Metsikas v Quirk
[2009] FMCA 862
•4 September 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| METSIKAS v QUIRK & ORS | [2009] FMCA 862 |
| BANKRUPTCY – The applicant seeks orders that leave be granted pursuant to the provision of s.53(3)(b) of the Bankruptcy Act 1966 (Cth) for her to proceed against the Respondent by joining her in proceedings in the Supreme Court of NSW – applicant a discharged bankrupt – applicant unsuccessful in obtaining property assigned back to her by her Trustee – application dismissed. |
| Bankruptcy Act 1966 (Cth) ss.5, 58, 58(3)(b), 116, 116(2)(g) Evidence Act 1995 (Cth) s.131 Real Property Act 1900 (NSW) s.74O Victims Support Rehabilitation Act 1996 (NSW) Federal Magistrates Court Rules 2001 r.11.03 |
| Allanson v Midland Credit Ltd & Anor (1977) 16 ALR 43 Daemar v Industrial Commission of New South Wales (1988) 12 NSWLR 45 Fraser v Deputy Commissioner of Taxation & Official Trustee (1996) 69 FCR 99 Macquarie Bank v Bardetta [2005] FCA 507 Rogers v Asset Loan Co Pty Ltd [2006] FCA 1708 Re McMaster; ex parte McMaster (1991) 33 FCR 70 Scott v Bagshaw (2000) 99 FCR 573 W & W [2003] FMCAfam 150 |
| Applicant: | STELLA METSIKAS |
| First Respondent: | MELISSA MAREE QUIRK |
| Second Respondent: | WAYNE JOHN QUIRK |
| Third Respondent: | ANNA QUIRK |
| File Number: | SYG 801of 2009 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 7 July 2009 |
| Delivered at: | Sydney |
| Delivered on: | 4 September 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Cohen |
| Solicitors for the Applicant: | Kalmath Lawyers |
| Solicitor for the First and Second Respondents: | Mr G Pignoni of PH Legal |
| Counsel for Wayne and Anna Quirk: | Mr P J Newell |
| Solicitors for Wayne and Anna Quirk: | L C Muriniti & Associates |
ORDERS
The application filed on 7 April 2009 is dismissed.
The applicant is to pay the respondent’s costs to be agreed or assessed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 801 of 2009
| STELLA METSIKAS |
Applicant
And
| MELISSA MAREE QUIRK |
First Respondent
| WAYNE JOHN QUIRK |
Second Respondent
| ANNA QUIRK |
Third Respondent
REASONS FOR JUDGMENT
The proceedings
I have before me an application seeking leave for Stella Metsikas, the applicant, to proceed against Melissa Maree Quirk the first respondent pursuant to s.58(3)(b) of the Bankruptcy Act 1966 (Cth) (“the Act”). Section 58:
Vesting of property upon bankruptcy--general rule
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a) the property of the bankrupt, not being after‑acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b) after‑acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
(2) ….
(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.
In setting out the following background facts and circumstances I have paraphrased or quoted directly from the written submissions of
Mr Cohen, Counsel for the applicant. I have not made any further direct attribution as this would make the summary unwieldy. The summary information is provided to assist in the understanding of the nature of the application and does not establish any evidence.
In the period January 2002 and January 2006 Melissa Quirk was responsible for defrauding Stella Metsikas of the sum of $414,748 and was convicted in the District Court of New South Wales on 29 June 2007 for various offences under the Crimes Act 1900 (NSW). In the sentencing proceedings of Melissa Quirk the District Court made orders under New South Wales legislation for a compensation order in favour of Stella Metsikas and against Melissa Quirk.
Proceedings in the Supreme Court of New South Wales (case number 1818 of 2009) seeks a tracing remedy against Melissa Quirk and her parents Wayne John Quirk and Anna Quirk who received the sum of $50,000 from Melissa Quirk. Melissa Quirk is an undischarged bankrupt and leave of this Court is required if Melissa Quirk is to be joined to proceedings in the Supreme Court of New South Wales and for all necessary parties including Melissa Quirk in this Court to be amenable to the jurisdiction of the Supreme Court of New South Wales in Stella Metsikas’ suit for the restitution of monies stolen from her.
The tracing remedy involves declarations of rights in favour of Stella Metsikas and consequently orders for payment in the sum of $50,000 to her. On the facts and circumstances which arise solely within the legal system of the state of New South Wales and relevant to such claim, jurisdiction is attracted in the Supreme Court, being the Court of appropriate equitable jurisdiction. No basis exists for accrued jurisdiction to exercise by the Federal Magistrates Court as no federal matter is capable of being identified.
Application by Mr & Mrs Quirk to join proceedings
On 15 June 2009 Melissa Quirk’s parents Wayne John Quirk and Anna Quirk filed an “Application in the Case” seeking leave to be included as a party in the proceedings pursuant to r.11.03 of the Federal Magistrates Court Rules 2001. In support of this “Application in the Case” an affidavit of Leonardo Carlo Muriniti, solicitor for Wayne and Anna Quirk was filed. This affidavit was formerly read into evidence.
Mr Cohen, Counsel for Stella Metsikas, the applicant in the main proceedings, opposes the application by Mr and Mrs Quirk to be joined in these proceedings. Mr Cohen referred the Court to the decision in W & W [2003] FMCAfam 150 per Scarlett FM at paragraphs [8]-[12] inclusive addresses the issue of standing in the joinder application.
His Honour stated:
Principles to be applied
8. Any person may apply to intervene in proceedings other than for principal relief (Family Law Act, s.92). The purpose of intervention is to allow a third party who may be affected personally by the proceedings to intervene to protect their own interests (Rogers and Rogers; Fernandez and Borowicz (1988) FLC 91-963). There appears to be no reason why a company, in an appropriate case, should not be permitted to do so.
9. Section 18 of the Federal Magistrates Act 1999 gives the Federal Magistrates Court jurisdiction in respect of matters not otherwise within its jurisdiction that are associated with matters in which jurisdiction of the Federal Magistrates Court is invoked. It is necessary to decide whether the claim brought by N Investments has a sufficient association with the present matter in order to attract the jurisdiction given by s. 18.
10. Again, there is authority that the Family Court has, in a proper case, an accrued jurisdiction to determine the non-federal aspects of a justiciable controversy of which the family law claim or cause of action forms a part (Warby [2001] FamCA 1469; (2001-2002) 28 Fam LR 443). There is also authority from the Full Court of the Family Court that accrued jurisdiction not only exists in the Family Court, but there is no reason for distinguishing the Family Court from any other federal court, which would clearly include the Federal Magistrates Court (C and C and C: Accrued Jurisdiction [2001] FamCA 459; (2001) FLC 93-076).
Conclusions
11. The company seeking to intervene has the status of an unsecured creditor of the husband. The company has no interest in the real estate, which has, in any event, been sold. The contract between the husband and the company was entered into prior to the marriage, and the wife was never a part of that transaction.
12. I am not satisfied that the claim by N Investments Pty Ltd has a sufficient connection with the present property proceedings to attract the jurisdiction given to the Court by s.18 of the Federal Magistrates Act.
I am not satisfied, either, that the claim by N Investments against the husband is part of a single justiciable controversy which would invoke the accrued jurisdiction of this Court. It is a claim of an unsecured debt owing by the husband before the marriage. It would appear to me that the proceedings commenced in the District Court against, presumably, the husband would be the appropriate means of pursuing this claim.
Mr Cohen submits that His Honour’s reasoning principles are on all fours of the situation in the application by Mr & Mrs Quirk. Mr Cohen argues that there can be no standing in their joinder application and there can be no proper basis for them to be heard in the main application.
I have formed the view that the application by Mr & Mrs Quirk to be joined in the matter currently before this Court should be permitted. The purpose of these current proceedings before this Court is of a very limited nature and the granting of standing to Mr & Mrs Quirk is of no significance in any other proceedings. In the circumstances an order that the Court has the benefit of all of the available material to assist in the determination as to whether Ms Stella Metsikas should be granted leave pursuant to s.58(3)(b) of the Act. I grant leave to Mr & Mrs Quirk to be joined to these proceedings.
Evidence
The following material was read into evidence:
a)Affidavit of Stella Metsikas sworn 6 April 2009 filed on 7 April 2009 was read;
b)A letter from the Insolvency Trustee Services Australia addressed to Asheesh Kalmath dated 13 May 2008 was marked Exhibit A1 and read into evidence;
c)A letter from Kalmath Lawyers addressed to Dorling Kee Australian Government Insolvency & Trustee Services Australia dated 22 October 2008 was marked Exhibit T1 and read into evidence.
Submissions on behalf of Stella Metsikas
Mr Cohen, Counsel for the applicant, in his written submissions submits that the question as to whether the sum of $414,738 owed to Stella Metsikas by Melissa Quirk was in fact a “provable debt” for two possible reasons:
a)The monies which came into possession of Ms Quirk were always those of Ms Metsikas, and by reason of Ms Quirk’s fraud resulted in a constructive trust in favour of Ms Metsikas. On this analysis, the money could not be said to be property of the bankrupt, and therefore could not be a provable debt against the bankrupt estate of Ms Quirk.
b)The alternative view is that by reason that the District Court has made a compensation order against Ms Quirk in favour of Ms Metsikas, a statutory debt due by Ms Quirk to Ms Metsikas came into existence at that time and it appears to be a provable debt.
Mr Cohen submits that for abundance of caution, Ms Metsikas brings this application for leave to proceed to place the question beyond any doubt. This is not a question that has any material impact on the claim by Ms Metsikas in the Supreme Court proceedings and need not be resolved a grant of leave, should such leave be required. It is submitted that Ms Quirk is of modest circumstances of other than for the benefit of the monies fraudulent misappropriated from Ms Metsikas.
Mr Cohen submits that there is evidence before this Court of the obvious nexus between the debt and the proceedings in the Supreme Court. Those proceedings cannot effectively be prosecuted without Ms Quirk being amenable to the jurisdiction of the Supreme Court. The complexity of the underlying facts and circumstances disclose that the issues would be more comprehensively dealt with by a contested hearing in the Supreme Court. It is argued that these issues militate in favour of the orders sought. Further, the proceedings before the Supreme Court is such with the benefit of the usual interlocutory processes available in that Court, should there be further aspects of Ms Quirk that come to light and these also may be subject of the claim without any burden upon the administration of the bankrupt estate of Ms Quirk.
Mr Cohen submits that the necessary consequence of these factors is that the policy objectives of the Act for the fair and rateable distribution of creditors of any property that might remain in the bankrupt estate of Ms Quirk will be advanced. Mr Cohen referred the Court to the decision in Re McMaster; ex parte McMaster (1991) 33 FCR 70 per Hill J at [72]-[73]:
The modern bankruptcy law served three purposes. The first was to ensure that the assets of the bankrupt are distributed rateably among creditors. The second was to ensure that one creditor did not obtain an undue advantage over other creditors. The third was to bring about the discharge of the debtor from future liability for his existing debts, so that the debtor may start afresh.
This was approved by the Full Court in Fraser v Deputy Commissioner of Taxation & Official Trustee (1996) 69 FCR 99 per Black CJ, Beaumont and Tamberlin JJ at 112.
Mr Cohen submits that it is a proper exercise of the discretion of this Court for leave now to be granted “nunc pro tunc”: Scott v Bagshaw (2000) 99 FCR 573.
Mr Cohen, informed the Court that his client has commenced proceedings in the Supreme Court of New South Wales Equity Division seeking relief in the form of a declaration that there exists a constructive trust between Ms Quirk and Ms Metsikas and that the funds, such as they are that remain, that were paid by Ms Quirk to her parents, be the subject of orders for restoration. Mr Cohen advised that of the $424,748 most had been dispersed on frivolity but $50,000 went from Ms Quirk to her parents and can be traced into their assets by reason of the fact that the funds were used on improvements of their house in the western suburbs of Sydney. Consequently the trace of remedy in the Supreme Court Equity division relevantly seeks restitution.
Mr Cohen informed the Court that the reason for the application to this Court is that Ms Quirk is bankrupt and this Court’s leave is required by Ms Metsikas to proceed further against Ms Quirk and join her in the Supreme Court proceedings. The activities of Ms Quirk were fraud in the state of New South Wales resulting in a state conviction and the remedy sought is a tracing provision and order for restitution under the state jurisdiction. Consequently there is no accrued jurisdiction that could arise in this Court as there is no relevant federal issue at stake. However, this Court relevantly can and it is submitted ought to exercise discretion to grant leave to proceed against all relevant parties necessary in pursuit of the claim. The current application for the Supreme Court of New South Wales for the tracing of the amount of $50,000 which was provided to the parents was disclosed during the hearing in the District Court.
Submissions on behalf of Mr Quirk and Mrs Quirk
Mr Newell, appearing for the Mr and Mrs Quirk, indicated that he relied upon the affidavit of Leonardo Carlo Muriniti who was the solicitor for Wayne John Quirk and Anna Quirk sworn 11 June 2009.
Mr Newell drew the Court’s attention to Mr Muriniti’s affidavit, Annexure “E” which is part of a three page extract from the Espreon Online Information System – ITSA full extract prepared at 12.01 on 5 May 2009 in respect of Stella Metsikas. The extract indicates that Ms Metsikas was bankrupt until 5 January 2009. Mr Newell submits that in no circumstances that anything in the nature of property vested in the Trustee at the time of her bankruptcy (which accepted at 4 January 2006). Mr Newell submits that the proceedings in the Supreme Court of NSW seeks to vindicate a chose in action which is not the property of Ms Metsikas and there can be no serious doubt about that issue.
Ms Metsikas is seeking to have a declaration to construct a trust which is an interest of a proprietary nature. Mr Newell argues that the claimed chose in action is not that of Ms Metsikas and to grant leave sought in this application could cause prejudice both to ITSA and to Ms Melissa Quirk who will be required to participate in the proceedings in the Supreme Court. Further there is an intention to use the interlocutory procedures to find out if there is more money which will result in Ms Quirk to put to the trouble of participating in these proceedings when the chose in action is not vested in Ms Metsikas.
Mr Newell advised the Court that these proceedings have been adjourned on two prior occasions being 12 May 2009 and 23 June 2009 for the reason that Ms Metsikas would seek an assignment of the chose in action and by necessary implication acknowledged that it was not her chose in action. Mr Newell indicated that it was his understanding and that it was common ground between the parties that there had been no assignment of the chose in action. Mr Newell submits that in respect to Exhibit “A1” that letter is a request to indicate whether a compensation order made pursuant to the Victims Support Rehabilitation Act 1996 (NSW) vested in the trustee and the answer was no. However, the question currently before the Court is a very different question and is quite separate to whether the remedy of a constructive trust can be established against Melissa Quirk and whether an order of constructive trust which is a proprietary remedy can be made. It is submitted that these outcomes are not possible because the chose in action is not vested in Ms Metsikas.
Submissions on behalf of the Trustee
Mr Pignoni, solicitor for PH Legal, appeared for Melissa Maree Quirk and the Official Trustee in Bankruptcy. Mr Pignoni sought to tender a letter which was issued on a “without prejudice” basis but indicated that it was relevant to the submissions currently being made to the Court. Mr Cohen objected to the tender on the basis of s.131 of the Evidence Act 1995 (Cth) being a communication that is being made between parties in a dispute in connection with an attempt to negotiate a settlement of the dispute.
Mr Pignoni indicated that the Court had the benefit of the correspondence regarding the response from ITSA and that could only be read in the context of the request which is “without prejudice” and this is a similar letter. Leave was granted to tender the letter.
Mr Pignoni indicated that he believed that what has occurred in this matter is that Ms Metsikas and her advisors have made an assumption about her entitlement to pursue a cause of action against the defendants to the Supreme Court proceedings. This assumption appears to be based on the correspondence which was tendered and marked Exhibit “A1”. Mr Pignoni indicated that a representative of his client was available to give evidence as to whether or not ITSA has or has not consented to the assignment of the chose in action. Mr Pignoni indicated that an officer of ITSA was available to confirm that a request was made to ITSA to consent to proceedings being commenced in the Supreme Court will indicate that no such consent has been given.
Mr Pignoni indicated that the legislation is clear that once there is a sequestration order under s.58 of the Act all the property of the bankrupt vested with the Trustee and in this case it was the Official Trustee in bankruptcy. That scope of property that vests in the trustee includes a wide description as defined in s.5 of the Act and includes chose in action. The only exclusion from that property could be an exclusion under s.116 of the Act. Mr Pignoni submits that a chose in action of the nature referred to in this matter is not excluded by this section. The effect of s.58 means that irrespective of the discharge of the bankrupt, the property that vests in the trustee is vested in the trustee for all purposes for all time unless it reverts back to the bankrupt under some provision of the Act or by an assignment back or transfer back of that property.
Mr Pignoni submits that the chose in action which is the centre of these proceedings remains with the Trustee because it is not excluded as property under the Act and it has not been assigned back to the bankrupt.
Mr Pignoni drew the Court’s attention to the operation of s.116(2)(g) of the Act which states:
(2) Subsection (1) does not extend to the following property:
(g) any right of the bankrupt to recover damages or compensation:
(i) for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or
(ii) in respect of the death of the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt;
and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person;
Mr Pignoni submits that s.116(2)(g) brings up a type of action which is personal to the bankrupt in the nature of a personal injury or a role of that nature. Mr Pignoni referred the Court to the decision in Rogers v Asset Loan Co Pty Ltd [2006] FCA 1708 per Collier J which was a decision in respect of a claim concerning a Trade Practices type of breach and the bankrupt in those proceedings was seeking to allege that it was a personal action that fell within s.116(2)(g). In that decision Her Honour referred to a previous judgment of Greenwood J that relevantly indicated that where there is a connection between the personal injury aspect of a matter and a property aspect of a matter it is the property aspect of the matter which vests in the Trustee. If the issues cannot be separated then the Trustee maintains the action. However, if it can be separated then the bankrupt obtains the personal action and the Trustee retains the property action.
At paragraph [24] of Her Honour’s judgment she states:
[24] As Greenwood J noted in his judgment ([2006] FCA 434 at [4]) with respect to the claims of the applicant against the respondents, the most immediate difficulty confronting the applicant is the question of whether he has standing in connection with this litigation, on the basis that a sequestration order in respect of the applicant’s estate was made on 23 February 2005. His Honour explained:
• the effect of s 58 Bankruptcy Act, which vests the property of the bankrupt in the registered trustee (at [36])
• the meaning of ‘property of the bankrupt’ for the purposes of s 58, which is defined as ‘the property divisible among the bankrupt’s creditors; and any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt’ (at [36])
• the fact that property divisible amongst the creditors for the purposes in s 116 includes ‘the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his discharge’ (at [37])
• that only the trustee in bankruptcy is entitled to seek remedial orders in respect of property, contractual rights, security interests, and related entitlements (at [43])
• that the exemption in s 116(2)(g) with respect to wrongs done to the bankrupt is limited to those cases where the essential cause of action is the personal injury done to the person or feelings of the bankrupt, as distinct from where the damages or part of them are to be estimated by reference to the bankrupt’s rights of property (at [45]–[47]; cf Daemar v Industrial Commission of New South Wales (1988) 79 ALR 591 at 601; Cox v Journeaux (No 2) (1935) 52 CLR 713 at 721; Faulkner v Bluett (1981) 52 FLR 115 at 119)
• that a claim with respect to a wrong done to the applicant characterised by reference to the anxiety, stress and pain felt by the bankrupt in respect of a recognised cause of action remains with the applicant under s 116(2)(g) Bankruptcy Act (at [46]) and
• that in the case before his Honour the claims were not claims for damages founded upon immediate reference to the distress and anxiety caused to the bankrupt without reference to his rights of property (at [49]); further the applicant’s claim for final relief was a consequential claim necessarily connected with the applicant’s interests in property (at [50]).
In the summons filed in the Supreme Court in matter 1818 of 2009 (affidavit of Leonardo Carlo Minureti, Annexure G) Prayer 2 seeks an order pursuant to s.74O of the Real Property Act 1900 (NSW) for leave to lodge a caveat in respect of a property. Prayer 3, in the alternative, seeks damages from the first and second defendant to be obtained pending orders for the sale or further encumbrance of the property. Prayer 4 seeks a declaration that an existing constructive trust between the bankrupt and the trustee (being the plaintiff in those proceedings) be held. Prayer 6 seeks an order that the funds loaned are in breach of that trust. All of those prayers for relief concern a property type of relief. They do not concern personal injury or wrong done to the bankrupt (the applicant in these proceedings) and for that reason s.116(2)(g) cannot apply.
Mr Pignoni submits that there are, however, certain provisions of the victim’s compensation legislation that may have brought into play a specific entitlement to receive compensation but that is not what sought in the Supreme Court proceedings. What has occurred is that Ms Metsikas has sought to pursue property type claims in a jurisdiction in respect of property which has vested in the Trustee without:
a)Firstly getting leave;
b)Having that property assigned back to her; and
c)Without having entitlement to do so the letter (Exhibit T1) indicates that a request was made by Ms Metsikas to the Trustee to agree to the proceedings being commenced. The Trustee did not give consent for that to occur and what has happened as a consequence is that Ms Metsikas in these proceedings has discovered that, without foundation, proceedings have been commenced without standing now has to re-trace the steps to try to have the Supreme Court proceedings legitimised.
Consideration
The application before the Court is brought pursuant to s.58(3)(b) seeking leave of this Court setting in its bankruptcy jurisdiction for Ms Metsikas to join Melissa Maree Quirk in proceedings in the Supreme Court of New South Wales.
I acknowledge the submissions made by Mr Cohen in respect of the monies which came into the possession of Ms Quirk by the reason of her fraud. The question arises as to whether those monies is a provable debt against the bankrupt estate of Ms Quirk. I am not satisfied that sufficient details are before this Court in this application for that analysis to be completed.
I note the argument that there is a nexus between the debt and the proceedings in the Supreme Court and the submission that those proceedings cannot effectively be prosecuted without Ms Quirk being amenable to the jurisdiction of the Supreme Court. I also note that the complexity of the underlying facts and circumstances indicate that the matter would be more comprehensively dealt with by a contested hearing in the Supreme Court. I rely on the frequently quoted passage from Allanson v Midland Credit Ltd & Anor (1977) 16 ALR 43 per Bowen CJ, Riley and Deane JJ at p48 where their Honours stated that all issues would be better and more comprehensively dealt with by a contested trial of the action in the Supreme Court and could be possibly the case if the creditor was required to lodge a Proof of Debt in respect of its claim against the bankrupt alone.
Similarly in Macquarie Bank v Bardetta [2005] FCA 507 per Conti J at [19] where His Honour stated:
[19] The Bank’s first submission was that the appropriate process for the determination of Mr Bardetta’s indebtedness to the Bank was as presently structured per medium the proceedings in the Supreme Court of New South Wales, rather than for the Trustee to undertake that determination in the context of adjudication upon a proof of debt to be tendered by the Bank in litigation involving the trustee in bankruptcy in the Federal Court. I was referred by the Bank to the Full Federal Court’s decision in Allanson v Midland Credit Ltd (1977) 30 FLR 108 (Bowen CJ, Riley and Deane JJ), where at 114 the following reasoning and decision appear:
Before proceeding further with the question of the effect of the stay and the operation of s 58(3), it is convenient to consider the second question which arises. That is, whether the court, if it has jurisdiction, should grant leave in the present case. Franki J, while indicating that as then advised he would not have answered this question in the affirmative, never reached the stage where it was necessary to decide it. The facts are complex. The claim of Midland Credit is not only against Mr Allanson, but against other defendants who, in some respects, may be jointly and severally liable with him. There is also the question of the defences, some of which form the basis of the cross-claim. It would seem that all of these issues would be better and more comprehensively dealt with by a contested trial of the action in the Supreme Court than could possibly be the case if Midland credit were required to lodge a proof of debt in respect of its claim against Mr Allanson alone. Such a proof of debt would be in the form of an affidavit and determined by the official receiver at such time as the stay ceased to operate. If the official receiver disallowed the claim in whole or in part, an appeal on this isolated issue could be brought to the Bankruptcy Court. But in these circumstances, the issues would have been determined in a less satisfactory way and questions between Mr Allanson and the other parties to the action would not be resolved.
It is not suggested that if leave be granted, the bankrupt estate will suffer financially in any way.
In the circumstances, we have formed the view that, if s 58(3) applies, the court has jurisdiction to grant leave to proceed and such leave should be granted.’
I was further referred by the Bank to the later decision of this Court in Sturdy Components Pty Ltd v Trustee of the Bankrupt Estate of Sturt [2000] FCA 884, where Burchett J adopted what was said by the Full Court in Allanson and granted leave to the trustee of a bankrupt estate to continue a cross-claim in certain Supreme Court proceedings framed under s 58(3) (and also s 249(3)) of the Bankruptcy Act.
I also note the policy issue and the submissions made by Mr Cohen at paragraphs [15]-[19]. However, there is a further difficulty facing the present application arising from the vesting in her trustee of
Ms Metsikas’ cause of action against Ms Quirk pursuant to s.116 of the Act: Daemar v Industrial Commission of New South Wales (1988) 12 NSWLR 45 at [50].
The affidavit of Leonardo Carlo Muriniti, Exhibit “EE” indicates that Ms Metsikas was a bankrupt on 4 January 2006 and subsequently discharged on 15 January 2009 by operation of the relevant legislation. Submissions were made that despite requests to Ms Metsikas’ trustee to assign or transfer back the chose in action which is the centre of these proceedings, this has not occurred nor do the provisions of the Act in respect to the chose in action reverting back to Ms Metsikas under the provisions of the Act in this matter does not apply. Ms Metsikas herself therefore has no interest in the chose in action that she needs to provide her with a standing to proceed against Ms Quirk in the Supreme Court proceedings if leave was granted. Submissions have been made that these proceedings before this Court have been adjourned on two previous occasions awaiting a response from Ms Metsikas’ trustee and at the time of the hearing before this Court no transfer or assignment of a chose in action has occurred. It would not be a proper exercise of the power under s.58(3)(b) of the Act to give Ms Metsikas leave to join Ms Quirk in an action in which Ms Metsikas has no interest in the requisite chose in action to permit this order. There has been no suggestion made before this Court that there is any application to be made to join Ms Metsikas trustee as the person currently vested in the relevant cause of action.
Mr Cohen informed the Court that [Judge Hughes of the District Court] granted a certificate under the NSW Victim and Compensation legislation to Ms Metsikas making the relevant funds that were fraudulently misappropriated by Ms Quirk a debt under that Act. It is argued that those funds are held in the trust because they were stolen by Ms Quirk which makes their status unclear and the application of the orders under s.58(3) have been made for an abundance of caution in respect of the continuance of the Supreme Court proceedings in its Equity division.
In the circumstances I am not persuaded to exercise the Court’s power under s.58(3)(b) in the terms sought on behalf of Metsikas and I dismiss her application.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM
Associate:
Date: 4 September 2009
0
16
5