Picone v Velos - [2007] FCA 1183

FEDERAL COURT OF AUSTRALIA
Picone v Velos [2007] FCA 1183
BANKRUPTCY – solvency – set-off – Magistrate did not accept appellant’s statement of assets or existence of set-off
COSTS – indemnity costs – unsupported allegations of perjury – whether appropriate to make against bankrupt
Held: Appeal dismissed. Not appropriate to award indemnity costs where effect would be to dilute assets available to other creditors
McIntosh v Shashoua (1931) 46 CLR 494, applied
Sandell v Porter (1966) 115 CLR 666, applied
Bankruptcy Regulations 1996 (Cth), reg 16.01
Bankruptcy Act 1966 (Cth), ss 40(1)(g), 109
ALFIO PICONE v BILL VELOS AND PETER DAVIS PREVIOUSLY TRADING AS VELOS & DAVIS (A FIRM)
VID 151 OF 2007
SUNDBERG J
10 AUGUST 2007
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 151 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

ALFIO PICONE
Appellant

AND:

BILL VELOS AND PETER DAVIS PREVIOUSLY TRADING AS VELOS & DAVIS (A FIRM)
Respondent

JUDGE:

SUNDBERG J

DATE OF ORDER:

10 AUGUST 2007

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:
1.The appellant have leave to appeal.
2.The respondents’ motion, notice of which was filed on 28 June 2007, be dismissed.
3.The appeal be dismissed.
4.The appellant pay the respondents’ costs of and incidental to the appeal and the motion.
5.The costs of the motion and the appeal be paid out of the appellant’s bankrupt estate with priority under s 109 of the Bankruptcy Act 1966 (Cth) as if a sequestration order had been made on the hearing.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 151 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

ALFIO PICONE
Appellant

AND:

BILL VELOS AND PETER DAVIS PREVIOUSLY TRADING AS VELOS & DAVIS (A FIRM)
Respondent

JUDGE:

SUNDBERG J

DATE:

10 AUGUST 2007

PLACE:

MELBOURNE

REASONS FOR JUDGMENT
BACKGROUND

This is an appeal from a decision of Burchardt FM refusing to set aside a creditor’s petition filed and a sequestration order made in respect of the appellant. Pursuant to s 25(1A) of the Federal Court of Australia Act 1976 (Cth) the Chief Justice has directed that the appellate jurisdiction of the Court be exercised by a single judge.
The appellant is a former client of the respondents who traded as a firm of solicitors. The respondents acted for the appellant in proceedings in the Victorian County Court and ceased doing so on 28 September 2004, presumably because of a failure by the appellant to pay the respondents’ fees.
On 20 October 2004, the respondents issued a complaint in the Victorian Magistrates Court claiming unpaid fees in respect of the County Court proceeding. On 28 June 2005, the respondents’ costs of the Magistrates Court proceeding were taxed by a Master of the Supreme Court. After taking into account set‑offs and monies already paid, the amount allowed as owing by the appellant to the respondents…

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.

Continue reading Picone v Velos

Details

AGLC: Picone v Velos [2007] FCA 1183
Case: [2007] FCA 1183
Decision Date: 10 August 2007

CaseChat Overview and Summary

The matter of Picone v Velos involved the appellant, who sought to appeal the dismissal of his complaint by the Victorian Magistrates Court against the respondents. The Federal Magistrate was tasked with reviewing the decision of O’Dwyer FM, which had previously dismissed the appellant's attempt to extend the time for compliance with a bankruptcy notice. Additionally, the validity of the bankruptcy notice and creditor’s petition were scrutinized, along with allegations of abuse of the bankruptcy process and ulterior motives by the respondents.

The legal issues at the heart of the case included whether the Federal Magistrate could revisit the decision of another Federal Magistrate regarding the bankruptcy notice extension, the calculation of interest during a 14-day stay of execution on a bill of costs, and whether the amendments to the creditor’s petition could reasonably confuse the appellant. The court also had to determine if the respondents' refusal to accept the appellant's tender of the claimed amount constituted an abuse of process or was motivated by ulterior intent.

The Federal Magistrate ruled that he could not overrule the decision of O’Dwyer FM. The Magistrate also found that the calculation of interest during the 14-day stay period was correctly done and did not affect the validity of the creditor’s petition. The court dismissed the appellant's argument that the date and description changes in the creditor’s petition were confusing, noting that the legal identity of the respondents was never in question. Regarding the allegations of abuse of process and ulterior motives, the Magistrate accepted that the respondents were not legally required to accept the tendered amount and found no evidence of improper motives or abuse of the legal process.

The orders of the court were that the appellant have leave to appeal but the appeal itself was dismissed. The respondents' motion, filed on 28 June 2007, was also dismissed. The appellant was ordered to pay the respondents' costs of and incidental to the appeal and the motion, with these costs to be paid from the appellant’s bankrupt estate with priority as if a sequestration order had been made on the hearing.

Orders

Orders of the court

1. The appellant have leave to appeal.

2. The respondents’ motion, notice of which was filed on 28 June 2007, be dismissed.

3. The appeal be dismissed.

4. The appellant pay the respondents’ costs of and incidental to the appeal and the motion.

5. The costs of the motion and the appeal be paid out of the appellant’s bankrupt estate with priority under s 109 of the Bankruptcy Act 1966 (Cth) as if a sequestration order had been made on the hearing.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

SUNDBERG J

The appellant has appealed the striking out of his Victorian Magistrates Court complaint against the respondents. The Federal Magistrate noted that a Master dismissed the Supreme Court proceeding on 8 September 2006 and that accordingly it was of no assistance to the appellant.The Correctness of the Decision of O’Dwyer FM Before the Federal Magistrate, the appellant sought to appeal out of time from the decision of O’Dwyer FM not to further extend the time for compliance with the bankruptcy notice. The Federal Magistrate noted that he was not in a position to go behind a decision of another Federal Magistrate.Validity of the Bankruptcy Notice The argument about the validity of the bankruptcy notice appears to concern the calculation of interest during a 14‑day period after the taxation of the bill of costs in the Supreme Court proceeding. The Master made an order staying execution of the order for taxation for 14 days. The appellant appears to have claimed that interest did not accrue during this period. The Federal Magistrate disagreed but noted that at any event the creditor’s petition claimed an amount that did not include any interest on the amount allowed by the Master.Validity of the Creditor’s Petition The appellant submitted that the date on the amended creditor’s petition caused him confusion. Without explaining why, the Federal Magistrate found that the change in date was not likely to confuse the appellant. The appellant also made submissions about confusion occasioned by the change in description of the legal name of the respondents. The Federal Magistrate referred to the irrelevance of the change in the description and said “I do not think that the partnership as an entity known to law was ever in danger of being misunderstood and I do not believe that the changes made were of any moment.”Abuse of the Bankruptcy Process and Ulterior Motive These allegations arise out of the refusal by the respondents to accept the appellant’s tender of the amount stated in the creditor’s petition. The appellant said that the proceeding before the Federal Magistrate amounted to an improper use by the respondents of their superior legal skills and resources generally. As well as noting that the respondents were not legally obliged to accept tender, the Federal Magistrate appears to have accepted the evidence of Mr Velos that there was no improper motive in bringing the proceedings. His Honour noted that with the addition of a number of costs orders, the debt owed by the appellant to the respondents was in excess of $16,000. He also accepted the respondents’ submission that acceptance of the tendered amount may have given rise to a preference. His Honour concluded that there was no abuse of process or ulterior motive.Other Submissions of the Appellant The appellant submitted that it was inappropriate that the respondents send him correspondence to his old address when it had previously sent correspondence to his new address. The Federal Magistrate accepted that the use of the wrong address was an error.

Ratio Decidendi

Legal Principle Established

Established by: SUNDBERG J

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IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 151 OF 2007

BETWEEN:	ALFIO PICONE Appellant
AND:	BILL VELOS AND PETER DAVIS PREVIOUSLY TRADING AS VELOS & DAVIS (A FIRM) Respondent

JUDGE:	SUNDBERG J
DATE OF ORDER:	10 AUGUST 2007
WHERE MADE:	MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 151 OF 2007

JUDGE:	SUNDBERG J
DATE:	10 AUGUST 2007
PLACE:	MELBOURNE