Pitman v Johnson
[2015] FCCA 3405
•22 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PITMAN & ORS v JOHNSON & ANOR | [2015] FCCA 3405 |
| Catchwords: PROCEDURE – Application to intervene – matters to be considered. |
| Legislation: Bankruptcy Act 1966, ss.54(1); 58(1)(a); 77; 129(1); 129A; 130; 130(1); 130(2); 130(4) Federal Circuit Court Rules 2011, rr.1.05(1); 9.12(1); 9.12(2), 11.02 |
| Portellos v GE Finance Australasia Pty Ltd [2013] FCCA 1044 Trop Nominees Pty Ltd v Liquor Licencing Commissioner (1987) 46 SASR 255 Trollope v The Honourable Justice Middleton& Jesse Rambaldi (as trustee of the bankrupt estate of Barry Barton Trollope) [2008] FCA 564 Commercial & General Law (SA) Pty Ltd v Law Society of South Australia [2015] SASC 16 |
| Applicants: | PHILIP JOHN PITMAN, DEAN CLIFT & DOROTHEA TOMAZOS |
| First Respondent: | GREGG ROBERTSON JOHNSON AS TRUSTEE OF THE BANKRUPT ESTATE OF SOTIRIOS PORTELLOS |
| Second Respondent: | RECALL INFORMATION MANAGEMENT PTY LTD |
| File Number: | ADG 349 of 2013 |
| Judgment of: | Judge Brown |
| Hearing date: | 5 November 2015 |
| Date of Last Submission: | 5 November 2015 |
| Delivered at: | Adelaide |
| Delivered on: | 22 December 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Ryder |
| Solicitors for the Applicant: | O'Loughlins Lawyers |
| Counsel for the Respondent: | No appearance |
| Solicitors for the Respondent: | No appearance |
| Counsel for Proposed Intervenors: | Mr Strawbridge |
| Solicitors for Proposed Intervenors: | Neil Strawbridge |
ORDERS
The application filed on 4 June 2015 is dismissed.
The applicants pay the first respondent’s costs of and incidental to the application.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 349 of 2013
| PHILIP JOHN PITMAN, DEAN CLIFT & DOROTHEA TOMAZOS |
Applicants
And
| GREGG ROBERTSON JOHNSON AS TRUSTEE OF THE BANKRUPT ESTATE OF SOTIRIOS PORTELLOS |
First Respondent
And
| RECALL INFORMATION MANAGEMENT PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
Introduction
These proceeding arise by virtue of an application in a case filed by Philip John Pitman, Dean Clift and Dorothea Tomazos, in which they seek to intervene in proceedings arising between Gregg Robertson Johnson, in his capacity as trustee of the bankrupt estate of Sotirios Portellos and Recall Information Management Pty Ltd “Recall”.
Recall operates storage facilities throughout Australia. It was Mr Johnson’s position that Mr Portellos had lodged property, in one of Recall’s facilities, which had vested in him as a result of Mr Portellos’ bankruptcy.
As a consequence of his view, Mr Johnson applied to an eligible judge of this court to search the premises of Recall to locate this property and secure it. Warrants to this effect have been issued by the court on two separate occasions.
It is the submission of his counsel, Mr Ryder that the issue of the relevant warrants, by the court, was essentially administrative in character and with their execution its function was complete. As such, he contends that there are currently no proceedings on foot and certainly not ones to which the putative intervenors may be joined.
Messrs. Pitman and Clift and Mrs Tomazos assert that they or entities, which they control, own the property which was the subject of the warrants in question. They seek an order, in the nature of a declaration, that this is the case.
Mr Ryder asserts that in the concluded proceeding, between his client and Recall, is not an appropriate vehicle for such litigation and the current application is misconceived. These reasons for judgement are directed to resolving this controversy.
It is convenient to refer to the proposed intervenors, in the case, as the applicants in the proceedings and to Mr Johnson and Recall as the first and second respondents to the application concerned. It should be noted however that Recall has taken no part in the matter.
Background
On 22 May 2012, a sequestration order was made, by a Registrar of the Court, against the bankrupt estate of Mr Portellos, on the petition of G E Finance Australasia Pty Ltd. On the same day, Mr Johnson was appointed as trustee of the estate.
The sequestration order was founded on a judgement debt, in favour of G E Finance, in the sum of $335,256.50, granted by the District Court of South Australia on 21 April 2011.
Mr Portellos sought to review the decision in respect of his bankruptcy. The application was dismissed, by Judge Simpson, on 12 August 2013. Judge Simpson published reasons for his decision.[1] At the time, Mr Portellos’ solicitor and counsel was Mr McNamara of Commercial & General Law.
[1] See Portellos v GE Finance Australasia Pty Ltd [2013] FCCA 1044
One of the consequences of bankruptcy is that property of the debtor concerned vests in the appointed trustee.[2] As a result, the statutory responsibilities of a trustee in bankruptcy include the identification of property previously held by the bankrupt and obtaining possession of that property.
[2] See Bankruptcy Act 1966 (Cth) at section 58(1)(a)
In this regard, the Bankruptcy Act provides trustees with a number of statutory powers to achieve these ends. These powers are contained in Parts V and VI of the Act. Of particular relevance to these proceedings are the provisions contained in division 4 of Part VI, which is headed Realisation of Property.
Pursuant to section 77 of the Act, a bankrupt is required to cooperate with the trustee appointed to his/her estate and provide information about his/her financial affairs and the location of property. This objective is assisted by section 54(1), which requires a bankrupt to provide a statement of affairs, within fourteen days of the date of sequestration.
Mr Portellos provided such a statement of affairs on 13 June 2012, which was filed in the Federal Magistrates Court, as this court was previously known. The statement of affairs was not executed. In it, Mr Portellos indicated that he owned a gemstone collection worth $2.6 m.
On 8 October 2013, Mr Johnson, in his capacity as trustee of Mr Portellos’ estate, reported to his (Mr Portellos’) various creditors that it was his (Mr Johnson’s) understanding that Mr Portellos was residing in Greece. Certainly it was Mr Johnson’s positon that Mr Portellos had provided him with limited assistance in respect of managing the bankrupt estate.
Mr Johnson further reported that he estimated the unsecured creditors of Mr Portellos to have claims against the estate amounting to $15.7 m. Apart from the gemstone collection, Mr Portellos disclosed assets of minimal value.
In his statement of affairs, Mr Portellos indicated that he was a director of a firm entitled Opal World Andamooka Australia Pty Ltd. He further disclosed that he received a net salary of approximately $300,000.00 per annum from this company.
The nature of the proceedings to which the applicants wish to be joined
On 21 November 2013, in his capacity as the Trustee of the Bankrupt Estate of Mr Portellos, Mr Johnson commenced proceedings, in this court, naming Recall Information Management Pty Ltd as the sole respondent. Recall operates a storage facility at 35 Jonal Drive, Cavan, which is a suburb of Adelaide. In his application, Mr Johnson sought the following orders:
1. That this application be made specially returnable to a Hearing, before an ‘Eligible Judge’ pursuant to section 129A of the Bankruptcy Act 1966 (Cth), on or before close of business on Tuesday, 26 November 2013.
2. That a warrant for search and seizure, pursuant to section 130 of the Bankruptcy Act 1966 (Cth), be issued against the Respondent in relation to:
2.1 pallets 5509593874, 5509593875, 5509593879 and 5509593880 (including the contents thereof) situated at the Respondent’s premises, being at 34 Jonal Drive, Cavan SA 5094.
2.2 any records, documents or other information regarding the account reference number BL550628/52098.”[3]
[3] See application filed 21 November 2013
In his affidavit filed in support of the application, Mr Johnson deposed that, in his role of trustee of the Estate of Mr Portellos, he had obtained a number of documents, which included various invoices issued by Recall to Mr Portellos, which ostensibly indicated that Recall was holding property for and on the direction of Mr Portellos at one of its facilities.
At some unspecified time, during his investigation of the bankrupt’s affairs, Mr Johnson also obtained an undated letter from Mr Portellos to the respondent. In the letter, Mr Portellos purported to transfer four pallets of goods from the account established by him, with Recall, to an entity known as International Trading Concepts Pty Ltd.
Mr Portellos further advised that a Mr Philip Pitman would hence forward be responsible for payment of all storage and administration costs in respect of these four pallets. Mr Portellos requested that his name be removed from Recall’s account with him, in respect of the numbered pallets and the pallets be re-deposited into the newly created account established for Mr Philip Pitman in the name of International Trading Concepts Pty Ltd.
In addition, during the course of his duties, Mr Johnson was provided with a series of documents prepared by Mr Jim Turner, who described himself as a gemmologist. Mr Turner operates a company known as JTI Diamond Company (US), which is based in San Antonio, Texas.
In these various documents, which were addressed to Mr Portellos at an address in Norwood, South Australia, Mr Turner indicated that he had been approached by Mr Portellos to value a collection of rough and cut opals, which Mr Portellos had assembled over a period of time.
Mr Turner further indicated that he had been sent samples of opals by Mr Portellos, to his premises in San Antonio, which he had subsequently cut and polished and found to have a very high quality and therefore significant value. On this basis, he had agreed to travel to South Australia to perform an independent valuation of further rough opal, purportedly owned by Mr Portellos, at a secured storage facility (Recall) in South Australia.
This valuation, purportedly prepared by Mr Turner, has also come into the hands of Mr Johnson. It indicates a value of US$221,364,000.00 for what are described as 16 boxes of rough and slabbed Andamooka Opal Stone [having] a combined weight of 201.24 Kg.
As a consequence of the bankrupt’s statement of affairs; the various invoices issued to the bankrupt by Recall; the valuation of Mr Turner; and the undated letter from Mr Portellos to Recall, regarding Mr Pitman; Mr Turner determined to commence these proceedings. In his affidavit, he deposed as follows:
“I do not know why such a large transfer of opals appears to have been attempted between the Bankrupt and Mr Philip Pitman and/or International Trading Concepts Pty Ltd.
I am currently investigating that issue and will seek advice regarding my right to void certain transactions of the bankrupt, pursuant to my powers under the Bankruptcy Act 1966.
I believe that the opal collection stored at the Respondent’s premises may form part of the property of the Bankrupt Estate of Portellos.
I require the assistance of the court in order to search the Respondent’s premises, and more particularly the Pallets and the Respondent’s records regarding the Recall Account (Ref No. RL 550628/52098), in order to identify whether the opal collection remains in the possession of the Respondent and, if that is the case, to seize those opals, in due course, so I can realise those assets, for the benefit of the creditors of the Bankrupt Estate of Portellos.[4]
[4] See affidavit of Gregg Robertson Johnson filed 21 November 2013 at paragraphs 15-18
The application came before Judge Lindsay on 25 November 2013. Recall had been served with the application but declined to take part in the proceedings themselves. Counsel for Recall indicated to the solicitors for Mr Johnson that they had no objection to the warrant issuing, provided that any of their costs, arising from Mr Johnson physically accessing the pallets in question, were met.
On the basis of the evidence available to him, Judge Lindsay was prepared to grant the warrant concerned. Apart from the issue of the warrant, his Honour made no further order and no adjourned date was provided. To all intents and purposes, the proceedings were concluded.
The warrant executed by Judge Lindsay contained the following endorsement:
“(b) information given to me by affidavit that there are reasonable grounds for suspecting that there is on or in the premises the following property (relevant property):
(i) property of the bankrupt (including but not limited to collectables, gemstones, opals, jewellery, keys, records, documents or other information regarding the accounts reference number BL550628/52098 and BL550628/52093 and the contents of the aforesaid pallets);
(ii) property that may be connected with, or related to, the bankrupt's examinable affairs (including but not limited to collectables, gemstones, opals, jewellery, keys, records, documents or other information regarding the account reference number BL550628/52098 and the contents of the aforesaid pallets);
(iii) books of the bankrupt or an associated entity of the bankrupt relevant to any of the bankrupt's examinable affairs (including but not limited to collectables, gemstones, opals, jewellery, keys, records, documents or other information regarding the account reference number BL550628/52098 and the contents of the aforesaid pallets).”
On 16 September 2014, Mr Johnson filed a further application, again naming Recall Information Management Pty Ltd as the sole respondent. The application sought identical orders to the earlier application but in respect of four additional and numbered pallets, also held at Recall’s facility at Cavan.
In support of his second application, Mr Johnson deposed that the warrant issued by Judge Lindsay had been executed by an officer of the Australian Federal Police on 29 November 2013, at Recall’s Cavan premises. As a consequence, Mr Johnson retained possession of four pallets of uncut opals.
Between late April and late June of 2014, Mr Johnson deposed that he had been in communication with Mr Ian Hindle, who is a senior executive of Recall. Mr Johnson requested Recall, via Mr Hindle, that he provide any documents, in Recall’s possession, regarding requests received by Mr Portellos to Recall to transfer pallets, held in his name, to others in the period between 1 January 2012 and 23 June 2012.
Pursuant to the provisions of section 77A of the Bankruptcy Act, a trustee in bankruptcy is authorised to require any person to produce to him any specified document relating to the affairs of a bankrupt. Mr Hindle was directed to produce the relevant documents to Mr Johnson as a consequence of this power.
It led to Mr Johnson becoming aware of further pallets being purportedly transferred from Mr Portellos’ account to Mr Pitman’s account on or around 12 June 2012. This was after the sequestration order made by Registrar Christie on 22 May 2012. In his affidavit, Mr Johnson deposed as follows:
“It is apparent to me from the Respondent’s records that the pallets numbered 5509593878 and 5509593881 were transferred from the Bankrupt’s account to Pitman’s Account after the date of the Sequestration Order when that property had already vested in me, as Trustee of the Bankrupt Estate, pursuant to section 58 of the Act.”[5]
[5] See affidavit of Mr Gregg Robertson Johnson filed 3 September 2014
In the course of his investigation, Mr Hindle also provided Mr Johnson with an email dated 25 January 2012, which originated with Stephen McNamara, who was formally a solicitor practising in Adelaide. As previously indicated, Mr McNamara acted for Mr Portellos in the bankruptcy proceedings, including the review proceedings, before Judge Simpson, of Registrar Christie’s sequestration order. The email read, in part, as follows:
“We need to book out containers 5509593877 and 5509593876 and have them re-booked in the name of Philip Pitman. …”
It was Mr Johnson’s position that, if this transfer of assets had occurred, it would have happened in the relating back period, arising in respect of Mr Portellos’ bankruptcy. As such, it was Mr Johnson’s position that the transaction was void against him, as the appointed trustee of Mr Portellos’ estate.
It was on the basis of these documents and the transactions, which they disclosed, that Mr Pitman brought his second application, which was made returnable before me on 12 September 2014. Again, Recall were served with the application but elected to take no part in the proceedings.
On the basis of the evidence available to me, I was prepared to issue the warrant requested. I was satisfied that it was appropriate for the warrant to issue on the basis of Mr Johnson’s belief that there was property of Mr Portellos, at Recall’s premise, and this belief was objectively reasonable.
The reasons why I considered Mr Johnson’s belief to be objectively reasonable turned on the fact that Mr Portellos had apparently booked the pallets in question into Recall’s facility; and then later attempted to transfer them to Mr Pitman; against a background of Mr Portellos having acknowledged to Mr Johnson that he owned a gemstone collection of considerable worth.
Again, Recall was the only respondent to the proceedings and no further adjourned date was allocated. The warrant issued by me contained the following endorsement:
“(b) information given to me by affidavit that there are reasonable grounds for suspecting that there is on or in the premises the following property (relevant property):
(i) property of the bankrupt (including but not limited to collectables, gemstones, opals, jewellery, keys, records, documents or other information regarding the accounts reference numbers BL550628/52098 and BL550628/52093 and the contents of the aforesaid pallets);
(ii) property that may be connected with, or related to, the bankrupt's examinable affairs (including but not limited to collectables, gemstones, opals, jewellery, keys, records, documents or other information regarding the accounts reference numbers BL550628/52098 and BL550628/52093 and the contents of the aforesaid pallets);
(iii) books of the bankrupt or an associated entity of the bankrupt relevant to any of the bankrupt's examinable affairs (including but not limited to collectables, gemstones, opals, jewellery, keys, records, documents or other information regarding the accounts reference numbers BL550628/52098 and BL550628/52093 and the contents of the aforesaid pallets).”
The application for joinder
On 4 September 2015 Philip John Pitman, Dean Clift and Dorothea Tomazos filed an application, which referenced the proceeding number allocated to the two applications earlier made by Mr Johnson for a warrant pursuant to section 130 of the Bankruptcy Act.
In the application Messrs Pitman and Clift and Mrs Tomazos seek the following orders:
1. They be joined as parties to this matter, alternatively.
2. That they be permitted to intervene in this matter.
3. That the order made by this Court on 25 November 2013 be revoked.
4. That the order made by this Court on 12 September 2014 be revoked.
5. The applicant pay the interveners costs to be agreed or taxed.
6. That the rough opal presently stored at Recall are the property of the Trust.”[6]
[6] See application in a case filed 4 June 2015
Mr Johnson opposes the intervention of Messrs Pitman, Clift and Mrs Tomazos in the proceedings, which he contends are finalised with the granting of the relief sought by him in respect of the various pallets, held by Recall, which are now effectively in his possession and control. It is the contention of Mr Ryder, counsel for Mr Johnson that the application is misconceived and should therefore be dismissed.
Mr Johnson has not filed any response or other document in respect of the current application. Messrs Pitman and Clift and Mrs Tomazos rely on the following documents:
i)An affidavit of Philip John Pitman filed 4 June 2015;
ii)A further affidavit of Philip John Pitman filed 3 August 2015.
The legal provisions applicable
a) Relating to joinder of parties
Rule 11.02 of the Federal Circuit Court Rules 2001 authorises the court to permit, on application by the person concerned, that he or she be included in the relevant proceedings, as a party. In support of such application, the applicant concerned must state his/her interest in the proceedings or any matter in dispute between the person and a party in the proceedings; as well as specify the orders sought by him or her.
The asserted interest of Messrs Pitman and Clift and Mrs Tomazos’ in these proceedings is that they are each trustees of an entity known as the Andamooka Opal Stone Unit Trust, which is the owner of the opals in question, which have never formed part of the estate of Mr Portellos.
Pursuant to Rule 1.05(1) of the Federal Circuit Court Rules, the court is authorised to apply the applicable portion of the Federal Court Rules if its own rules are insufficient or inappropriate to the circumstances prevailing.
Counsel for the putative intervenors relies on Rule 9.12(1) & (2) if the Federal Court Rules 2011, which authorises a person to apply to the court for leave to intervene in proceedings. In determining the question of intervention, the court is directed to consider the following:
a)whether the intervener’s contribution will be useful and different from the contribution of the parties to the proceedings; and
b)whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceedings as the parties wish; and
c)any other matter that the court considers relevant.
Under this rule, it is explicit that intervention will be permitted only if such intervention will be useful in the sense of adding to efficiency or utility of the proceedings in which intervention is sought. In Trop Nominees Pty Ltd v Liquor Licencing Commissioner Legoe J discussed a similar rule arising under the South Australian Supreme Court Rules in reference to a very different factual situation. His Honour said as follows:
“…non-party intervention may only be allowed where the intervener can provide arguments or facts which will contribute to the courts reaching an informed decision. And where the significance of these arguments or facts is sufficient to outweigh any expense and/or delay which may be caused to the parties by such intervention…”[7]
[7] See Trop Nominees Pty Ltd v Liquor Licencing Commissioner (1987) 46 SASR 255 at 266
b) Relating to the grant of the warrants dated 25 November 2013 and 12 September 2014
Section 129(1) of the Bankruptcy Act places a statutory duty on a trustee to take possession of all property, capable of manual delivery, of the bankrupt concerned, forthwith. This obligation arises as a consequence of section 58(1) of the Act, which as previously indicated, has the consequence of vesting all property of the bankrupt, in the trustee appointed, as at the date of bankruptcy.
The trustee is given a variety of powers to achieve this end. Of particular relevance, in this case, pursuant to section 130(1) the trustee may apply to an eligible judge for the issue of a warrant, if the trustee has reasonable grounds for suspecting that there is any property of the bankrupt concerned in any nominated premises.
Pursuant to section 130(2) such a warrant may authorise the forcible entry on the nominated premises, in order to search them and to take possession of property relevant to the bankrupt and deliver it to the trustee concerned.
In this case, given the tangible nature of the various pallets concerned, it is clearly the case that they constitute property capable of manual delivery.
The standing of a trustee to make an application for a warrant under section 130(1) arises if the trustee concerned has reasonable grounds for suspecting that there is property on the nominated premises. These grounds must be provided to the eligible judge in affidavit form. Thereafter the eligible judge concerned must be satisfied that there are reasonable grounds for issuing the warrant sought.
The concept of eligible judge arises in section 129A of the Bankruptcy Act. Not every judge of the Federal Circuit Court is such an eligible Judge. This is because to become such an eligible judge, a judge of this court must both consent to be such an eligible judge and be declared, as such, by the relevant Minister.
Accordingly, the issue of a warrant, pursuant to section 130 of the Act is an administrative function, as distinct from one involving the exercise of judicial power. As such, in my view, the decision taken, both by myself and Judge Lindsay, to issue warrants to search the premises of Recall were not decisions of the Federal Circuit Court per se.
Rather, they were the exercise of a statutory administrative power, vested in a Federal Circuit Court Judge, as a persona designata. As a consequence, it would seem to be the case that there is no right of appeal, in respect of decisions of this nature, to the Federal Court of Australia, arising as a consequence of an adjudication of a judicial character.
I am fortified, in this view, by what was said in Trollope v The Honourable Justice Middleton.[8] In the case, Tracey J indicated that a judge, when acting as an eligible judge under section 129A of the Bankruptcy Act and determining to issue a warrant under section 130 of the Act, was not acting in a judicial capacity nor exercising judicial authority. [9]
[8] See Trollope v The Honourable Justice Middleton& Jesse Rambaldi (as trustee of the bankrupt estate of Barry Barton Trollope) [2008] FCA 564
[9] Ibid at [12]
One of the central questions, arising in Trollope, was whether Justice Middleton, who had issued such a warrant, was obliged to provide further or more substantive reasons justifying his decision to issue a warrant under section 130 prior to any potential application for review pursuant to the provisions of the Administrative Decisions (Judicial Review) Act 1977) (Cth) “the ADJR Act”.
In the current matter, it needs to be emphasised that these are not proceedings arising under the ADJR Act. They are not characterised by the potential intervenors as an appeal or a review. Rather the applicants concerned seek to intervene in the actual proceedings, which resulted in the issue of the relevant warrants. They do not seek to review the decision to issue the warrants in the first place.
Prior to the determination of the issue relating to the adequacy of Justice Middleton’s reasons, it was necessary for Tracey J to determine whether the applicant concerned who, like Mr Portellos, was an undischarged bankrupt, had standing, under the ADJR Act, to review the decision of Justice Middleton to issue the warrant in favour of his trustee in bankruptcy.
In Trollope, Tracey J considered that the standing of the applicant concerned, to bring review proceedings under the ADJR Act, turned on whether he was a person interested in the outcome of the warrant application. His Honour considered that the applicant before him was a person who was interested in the outcome of the warrant proceedings, for the purposes of the ADJR Act and, as such, was entitled to make a request for reasons.[10]
[10] Ibid at [20]
In Trollope, Tracey J, after confirming that the issue of a warrant under section 130 of the Act is an administrative function, described the process in the following terms:
“Section 130 of the Bankruptcy Act allows a trustee of a bankrupt’s estate to make an ex parte application to a Judge for the issue of a search warrant. The warrant, if issued, authorises the persons named in it to search for and take possession of the property of a bankrupt, property that may be connected with, or related to, the bankrupt’s examinable affairs or books relevant to any of the bankrupt’s examinable affairs. Thus, although his Honour was under no obligation to hear the applicant prior to the issue of the warrant, the property to which the warrant was directed was, necessarily, the property of the applicant (albeit vested in his trustee) or property or books relating to his examinable affairs. The notations made by his Honour, in accordance with the requirements of s 130(4) of the Bankruptcy Act, record that he was satisfied, on the affidavit material before him, that there were reasonable grounds for believing that there were, on the premises of TS&B Retail, books that would disclose that the applicant played a role in the conduct of the business of TS&B Retail and that the books would disclose that role.” [11]
[11] Ibid at [19] – [20]
In many cases, for obvious reasons, the forewarning of any particular person that a warrant is to be issued may defeat the efficacy or purpose of such a warrant. As such, Mr Johnson was under no obligation to inform Mr Portellos, or any person with whom he was associated, that he (Mr Johnson) intended to apply for the warrants in question.
This is important because it points to the essentially administrative function which is performed when a warrant is issued. The exercise of this function has the potential to lead to the commencement of civil proceedings but not necessarily so. The power granted to a bankruptcy trustee to apply to an eligible judge for a warrant under section 130 of the Act is investigative in nature.
As I say, unlike the present matter, Trollope arose in the context of potential judicial review proceedings under the ADJR Act. In that context, Tracey J determined that Middleton J’s reasons were inadequate for the purpose of review.
However, as a consequence of the contents of paragraph (f) (iii) of Schedule of the ADJR Act, which obviate a decision maker from providing reasons in respect of a decision made in connection with the institution or conduct of proceedings in a civil court particularly in relation to the issue of search warrants, he considered that there was no obligation to provide reasons.
This was how Tracey J characterised a decision of this nature in his reasons in Trollope:
“In my view there is no relevant distinction to be drawn between a decision to issue a notice, under s 155 of the Trade Practices Act which requires the production of documents and a decision to issue a warrant under s 130 of the Bankruptcy Act which authorises the seizure of property (including documents). Both are decisions taken in order to facilitate an investigative process which has the potential to lead to the commencement of civil proceedings but which may not, necessarily, have that outcome. The same may be said of decisions to seize property, made under the Customs Act.”[12]
As such, Tracey J did not consider an application to issue a warrant, under section 130, could be characterised either as the institution or conduct of proceedings in a civil court.
[12] Ibid at [38]
Accordingly, in my view, the two applications commenced by Mr Johnson did not constitute the commencement of civil proceedings. Rather, Mr Johnson was carrying out one of his essential administrative tasks, arising under the Bankruptcy Act to secure property, which he reasonably believed had previously belonged to the bankrupt concerned, but which had vested in him, as a consequence of the sequestration order made.
Pursuant to section 130(4) of the Bankruptcy Act, where an eligible judge issues a warrant, he or she is required to set out on the affidavit furnished in support of the application concerned, the grounds on which he or she has relied to justify the issue of the warrant in question.
In this particular matter, the warrants issued by both Judge Lindsay and myself indicate that we were satisfied that there were reasonable grounds for suspecting that the premises of Recall, at Cavan, contained property suspected to have belonged to Mr Portellos. In my view, these endorsements, when coupled with the contents of Mr Johnson’s two affidavits, which were formally read before the court, satisfy the requirement of section 130(4).
Consideration
What Tracey J in Trollope established is that the issue of a warrant under section 130 of the Act is an administrative function solely conferred upon eligible judges in order to assist bankruptcy trustees, in their statutory responsibilities, to secure the property of the bankrupt estates to which they have been appointed. This task may be a precursor to civil proceedings, but it may not. It is not a civil proceeding per se, as it an investigative tool provided to trustees by the relevant legislation.
Trollope also established that a person interested in the outcome of a warrant is likely to have standing in any subsequent judicial review proceedings relating to the issue of any warrant, but do not have an automatic right to be advised of the actual application for the relevant warrant, as such applications are invariably dealt with on an ex parte basis.
In these circumstances, in my view, the applications commenced by Mr Johnson, which resulted in the issue of the two warrants concerned are finalised, in the sense that they have achieved their objective – the property, which Mr Johnson reasonably believed was the property of Mr Portellos, and which vested in him as a consequence of the latter’s bankruptcy, has been secured.
The current proceedings are not in the nature of a judicial review, either pursuant to the ADJR Act or otherwise, nor are they an application for reasons in respect of the decision to grant the warrant in the first place. The intent of the application, mounted by Messrs Pitman and Clift and Mrs Tomazos, is to launch a fresh civil proceeding, in a piggy back fashion, off a concluded administrative application.
Thus, in my view, there are no proceedings currently on foot to which Messrs Pitman and Clift and Mrs Tomazos may usefully contribute. As such, they lack standing to join the proceedings, which they have nominated to join, which are, in any event, concluded. Accordingly, I have reached the conclusion that the application currently before me is misconceived and must therefore be dismissed.
In these circumstances, it is not necessary for me to comment on the assertions, made by Mr Pitman, in his two affidavits, regarding the alleged ownership of the slab opal by variously the Opalworld Andamooka Unit Trust; the Andamooka Opal Stone Unit Trust; and other entities related to him and Mr Clift and Mrs Tomazos.
Nor is it necessary for me to refer to the comments of Gray J in Commercial & General Law (SA) Pty Ltd v Law Society of South Australia, to which Mr Ryder referred me, which are critical of Mr McNamara and his involvement with one of the trusts referred to by Mr Pitman.[13]
[13] Commercial & General Law (SA) Pty Ltd v Law Society of South Australia [2015] SASC 16
These are matters likely to be relevant in any subsequent civil proceedings, which Messrs Pitman and Clift and Mrs Tomazos may elect to institute against Mr Johnson, in respect of title to the rough opal concerned. Necessarily, any such proceedings will require them to plead the nature of their claim in any statement of claim filed on their behalf.
In my view, considerations of pragmatism or expediency alone are not sufficient to circumvent the requirement that proper curial proceedings be instituted by any person in respect of any dispute arising regarding proprietary interests in the opal slabs held at Recall, which are now in the control of Mr Johnston.
The application should be dismissed with costs.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of Judge Brown
Associate:
Date: 22 December 2015
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