Pascoe v Smirneos
[2014] FCCA 2764
•5 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PASCOE v SMIRNEOS & ORS | [2014] FCCA 2764 |
| Catchwords: BANKRUPTCY – Funds paid into Court – application in relation to part of those funds – oral application by another party for payment of part of those funds or for adjournment – whether in the interests of justice. |
| Legislation: Federal Circuit Court Rules 2001 (Cth), r.1.05 Federal Court Rules 2011 (Cth), rr.2.42, 2.43 |
| Bou-Simon v Attorney-General of the Commonwealth of Australia [2003] FCA 1303 Pascoe v Smirneos & Ors [2010] FMCA 404 |
| Applicant: | SCOTT DARREN PASCOE IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF HELEN SMIRNEOS, A BANKRUPT |
| First Respondent: | HELEN SMIRNEOS, A BANKRUPT |
| Second Respondent: | ANDREW SMIRNEOS |
| Third Respondent: | GEOFFREY REIDY IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF PETER SMIRNEOS, A BANKRUPT |
| Fourth Respondent: | WESTPAC BANKING CORPORATION ABN 33 007 457 141 |
| Fifth Respondent: | NATIONAL LENDING PTY LTD ACN 119 336 631 |
| Sixth Respondent: | STEVE SMIRNEOS |
| Seventh Respondent: | PETER SMIRNEOS |
| Eighth Respondent: | BARBARA SMIRNEOS |
| File Number: | SYG 346 of 2010 |
| Judgment of: | Judge Barnes |
| Hearing date: | 5 November 2014 |
| Delivered at: | Sydney |
| Delivered on: | 5 November 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Kemp Strang |
| Counsel for the Third Respondent: | Mr P Cutler |
| Solicitors for the Fifth Respondent: | Tucker & Cowen Solicitors |
ORDERS
The oral application for an order in favour of National Lending Pty Ltd is refused.
The oral application that no orders be made until a further application in a case or other application is made by National Lending Pty Ltd is refused.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 346 of 2010
| SCOTT DARREN PASCOE IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF HELEN SMIRNEOS, A BANKRUPT |
Applicant
And
| HELEN SMIRNEOS, A BANKRUPT |
First Respondent
| ANDREW SMIRNEOS |
Second Respondent
| GEOFFREY REIDY IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF PETER SMIRNEOS, A BANKRUPT |
Third Respondent
| WESTPAC BANKING CORPORATION ABN 33 007 457 141 |
Fourth Respondent
| NATIONAL LENDING PTY LTD ACN 119 336 631 |
Fifth Respondent
| STEVE SMIRNEOS |
Sixth Respondent
| PETER SMIRNEOS |
Seventh First Respondent
| BARBARA SMIRNEOS |
Eighth Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This matter came before the Court as an application in a case filed by Scott Darren Pascoe in his capacity as trustee of the property of Helen Smirneos (Ms Smirneos), a bankrupt. There are eight respondents. Five of them are members of the Smirneos family, including Ms Smirneos. The other Respondents are Geoffrey Reidy, as trustee of the property of Peter Smirneos (the son of Ms Smirneos) who is also bankrupt, Westpac Banking Corporation and National Lending Pty Ltd (National Lending). There are appearances today for the Applicant, Mr Reidy and National Lending.
Mr Pascoe seeks orders in respect of funds paid into Court on 22 November 2013 pursuant to orders made by Smith FM on 7 June 2010. The amount paid into Court was $82,520.02. However the orders sought by Mr Pascoe are that $15,000 be paid to Mr Reidy; that half of the balance of the fund (after payment of the $15,000) be paid out of the fund to Mr Pascoe as trustee of the property of Mr Smirneos; and such further or other order as the Court considers fit. It is apparent that this application does not address all the funds paid into Court.
The matter came across to me from the bankruptcy list on 3 November 2014. As I was not in a position to hear it on that day, it was adjourned until today. I consider that the parties have all had the opportunity to consider the scope of the application before the Court.
The solicitor for National Lending has today made an oral application for an order for a payment to it from the funds paid into Court. It is apparent that what is sought is that National Lending be paid one half of the balance of the fund after payment of $15,000 to Mr Reidy. This is said to be consistent with the priorities in relation to application of the net proceeds of sale of property previously owned by Ms Smirneos and her husband considered by Smith FM in Pascoe v Smirneos & Ors [2010] FMCA 404. It appears that National Lending lent money to Andrew and Helen Smirneos secured by a mortgage over the property that was the subject of the orders in relation to sale and application of the proceeds of sale made by Smith FM in 2010 and also obtained a judgment against Andrew Smirneos (see [17]).
However, for the reasons that follow I am not prepared to make such an order on the basis of the present oral application.
An application for payment of money out of court is dealt with (by virtue of r.1.05(3)(b) of the Federal Circuit Court Rules 2001 (Cth)) pursuant to Division 2.5 of the Federal Court Rules 2011 (Cth). In particular, rr.2.42 and 2.43 provide that:
2.42 (2) A party may apply to the Court for an order:
(a) that money paid, or to be paid, into Court be paid, credited or applied in a manner other than by payment into the Litigants' Fund; and
(b) in relation to the disbursement of any interest earned on the money.
2.43 (1)Money paid into Court under rule 2.42 may be paid out or applied only in accordance with an order of the Court.
The parties were not able to assist me with the principles applicable in relation to payments out of Court. It is necessary to have regard to what is proper in the interests of justice in determining whether to exercise the discretion under these provisions (see Bou-Simon v Attorney-General of the Commonwealth of Australia [2003] FCA 1303 at [24]).
However it is apparent from the affidavit of Ms Webster, the solicitor for National Lending, affirmed on 31 October 2014, that some of the respondents (including, relevantly, Andrew Smirneos, the husband of Ms Smirneos and former co-owner of the property from which the funds that were ultimately paid into Court came) were each requested by letter from the solicitors for National Lending to sign consent orders which would have provided for distribution of funds in part to National Lending.
The explanation provided in the letter was that the trustee (Mr Pascoe), Mr Reidy and National Lending had reached an agreement in relation to the moneys that had been paid into Court to enable a claim to be made by Mr Reidy as trustee of the property of Peter Smirneos. These parties were said to have consented to orders whereby Mr Reidy’s claim would be satisfied by payment of $15,000 and the balance of the funds would be shared equally between Mr Pascoe (as trustee) and National Lending. However it was acknowledged that a Registrar of the Court had advised that the consent of all the parties to the proceedings was required or an application to the Court would be necessary.
In the letter to Andrew Smirneos the solicitors for National Lending asked Mr Smirneos to sign the consent order in order to avoid unnecessary costs of an application to court. Critically, the letter also advised him:
If you do not sign and return the enclosed Consent Order, our client will have no option but to file an application with the Court for the Orders to be made. If an application to Court is necessary, our client reserves the right to refer to this letter on the question of costs.
In other words, Mr Smirneos, the Second Respondent, was advised by the solicitors for National Lending that if National Lending was going to seek payment to it of money paid into Court it would do so by way of filing an application with the Court.
It is not disputed that the proposed consent orders were not signed by Mr Smirneos. I note that there is no evidence to indicate that consent to such orders was sought from the Sixth, Seventh, and Eighth Respondents.
The Court has to exercise its discretion and make orders that are proper and in the interests of justice. The requirement for an application for payment out of Court is consistent with the approach taken in the Rules. I am not satisfied that it is appropriate to make the order sought on the basis of an oral application where the party most likely affected by that order (who might, if anyone did, object to such an order), has been told that if National Lending seeks such a payment then it will do so by way of filing an application. This clearly suggests a written application.
In the alternative, National Lending seeks that the hearing of Mr Pascoe’s Application in a Case be adjourned. The trustee’s application for distribution of part of the money paid into Court has been served on all of the other parties to these proceedings, including all of the respondents who might potentially take issue with any aspect of the orders that he sought. It is apparent on the face of Mr Pascoe’s application that he does not seek orders relating to the whole of the funds paid into Court.
There is no suggestion that National Lending intends to seek payment of an amount that would result in a conflict between it and Mr Pascoe (or Mr Reidy) as to allocation of the fund. However, in circumstances where the contesting interests are rather different in relation to certain aspects of the funds, it may well be the case that those who might object to a payment to National Lending may have no basis to take issue in relation to payment of one half of the balance of the fund in Court to the Trustee of the bankrupt estate of the former owner of 50 per cent of the property that was sold. The Respondents have only been put on notice of Mr Pascoe’s application to the Court. They could have appeared in order to object if they had any issue with payment of $15,000 to Mr Reidy or payment of one half of the balance of the fund to Mr Pascoe in his capacity as trustee of the property of Helen Smirneos. Those Respondents who might object or raise their own claim to that proportion of the funds are on notice of the application in relation to that proportion of the funds. However they are not on notice of an application by National Lending in relation to the remainder of the funds paid into Court.
In these circumstances, insofar as an oral application is made for an adjournment, such application is refused. It is open to National Lending to file its own Application in a Case to be served on all appropriate parties. The orders sought by Mr Pascoe (if made) would not have any impact on such separate application by National Lending.
Insofar as the solicitor for National Lending suggested that if orders were not made in its favour then it wished to oppose the orders sought by Mr Pascoe and contended that the whole of the funds should remain in Court until resolution of any future application by National Lending, I am not satisfied that such an order is appropriate. National Lending has been on notice of Mr Pascoe’s application for some time. If it had wished to take issue with that application, it had the opportunity to do so. No basis of opposition, other than National Lending’s wish that the balance of the fund after payment to Mr Reidy and Mr Pascoe be paid to it, has been identified. The fact that there appears to have been an omission or oversight on the part of National Lending is not such as to justify requiring the lawyers for Mr Pascoe, or, indeed, for Mr Reidy, to return and reargue Mr Pascoe’s application at a later stage. National Lending’s oral applications should be refused.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Barnes.
Associate:
Date: 26 November 2014
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