Pekar v Juratowitch
[2022] VSC 556
•16 September 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
GENERAL LIST
Proposed proceeding
| FIMA PEKAR | Proposed Plaintiff |
| v | |
| DANIEL P JURATOWITCH as trustee of the bankrupt estate of IDA PEKAR | Proposed Defendant |
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JUDGE: | Richards J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 16 September 2022 |
CASE MAY BE CITED AS: | Pekar v Juratowitch |
MEDIUM NEUTRAL CITATION: | [2022] VSC 556 |
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PRACTICE AND PROCEDURE – Prothonotary refused to seal originating process under r 27.06(1) – Proposed plaintiff sought direction under r 27.06(3) that Prothonotary seal originating process – Proposed proceeding relates to administration of wife’s bankrupt estate pursuant to sequestration order of Federal Circuit and Family Court (Division 2) – Proposed proceeding should properly be made in court that made sequestration order – Proposed plaintiff a vexatious litigant in Federal Court and Federal Circuit and Family Court (Division 2) – Proposed proceeding would be an abuse of process of the Supreme Court – Application refused – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 27.06.
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HER HONOUR:
On 28 October 2021, the Federal Circuit and Family Court of Australia (Division 2) made a sequestration order against the estate of Ida Pekar, under the Bankruptcy Act 1966 (Cth). Daniel Juratowitch was appointed trustee of her bankrupt estate.
On 29 June 2022, Fima Pekar, the husband of Ida Pekar, attempted to file a writ and statement of claim in the Supreme Court of Victoria. Mr Pekar sought to initiate a proceeding against Mr Juratowitch, in his capacity as the trustee of the bankrupt estate of Mrs Pekar.
The statement of claim set out various allegations including:
(a) the trustee had frozen a bank account held jointly by Mr and Mrs Pekar;
(b) the trustee had frozen a credit card issued in the name of Mr Pekar; and
(c) the trustee was acting unconscionably.
Mr Pekar sought a number of remedies including:
(a) a declaration that the trustee’s conduct constitutes unconscionable conduct;
(b) a declaration that the trustee is not fit and proper to act as a trustee;
(c) an order requiring the trustee to remove the freeze on the joint bank account;
(d) aggravated compensation;
(e) penalty interest on the amount frozen by the trustee; and
(f) a pecuniary penalty order arising from the unconscionable conduct of the trustee.
The Prothonotary refused to seal the writ and statement of claim pursuant to r 27.06(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), which provides:
The Prothonotary may refuse to seal an originating process without the direction of the Court where the Prothonotary considers that the form or contents of the document show that were the document to be sealed the proceeding so commenced would be irregular or an abuse of the process of the Court.
On 4 August 2022, the Prothonotary wrote a letter to Mr Pekar explaining the refusal to seal his originating process. The letter explained that the decision was made pursuant to r 27.06(1) of the Rules and highlighted four reasons for the refusal:
1. This proceeding started in the Federal Circuit Court and any attempt to alter the terms, outcomes or processes of their order for bankruptcy are best addressed at the Federal Circuit Court. For example, questions of when and to what extent a trustee can freeze assets held jointly by the bankrupt person and the spouse of the bankrupt person are questions best addressed in the Federal Circuit Court jurisdiction.
2. The Supreme Court has no power to mandate a trustee or a bank to unfreeze assets that are frozen pursuant to a Federal Circuit Court order.
3. The trustee in bankruptcy for Mrs Ida Pekar owes no fiduciary duty to you and can therefore not be sued by you for a breach of fiduciary duty. This means that the trustee has no liability for ‘aggravated compensation’, ‘pecuniary penalty order’ or any type of damages arising from professional liability.
4. You have not articulated a legal basis upon which a claim can be made by you against the defendant.
The letter went on to say that a claim seeking remedies such as those in the statement of claim would be doomed to fail at the Supreme Court and could expose Mr Pekar to further liability of costs orders. The letter concluded with a strong recommendation that Mr Pekar seek independent legal advice regarding his situation.
On 10 August 2022, Mr Pekar wrote to the Prothonotary, applying for a direction under r 27.06(3) of the Rules. That rule provides that the Court may direct the Prothonotary to seal an originating process or accept a document for filing.
Mr Pekar’s letter sets out the following bases for appeal:
1. Statement by the registry that the assets [have been frozen] by an order of the Federal Court is not correct there is no such order.
2. The defendant in the proceeding [froze] my assets despite the fact that I’m not bankrupt, the [frozen] assets belong personally to me and the defendant has no right to freeze them.
3. The conduct by the defendant caused substantial financial [losses] by me and inflicted unnecessary pain and suffering therefore in my view the conduct by the defendant constitutes ‘unconscionable conduct’ and gives me the legal bases to seek all orders outlined in my writ.
4. I drew the attention of the court that I’m not bankrupt, and therefore not banded by any rules of the Federal Court or the Australian Bankruptcy Act 1966, my right to seek justice in any court of complete jurisdiction, and it was my decision to seek justice in this court.
5. Based on all the above I kindly request, that the court makes an order for registry of the court to seal the writ filed by me on 29.06.2022 and to let justice take its course.
The application has been referred to me for determination.
For the reasons that follow, I refuse the application. In my view Mr Pekar’s proposed proceeding would be an abuse of the process of this Court.
Mr Pekar’s bankruptcy
On 2 October 2014, a Registrar of the Federal Circuit Court of Australia made a sequestration order against the estate of Mr Pekar, under the Bankruptcy Act. By the same order, Timothy Mark Holden was appointed as trustee. Mr Pekar applied for a review of the sequestration order, which was dismissed by Judge Burchardt of the Federal Circuit Court on 12 February 2015.[1]
[1]Holden in his Capacity as Trustee of the Bankrupt Estate of Pekar v Pekar [2017] FCCA 22, [6].
Mr Pekar later applied to have Mr Holden removed as trustee. On 18 November 2019, Moshinsky J ordered that Mr Holden cease to be the trustee of the bankrupt estate of Mr Pekar, on the basis that he was failing to administer the estate in a timely manner. As there was no other trustee nominated, the Official Trustee became the trustee of the bankrupt estate of Mr Pekar.[2]
[2]Pekar v Holden (Trustee) (No 3) [2019] FCA 1928, [26].
Subsequently, Matthew James Jess and Matthew Kucianski were appointed joint trustees of the bankrupt estate of Mr Pekar.[3]
[3]Pekar v Jess (Trustee) [2020] FCA 1250, [3].
On 18 May 2021, Mr Pekar sought leave in the Federal Court of Australia to institute a proceeding for an annulment of bankruptcy pursuant to the Bankruptcy Act. By this stage, he was the subject of a vexatious proceedings order in the Federal Court and therefore could not institute the proceeding without leave.[4] On 27 October 2021, O’Callaghan J refused to grant leave and dismissed the application on the basis that the proceeding would be doomed to fail.[5]
[4]Pekar v Holden [2021] FCA 141.
[5]Pekar v Jess (Trustee) [2021] FCA 1325.
At some point between then and now, Mr Pekar was discharged from bankruptcy. The circumstances in which his bankruptcy ended are not matters of public record.
Mr Pekar is declared to be a vexatious litigant
On 7 June 2017, Judge Hartnett of the Federal Circuit Court declared Mr Pekar to be a vexatious litigant, and made an order pursuant to s 88Q(2)(b) of the Federal Circuit Court of Australia Act 1999 (Cth) that Mr Pekar is prohibited from instituting proceedings in the Federal Circuit Court other than proceedings under the Family Law Act 1975 (Cth).[6] The order was made on the application of Rickards Legal, a law firm that had previously represented Mr Pekar, and against which he had brought numerous proceedings.
[6]Pekar v Rickards Legal (No 3) [2017] FCCA 1196.
Judge Hartnett accepted as accurate a table setting out 21 proceedings brought by Mr Pekar against the firm in Australian courts and tribunals between 2011 and 2017.[7] Having noted various proceedings issued by Mr Pekar on his own behalf and on behalf of his wife against the trustee of Mr Pekar’s bankrupt estate, Judge Hartnett held:[8]
Since 2011, Mr Pekar has sought to continually litigate the same subject matter, namely the tax invoice paid by him to Rickards Legal and of which he sought a refund. Since 2014, Mr Pekar has sought to challenge the sequestration order made against him and has issued further proceedings on behalf of himself and his wife. He has also sought to make other claims and seek damages against the Respondent, Michael Rickards and Karen Katz.
Despite issuing no less than 21 applications or proceedings in the various jurisdictions … Mr Pekar has not succeeded in any one of these proceedings. They have been entirely misconceived, an abuse of process and vexatious. As a result of these repeated applications, Mr Pekar has caused considerable costs to be incurred by Rickards Legal. He has used extensively the resources of the courts and VCAT. Those parties against whom he has taken these proceedings, in particular, Mr Rickards and Rickards Legal have borne the significant costs of applying their time in opposing the various applications or on occasion simply as a courtesy to the Court without payment, adding to the other unquantified costs, including emotional, that vexatious proceedings involve and that other parties need protection from. Mr Pekar has, not once, paid any costs orders awarded against him. He appeared to recognise that his pattern of litigation was oppressive, and unusual, in an application he made for a litigation guardian. However, he then provided no relevant evidence to support such an application despite being given an opportunity to do so. It became just another provocative piece of litigation and was not in any way indicative of insight.
On that basis, her Honour was satisfied that she should make an order prohibiting Mr Pekar from bringing further vexatious proceedings in the Federal Circuit Court.[9]
[7]Pekar v Rickards Legal (No 3) [2017] FCCA 1196, [12].
[8]Pekar v Rickards Legal (No 3) [2017] FCCA 1196, [15]-[16].
[9]Pekar v Rickards Legal (No 3) [2017] FCCA 1196, [18].
This order did not prevent Mr Pekar from commencing proceedings in the Federal Court in relation to his bankruptcy, which he did on a number of occasions between 2017 and 2021. On 26 February 2021, Snaden J summarily dismissed one of those proceedings. At the same time, his Honour ordered pursuant to s 37AO(2)(b) of the Federal Court of Australia Act 1976 (Cth) that Mr Pekar be prohibited from instituting in any registry of the Federal Court any proceedings other than proceedings instituted pursuant to s 104 of the Bankruptcy Act.[10]
[10]Pekar v Holden [2021] FCA 141, [12]-[20].
As far as I am aware, Mr Pekar is not at present the subject of any order made under the Vexatious Proceedings Act 2014 (Vic) that requires him to obtain leave before commencing a proceeding in this Court.
Mrs Pekar’s bankruptcy
On 28 October 2021, a Registrar of the Federal Circuit and Family Court (Division 2) made an order that the estate of Ida Pekar be sequestrated under the Bankruptcy Act.
An application for review of the sequestration order against the estate of Mrs Pekar was filed in the Federal Circuit and Family Court (Division 2) on 18 November 2021. The application was filed in the name of Mrs Pekar, against the trustee of the bankrupt estate of Mr Pekar. On 23 December 2021, an ‘urgent’ interim application was filed in the proceeding, which sought a stay of the execution of the sequestration order against Mrs Pekar’s estate until the hearing and determination of the application for review of the order, and an order for the bank account to be unfrozen. Again, the application was filed in Mrs Pekar’s name.
The interim application was heard on 24 January 2022 by Judge Symons, who dismissed the application with costs on 7 April 2022.[11] Based primarily on a report from Mrs Pekar’s psychiatrist, Judge Symons found that Mrs Pekar was incapable of understanding or giving instructions with respect to the proceeding and was a person in need of a litigation guardian.[12] Her Honour found that it was not in fact Mrs Pekar who had commenced the proceeding:[13]
The proceeding – by which I mean the substantive review application and the application for interim relief – was commenced by Mr Pekar, purportedly on his wife’s behalf but in circumstances where (by his own admission) Mr Pekar was acting without his wife’s instructions or authority. Further, and significantly, Mr Pekar filed three affidavits in this Court that were identified as having been made by [Mrs Pekar] but which in fact (again, by Mr Pekar’s admission) were made by him. The circumstances in which [Mrs Pekar’s] signature came to appear on these documents is not clear. To describe this situation as unsatisfactory would be a gross understatement.
[11]Jess (Trustee), in the Matter of Pekar (Bankrupt) v Pekar [2022] FedCFamC2G 218.
[12]Jess (Trustee), in the Matter of Pekar (Bankrupt) v Pekar [2022] FedCFamC2G 218, [38].
[13]Jess (Trustee), in the Matter of Pekar (Bankrupt) v Pekar [2022] FedCFamC2G 218, [42].
Judge Symons declined to appoint a litigation guardian, concluding that to allow the proceeding to continue by that means would bring the administration of justice into disrepute.[14]
[14]Jess (Trustee), in the Matter of Pekar (Bankrupt) v Pekar [2022] FedCFamC2G 218, [50].
The proposed proceeding would be an abuse of process
Section 27 of the Bankruptcy Act gives exclusive jurisdiction in bankruptcy to the Federal Court and the Federal Circuit and Family Court (Division 2). The issues that Mr Pekar seeks to agitate in the proposed proceeding relate to the administration of his wife’s bankruptcy. The trustee of her bankrupt estate, Mr Juratowitch, was appointed by the Federal Circuit and Family Court (Division 2) and is under the supervision of that court.[15]
[15]Bankruptcy Act 1966 (Cth), sch 2 – Insolvency Practice Schedule (Bankruptcy) div 45 – Court oversight of registered trustees, div 90 – Review of the administration of a regulated debtor’s estate.
As a result, any application concerning Mr Juratowitch’s administration of Mrs Pekar’s bankrupt estate should properly be made to the Federal Circuit and Family Court (Division 2). Even if this Court had some jurisdiction in relation to the proposed proceeding, there would be an almost irresistible case for its transfer to the Federal Circuit and Family Court (Division 2), which has oversight of the administration.[16]
[16]Jurisdiction of Courts (Cross-vesting) Act 1987 (Vic), s 5.
Because he has been found to be a vexatious litigant, Mr Pekar would first have to obtain leave to institute the proceeding in the Federal Circuit and Family Court (Division 2).[17] The court may grant leave if satisfied that the proceeding is not a vexatious proceeding – that is, that it is not a proceeding that is an abuse of the process of a court or without reasonable ground, or a proceeding instituted or conducted in a way so as to harass or annoy, to cause delay or detriment, or for another wrongful purpose.[18] The effect of this requirement is that Mr Pekar would have to demonstrate that his proposed proceeding has some merit, and is reasonably brought, before he would be permitted to commence yet another proceeding.
[17]Federal Circuit and Family Court of Australia Act 2021 (Cth), s 242.
[18]Federal Circuit and Family Court of Australia Act 2021 (Cth), ss 7(1) (definition of ‘vexatious proceeding’), 244(4).
I infer that Mr Pekar sought to commence the proceeding in the Supreme Court in order to avoid having to seek leave to institute a proceeding in the Federal Circuit and Family Court (Division 2). To permit him to do so would in my view amount to an abuse of the process of this Court.
Disposition
Mr Pekar’s application for a direction under r 27.06(3) of the Rules is refused.
If Mr Pekar persists in attempting to agitate matters concerning his wife’s bankruptcy in this Court, consideration will have to be given to making a litigation restraint order under the Vexatious Proceedings Act 2014 (Vic). Mr Pekar would of course have an opportunity to be heard before any such order could be made.[19]
[19]Vexatious Proceedings Act 2014 (Vic), s 45.
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