Loftus v Clark (No.1)
[2003] FMCA 66
•5 March 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LOFTUS v CLARK (No.1) | [2003] FMCA 66 |
| BANKRUPTCY – Whether claim in County Court provable debt – whether leave to proceed necessary – interest of the parties. |
Bankruptcy Act1966, ss.58 (3), 60(2), 60(3), 82(1)
Fraser v Deputy Commissioner of Taxation [1996] 69 FCR 99
Kattirtzis v Zaravinos [2001] FCA 1158
Re Sharp Ex Parte Tietyans Investments Pty Ltd (in liq) [1998] FCA 1367
Sturdy Components Pty Ltd v Trustee of the Bankrupt Estate of Sturt [2000] FCA 884
| Applicant: | ANTHONY LOFTUS |
| Respondent: | GRAHAM J CLARK (AS TRUSTEE IN BANKRUPTCY OF THE ESTATE OF MICHAEL LOFTUS) |
| File No: | MZ 1199 of 2002 |
| Delivered on: | 5 March 2003 |
| Delivered at: | Melbourne |
| Hearing Date: | 11 December 2002 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Counsel for the Applicant: | Mr M Black |
| Solicitors for the Applicant: | Noble Lawyers |
| Counsel for the Respondent: | Mr P Duggan |
| Solicitors for the Respondent: | Madisons |
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 1199 of 2002
| ANTHONY LOFTUS |
Applicant
And
| GRAHAM J CLARK (AS TRUSTEE IN BANKRUPTCY OF THE ESTATE OF MICHAEL LOFTUS) |
Respondent
REASONS FOR JUDGMENT
In this application ANTHONY LOFTUS (the Applicant) seeks orders against GRAHAM J CLARK (the Respondent) in his capacity as Trustee in bankruptcy of the estate of Michael Loftus. Michael Loftus became bankrupt on 26 August 2002 which is the date upon which the Respondent was appointed as Trustee of the bankrupt’s estate.
The Applicant is the brother of the Bankrupt. The brothers inherited a property situated at and known as 7 Tennyson Street Malvern (the property) and became registered as joint proprietors of the property on 20 July 1999. The property had been valued at between $320,000 and $340,000 in late April 1999. It was subsequently sold on 26 August 2000 for the sum of $271,500.
The purchasers of the property commenced Supreme Court proceedings for specific performance of a contract of sale in circumstances where the brothers were unable to agree in relation to the proceeds of sale and it was alleged the Bankrupt was not prepared to complete the contract. In any event after commencement of Supreme Court proceedings an order was made by a Senior Master
of the Supreme Court on 11 December 2000 for specific performance of the contract of sale for the property by 13 December 2000. At settlement a further order was made that the purchasers be entitled to retain a certain sum from the settlement by way of set off for costs of the action with any surplus to be returned to the Applicant and the Bankrupt. The Applicant and the Bankrupt were ordered to pay costs of the proceedings and the balance of proceeds of sale were to be paid to the Senior Master to be held together with interest for the benefit
of the Applicant and the Bankrupt. Settlement of the property occurred on 13 December 2000. After deduction of the sum of $4,500 retained by the purchasers pursuant to the orders of the Court a sum of $103,486 was paid into the office of the Senior Master of the Supreme Court.
It is claimed in the affidavit material that in about late April 2001 an amount of $34,000 was released by the Senior Master by consent of the Applicant and the Bankrupt and the purchasers. That sum was paid to the mother of the Applicant and the Bankrupt. It was paid in satisfaction of a debt owed by the Applicant of $25,000 and a debt owed by the Bankrupt in the sum of $9,000.
In brief terms the Applicant claims an entitlement to all the monies held by the Senior Master based upon claims that loans were advanced on security for the property to the Bankrupt of what ultimately appears to be $150,000 which at the time was still less than the one half net equity of the Bankrupt in the property. The property was sold for $271,500 and did not achieve the estimated value of $320,000 to $340,000 being the valuation in April of the year prior to the auction. Hence, the reduction of proceeds of sale of the property from an expected $320,000 to $340,000 to $271,500 resulted in a reduced net equity available to the brothers. The advance therefore of $150,000 is therefore alleged to be greater than one half of the share to which the Bankrupt was entitled.
It is not necessary for me to set out in further detail the claims and counter claims between the Applicant and the Bankrupt save to say that on 25 June 2001 the Applicant commenced proceedings against the Bankrupt in the County Court. In those proceedings the Applicant seeks a declaration that he is entitled to the full benefit of the funds held by the Senior Master. By a Defence, Set-off and Counter-claim dated 16 August 2001 the Bankrupt in the County Court proceeding admits that the brothers upon becoming registered as tenants in common of the property held a legal interest in the land in equal shares and further admits that a loan agreement was entered into by the Bankrupt for the sum of $150,000 on 28 April 1999 as described earlier in this judgment. There is a dispute about the use to which any valuation of the property was made and otherwise it would seem the real issue in dispute is the purpose for which the loan was used with the Bankrupt asserting it was to pay joint debts of the Applicant and the Bankrupt arising from alleged failed partnership ventures. As I understand the Defence the Bankrupt asserts that there is no surplus to distribute from the property after taking into account partnership debts and by counter-claim refers to a partnership with the Applicant relating to the acquisition, development and management of orchards and vineyard properties. In the counter-claim the Bankrupt asserts that the partnership enterprises failed leaving debts in excess of the surplus now available to the property. Again, it is not necessary for me to refer in further detail to that matter which is presently before the County Court.
As I understand it the County Court proceedings have been adjourned pending the outcome of this application. Solicitors acting for and on behalf of the Bankrupt were granted leave to withdraw from acting for the Bankrupt when the proceedings were before the County Court on 11 November 2002. In accordance with orders of the Court an amended Writ was filed on 13 November 2002 naming the respondent in this application as defendant to the County Court proceedings in his capacity as Trustee in the bankruptcy of the estate of the Bankrupt.
From the affidavit material it appears that the County Court proceedings were listed on 18 November 2002 and on that date Counsel for the Respondent applied for a stay pursuant to s.58(3) of the Bankruptcy Act. As indicated the proceedings were then adjourned to allow the application to be made to this Court.
The Applicant in simple terms has asserted that the County Court proceedings are based upon the issue of who owns the monies currently held in the Senior Master’s fund. It is asserted that if the money is found to be the Applicant’s then it would not form part of the Bankrupt’s estate and therefore would not fall within the provisions of the Bankruptcy Act1966 (the Bankruptcy Act). In those circumstances the Applicant seeks orders permitting him to continue with the claim in the County Court at least insofar as it relates to the monies held by the Senior Master.
Relevant legislation
Section 58(3) of the Bankruptcy Act provides:-
“58(3)Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a)to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b)except with the leave of the court and on such terms as the court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.”
Sections 60(2), 60(3) and 82(1) provide:-
“60(2)An action commenced by a person who subsequently becomes a bankrupt is, upon his becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.
60(3)If the trustee does not make such an election within 28 days after notice of the action is served upon him by a defendant or other party to the action, he shall be deemed to have abandoned the action.”
82(1)Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.”
Applicant’s submissions
The Applicant provided written submissions dated 10 December 2002. In those written submissions the Applicant claims the following:-
·The Applicant is not a creditor so s.58(3) does not apply; or
·Alternatively, the County Court proceeding is not an attempt to enforce a remedy so s.58(3)(a) is not applicable; or
·Alternatively, the Applicant’s claim is not for a provable debt so s.58(3)(b) does not apply; or
·Alternatively, if s.58(3) does apply leave ought to be granted because it is in the interests of all the parties to do so.
Applicant not a creditor
The Applicant relied upon the dictionary definition of ‘creditor’ as being “a person or commercial enterprise to whom money is owed” (Collins Concise Dictionary). It was submitted that if the Applicant is correct in his assertion that the funds deposited with the Senior Master are the property of the Applicant then to the extent that leave is sought the County Court proceeding is not a claim by a creditor. The funds are not and were not it was submitted owned by the Bankrupt and therefore they cannot be owed by the Bankrupt to anybody, the Applicant included. If the funds are not owed by the Bankrupt to the applicant then the Applicant is not a creditor of the Bankrupt and therefore does not fall within the provisions of s.58(3). Section 58(3) it was submitted does not operate to stay a claim or acquire leave to continue a claim that is brought against the Bankrupt in the capacity other than that of a creditor.
Not enforcement of remedy
It was submitted that the County Court proceedings are not an attempt by the Applicant to enforce a remedy against the Bankrupt and for the same reasons that the Applicant is not a creditor of the Bankrupt the County Court proceedings to the extent that leave is sought is not an enforcement of a remedy. If funds deposited with the Senior Master are not and were not the property of the Bankrupt then the Applicant cannot seek relief against the Bankrupt in respect of those funds. It is further submitted that the County Court proceedings do not seek enforcement of any remedy. Reference was made to the decision of Beaumont J in Fraser v Deputy Commissioner of Taxation [1996] 69 FCR 99 and in particular the following paragraphs:
“32.As the High Court observed in Clyne (at 595) a distinction should be drawn, for the purposes of s.58(3), between the ‘enforcement’ of a remedy against the property of the bankrupt, on the one hand, and the commencement or the taking of a fresh step in a ‘legal proceeding’, on the other. An obvious example of the former would be to levy execution against the lands or goods of the bankrupt. In this connection, the words ‘enforcement’ of a ‘remedy’ should, I think, be interpreted as having their settled meaning. In R v Bates (1982) 2 NSWLR 894, Samuels JA. Said, of ‘enforce’ (at 895):
‘ … I would harbour considerable doubt, as a matter of grammar or syntax, whether the word ‘enforced’ extends to cover the institution of proceedings for breach of a provision of a statute. The relevant meaning assigned in the Shorter Oxford Dictionary is that to enforce means ‘to compel observance of’. That is, I think, its ordinary meaning …’
With respect, I agree. Moreover, it will be recalled that the notion of ‘enforcement’ was not used in s.60(2) when considered by Clyne J in White. This may be the basis for distinguishing White. But, in any event, the doubts cast in Clyne upon the approach taken in White, when considered in the context of the settled meaning of the phrase ‘enforce a remedy’, lead, in my opinion, to the conclusion that the absolute bar imposed by s.58(3)(a) should be construed so as to apply only to the enforcement of remedies, including extra-curial remedies, as distinct from the institution of legal proceedings and their maintenance up to the point of recovery of judgment. The institution and maintenance of such proceedings will, of course, be subject to the different constraints imposed by s.58(3)(b), unless leave be granted under that provision”.
33.It follows, in my view, that the application under s.79A of the Family Law Act should be characterised as a ‘legal proceeding’ rather than the ‘enforcement’ of a ‘remedy’; so that s.58(3)(a) has no application in the present circumstances”.
It was then submitted that essentially in the present case s.58(3)(a) does not apply and the Court needs to consider s.58(3)(b). It is understood that in dealing with s.58(3)(b) of the Bankruptcy Act the Court would need to be first satisfied that the Applicant is a ‘creditor’ and otherwise satisfied that the section applies to the circumstances of the present case.
Not provable debt
As part of the circumstances of the present case consideration needs to be given to whether or not the County Court proceedings may be characterised as proceedings ‘in respect of a provable debt’. Reliance was placed upon s.82(1) of the Bankruptcy Act and it was submitted that if the funds deposited with the Senior Master are the property of the Applicant then they are not a debt or a liability of the Bankrupt. There are no other provisions in the Bankruptcy Act which would enable the funds deposited with the Senior Master to fall within the definition of provable debt. If the County Court proceeding is not one in respect of a ‘provable debt’ then s.58(3)(b) does not apply and/or would not prevent action being taken against the Bankrupt for a claim which is not a provable debt. It was submitted that the aims of bankruptcy law are to deal with assets of the Bankrupt and therefore any property owned by another party cannot form part of the Bankrupt’s estate.
It was submitted that the bankruptcy law is designed to ensure that the assets of the Bankrupt are distributed rateably among creditors, that one creditor does not gain an undue advantage over other creditors and to discharge a debtor from future liability for existing debts.
Interest of all parties
It was submitted that it is in the interests of all parties to permit the County Court proceedings to continue to judgment as this is the only way that ownership of the funds deposited with the Senior Master can be resolved. To the extent that it is necessary leave should therefore be granted to the Applicant to continue the County Court proceedings in order to determine the ownership of those funds. Counsel relied upon a decision of Gyles J in Kattirtzis v Zaravinos [2001] FCA 1158 where the Court held at paragraph 8 the following:
“Generally speaking, if there is any disadvantage to the bankrupt estate arising out of the proceedings then leave should not be granted.”
It was then ultimately submitted that in the present case the appropriate course for the Court is to grant the orders sought by the Applicant. It should be noted that during the hearing Counsel for the Applicant indicated that the Applicant would seek orders in the following terms:
“1.The Applicant does not require leave pursuant to s 58(3)(b) of the Bankruptcy Act to take all necessary fresh steps in County Court proceeding 5040/01, in relation to determining the question of ownership of the funds deposited with the Senior Master of the Supreme Court.
2.Alternatively, leave be granted to the Applicant to take all necessary fresh steps in proceedings 5040/01 in the County Court of Victoria to determine the question of ownership of the funds deposited with the Senior Master of the Supreme Court of Victoria”.
It was submitted that the restriction in the alternative order is an appropriate restriction in the present case. Any disadvantage to the Bankrupt’s estate is irrelevant according to the submissions of the Applicant. Any disadvantage has arisen due to the involvement of the Trustee in the County Court proceedings.
Respondent’s submissions
The Respondent opposes the application and specifically has submitted that the Court should not make any declaration of the kind sought that
s.58(3) of the Bankruptcy Act does not operate to stay the current proceedings in the County Court. The Respondent submits that leave should not be granted to the Applicant to proceed against the Bankrupt estate pursuant to s.58(3) of the Bankruptcy Act.
The Respondent submits that even if the Applicant’s evidence were to be accepted in the County Court proceedings then that is not sufficient to provide grounds for leave to be granted in the present case.
It is submitted that even if the Applicant were to succeed in the County Court proceedings entirely on both its claim and defence of the counter claim that there is no suggestion that the claim would be covered by insurance or any other third party indemnity. Arguably any judgment for the Applicant would be futile by reason of the application of
s.58(3)(a) and that there is no reason to conclude that the judgment, if obtained, would enjoy priority over the Bankrupt’s other creditors. It was submitted that this application may be described as a “misconceived attempt to queue-jump other creditors”.
The Respondent submitted that the Applicant cannot take any fresh steps in the current County Court proceedings without making the current application and as I understood it to that extent s.58(3) applies. The onus is on the Applicant to make the application and displace the presumption against proceedings being allowed to continue.
It was submitted that in considering whether to allow the proceedings in the County Court to continue the Court should have regard to whether there is a potential for policy considerations of the Bankruptcy Act to be subverted by effectively allowing one creditor an undue advantage over other creditors and/or preventing the release of the Bankrupt from further liability in respect of provable debts. It was in that context that the Respondent submitted that relevant considerations include the issue of whether the claim is covered by insurance (see
ReSharp Ex Parte Tietyans Investments Pty Ltd (in liq) [1998] FCA 1367 at pp 5-7), whether some wider litigation will be frustrated by the absence from the Bankrupt in person where the Bankrupt’s liabilities at least joint and several with others and whether the conduct of the proceedings would be a burden of the estate. It was further submitted that the Court needs to consider whether leave could be granted subject to conditions that safeguard the policy considerations of the Bankruptcy Act. An example was referred to of an order being made where leave was granted with the proviso that no step be taken to enforce any judgment against the Bankrupt personally without further leave of the Court (Sturdy Components Pty Ltd v Trustee of the Bankrupt Estate of Sturt [2000] FCA 884). It was submitted that none of the criteria is applicable in the current application. It was further submitted that in the present case the claim of the Applicant in the County Court proceedings does not involve any of the exceptions referred to in s.82 of the Bankruptcy Act.
In general the submissions for the Respondent were that the Applicant’s claim in the County Court is for a provable debt and in the absence of leave it is not competent for the Applicant to take any fresh step in those proceedings. There are no circumstances in the present case which would justify the granting of leave pursuant to s.58(3) of the Bankruptcy Act. That section it was submitted currently provides a bar to the action in the County Court proceeding. There is nothing in the material to support the granting of leave under that provision.
The correct course to be followed in order to access the amount retained in the fund held by the Senior Master would be to make application to the Senior Master for release of those funds and at that point the Applicant would have an opportunity to make a claim on the estate. It was submitted that the Trustee would need to persuade the Senior Master to release the funds to the Trustee and it is then a matter for the Trustee upon the appropriate lodging of proofs to determine what will happen to those funds. That decision would be the subject of further proceedings in the event of a dispute and it was conceded that there would be some duplication in the issues that are now currently before the County Court and what may at least potentially be before a Court in bankruptcy in the event of a dispute over the Trustee’s decision.
In considering the exercise of the Court’s discretion to grant leave it was submitted that to do so would be to the disadvantage of the Bankrupt estate. Reliance was placed upon the fact that there is a claim and counter claim in the County Court proceedings. It is argued that the conduct of proceedings both in relation to the claim and counter claim that are pending in the County Court would involve considerable expense and constitute a significant disadvantage to the Bankrupt estate. There has not been any substantive hearing of the proceedings in the County Court even though technically it may be said that the proceedings are part heard.
By way of clarification it was submitted that the current status of the Trustee’s involvement in the counter claim is that a decision about whether to pursue the counter claim has not yet been finally determined as I understood it from the submissions made by Counsel for the Respondent.
Reasoning
In my view the submissions made by the Applicant in relation to whether or not the Applicant is a creditor for the purpose of s.58(3) of the Bankruptcy Act cannot be sustained. There is clearly a dispute between the parties where the Applicant claims to be owed money by the Bankrupt and at least part of that money happens to be in a fund currently under the control of a Senior Master of the Supreme Court. The definition of ‘creditor’ referred to by the Applicant in my view covers the current situation of the relationship between the Applicant and the Bankrupt. If one looks further at the definition of ‘creditor’ in the New Shorter Oxford Dictionary it provides that a creditor means, “a person who gives credit for money or goods; a person to whom a debt is owing”. The Applicant claims the Bankrupt owes him a debt.
Whilst there may be some dispute about whether the funds held by the Senior Master are owned by the Bankrupt there seems to me to be little dispute that there is at least a claim presently before the County Court that those funds and other amounts are owed by the Bankrupt to the Applicant. It would be artificial in my view to simply endeavour to isolate those funds in the context of the dispute presently before the County Court.
Accordingly in my view s.58(3) would apply to the present circumstances and does effectively provide a bar to the current County Court proceedings continuing in the sense that the Applicant would be prevented by operation of s.58(3) from taking any fresh step in those proceedings which includes interlocutory steps and/or the hearing itself.
I accept however that s.58(3)(a) does not apply to the present case as the institution of legal proceedings and the maintenance of those proceedings up to the point of recovery of judgment in my view is subject to s.58(3)(b). I otherwise apply and accept the law as stated by the Full Court of the Federal Court in the case of Fraser v Deputy Commissioner of Taxation and in particular the paragraphs cited earlier in this judgment.
I am satisfied in the present case that the proceedings in the County Court are proceedings of a kind which could be regarded as being “in respect of a provable debt”. Having regard to the nature of those proceedings it would be somewhat artificial to describe them as anything other than a claim for a provable debt by the Applicant who as creditor claims to be owed money by the Bankrupt albeit proceeds of sale of a property.
In considering the issue of whether I should exercise discretion to grant leave to the Applicant to continue the proceedings in the County Court to judgment, I agree that in the circumstance of the present case with the decision of Gyles J in the Kattirtzis case that “Generally speaking, if there is any disadvantage to the bankrupt estate arising out of the proceedings, then leave should not be granted”. I accept however that that is a general statement and does not in any way suggest that where some disadvantage is demonstrated that it should automatically determine that the application for leave should fail.
In the present case it is relevant to consider the issues currently before the County Court and whether those issues having been the subject of proceedings already commenced in that Court should properly be allowed to continue so that ultimately a judgment will be delivered which will assist in resolving the issue of the extent to which the Applicant is entitled to funds deposited with the Senior Master.
It is clear to me that the issue between the Applicant and the Bankrupt is a significant issue and one which may well ultimately be the subject of adjudication either by the County Court if leave were to be granted in this application or by this Court or the Federal Court if a dispute arises in relation to any decision taken by the Trustee in relation to the funds with the Senior Master. Whilst there are other issues over and above the issue of ownership of those funds deposited with the Senior Master which are currently before the County Court, it seems to me that that issue is a core issue in those proceedings and determination of that issue at an early stage would be in the interests of all parties. Whilst I accept that the conduct of County Court proceedings may involve a degree of disadvantage to the Bankrupt estate, it is my view that in all the circumstances litigation of issues in a Federal Court of a similar kind to those presently before the County Court would appear to be almost inevitable in the present case and therefore costs and expenses of conducting the County Court proceedings would not in all the circumstances seem to be all that much greater than the costs and expenses of conducting a disputed claim by the Applicant in relation to any decision by the Trustee concerning ownership of the funds and/or proof of any debt claimed by the Applicant.
Whilst there are a number of factors which have been referred to by Counsel for the Respondent as being relevant in the exercise of my discretion I do not regard those factors as constituting an exhaustive list of those matters to be taken into account. In my view the most significant issue in the present case is whether the County Court proceedings which are already commenced and ready for hearing should be permitted to proceed so that a degree of finality and certainty is achieved in relation to the issues between the Bankrupt and the Applicant and in particular the issue of ownership of the funds currently held by the Senior Master. Whilst any judgment which may be obtained by the Applicant may, by reason of s.58(3)(a) of the Bankruptcy Act, not be capable of enforcement there would at least be a degree of certainty in relation to the debt claimed by the Applicant and proper adjudication of that issue by the County Court. If I were to refuse to grant leave then it seems to me that further litigation in all probability would be the result and the only difference would be that substantially the litigation in the County Court would be rendered useless and in all probability fresh proceedings would need to be commenced by the Applicant in a Court exercising jurisdiction under the Bankruptcy Act.
Whilst it has been suggested that if I were to grant leave I should restrict it to leave for those proceedings in the County Court to be dealt with on the basis that they should be confined to the question of determining the ownership of the funds deposited with the Senior Master of the Supreme Court of Victoria, it is my view that conditional leave is too narrow and would unduly interfere with the power of the County Court Judge to determining the issues properly before that Court. It is not appropriate to impose a condition on leave of a kind which effectively would seek to confine the judicial powers of the County Court in determining the proceedings currently before that Court. Ultimately a decision will be made by that Court which in any event it is reasonable to expect would be of assistance to the parties and in their interests in determining the indebtedness, if any, of the Bankrupt to the Applicant and thereafter providing guidance to the Senior Master of the Supreme Court in relation to the funds currently held in the Senior Master’s fund.
In my view there is a common interest in the parties in permitting the County Court proceedings to continue to judgment. It would be artificial and inappropriate for this Court to otherwise seek to impose conditions on leave granted by restricting the issue in the County Court to the ownership of the funds deposited with the Senior Master.
In the present case I am mindful of the duty of this Court to ensure that the objectives of the Bankruptcy Act are achieved. In particular I accept that the policies behind s.58(3) of the Bankruptcy Act involve the factors referred to in Re Sharp ex parte Tietyans Investments Pty Ltd (in liq) referred to by Counsel, that is I accept that the policy includes freeing the Bankrupt from any claims which might be made in respect of a period prior to bankruptcy, to permit the Trustee in bankruptcy if a proof of debt is accepted to treat that claim against the estate as he would treat other claims of all other creditors and to ensure that the Trustee is not put to expense in defending proceedings where he has no money to defend those proceedings. I further accept that it is important not to allow one creditor to obtain an undue advantage over other creditors. Other factors which are relevant though not conclusive which have caused some concern to the Court is whether the Bankrupt will participate in the County Court proceedings and/or whether the Trustee will be able to obtain the co-operation of the Bankrupt. In the present case given the nature and extent of the dispute between the Applicant and the Bankrupt, it is my view that in these circumstances it would be highly unlikely that the Bankrupt would not actively participate and co-operate in relation to proceedings where there was a claim and at least foreshadowed a counter-claim. I do not believe that resolution of the dispute in the County Court will necessarily give undue preference to the Applicant over other creditors.
Overall I am satisfied that by granting leave for the existing County Court proceedings to continue in an appropriate forum will ensure that all the relevant issues are dealt with comprehensively by an appropriate Trial Court and that it is not in the interests of the parties to effectively commence new litigation in the matter which in my view in all probability would occur if I were to refuse to grant leave. The proceedings are at least listed for trial in the County Court and should be permitted to proceed.
Accordingly the following order is appropriate subject to further submissions from Counsel:
Pursuant to s.58(3)(b) of the Bankruptcy Act 1966 Anthony Loftus (the Applicant) is granted leave nunc pro tunc to continue legal proceedings in County Court action number 5040/01 against Graham J Clark (as Trustee in bankruptcy of the estate of Michael Loftus) (the Respondent) up to and including judgment of the said County Court proceedings.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 5 March 2003
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