Melnik v Melnik - [2001] FMCA 38

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MELNIK v MELNIK [2001] FMCA 38

BANKRUPTCY – Application for Stay – Transfer to Family Court – s35A and s60(1)(b) Bankruptcy Act 1966

Applicant:

JOSEPH MORRIS MELNIK

Respondent:

AMANDA CATHERINE MELNIK

File No:

BZ 269/01

Delivered on:

21 June 2001

Delivered at:

Brisbane

Hearing Date:

20 June 2001

Judgment of:

Baumann FM

REPRESENTATION

Counsel for the Applicant:

Mr C Cooper

Solicitors for the Applicant:

Messrs Primrose Couper Cronin Rudkin

Counsel for the Respondent:

Mr D Reardon

Solicitors for the Respondent:

Messrs Price & Roobottom

ORDERS

Pursuant to s35A of the Bankruptcy Act 1966, these proceedings are transferred to the Family Court of Australia sitting in Brisbane.
Costs be reserved to the trial judge.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE

BZ 269 of 2001

JOSEPH MORRIS MELNIK

Applicant

And

AMANDA CATHERINE MELNIK

Respondent

REASONS FOR JUDGMENT

History

The applicant seeks an Order under Section 60(1)(b) of the Bankruptcy Act 1966 (“the Act”), restraining the respondent from further pursuing certain proceedings against the applicant in the Family Court of Australia insofar as those proceedings relate to alleged failure by the applicant to pay certain moneys.
The applicant also seeks an Order under Section 60(1)(b) of the Act restraining the respondent from pursuing her application filed in the Family Court on 16 May 2001 seeking orders under the Bankruptcy Act and orders for further conduct of the proceedings in the Family Court.
On the 23 August 2000 Jerrard J ordered that the husband pay to the wife $79000.00 by way of property settlement, arrears of spousal maintenance and costs (see paragraph 9 of the affidavit of the applicant filed 5 June 2001.
On 10 November the applicant filed an appeal and later filed an application for stay of judgment pending the hearing of the appeal.
On 13 February 2001 the applicant filed a Statement of Affairs with the insolvency and Trustee Service Australia and became bankrupt on his own petition.
The said amount payable to the respondent was set out as one of his liabilities in his Statement of Affairs (page 18 of annexures to his affidavit).
On the 16 May 2001 the respondent filed two further applications in the Family Court:
a)An application for the applicant to be dealt with for contempt of court (page 94 of the annexures to the applicant’s affidavit); and
b)An application seeking various orders including an application for annulment of the bankruptcy and the setting aside of certain transactions (page 99 of the annexures to the applicant’s affidavit).
On the 5 June 2001 the applicant filed this application under Section 60(1)(b) of the Act.
On 13 June 2001 by consent this application was transferred from the Federal Court to the Federal Magistrates Court.
The applicant seeks to restrain the respondent from pursuing those contempt applications which she is making in the Family Court which relate to alleged failure by the applicant to pay moneys pursuant to Jerrard J’s orders.
The applicant also seeks to restrain the respondent from pursuing her application for annulment of the Bankruptcy pursuant to s153B of the Act , which has been filed in the Family Court. As that matter is before the Family Court tomorrow, I believe it is a matter for that Court whether it has jurisdiction to entertain that part of the proceedings, in view of the exclusive jurisdiction of the Federal Court and this Court (pursuant to s27 of the Act) and absent an order to transfer those proceedings under s35A of the Act.
That leaves the question for determination by me as to whether I should exercise my discretion to:
a)Transfer the matter to the Family Court of Australia under s35A of the Act; on
b)Refuse to transfer the matter, and decided the application pursuant to s60(1)(b) of the Act.
S35A of the Act provides, in part that:
“(2A)If a proceeding is pending in the Federal Magistrates Court, the Federal Magistrates Court may, on the application of a party to the proceeding or on its own initiative, transfer the proceeding to the Family Court.
(5)An appeal does not lie from a decision of the Federal Court or the Federal Magistrates Court in relation to the transfer of a proceeding under this Act to the Family Court.”
In Re Sabri:ExParte Sabri v Brien (1995) 60 FCR 131, Davies J made some pertinent observations in relation to the way in which the Federal Court should exercise its discretion under s35A of the Act in an application to transfer proceedings to the Family Court from the Federal Court. In that case an order had been made under the Family Law Act for the transfer of property from a husband to his wife in circumstances where the husband subsequently became bankrupt. An application was made under the Act for an order that the wife transfer the property to the Trustee in Bankruptcy in reliance, inter alia, on the provisions of s121. His Honour decided that it was appropriate for the bankruptcy proceedings to be transferred to the Family Court and he said, at 133:
“…if this Court were to make orders in favour of the Trustee, it is likely that those orders would appear, on the face of them, to conflict with the order of the Family Court. Mr Thomson, counsel for the Trustee, has submitted that there would in fact be no actual conflict, for the orders would have been made under different statutes and would each have different effects. Nevertheless, on the face of the matter, if an outsider, not knowing either the terms of the Family Law Act 1975 (Cth) or the terms of the Bankruptcy Act, simply looked at the two orders, there would certainly be a likelihood of an appearance of conflict.
Matters of conflict, should, if possible, be avoided. If this matter can be transferred to the Family Court so that all orders in relation to the matters are made by the Family Court, then the potential for an appearance of conflict will disappear.”
The observations of Davies J were subsequently followed and applied by Sundberg J in Carter v Vos (1999) FCA 1703 at paragraphs 6-8 and by Tamberlin J in the Official Trustee in Bankruptcy & Higgins [2000], FCA 1850 at paragraph 22.
Mr Cooper for the applicant, in opposing the application for transfer to the Family Court, relied upon the observations of Sackville J in Boscolo: Ex Parte Botany Council (1996) 136 FLR 623 and Burchett J in R:McKean; Page v McKean & Anon (FCA 16 April 1996).
In both these cases the trial judge found there was no conflict between the orders or pending proceedings in the Family Court and the proceedings in Bankruptcy before them. Boscolo’s case dealt with a sequestration order and McKean’s case dealt with an annulment application.
In this case the orders sought in the Family Court by the wife/respondent relate to an alleged contravention of the orders of Jerrard J and also injunctive relief in effect to restrain the husband exercising rights which may be available to him under the Bankruptcy Act. Some of the relief is curiously pleaded and will, I suspect, entertain the consideration of the Family Court as to jurisdiction.
The applicant in the proceedings before me seeks an order restraining the respondent from pursuing her applications for:
a)contempt of Court, filed on 16 May 2001;
b)contravention filed on 27 October 2000;
c)injunctive relief filed on 24 January 2001;
d)for relief under the Bankruptcy Act filed 16 May 2001
but only
“insofar as those applications relates to alleged failure by the applicant to pay certain moneys”.
s60(1)(b) of the Bankruptcy Act provides that the Court may stay any legal process, whether civil or criminal and whether instituted before or after the commencement of this subsection, against the person or property of the debtor:
i)In respect of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt; or
ii)In consequence of his refusal or failure to comply with an order of a court, for the payment of a provable debt.
I am of the view in this matter that it is not desirable for the Family Court of Australia and the Federal Magistrates Court to be contemplating orders for injunctive relief of a similar nature, independently, and where a potential for conflicting orders is likely to arise. This was, it seems to me, one of the foundations for the enactment of s35A, and I have decided, accordingly, in the exercise of my discretion, to transfer the matter to the Family Court of Australia.
It may be, that as a result of my order, the Family Court of Australia may consider it has jurisdiction to deal with certain other relief sought by the wife in the proceedings before it pursuant to s35A(3)(b) of the Act . That is, of course, a matter for the Family Court.
I shall order that the costs of these proceedings be reserved to the trial judge.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Baumann FM

Associate:
Date: