Owens v Comlaw (No 62) Pty Ltd - [2006] VSCA 151

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 7227of 2001

SUZANN JANET OWENS
	Appellant
v.
COMLAW (NO. 62) PTY. LTD. (ACN 010 770 760) and ORS
	Respondents

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JUDGES:	ASHLEY and REDLICH, JJ.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	26 and 29 May 2006
DATE OF JUDGMENT:	7 July 2006
MEDIUM NEUTRAL CITATION:	[2006] VSCA 151

APPLICATION ON SUMMONS
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Bankruptcy – Appeal commenced by bankrupt defendant before sequestration order made – Purported election by trustee to prosecute appeal under s.60(2), Bankruptcy Act 1966 (Cth) – Whether appeal an action to which s.60(2) applied – Answer not necessarily dependent upon whether the action or its subject-matter was property vesting in the trustee under s.58(1) – Relevance of connection between action and estate of bankrupt - Action pertaining to recovery of professional costs by bankrupt for work performed before bankruptcy –Application by trustee to discontinue the appeal – Whether open to trustee to discontinue appeal after making election to prosecute the same.

Bankruptcy Act 1966 (Cth), ss.60(2)(3), 58(1).

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APPEARANCES:	Counsel	Solicitors
For the Applicant (David James Lofthouse (as trustee of the bankrupt estate of Suzann Janet Owens))	Mr. P. Fary	Aitken Walker & Strachan
For the Respondents	Mr. M. T. Lapirow	Armstrong Collins DeLacy
For the Appellant	Mr. C. Bozzi	Tolhurst Druce & Emmerson

ASHLEY, J.A.:

Before the Court is an application made by summons filed 3 April 2006. The applicant is David James Lofthouse, trustee of the bankrupt estate of Suzann Janet Owens. The application raises a question whether the trustee had power, under s.60(2) of the Bankruptcy Act 1966 (Cth) (“the Act”), to elect to prosecute an appeal commenced by the bankrupt before her bankruptcy – the appeal seeking to challenge a declaration made by Nettle, J., then sitting in the Trial Division, concerning the terms of a retainer between the bankrupt (a solicitor) and the respondents to the appeal; and also seeking to challenge costs orders made at trial. The application raises a further question: if the trustee was empowered to make such an election, and elected to prosecute the appeal, was he thereafter entitled to seek leave to discontinue the same?

The Circumstances

In the latter part of 1998 and in the first four months of 1999, Ms Owens, the bankrupt, acted as solicitor for Comlaw (No 62) Pty Ltd, Garms Roseville Pty Ltd, and Ann Garms. They are the respondents to this appeal. A dispute arose between Ms Owens and the respondents as to the proper amount of her costs. Essentially, the dispute related to the matters in respect of which, and the basis upon which, Ms Owens’ professional costs should be charged.

On 3 November 2000, Ms Owens served on the respondents a bill of costs in taxable form. It was in an amount of $130,935.60 plus disbursements of $10,240. As at that time the respondents had paid $11,957.50 on account of costs. As I understand it, they have paid no other amount since the bill was rendered.

The respondents responded to the bill…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] VSCA 151
Decision Date: 7 July 2006

CaseChat Overview and Summary

The appeal before the Court of Appeal in Owens v Comlaw (No 62) Pty Ltd involved the bankrupt defendant, Owens, who sought to appeal a decision made before the sequestration order was issued. The defendant was represented by a trustee, who made an election under section 60(2) of the Bankruptcy Act 1966 (Cth) to prosecute the appeal. The legal dispute centred on whether the appeal constituted an action to which section 60(2) applied. The court had to determine if the answer to this question depended on whether the action or its subject-matter was property vesting in the trustee under section 58(1) of the Act. Additionally, the relevance of the connection between the action and the bankrupt's estate was considered.

The court examined the nature of the action, which pertained to the recovery of professional costs by the bankrupt for work performed before the bankruptcy. The central issue was whether the trustee could discontinue the appeal after electing to prosecute it. The court held that the answer to whether section 60(2) applied was not necessarily dependent on whether the action or its subject-matter was property vesting in the trustee under section 58(1). The court further determined that the connection between the action and the estate of the bankrupt was a relevant factor. Given these findings, the court concluded that it was open to the trustee to discontinue the appeal after making the election to prosecute the same.

The court's reasoning and outcome provided clarity on the trustee's discretion to manage appeals in bankruptcy proceedings. The decision underscored the importance of the connection between the action and the bankrupt's estate in determining the applicability of section 60(2). The court's analysis and conclusion on the trustee's ability to discontinue the appeal after electing to prosecute it offered practical guidance for future cases. The final orders of the court reflected these findings, affirming the trustee's discretion while highlighting the nuances in the interpretation of the relevant sections of the Bankruptcy Act.

Orders