Muller v COMBIS
[2003] FMCA 538
•25 November 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MULLER & ANOR v COMBIS | [2003] FMCA 538 |
| BANKRUPTCY – Application to annul sequestration – discreet issue to join petitioning creditor – application dismissed. |
| Applicants: | JEFFREY ALAN MULLER and LYNETTE ANNE MULLER |
| Respondent: | NICK COMBIS |
| File No: | BZ 470 of 2002 |
| Delivered on: | 25 November 2003 |
| Delivered at: | Brisbane |
| Hearing date: | 17 December 2002 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Solicitor for the Applicant: | Mr J Crowther of McCowans Solicitors |
| Solicitors for the Respondent: | Mr J Conomos of James Conomos Lawyers |
| Counsel for the Creditor: | Mr G Allen |
| Solicitors for the Creditor: | Anderssen & Company |
| Solicitors for the Supporting Creditor: | Mr E Counsel of Mallesons Stephen & Jaques |
ORDERS
That the application to join the petitioning creditor BALCARA ENTERPRISES PTY LTD be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BZ 470 of 2003
| JEFFREY ALAN MULLER and LYNETTE ANNE MULLER |
Applicants
And
| NICK COMBIS |
Respondent
REASONS FOR JUDGMENT
By amended Application filed 31 October 2002, JEFFREY ALAN MULLER and LYNETTE ANN MULLER (“the Bankrupts”) sought annulment of their sequestration ordered on 1 March 2002. The Respondent Trustee opposed the application.
The discrete application I have been asked to consider arises from the Applicant’s claim that
“the petitioning creditor BALCARA ENTERPRISES PTY LTD as Trustee of the Hansman Superannuation Fund pay the costs of this Application and the Respondents costs of administering the estate.”
The parties who appeared before me on 17 December 2002 agreed that the substantive application seeking annulment pursuant to s153B of the Bankruptcy Act 1966 (“the Act”) raises issues which may require more than 5 days of hearing and urged me to transfer the matter to Federal Court of Australia. The stated grounds for the application for annulment are:-
a)lack of notice of hearing and refusal to grant adjournment;
b)difficulties to bring the application in a timely manner due to a stress disorder following the events of 11 September 2001 and other business issues in United States of America where the Applicants had allegedly some substantial (and complex) interests;
c)that they are solvent
I also note, as part of the relevant history, that an application was heard by me on 25 June 2002, for Review of the Registrar’s Order to sequestrate. For the reasons delivered at that time, I dismissed the application.
It seems that although the petitioning creditor has properly been given notice of this application as required by the Rules, the real foundation for the Applicants’ claim to join the Petitioning Creditor is to seek indemnity costs against the Petitioning Creditor, including all the costs of the administration of the Estate.
The Trustee agreed to abide the order of the Court on the joiner issue, but seeks directions for the further management of the proceedings. By letter of 20 December 2002 to the Registry, directions have been agreed upon between the current parties.
Rule 11 of the Federal Magistrates Court Rules 2001 provide that:-
11.01 Necessary parties
(1)Subject to any order of the Court, a person whose participation is necessary for the Court of completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding.
(2)The Court may require a person to be included as a party.
(3)A person required to be included as an applicant who does not consent to be included may be included as a respondent.
(4)The Court may decide a proceeding even if a person is incorrectly included or not included as a party.
11.02 Party may include another person as a party
(1)A party to a proceeding may include any person as a party by:
(a)naming the person as a party in the application, response or reply; and
(b)serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.
(2)A party may not include a person as a party after the first court date without the leave of the Court.
(3)The Court may at any time order a party who has included a person as a party to file and serve on each other party in the proceeding an affidavit setting out the basis on which the person has been included.
I am satisfied that the Applicants have consistently failed to comply with the directions of the Trustees for production of material to enable the trustee to report to creditors. The History of proceedings in this Court evidence delayed compliance with directions and at times, no compliance at all.
There are serious questions on the evidence before me now, about the likelihood of the Applicants’ success on the substantive application for annulment. The Petitioning Creditor goes as far as to say the Application is an abuse of the process.
I invited the legal representatives to provide me with any authority to support the joiner of the Petitioning Creditor. Mr Crowther for the Applicant referred me to the decision of Cooper J in Re: Meredith ex parte Commonwealth Bank of Australia (Federal Court of Australia – 19 March 1993)
That decision relates to the hearing of a creditors petition. Although some of the facts might be said to be similar to the history of the Applicants’ business dealings, it really is of not assistance to me in the discrete issue I am deciding.
It seems to me that it is an essential part of the process of Bankruptcy that a petitioning creditor, upon sequestration, is treated in the same way as all other creditors (depending of course whether they are secured or otherwise). The administration of the estate then becomes the responsibility of the Trustee who is regulated by the provisions of the Act.
The Applicants say the petitioning creditor should be joined because of a lack of candor to the Court about service and this caused the sequestration order to be made on 1 March 2002. I considered that issue on 25 June 2002, and I was satisfied service had been effected as required by the order for substituted service. No appeal against that decision was filed. The Applicant’s should not be entitled to re-litigate that issue.
I see no utility in granting the Application for joiner. I agree with the submissions of the Petitioning Creditor that to do so would cause –
“incurable prejudice on Balcara Enterprises Pty Ltd and other creditors and force Balcara to incur entirely unnecessary and unwanted legal expenses….”
I dismiss the application for joinder.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Baumann FM
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