McIntosh v The Official Trustee in Bankruptcy
[2014] FCCA 2502
•22 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| McINTOSH v THE OFFICIAL TRUSTEE IN BANKRUPTCY | [2014] FCCA 2502 |
| Catchwords: BANKRUPTCY – Trustee – review of decision – election to prosecute or discontinue bankrupt’s proceedings – where application to appeal trustee decision not made within 60 days – whether 60 day time limit can be enlarged. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.30, 60, 178 |
| Heshmati v Paul Burness and Morgan Lane as Trustees of the Bankrupt Estate of Bijan Heshmati [2012] FMCA 884 Sarkis v Moussa [2013] FCA 373 |
| Applicant: | MORAY MCINTOSH |
| Respondent: | THE OFFICIAL TRUSTEE IN BANKRUPTCY |
| File Number: | BRG 713 of 2014 |
| Judgment of: | Judge Burnett |
| Hearing date: | 22 October 2014 |
| Date of Last Submission: | 22 October 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 22 October 2014 |
REPRESENTATION
| The applicant appeared on his own behalf. |
| Solicitors for the Respondent: | Hynes Legal |
ORDERS
That the interim application of the Official Trustee in Bankruptcy filed on 11 September 2014 be allowed.
That the application filed in the Federal Court on 1 July 2014 (QUD 349/14) and transferred to the Federal Circuit Court by order made 31 July 2014 be dismissed.
That the applicant pay the respondent’s costs of and incidental to each application which, if not agreed, shall be taxed on the standard basis. Such costs to be paid from the bankrupt estate with priority afforded to costs, pursuant to s.109(1)(a) of the Bankruptcy Act 1966 (Cth).
| FEDERAL CIRCUIT COURT AT BRISBANE |
BRG 713 of 2014
| MORAY MCINTOSH |
Applicant
And
| THE OFFICIAL TRUSTEE IN BANKRUPTCY |
Respondent
REASONS FOR JUDGMENT
(Ex tempore)
In this application, the respondent, the Official Trustee in Bankruptcy, seeks interim orders in respect of paragraph 1(a) of its application filed 11 September. It seeks determination of the question of whether or not the applicant became aware of its decision to elect to discontinue certain proceedings, pursuant to s.60(3) of the Bankruptcy Act 1966 (Cth) (“the Act”), outside 60 days from making his application for a review, pursuant to s.178 of the Bankruptcy Act (supra).
The applicant is a bankrupt who was subject to a sequestration order made on 19 February 2014. One of the assets the bankrupt claims in his estate is a chose in action, being certain Supreme Court proceedings, which were filed in the Supreme Court of Queensland and bear file number 118/14 in the Townsville Registry. It is a claim by the applicant against Christopher Roland Bath, who was an employee at all material times of the Suncorp Metway Bank. It claims against him for damages for misrepresentation in the course of Bath applying to the Suncorp Metway for the purpose of obtaining a loan from that bank on behalf of the bankrupt and his wife, who is now deceased. The damages claim is for a sum of $1.056 million.
These proceedings are in part related to earlier proceedings between Mr McIntosh and his late wife and Suncorp Bank, which were resolved in a judgment delivered in the Supreme Court on 19 September 2013, following a four-day trial. In the result, the bankrupt’s claim against Suncorp Metway was dismissed and judgment was entered for the Suncorp Metway Bank against the bankrupt, in the sum of $439,000.
There were subsequent proceedings, including an application for appeal against the judgment of Henry J and an application for security for costs in the appeal. The later claim which the bankrupt wishes to pursue against Mr Bath seeks to reagitate some of the issues that no doubt were alive in the proceeding before Henry J and, in particular, is premised upon an assertion that there is fresh evidence to support those claims.
The history of these claims, in part, is restated in a letter from Clayton Utz addressed to the Australian Financial Security Authority, which in the exercise of its insolvency powers was administering the bankrupt’s estate. It detailed a brief history and noted particularly in respect of the most recent claim, that is proceeding 118/14, that the bankrupt had filed a further statement of claim against Mr Bath. The statement of claim arose out of the same set of facts in the earlier proceedings. Accordingly, it was destined to suffer the same problems as the earlier proceedings – that is, it was without merit, embarrassing and liable to be struck out. As a result, Clayton Utz’s client, Suncorp Metway, contended to the trustee that the proceedings should be discontinued. They proceeded:
“We note that in accordance with s. 60(2) of the Bankruptcy Act 1966 the current proceedings be stayed until the official trustee makes an election to either prosecute or discontinue the claim. This letter is a letter sent in accordance with s. 60(3) of the Act. We call on the official trustee within 28 days of receipt of this notice to make an election to either prosecute or discontinue the current proceedings.”
They, of course, contended that the claim should be discontinued. As a consequence of receiving that correspondence, the trustee wrote to the bankrupt, requesting from him certain information. The trustee informed the bankrupt that it was aware of the proceedings against Mr Bath, a then employee of the Suncorp Metway Bank; that the proceedings were stayed pursuant to s.62 of the Act; and that, in accordance with s.60(3) of the Act, the official trustee has within 28 days of receipt of the proceeding notice, which was dated 20 February, to either prosecute or discontinue the claim. It continued:
“In order for the official trustee to make an informed election to the current proceedings, please provide the following information if applicable:
· Copies of legal advice that you obtained;
· Copies of affidavits;
· Evidence that you can provide funds to pay security for costs to continue the proceedings.
Please provide the above information by close of business, 14 March 2014. If no information is received by the due date the official trustee would discontinue current proceedings 114/14.”
The bankrupt responded by email of 13 March 2014 to a Mr Djeng, who was an officer of the trustee. In broad terms, he stated in part:
“Sorry, but I cannot send an email. Attached docs were those I attempted to adduce to my appeal, but for obvious reasons were not allowed to be presented into the court. The copies I send in my claim against Bath for fraud were highlighted, showing clearly the fraud and that is the best way to consider them. The fraud is clear, deliberate and completely shows the dishonesty of Bath. There can be no denial of the facts as they are shown. The evidence is credible clear and there can be no argument by Bath that he did no [sic] construct them himself.
Hope you read and understand whyl [sic] I believe that we have an excellent case.
As you know I am on my own in this and have no help from any legal advisers.
I believe that when the time comes to present this to court I will be able to find the funds needed to go through with the case. I know that they will again claim costs assessments but hopefully the evidence will be considered before such an order will be given, as stipulated in the rules and Justice [sic] might finally be served. I believe the evidence is damning to Bath.
Please advise if you require any further [sic]
Regards, Moray McIntosh.”
It seems obvious from the bankrupt’s letter that first he received and understood the trustee’s earlier letter of 11 March. His reply was responsive to it. Plainly, the trustee was not satisfied with the matters detailed by the bankrupt, and, accordingly, in a letter of 17 March 2014, he wrote to the bankrupt in these terms, stating in part:
“Based on the information available at this stage, The Official Trustee is of the view that you do not have the funds to provide security for costs to continue the proceedings, as required in your previous proceeding (Supreme Court of Queensland case no: 225/13) and you have not received legal advices regarding your position.
Furthermore, previous proceedings… have all been dismissed. Therefore, in accordance with s.60(3) of the Act, The Official Trustee has elected to discontinue the current proceedings.”
It is that decision which the bankrupt sought review of by its initial application to the Federal Court on 15 May 2014. That application, arguably, was within time. However, the application was dismissed. It appears the application was dismissed because of non-appearance on the part of the bankrupt. Before me today he states he was not aware that the matter was in fact listed for hearing on that date. I am not about to embark upon any analysis of that submission, except to state that that does appear to me to be contrary to the usual practice in terms of the receipts that issue in the electronic filing process.
But, in any event, the fact remains that rather than make application to set aside the order dismissing the application of 15 May 2014, which would have been the appropriate approach in the circumstances, the applicant commenced a fresh application by filing a further application, seeking essentially identical relief. That application was made on 1 July 2014. That is a date well outside 60 days from the date on which he did, or ought to reasonably have become aware of the trustee’s decision to deliver a s.60(3) notice under the Act in respect of the proceeding.
It is now well settled that in respect of s.178(2) of the Act, the 60 day time limit is an absolute one. So much was stated by a judge of this court in Heshmati v Paul Burness and Morgan Lane as Trustees of the Bankrupt Estate of Bijan Heshmati [2012] FMCA 884, where Driver FM (as his Honour then was), said at [48]:
“In my view, s.178(2) on its face discloses a parliamentary intention that the 60 day time limit is an absolute one which cannot be extended by the Court. I note first the imperative language of the section in the use of the word “must”. I note secondly that the limitation period is a long one. Federal statutory limitation periods generally range from a few days to a period of 35 days, as in the Migration Act 1958 (Cth). I note further that the administration of bankrupt estates could be significantly disrupted if there were no certainty in decisions made by trustees in that administration. The opportunity to bring proceedings outside the limitation period of 60 days could create significant uncertainty, including after the bankrupt administration had been completed. In that regard, I note that the limitation period does not commence to run until the person becomes aware of the trustee’s act, omission, or decision.
[49] Considering those factors in combination, I am minded to conclude that Parliament intended that the limitation period was not one that could be extended by the Court. It is necessary, however, to consider also the operation of s.33 of the Bankruptcy Act”
His Honour continued at [50]:
“On one view, s.33(1)(c) confers on the Court a general power to extend limitation periods in the absence of an express prohibition on doing so. I have considerable doubt, however, that that provision was intended by Parliament to apply to limitation periods for the bringing of proceedings in the Court for the purposes of the Bankruptcy Act. Section 33 deals with the adjournment, amendment of process, and extension or abridgement of times generally in relation to proceedings before the Court. That suggests that the power conferred on the Court is conferred for the effective administration of justice in proceedings which are otherwise properly before the Court.
[51] I have doubt that the section was intended to permit the Court to confer on itself jurisdiction that it would not otherwise have because of the expiration of a limitation period for the bringing of proceedings.
[52] There is also an awkward distinction in s.33(1)(c) between the extension of a time period before its expiration and the extension of time after its expiration. The limitation on the power to extend time where there is an express provision to the contrary only applies if the time period has expired. In my view, if the Court lacks the power to extend time for the bringing of proceedings, it would make no difference whether the time period had already expired or not. It would also be surprising if Parliament intended that the Court could shorten (abridge) the limitation period in s.178(2).”
His Honour proceeded to note that in the case before him it was not necessary to express a concluded view, although he did continue to note at [53]:
“… in my view, s.178(2) expresses a clear parliamentary intention that the time fixed for the bringing of proceedings cannot be extended. To that extent, s.178(2) may be taken to have expressly provided to the contrary, for the purposes of s.33(1)(c).”
In a more recent decision of Sarkis v Moussa [2013] FCA 373, Farrell J in the Federal Court was considering an application for extension of time. In that case again his Honour did not need to resolve the issue, however, in reaching his conclusions in that case he made the observation at [32] that neither of the respondents had sought to rely in the appeal on the ground that the bankrupt in that instance should have been deemed to have received the trustee’s letter at some time before a set date.
He continued that if on the first day on which the bankrupt came to know of the trustee’s action was a certain date or even a later date, which were referred to in the judgment, then the application that was made was within the 60 day period. He continued at [32]:
“However, I do not need to determine whether the Federal Magistrate was incorrect to observe that the application before him was out of time because even if it were within time, Mr Sarkis has failed to show that it is just and equitable for the court to intervene.”
While Farrell J did not determine the question, it is apparent from his Honour’s observations , in particular at [29], that Driver FM (as his Honour then was) at first instance was considering an application under s.179 of the Act not being made within the 60 day mandated period. Farrell J’s observations did not appear to question Driver FM’s approach. By implication, it appears Farrell J accepted Driver FM’s approach, namely that it was indeed the case that the 60 day period was one which was not capable of being enlarged, pursuant to s.30(3) of the Act.
It follows that in this case, the only question for resolution is whether or not as a matter of fact the application was made within 60 days of the trustee’s decision coming to the bankrupt’s attention. As a matter of fact, it has not been made within 60 days and accordingly the application has no prospects of success and it must be dismissed. It follows that I will allow the application of The Official Trustee in Bankruptcy filed 11 September 2014. In the circumstances, there is no utility in the principal application, that being the application filed on 1 July 2014 and remitted to this court, proceeding further, and it is appropriate in those circumstances, that that application also be dismissed. I will dismiss that application.
I will direct that, in each application, the bankrupt pay The Official Trustee’s costs of and incidental to the application to be assessed on the standard basis and such costs be the trustee’s costs as a first charge in each application.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Judge Burnett
Associate:
Date: 7 November 2014
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