Mann v Condon
[2013] FCCA 780
•11 July 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MANN v CONDON | [2013] FCCA 780 |
| Catchwords: BANKRUPTCY – Applicant seeks permission to proceed with a complaint to the Financial Ombudsman Service – s.178 of the Bankruptcy Act 1966 (Cth) – application dismissed. |
| Legislation: Bankruptcy Act 1966 (Cth) s.178 |
| Cummins v Claremont Petroleum NL (1996) 185 CLR 124 Frost v Sheahan [2009] FCAFC 20 Healey v Prentice (No 2) [2000] FCA 1598 |
| Applicant: | KAREN LOUISA MANN |
| Respondent: | SCHON GREGORY CONDON (AS TRUSTEE OF THE BANKRUPT ESTATE OF KAREN LOUISA MANN) |
| File Number: | MLG 1007 of 2013 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 10 July 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 11 July 2013 |
REPRESENTATION
| The Applicant: | In Person |
| Solicitors for the Respondent: | Matthews Folbigg Lawyers |
| Counsel for the Bank of Queensland | Mr Moore |
ORDERS
The Application filed on 8 July 2013 be dismissed.
Subject to paragraph 3, the Applicant, Respondent, and Bank of Queensland pay their own costs.
If any of the parties or the Bank of Queensland wish to contend the Court should make a different order for costs to the one specified in paragraph 2:
(a)by 18 July 2013 whoever so contends submit to the Associate of Judge Manousaridis and to each other party a short written submission in support of such contention;
(b)by 25 July 2013 whoever opposes such contention submit to the associate of Judge Manousaridis and to each other party a short written submission in response; and
(c)any contention for the making of a different order to that specified in paragraph 2 be determined by Judge Manousaridis in chambers.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1007 of 2013
| KAREN LOUISA MANN |
Applicant
And
| SCHON GREGORY CONDON (AS TRUSTEE OF THE BANKRUPT ESTATE OF KAREN LOUISA MANN) |
Respondent
REASONS FOR JUDGMENT
Introduction
By Application filed on 8 July 2013, the Applicant, Ms Mann, seeks, among other things, an order that she be given permission to proceed with a complaint she wishes to make to the Financial Ombudsman Service (FOS) about the Bank of Queensland (Bank). The complaint Ms Mann wishes to make is set out in a “Dispute Form” dated 6 July 2013 which is attached to the application.
Ms Mann says she needs the order to be made before 11 July 2013 because:-
a)she is an undischarged bankrupt;
b)the FOS will not consider her complaint unless she obtains her trustee’s permission;
c)the Bank proposes to sell by auction on 11 July 2013 two properties; and
d)the Court’s granting her permission to proceed with the complaint will have the effect of preventing the Bank from continuing with the proposed sales.
In order to assess Ms Mann’s application, it will be necessary to first set out the relevant facts, as deposed by Ms Mann.
Facts
A sequestration order was made against the estate of Ms Mann in May 2011.[1] In September 2012 Ms Mann lodged a complaint to the FOS about the Bank. Ms Mann does not hold a copy of the complaint she says she lodged with FOS.
[1] Affidavit of Karen Louisa Mann filed 8 July 2013 at [23]
The FOS informed Ms Mann she could not proceed with the complaint unless she had the permission of her trustee. Ms Mann says she requested such consent from the Trustee in October or November 2012, but received no response.
On 5 July 2013 Ms Mann sent an email to the Trustee. The email stated that the Trustee had not responded to Ms Mann’s request for permission to make a complaint to the FOS, and that the Bank had listed two properties to be sold by auction on 11 July 2013. The email requested the Trustee consent to Ms Mann’s making a complaint to the FOS, noting that if consent were not forthcoming, she would urgently apply to the Federal Court (sic) for a review of the Trustee’s decision or action.
In her email Ms Mann described the complaint she proposed to make about the Bank as follows:-
“. . . . The basis of my complaint is the information already provided to you, which, it is clear, constitutes a breach of section 25.2 of the Code of Banking Practice, which says:
“With your agreement, we will try to help you overcome your financial difficulties with any credit facility you have with us. If, at the time, the hardship variation provisions of the Uniform Credit Code could apply to your circumstances, we will tell you about them.”
Not only did the bank ignore a number of requests, several in writing, from 2010 on to address financial hardship, but it failed entirely to advise me about the Uniform Credit Code (section 66).”
The Trustee responded by letter Ms Mann received on 5 July 2013. The Trustee said that during Ms Mann’s bankruptcy, she had provided minimal assistance to the Trustee and that Ms Mann’s conduct had demonstrated a refusal by Ms Mann to acknowledge her bankruptcy and her responsibilities to the Trustee. The Trustee also said that the complaint Ms Mann wanted to make against the Bank, and for which she sought the Trustee’s permission, appeared to relate to the Bank’s refusal to provide Ms Mann information relating to assets which had vested in the Trustee.
The Trustee refused to grant the permission because of the following:
a)the assets in question vested in the Trustee;
b)any communications relating to the assets should have been forwarded to the Trustee;
c)the Bank would not be required to communicate with Ms Mann but with the Trustee, because the assets are vested in the Trustee; and
d)the Trustee could not be satisfied that his consenting to the application would benefit Ms Mann’s estate or its creditors.
The Trustee noted, however, that he would be prepared to reconsider the request for consent if Ms Mann were to provide him with documents and information requested in the letter.
Procedural history and submissions of the parties
The matter first came before me at 2.15 pm on Tuesday 9 July 2013. The applicant, representing herself, appeared but there was no appearance on behalf of the respondent (Trustee). As I was not satisfied the Trustee had been given sufficient notice of the application, I adjourned the matter before me at 10.00 am on 10 July 2013.
At 10 am on 10 July 2013, the applicant appeared and the Trustee, through his solicitor, Mr Mullette, appeared by telephone. Mr Mullette informed the Court that the complaint the applicant proposed to make to FOS (Complaint) did not appear to assist the creditors. Mr Mullette further informed the Court that if, as Ms Mann contended, her making the Complaint would operate as a stay on the Bank’s selling the two properties, then this might delay the administration of the bankruptcy. Mr Mullette also suggested that notice of the application be given to the Bank of Queensland.
I adjourned the matter to 2.15 on 10 July 2013 and directed the applicant inform the Bank of the listing of the matter before me at 2.15 pm on 10 July 2013. At that time, the applicant appeared, as did the Trustee through Mr Mullette by telephone. In addition, Mr Moore, of counsel, appeared on behalf of the Bank of Queensland.
A number of matters were traversed at the hearing at 2.15 pm of 10 July 2013. Mr Moore (who I recognise did not have the opportunity to be properly briefed, and therefore addressed the Court on the basis of instructions he had limited opportunity to obtain) indicated that the Bank was of the view that the terms of reference under which the FOS acts would not operate to stay the sale of the properties if Ms Mann were to lodge the Complaint. Mr Moore said, however, that he could not confirm to the Court that the Bank would act on that view irrespective of whether or not Ms Mann lodged the Complaint.
Mr Moore, again based on his understandings of his instructions, informed the Court of the possibility that Ms Mann had previously submitted a dispute with the FOS which may have been similar to the Complaint, and that that dispute had been resolved adversely to Ms Mann. Ms Mann denied this. Ms Mann said that she did have a complaint resolved against her on the basis that the FOS had no jurisdiction. As I understand Ms Mann, the basis of that decision was that she had made the complaint when bankrupt but without her trustee’s consent.
I invited Ms Mann and Mr Moore to provide by email to my associate documents created in relation to any previous complaint Ms Mann lodged with FOS by 4.30 of 10 July 2013. I indicated to Ms Mann that if, contrary to her denials, she previously made a complaint to the FOS substantially similar to the Complaint for which she seeks now permission to make and that complaint had been dismissed, that would be treated by me as a matter which would count against her application.
My associate received from Ms Mann a letter dated 6 September 2013 from the FOS to her stating that the complaint Ms Mann intended to make to the FOS fall out of the terms of reference of the FOS because, to the extent she wished to make a complaint in her name, she was an undischarged bankrupt and that, in order to make her complaint, the FOS required the consent of her trustee. I will cause this letter to be marked as an exhibit (Exhibit A).
My associate also received, this time from Mr Moore, two documents. One is a Deed of Appointment of Receiver and Manager; the other is a document titled “The Circular Financial Ombudsman Service”. I will cause to have these documents marked for identification (MFI 1).
I was also informed during the hearing that Ms Mann has an interest in only one of the two properties that are due to be auctioned on 11 July 2013. Ms Mann holds an interest in that property in common with her now deceased husband. The registered proprietor of the other property is a company of which Ms Mann was once a director.
During the hearing Ms Mann handed up some written submissions. These have been placed in the Court file. I consider these later in these reasons.
Finally, I record that for the purposes of the application, I read the longer of two of the Affidavits Ms Mann filed on 8 July 2013 in support of her application. I did so subject to relevance, and without prejudice to any objections Mr Moore may wish to raise. Ms Mann indicated she did not wish to have the shorter of the two affidavits read, as that affidavit only went to the urgency of her application.
Section 178 of the Act – legal principles
Ms Mann seeks the orders claimed in her application pursuant to s.178(1) of the Act which provides:
“If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.”
Section 178 confers a “supervisory jurisdiction over the conduct of the trustee”.[2] Some of the principles governing the exercise of the power conferred by s 178 have been stated in Frost v Sheahan as follows:- [3]
“It is not necessary for an applicant for relief under the section to show that the trustee’s decision was absurd, or unreasonable or taken in bad faith. The Court has a wide discretion to make such order as seems appropriate in the circumstances of the case: Re Tyndall; Ex parte Official Receiver [1977] FCA 15; (1977) 30 FLR 6 at 9-10; [1977] FCA 15; 17 ALR 182 at 186 per Deane J. At the same time, the Court will be slow to make orders which will have the effect of interfering in the day-to-day administration of a bankrupt’s estate and, in cases involving an exercise of business or commercial judgment, will place considerable weight on the trustee’s decision.”
[2] Cummins v Claremont Petroleum NL (1996) 185 CLR 124 at 132-133 (Brennan CJ, Dawson, Toohey, Gaudron, and McHugh JJ).
[3] [2009] FCAFC 20 at [8].
In addition, in Healey v Prentice (No 2)[4] Madgwick J said that the “Court is given a very broad supervisory power”, and that the “only constraint is that it must be made to appear to the Court that it is just and equitable to make some proposed order”.
[4] [2000] FCA 1598 at [20]
Applying these principles to this application, the question I have to determine is whether, in the circumstances as revealed by the evidence before me, it is just and equitable that the Court should make an order requiring the Trustee to consent to Ms Mann making the Complaint.
Is it just and equitable that the Court should grant relief?
The range of factors that it is relevant to consider in determining this question must at the very least include the objects of a bankruptcy administration. One of these objects is the expeditious, cheap, and efficient administration of the bankrupt’s estate for the benefit of creditors. To the extent, therefore, that the granting of the relief Ms Mann seeks will have the effect of delaying the administration of Ms Mann’s bankruptcy to the detriment of creditors, that would be a factor against granting relief.
The evidence, although far from extensive, suggests that granting the relief Ms Mann seeks will delay the administration of Ms Mann’s bankruptcy, and hence will result in increased cost and corresponding detriment to the creditors. The premise of Ms Mann’s application is that the making of the Complaint alone will result in the Bank not exercising its powers to sell the properties. If that occurs, there is the risk that the debt Ms Mann owes the Bank will increase because of the accruing of interest and other costs. If there is insufficient equity in the properties to discharge the debt owed to the Bank, the claims of unsecured creditors may become higher than they would otherwise be. If, on the other hand, there will be sufficient equity, the amount of the surplus that would otherwise be available to the estate will correspondingly be reduced.
There is no evidence before the Court which permits me to assess with any accuracy the risks to which I refer in paragraph 27. That is not the fault of the Trustee or of the Bank, given the urgency with which Ms Mann brought this application. In my opinion, however, the evidence is sufficient for me to find, as I do, that there is a not insubstantial risk of the matters to which I refer in paragraph 27 occurring. The evidence is certainly not such as to permit me to find there is no or only a minimal risk of those matters occurring.
Another factor which, in my opinion, is relevant to the determination of the application is the nature of the relief FOS would grant to Ms Mann if she were permitted to make the Complaint, and Ms Mann succeeded on that complaint. If, for example, it could be shown that the relief, if granted, would benefit Ms Mann’s estate, that would be a factor in favour of the exercise of the discretion conferred by s. 178 of the Act.
Ms Mann has been unable to demonstrate that the Complaint, if upheld, would potentially benefit her estate. The FSO Dispute Form Ms Mann has completed and which is attached to the application asks the person who wishes to lodge a complaint the following question:-
“What do you think is a fair and reasonable resolution to the dispute? If you are seeking payment of a sum of money please provide any relevant calculations of your claim.”
Ms Mann responded to this question as follows:-
“I would need to seek further advice from my accountant.”
Thus, Ms Mann does not specify what amount of money she proposes to claim from the Bank. Nor does she specify any grounds on which one could begin to assess the amount she proposes to claim from the Bank.
A third factor which, in my opinion, is relevant is Ms Mann’s delay in making the application. As I note earlier in these reasons, Ms Mann first requested the Trustee’s permission in October or November 2012, yet Ms Man did not make this application until 8 July 2013.
Ms Mann, from the bar table, gave the following as reasons for her not having made this application earlier: she is self-represented; she did not know her rights under the Act until around 2 July 2013 when she read the Act herself; she had not read the Act before that time because her daughter was ill, and her father had passed away; and she suffers from severe depression.
These reasons were not the subject of any corroborative evidence. In my opinion, however, that does not matter. Even if these matters are accepted, they do not sufficiently explain the delay. For whatever reason, perhaps prompted by her knowledge of the impeding sale of the properties, in early July 2013 Ms Mann read the Bankruptcy Act 1966 (Cth) and decided she could apply for relief under s.178 of the Act. In my opinion, none of the matters to which Ms Mann referred appear to me to be such as could reasonably have prevented her from doing the same thing well before July 2013.
Ms Mann’s written submissions
Ms Mann handed up in Court written submissions. Most of that document details the claim she says she has against the Bank. Her principal submission was that her being permitted to make the Claim would not result in any prejudice to her creditors, and may improve her financial position and hence that of her creditors.
In my opinion, this submission is not to be accepted. It is not supported by evidence. And, as I note above, the evidence suggests that if Ms Mann were to lodge the Complaint, there is a not insubstantial risk that the position of the creditors will be prejudiced.
Disposition
For the reasons set out above, the application should be dismissed.
I propose to make no order as to costs. If, however, the parties or the Bank wish to contend the Court should make a different order, I direct that:
a)by 18 July 2013 whoever so contends submit to my associate and to each other party a short written submission in support of such contention;
b)by 25 July 2013 whoever opposes such contention submit to my associate and to each other party a short written submission in response; and
c)any contention for the making of a different order be determined by me in chambers.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 11 July 2013
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