Pekar v Holden

[2016] FCCA 2613

FEDERAL CIRCUIT COURT OF AUSTRALIA

PEKAR v HOLDEN [2016] FCCA 2613

Catchwords:
BANKRUPTCY – Application to compel trustee in bankruptcy to continue with proceeding in Magistrates’ Court – trustee electing not to proceed – whether trustees’ decision should be set aside – trustees’ decision clearly appropriate – application dismissed.

Legislation:

Bankruptcy Act1966, s.178

Fair Trading Act 1999, s.161
Federal Circuit Court of Australia Act 1999, s.17A
Legal Profession Act 2004, ss.3.4.38, 4.2.2, 4.2.4, 4.2.5, 4.3.2(c)
Fair Trading Amendment (Australian Consumer Law) Act 2010, s.42

Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166

Applicant: FIMA PEKAR

Respondent: TIMOTHY MARK SHUTTLEWORTH HOLDEN

File Number: MLG 490 of 2016

Judgment of: Judge Burchardt

Hearing date: 31 August 2016

Date of Last Submission: 31 August 2016

Delivered at: Melbourne

Delivered on: 20 October 2016

REPRESENTATION

Counsel for the Applicant: Mr Pekar, in person

Counsel for the Respondent: Ms Gobbo

Solicitors for the Respondent: Rothwell Lawyers Pty Ltd

ORDERS

1. That the application filed on 11 March 2016 be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

No. MLG 490 of 2016

FIMA PEKAR

Applicant

And

TIMOTHY MARK SHUTTLEWORTH HOLDEN

Respondent

REASONS FOR JUDGMENT

1. By an application filed 11 March 2016, Mr Pekar seeks an order “[t]o order the trustee reinstate Magistrates’ Court proceeding G10340588.”

2. In an affidavit filed contemporaneously, Mr Pekar deposes that his application is made pursuant to s.178 of the Bankruptcy Act1966 (Cth) (“the Bankruptcy Act”) and asserts that his complaint “is not related to bankruptcy”.  The affidavit relevantly continues:

   “The complainant seeks orders for production of records and documents justifying the costs of $6302.73 paid by me to Rickards Legal in full arising from tax bill for cost dated 29.07.2011 which was 3 years before bankruptcy, and sec 60 of the Bankruptcy Act is not applicable in this matter.”

3. The history of the matter is far from fully clear, but it is apparent from the materials annexed both to Mr Pekar’s affidavit and a submission filed in court that, on 26 August 2014, Mr Pekar filed a complaint under case number E12840498 with the Magistrates’ Court of Victoria at Moorabbin.  In this, he sued for breaches of the Fair Trading Act 1999 (Vic) (“the Fair Trading Act”).  The complaints asserted breaches by the defendant, essentially asserting a dispute about a payment of legal fees demanded by Rickards Legal.  I note that on 1 December 2014, the trustee elected to discontinue the action between Mr Pekar and Rickards Legal.  I note that as long ago as 10 August 2011 (see annexure to Mr Pekars’ affidavit) Mr Pekar was seeking “an itemised bill of cost for taxation, your bill from 29.07.11 is in my opinion, is not only an offence against the “Legal Profession Act 2004”, but an attempt to deceive me for a large sum of money…”.

4. The letter went on to complain of a number of matters in the itemised bill.  That bill is itself annexed to Mr Pekar’s affidavit and shows a bill dated 29 July 2011 that itemises 123 particular matters taking place between 15 September 2010 and 26 July 2011. 

5. I note that in exhibit 3 to Mr Pekar’s affidavit, being a letter to Rickards Legal dated 14 January 2013, which once again seeks a further itemisation of the bill and inter alia seeks copies of names of persons to whom phone calls were made and copies of any letters sent without alleged approval. 

6. On 3 February 2016 Mr Pekar filed an application in the Magistrates’ Court of Victoria G10340588. This noted the provision of the bill dated 29 July 2011 and a request made for an itemised bill on 10 August 2011. The complaint refers to s.161 of the Fair Trading Act 1999 (Vic) once again seeking phone records and copies of letters sent.

7. On 26 February 2016 the trustee wrote to the Magistrates Court of Victoria electing not to pursue the claim.  The reasons given were:

   -The action appears to relate to a debt that is provable in the bankrupt estate.  In the event that I request creditors to formally prove their claims, the examination of this debt will form part of the adjudication process.

   -The legal action commenced by the Bankrupt it premature.  I have not requested creditors to formally prove their debts as dividend in the bankrupt estate is not anticipated. 

   -Presently, a dividend is not anticipated in this estate.

   -Until such time a dividend is paid, a Trustee will generally have no formal reason to immediately deal with Proofs of Debt lodged in a bankrupt estate.  Furthermore, there is no time limit placed on a Trustee to examine proofs until there has been a notice of an intention to declare a dividend. 

   -In the event that I formally adjudicate Proofs of Debt in this bankrupt estate, the Bankrupt has the right to appeal against my decision pursuant to Section 104 of the Bankruptcy Act 1966. 

8. The respondent has sought to strike out the application, pursuant to s.17A of the Federal Circuit Court of Australia Act 1999 (Cth), as having no reasonable prospects of success.

9. The primary basis upon which the application is pressed is that Mr Pekar’s proceeding is misconceived and liable to be struck out essentially because his complaint ought to have been made to the Legal Services Commission under Part 4 of the Legal Profession Act 2004 (Vic) (“the Legal Profession Act”). 

10. It is submitted that the proceeding was automatically stayed upon the bankruptcy of the bankrupt and that the decision of the trustee not to elect to pursue it, pursuant to s.60 of the Bankruptcy Act, was considered, reasonable and commercially sound, and did not impact any rights of the bankrupt. 

11. Mr Pekar’s submissions, put shortly, are that this completely misconceives his position.  He says he is not seeking damages, but, rather, the provision of papers and documents to him to which he is entitled at law.  It should be noted, however, that the provision of those papers is clearly a staging post on the way to what Mr Pekar ultimately sees as a major award of damages in his favour against Rickards Legal. 

12. The relevant statutory landscape is far from wholly clear.  Neither party addressed in any detail about it.  From my own research, it is apparent that the Fair Trading Amendment (Australian Consumer Law) Act 2010 (“the Fair Trading Amendment Act”) was assented to on 19 October 2010.  Relevantly for these purposes, by s.42 of the Fair Trading Amendment Act it was provided, in substitution for s.161A of the Fair Trading Act, that “Section 101 of the Australian Consumer Law (Victoria) does not apply to a contract for the provision of legal services to which the Legal Profession Act applies.” The explanatory memorandum set out at the commencement of the Act relevantly says:

    “Clause 42 substitutes section 161A of the Fair Trading Act 1999, which deals with the requirement of a supplier to comply with a request for an itemised bill. Section 101 of the Australian Consumer Law (Victoria) deals with requests for itemised bills. This clause provides that section 101 of the Australian Consumer Law (Victoria) does not apply to a contract for the provision of legal services to which the Legal Profession Act 2004 applies, as the latter Act provides for different time periods for compliance with a request for an itemised bill.”

13. It seems reasonably clear therefore that at all relevant times the capacity to obtain an itemised bill from an Australian legal practitioner has reposed in the Legal Profession Act and not in the Fair Trading Act 1999 or its successors.

14. In his complaint, Mr Pekar refers to section 3.4.36 of the Legal Profession Act which relevantly provides at subsection (1):

    “If a bill is given by a law practice in the form of a lump sum bill, any person who is entitled to apply for a review of the legal costs to which the bill relates may, within 30 days after the bill is given, request the law practice to give the person an itemised bill.”

15. It is readily apparent that the bill presented by Rickards Legal dated 29 July 2011 is not a lump sum bill.  It is a highly detailed one involving what I would regard as detailed itemisation of the various matters asserted.

16. There is a procedure in the Legal Profession Act for dealing with disputes as to bills of costs. By section 3.4.38(1) it is provided that:

    “A client may apply to the Costs Court for a review of the whole or any part of legal costs.”

17. It is apparent that Mr Pekar has not taken his complaint to the Costs Court for review of the bill.

18. Furthermore, as counsel for the trustee points out, the Legal Profession Act provides in Part 4 a detailed and, as it would seem to me, exclusive regime for the disposition of cost disputes. Pursuant to s.4.2.2, a civil dispute is relevantly:

    (a)a dispute (costs dispute) in relation to legal costs not exceeding $25,000 in respect of any one matter–

    (i)between a law practice or an Australian legal practitioner and a person who is charged with those costs …

19. The bill in question here being of the order of $6,400, it was plainly a civil dispute.

20. A “civil complaint is a complaint about conduct to which this Chapter applies, to the extent that the complaint involves a civil dispute.”

21. By s.4.2.4, a civil complaint may be made by a person if the person has a civil dispute with the practice or practitioner. Pursuant to s.4.2.5, a complaint is to be made to the Commissioner. If it is a costs dispute, it must be made within 60 days after the costs were payable (s.4.2.7).

22. Pursuant to cl.4.3.2(c):

    “a complainant must not commence proceedings against a law practice or an Australian legal practitioner in relation to the subject-matter of a civil dispute with the practice or practitioner after the complainant has made a civil complaint about the conduct of the practice or practitioner in respect of the dispute – until the complaint is determined or dismissed and any appeal rights are exhausted.”

23. Part 4 of the Act goes on to provide a further path for proceeding to an unsatisfactory outcome before the Commissioner with proceedings in VCAT.

24. There are a number of things to be said about Mr Pekar’s action.  First, he is right to say that the matters he seeks to agitate in his complaint do not as such involve a money claim that will at this stage be provable as a debt in the bankrupt estate.  It is clear from the materials filed that this would be the ultimate end point of Mr Pekar’s claim, but that is not what he is seeking at the moment.  To that extent, the letter of election by the trustee is misconceived.

25. The difficulty, however, is that the claim itself is clearly hopeless.  It is apparent that Mr Pekar could and should have done one of two things.  First, if he disputed his bill, he should have taken the matter to the Costs Court.  Second, if he had a complaint arsing out of a costs dispute, he could and should have taken it to the Legal Services Commission.  That is what the Victorian legislation prescribes.  Were his proceeding to be reinstated in the Magistrates Court of Victoria as he seeks, it would be bound to fail. 

26. On this footing, it is clear that the relief Mr Pekar seeks pursuant to s.178 of the Bankruptcy Act should not be granted.

27. These are not the only difficulties that Mr Pekar faces.  It is not, as the applicant’s written submissions make clear for this Court as it were to stand in the shoes of the trustee.

28. The Court is fulfilling a supervisory role judicially, rather than an administrative role standing in the shoes of the trustee. Grounds for judicial review must be established by an applicant Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 at [170] per Lee J.

29. Although the trustee’s references to Mr Pekar having a provable debt are as I have indicated, misconceived, other aspects of the trustee’s decision are not misconceived at all.  The substantive relief sought by Mr Pekar is to compel the trustee to elect to continue the proceeding in the Magistrates’ Court.  That is a proceeding wholly for the benefit of Mr Pekar and not for the benefit of his creditors generally.  Furthermore, it would be the trustee who would be liable to the costs of the ongoing proceeding, as the trustee would in fact be progressing, so to speak, the chose in action of Mr Pekar which is vested in him.

30. Given the likely success or otherwise of the proceeding as I have indicated, it is instantly clear that the trustee’s decision was not in any sense inappropriate.  For completeness, I should make it clear that Mr Pekar’s associations that the trustee is fraudulently in collusion with Rickards Legal are scandalous and never should have been advanced. 

31. In all the circumstances, this application is hopelessly misconceived. It is, as s.17A says, one with no reasonable prospects of success. Accordingly, the application will be dismissed. I will hear the parties on the question of costs.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Date: 20 October 2016