrars of this Court pursuant to s.254 of the FCFCOA Act and Schedule 1 Part 1 item 5 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules). Where a Registrar has exercised delegated powers of this Court, a party to a proceeding may within the time prescribed by “the Rules of Court” or within any further time allowed in accordance with those rules, apply to the Court for review of that exercise of power: s.256(1) of FCFCOA Act.

11. The term “Rules of Court” is defined at s.7 of the FCFCOA Act to mean Rules of Court made under Chapter 3, encompassing both the Bankruptcy Rules and the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules). In bankruptcy proceedings, both the Bankruptcy Rules and the GFL Rules may be taken to apply. However, pursuant to r.1.04 of the Bankruptcy Rules, the Bankruptcy Rules take primacy and apply to a proceeding in which the Bankruptcy Act applies unless the Court otherwise orders.

12. 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.

13. 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.

14. 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].

15. 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.

16. 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?

17. It is important to bear in mind that the overarching purpose of the civil practice and procedure provisions of this Court is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. That overarching purpose includes the objectives of just determination of all proceedings before this Court, the efficient use of the judicial and administrative resources available, the efficient disposal of this Court’s overall caseload, disposal of all proceedings in a timely manner and resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute: s.190 of the FCFCOA Act.

18. A preliminary issue to determine in considering whether Mr Krongold’s review application ought be dismissed by default, as Ms Krongold sought at the second hearing before the Court, is the question of whether Mr Krongold is properly characterised as the “applicant” or the “respondent”, for the purposes of the default provisions at rr.13.04 and 13.05 of the GFL Rules. As will appear, the distinction matters not having regard to the nature and numerous instances of Mr Krongold’s non-compliance. For completeness, in circumstances where Mr Krongold commenced the review proceedings by filing a Form B3A and has not established that he has complied with the threshold service requirements on the Trustees in Bankruptcy (whether by the date that was at least 7 days before the date that was fixed for the first or second hearing as required by rule 7.05(2) of the Bankruptcy Rules, or at all) and did not seek or obtain relief from compliance with that rule, I consider he is properly characterised for present purposes as the review applicant. That is the case notwithstanding that, were it established that a competent application was made and served by Mr Krongold in compliance with the Rules of the Court, it would be heard de novo meaning it would then be for Ms Krongold to re-prosecute her application on review.

19. In considering the action (or in-action) of Mr Krongold necessary to determine the question of dismissal on default, at the outset it is important to note that the Court does not engage with non-parties to proceedings. A party being a person who has “standing” because their private rights and interests are (or will be) affected, or they may have a “special interest”. As Mr Krongold did not appoint a lawyer or otherwise update his address for service, nor was leave sought (or granted) for any other person to be heard as a non-party to these proceedings, correspondence from the “[email protected]” email address was considered to be from a non-party to the proceedings and was not accepted for filing.

20. As will be apparent from the detailed context above, the first identifiable non-compliance with a Court requirement relevant to the meaning of “default” as proscribed by r.13.04 of the GFL Rules is that Mr Krongold did not comply with the Court’s orders of 21 August 2023 because he did not file and serve an outline of submissions and any further evidence in support of his application whether by 4.00 pm on 23 August 2023 or at all.

21. Prior to the commencement of the first day of hearing of his review application, Mr Krongold did not request to attend the proceedings electronically as he was invited to do.

22. Mr Krongold did not attend the first day of hearing of his review application on 29 August 2023 and was not represented by a lawyer on that day and there was no request for assistance of any other person on that day. As earlier referenced, at that time the Court had not received an adjournment application that could be accepted or that was supported by certified medical evidence as to justify an adjournment. Indeed, the 10 August 2023 letter of a geriatrician (a Dr Yeo) referred to a past medical procedure which pre-dated the filing of the review application, prescription of anti-biotics and indicated difficulties for Mr Krongold in terms of his mobility but did not certify any incapacity to participate in Court proceedings (whether in person, or remotely). However, on that occasion, it was acknowledged that Mr Krongold had, by the review application itself, sought that the review hearing not occur before 18 December 2023. Further, annexed to the supporting affidavit filed with the review application was a communication from Mr Krongold to Ms Krongold’s lawyers which purported to give them authority engage with a “Ms Thynne” on his behalf and an email address apparently belonging to a person by the name of “Lucy Thynne” had sought to communicate with the Court - but Mr Krongold had not filed a notice of address for service at that time updating the “lXXXthynne” email as his address for service and a Ms Thynne was not on the record as his lawyer and therefore those communications could not be accepted. As earlier referenced the Court considered on that occasion that, as a self-represented litigant, Mr Krongold may not have been aware of the Court’s procedures and requirements of the bankruptcy legislation and the Court’s rules in relation to applications of this kind.

23. Accordingly, the first day of hearing was adjourned and, by the Court’s orders of 29 August 2023, Mr Krongold was afforded the opportunity to clearly understand and comply with the Court’s procedures in relation to matters of: representation by a lawyer (or leave to have the assistance of any other person); a further adjournment request and the standard of evidence required in support; and a request to attend the proceedings remotely and the standard of evidence required in support. Orders were made to that effect (extracted in full above) and the matter was adjourned to 10.00 am on Tuesday 5 September 2023. Those orders included a notation informing Mr Krongold of the consequences of any further failure to comply with the Court’s orders or attend a hearing and a reminder, in bold text, that no party should assume that a request made will be granted unless and until a decision is made by the Court.

24. Mr Krongold did not file and serve any materials in compliance with Order 2 of the 29 August 2023 orders by 12.00 pm on 1 September 2023.

25. In a further non-compliance with an order of the Court in the proceeding, at around 4.00 pm on 1 September 2023, Mr Krongold attempted to make a belated adjournment request by filing an application in a proceeding by email to chambers, the Court’s Registry and copied Ms Krongold’s legal representative. This document was not accepted for filing. Notwithstanding that it was not made in compliance with the Court’s orders of 29 August 2023, the adjournment request was inadequate. It was accompanied by an unfiled affidavit of 25 August 2023 (which was previously sought to be filed on behalf of Mr Krongold on 25 August 2023) which again annexed the letter of geriatrician Dr Yeo dated 10 August 2023. It will be recalled that the letter referred to a past medical condition, prescription of anti-biotics and indicated some difficulty with mobility until mid-September 2023. That also letter noted that an appointment was scheduled with Mr Krongold’s surgeon on 4 September 2023 but did not certify or indicate any reason why Mr Krongold would not be fit to participate in Court proceedings on 5 September 2023. On its face, that letter did not justify Mr Krongold’s non-attendance at the hearing on 5 September 2023.

26. Prior to the commencement of the second day of hearing of his review application, Mr Krongold received a notification from Ms Krongold’s lawyer that they planned to attend the hearing on 5 September 2023. Mr Krongold did not request to attend the proceedings electronically as he was invited to do.

27. Mr Krongold did not attend the second day of hearing of his review application on 5 September 2023 and was not represented by a lawyer on that day and there was no request for leave to be assisted by any other person on that day. As earlier referenced, Ms Krongold appeared with counsel and pressed that the review application be dismissed on default of Mr Krongold.

28. Having regard to everything that is before the Court and the overarching purpose as provided by statute, the Court is not minded to adjourn these proceedings again. I am sufficiently satisfied that Mr Krongold was on notice of the hearings dated 29 August 2023 and 5 September 2023. I am also satisfied by the various communications received from Mr Krongold that he was aware of those orders and simply did not attend to compliance. Mr Krongold was afforded substantial opportunity to comply with the Court’s orders. Even if there were some difficulty with his mobility (which, in the absence of certified medical evidence, I do not necessarily accept), Mr Krongold was afforded opportunities to request to attend the proceedings remotely in which case he could have asked questions if necessary to understand what was required of him. There is no explanation before the Court as to why Mr Krongold did not engage a lawyer to represent him which was an alternative course available to him. He did not seek to be represented at the hearings by any person as his “Mackenzie friend”. Mr Krongold simply did not avail of any of these options. A further adjournment would prejudice Ms Krongold who was put to the expense of briefing counsel and inconvenience of attending the review proceedings.

29. For the above reasons, Mr Krongold’s review application should be dismissed for his default by his failures to comply with the Court’s orders and in not attending the Court hearings for failing to prosecute the proceeding with due diligence, pursuant to r.13.05(1) of the GFL Rules. For completeness, I have had regard to the reasons given in Mr Krongold’s email of 6.14pm on 5 September 2023, after the conclusion of the hearing and reasons were reserved and to his attendance at judgment delivery but do not consider there to be any basis to alter the conclusion reached.

30. The application is dismissed in the knowledge that it does not appear that the Court has before it a competent review application. In addition to the question of whether the Trustees in Bankruptcy have been properly served, the application on its face lacks merit. Mr Krongold’s primary claim that he did not commit an act of bankruptcy on 26 June 2023 appears to be founded on the mere assertion of solvency by way of a cross claim that he did not bring in the family court proceedings to which the judgment debt relates. And, in any event, he did not seek an extension of time to make a cross claim in relation to the bankruptcy notice and did not seek to set aside the bankruptcy notice – from which the “act of bankruptcy” flowed. The matters deposed to in Mr Krongold’s 29 July 2023 affidavit do not adequately explain the period of alleged incapacity and are not supported by certified medical evidence. Even if the geriatrician’s letter of 10 August 2023 were taken into account it gives no basis to find that Mr Krongold was incapacitated from attending to those matters at the relevant times. Further, Mr Krongold does not contend that he is now in a position to prove his solvency (or would be in a position to prove his potential solvency until December 2023).

1. Put another way, it is apparent that Mr Krongold is not ready to proceed having – by his original review application - sought a period of some 4 months until 18 December 2023 to prepare materials in order to make a case for review of the sequestration order. Such delay would not be consistent with the earlier cited overarching purpose of the FCFCOA Act and would not appear to be in the interests of the administration of justice.

   CONCLUSION

2. For the above reasons, the review application is dismissed for default. Costs of this application will be reserved and heard on application of Ms Krongold.

3. It is acknowledged that, in the absence of any application for a stay of the Registrar’s sequestration order of 10 August 2023, other events may well overtake the utility of any further application. Nonetheless, with the benefit of these reasons, Mr Krongold is on notice that as his review rights have not been determined it remains open to him to file a competent application and seek the necessary extension of the time for filing and any stay.

I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini.

Associate:

Dated:       28 September 2023