Michaelis, H.M. v Contec Nominees Pty Ltd

I i

NOT

FOR

DISTRIBUTIOr\r

!	.
'

l 18s

IN THE FEDERAL COURT OF AUSTRALIA	)
) Nos. ACT G 64 of 1986,

AUSTRALIAN

CAPITAL

TERRITORY

ACT G

65 of 1986,

)	ACT G 66 of 1986,

i	DISTRICT	REGISTRY	)	ACT G 67 of 1986.
I
)

DIVISION	i	GENERAL	)
I

ON APPEAL FROM THE SUPREME COURT

OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: HERBERT MAX MICHAELIS

and NANCY

MABEL MICHAELIS

Appellants

AND:	CONTEC NOMINEES PTY. LIMITED

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER	: Neaves J.
DATE OF ORDER	: 15 April 1987

WHERE

MADE

Canberra

1HE COURT:

1. Declares that the applicants, Herbert Max Michaelis and Nancy Mabel Michaelis are not entitled, either

by virtue of sub-s.60(4) of the Bankruptcy Act

1966

(Ct.h) or otherwise, to continue in their

own names

the appeals to this Court from judgments

the

Supreme Court of

the Australian Capital Territory,

such appeals being numbered

ACT G

64 of 1986,

'ACT G 65 of 1986, ACT G 66 of 1986 and ACT G 67 of

1986.

2 . Orders that the applicants, Herbert Max Michaelis and Nancy Mabel Michaelis, pay the costs of the

respondent, Contec Nominees Pty. Limited,

the

application.

3 .

Declares that it

has no jurisdiction to strike out

the said appeals

numbered

ACT G 64 of 1986,

ACT G 65 of 1986, ACT G 66 of 1986 and ACT

G 67 of

.' 1986.

(

2 .

Directs that the sum of

$2,148.29

standing to the

credit of the Federal Court

of Australia Lltigants'

Fund on account of Herbert Max Michaelis and Nancy

Mabel

Michaelis be withdrawn

and

paid

the

Official Trustee

in Bankruptcy

as trustee of the

bankrupt estates of

the said Herbert Max Michaelis

and Nancy Mabel Michaelis.

Note:

Settlement and entry

of orders 1 s dealt with in Order

of the Federal Court Rules and in rule	124	of the Bankruptcy
Rules.

IN THE E'FDERAL COURT OF AUSTRALIA

) Nos. ACT G 64 of 1986,

AUSTRALIAN CAPITAL TERRITORY

)

ACT G

65 of 1986,

)	ACT G 66 of 1986,

DISTRICT	REGISTRY_	1	ACT G 67 of 1986.
)

GENERAL DIVISION

ON APPEAL FROM THE SUPREME COURT

OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: HEXBERT MAX MICHAELIS

and NANCY MABEL MICHAELIS

Appellants

AND:	COfiEEC NOMINEES PTY. LIMITED

Respondent

W: Neaves J.

m: 15 April 1987

REASONS FOR JUDGMENT

Prior

the

making

5 December 1986 of

sequestration

orders

against

their

estates,

Herbert

Max

Michaelis and Nancy Mabel Michaelis

("the applicants") had

instituted four appeals in this Court against judgments of the

Supreme

Court'

the

Australian

Capital

Territory.

Those

appeals have not yet come on for hearing and

the applicants

have now

applied to the Court by motion, notice of which was

given on 19 March

1987, for leave to continue those appeals.

Although the order sought

expressed in terms

leave to continue

the

appeals, the substantial question is

whether th&appeals, or any of them, fall within sub-s.60(4) of

L .

the Bankruptcy Act 1966 (Cth) ("the Act") so

that they may be

continued by the applicants In their

own names.

Sub-section 60(2) of the Act provldes that an action

commenced by a person who subsequently becomes a bankrupt is,

upon hls becoming

a bankrupt, stayed untll the trustee makes

election, in writing, to prosecute or

discontinue the action.

"Action" is proceedlng, whether at law

defined

sub-s.60(5)

to mean

"any

clvll

or	in equity". If the trustee does

not make such an electlon within 28 days after notice of the

action 1 s served upon hlm by

a defendant or other party to the

action,

is to be deemed to have abandoned the action

(sub-s.60(3)). Sub-section 60(4) provides:

"(4)	Notwithstanding anything contained in

thls section,

a bankrupt may continue, in his

own

name, an action commenced by him before

he became

a bankrupt in respect

of -

(a) any personal Injury

or wrong done to the

bankrupt, his spouse or a member of his

family; or

(b) the death of his spouse or

of a member

of his family.	"
,

Paragraph (b) of

sub-s.60(4)

clearly

has

application In the present circumstances.

The question whether any of the appeals answers the

description of a civil proceeding in respect of any personal

Injury or wrong done to the appllcants

or either

of them

within the meaning of par.(a) of that sub-section is to be answered By examining the true nature of each appeal as

I	3.
I

disclosed by the relevant court record. This I now proceed

to do.

Appeal No. ACT G 64 of 1986

The first appeal (No. ACT G 64 of

1986) is from a

judgment of the Supreme Court given on

9 May 1986

in an

action for debt commenced by Contec Nominees Pty. Limited

plaintiff against the applicants as defendants

(No. S.C. 459

of 1986)

The plaintiff clalmed

an amount of $12,000

alleged to be the balance due by way of licence

fees payable

respect

the

period

from

December

1984 to

March

!	1986	under	an agreement	dated	16	January	1985 whereby	the
I
i

I	plaintiff	agreed	to	grant	to	the	defendants	a licence	to
I

occupy certain premises known as

Unit 5, Block 3, Section

100, Yarralumla in

the

Australian Capital Territory.

The

plaintiff also claimed interest and costs.

Notwithstanding that

a defence had been filed on

behalf of the

defendants

on 9 April 1985 traversing

allegations in the statement of claim, notice of

a motion by

the plaintiff for

leave to enter judgment pursuant to Order

15, rule 1

of the Rules

the Supreme Court

the

Australian Capltal Territory was given on

2 May 1986. That

motion was heard on 9 May 1986.

At the conclusion

of the

hearing the Supreme Court ordered that the plaintiff have

leave t o

enter judgment in the sum

of $8,000 together with

an amount of $307.62 representing interest under s.53A of

the Australian Capital Territory Supreme Court Act 1933

(Cth) and-:that the defendants have leave to defend	in
respect of $4,000.

By thelr notice of appeal, which

was

not filed

until 10

October 1986 and then without leave of the Court

under Order

52,

r.15(2) of

the Federal Court Rules, the

applicants seek orders that the

~udgment

of the Supreme

Court be set aside and that,

in lieu thereof, it be ordered

that the application for summary judgment be set aside and

the applicants be given leave to defend the action.

Appeal No. ACT G 65 of 1986

The second appeal (No. ACT

G 65 of 1986) is from a

judgment of the Supreme Court given on

19 September 1986 in

an action commenced by Contec Nominees Pty. Limited

plaintiff against the applicants

as defendants (No. S.C. 718

of 1986).

The plaintiff claimed an

amount of $ 2 , 0 0 0 being

the licence fee payable on

15 April 1986 under the agreement

already referred to for the occupation of the premises	at
Yarralumla.

Judgment in default of defence was entered on

July 1986. The defendants sought orders setting aside that

Judgment and giving the defendants leave to defend and plead

counter-claim. On 19 September

1986 the Supreme Court

ordered that the judgment entered

14 July 1986

be set

aside but

that the plaintiff be allowed to

enter judgment

against the defendants nunc pro tunc, with costs calculated

by reference to what would have been payable

on a judgment

of $2,000 obtained by default in the Magistrates Court.

By their notice of appeal filed on

10 October 1986

the applicants seek orders that the ~udgment of the Supreme

Court be set aside and in lieu thereof it be ordered that

the applicatlon for summary judgment be set aside and

the

applicants be given leave

to defend the action.

Appeal No. ACT G 66 of 1986

The third appeal (No. ACT G 66 of

1986) is from a

~udgment

of the Supreme Court given on 26 September 1986 in

an action commenced by Contec Nominees Pty. Limited as

plaintiff against the applicants

as defendants (No. S.C.

1379 of 1986).

The plaintiff sued upon an agreement made on

16 January

1985

between the

plaintiff and the defendants

whereby the defendants agreed to purchase the unexpired

residue of the Crown lease

of the premises known

as Unit 5,

Block 3 ,

Sectlon 100, Yarralumla in the Australian Capital

Territory.

It was alleged

that

was a term

the

agreement that

deposit of $31,450 was payable by the

defendants and that, in a certain event (which was said to

have occurred), the

plaintiff was to be entitled

to recover

from the defendants any unpaid balance of the deposit as

liquidated

damages.

The

plaintiff claimed the

sum

$30,450 plus interest and costs.

The defendants on 8 September 1986 filed

a defence

and counter-claim. The counter-claim alleged that	a further
agreement had been made between the plaintiff and the

defendants in or about February or March

1986

varying the

sale

agreehent

a number

respects

and

that

the

plaintiff was in breach of that agreement. Paragraphs	5 and
6 were in the following terms:

"5.

The Defendant Eslc7

.... says that as a

result of the Plaintiff's breach

the

Defendant at the time was unable to

proceed with the purchase orders

wlth

its Company as the USA

export licences

are the

responsibility of the Defendant

and thereby suffered

loss.

6. The Defendant Csic7 further says that as

a result of the Plaintiff's breach the

Defendant was delayed in placing and

servicing

orders

and

order

mitigate

and

guarantee

asked

and

instructed its Company to make necessary

financial arrangements to restore its

position.

The counter-claim sought unspeclfled damages and interest.

On the same day as the defence and counter-claim

was delivered, the plaintiff gave notice of an application

for leave to enter judgment for the relief claimed in the

statement of claim.

On 26 September 1986 the Supreme Court ordered that

the plaintiff., have leave to enter judgment

agamst

the

defendants in the sum of

$30,450 and costs.

By their notice of appeal filed on 10 October

1986

the applicants seek orders that the judgment of the Supreme granted leave to defend the action.

Appeal No. ACT

G 67 of 1986

The remainlng appeal

(No. ACT G 67 of 1986) is from

a judgment of the Supreme Court given on 19 September 1986

in an action commenced by Contec Nominees Pty. Limited as

plaintiff against

the applicants as defendants

(No. S.C.

1380 of 1986) whereby the plaintiff sought possession of

the

premlses prevlously identified, mesne profits and interest.

The defendants filed a defence and counter-claim, the latter being in Identical terms to that pleaded in the

actlon No.

S.C. 1379

of 1986 which has given rise to the

appeal No. ACT G 66 of 1986.

On 8 September 1986 the plaintiff gave notice of

application for leave to enter judgment

for

the relief

claimed in the statement

of claim.

On 19 September 1986 the Supreme Court ordered that

the

plaintiff

granted

leave

enter

judgment

for

possession of the premises. On 26 September 1986 that Court

gave

leave

to profits, the amount thereof to be assessed by the Registrar.

enter

interlocutory

judgment

for

mesne

By their notice of appeal filed on 10 October 1986

the applicants seek an order setting aside the order

of the

Supreme Court made on

19 September 1986 and in lieu thereof

that it be ordered that the application

for summary judgment

be refused and the applicants have leave to defend	the
action.

. .

The Issue

It is unnecessary for present purposes to examine the hlstory of the provision which now appears

as par.(a) of

sub-s.60(4) of

the Act or to discuss its provislons at any

length.

is sufficient to refer to what was said by

Lockhart J. in Faulkner v. Bluett (1981) 52 F.L.R.

115.

The relevant proceedings m the Supreme Court were

not mstituted by the applicants. They were the defendants

in each

those proceedings. The relief sought against

them was the recovery of liquidated amounts owing under an

agreement granting a licence to occupy certain residential

premises, the recovery of an amount by way of liquidated

damages under

an agreement for the sale and purchase of that

property and the recovery of possession of those premises.

So to describe the proceedings

in the Supreme Court

is sufficient to demonstrate that, upon their commencement,

no one of them answered the description of

claim by the

applicants

falling

within

the

language

of par.(a) of

SUb-s .60 (4 )

the

Act. In two

those

proceedings,

however, that in which the plaintiff claimed the balance

the deposit under the agreement for the sale

and purchase of

the property and that for the recovery of possession of the

premises,

the

applicants

filed

a counter-claim.

The

question

must,

therefore,

answered

whether

that

circumstance warrants a

different conclusion to be drawn in

respect of those proceedings. Certainly the counter-claim

in each of those proceedings amounts to

claim by the

applicants sounding in damages. But it is

clalm for

breach of contract and is based on a

cause of action which

is properly characterised as one dlrectly related to the applicants' property. Any damages to which applicants may be entitled would be estimated by Immediate reference to their rights of property and not to pain felt by either

appllcant in respect of his or her mind, body or character:

Wllson v.

United Counties Bank Ltd.

C19203 A.C.

102. The

cause of action

is not properly described

as one relating to

a personal Injury or wrong done to the applicants or either

of them. It may well be that the success of the proceedings

in the Supreme Court

has had

an effect upon the applicants'

reputation and their credit but that, if it be

so, provides

no basis for characterising the appeals	as	proceedings of
the requisite kind.

In my opinion, the applicants are not entitled, by

virtue of

sub-s.60(4) of the Act or otherwise, to continue

their

own

names the appeals to this Court numbered

ACT G 64 of 1986, ACT G 65 of 1986, ACT G 66 of 1986 and ACT

67 of

1986.

The applicants must pay the respondent's

costs of the application.

Counsel for the respondent submltted that, if the application were to be dismissed,

I should order that the

four appeals be struck out.

This order was sought

on the

basis

that

the

appeals

may

not

continued

the

applicants 'in their

own names and the Officlal Trustee in

10.

Bankruptcy, the trustee of the applicants‘ estates,	has
elected not to proceed with any of them.

In my opinion, sitting as a slngle Judge

of the

Court,

I have

no jurisdiction to strike out the appeals.

That is a matter for a Full Court exercising the appellate

jurlsdictlon of the Court.	The application	is, therefore,
refused.

The Official Trustee in Bankruptcy,

as trustee of

the estates of the applicants, has sought

a declaration that

an amount of

$2,148.29

lodged by the

applicants with the

District Registrar of the Court forms part

of the assets of

the applicants divisible amongst their creditors and	an
order that the amount paid out to the trustee.

The amount was lodged with the District Registrar

the

following

circumstances.

The petition for the

sequestration of the applicants’ estates was presented on

September 1986.

It was listed for hearing

on 5 December

1986. The debt upon which the petition was founded was the

debt of $2,000’ which was the subject

of the judgment of the

Supreme Court entered by default on

July

1987

and

referred to above

in connection with the appeal to this

Court numbered

ACT

65 of

1986.

A s

has already been

mentioned, the notices of appeal from the various judgments

of the Supreme Court had been filed on

10 October 1986. On

27 November 1986 Mr Michaelis lodged at the Registry of this

Court a chgque for the

sum of $2,148.29

drawn on an account

11.

in the name of the applicants

wlth

Citibank, Canberra.

Querled

the

purpose

lodging

the

cheque,

Mlchaelis said that

wlshed the money to be held in

respect of the appeal in matter No. ACT G 6 5 of 1986 and drew attention to the fact that the amount was related to

the

debt

alleged

the

creditor's

petition.

Michaelis's

insistence,

the

cheque

was

received

and

arrangements made for the proceeds to be paid to the credit credited to that account and may not be paid out of that

of an account with the Commonwealth Bank of Australia

entitled "Federal Court of Australia Litigants' Fund" (see

fund otherwise than under	an order of the Court or a Judge
(Order 63, r.5).

Mlchaelis, in an affidavit sworn by him on

December 1986 in support of his opposition to the creditor's petition, stated:

"I have lodged into the said Court under the matter ACT G 65 of 1986 the said monies as security as per annexure marked 'C'."

,.I

The annexure marked

"C" is a copy of the official receipt

whereby the Registry acknowledged receipt of

the sum

$2,148.29.

The receipt bears on its

face a reference

to the

matter No. ACT G 65 of 1986.

the

hearing

the

petition,

Mr Michaelis

referred to the lodging of the moneys

in the Registry of the

12 I

Court.

He said that the moneys would be available to the

credltor should the appeal in matter No.

ACT G

65 of 1986

fail. He further said that the moneys had been lodged

with

the Registry "to secure the creditor" but made it plain that

they had not been lodged

"as a

method of satisfying the debt

immediately prior to the appeal".

am satisfied that the sum of

$2,148.29

is an

asset of the applicants divlsible amongst their creditors.

I direct that that sum be withdrawn from the Federal Court

of	Australia Litlgants' Fund and be paid to the Official

Trustee

Bankruptcy,

trustee

of the

applicants'

bankrupt estates.

I	certify that this and

the preceding

11 pages are

a true copy of the Reasons

for Judgment herein

of the

Honourable	Justice	Mr
Neaves .

Associate

Dated:

15 April 1987

Mr Michaelis appeared in person

Counsel for the respondent

Mr U.D. Boettcher

Solicitors for the respondent :

Meyer Boettcher & Clapham

Counsel for the Official

: Mr B.A. Meagher

Trustee in Bankruptcy

Solicitors for the Official

: Snedden Hall & Gallop

Trustee In Bankruptcy

Date of

hearing

: 3 April

1987

[1987] FCA 185

15 Apr 1987