RAVESI v HEGYI
[2015] FCCA 1962
•16 July 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RAVESI v HEGYI | [2015] FCCA 1962 |
| Catchwords: COSTS – Applicant’s delay in filing defence – costs incurred by trustee – applicant to pay petitioning creditor’s and former trustee’s costs. |
| Legislation: Bankruptcy Act 1966, ss.27, 52 |
| Totev v Sfar [2008] FCAFC 35 Ahern v Deputy Commissioner of Taxation (Queensland) (1987) ALR 137 Adamopoulos v Olympic Airways SA (1990) 95 ALR 525 Cottrell v Nicholls (Trustee) in the matter of Cottrell (Bankrupt) [2004] FCA 102 |
| Applicant: | PAUL RAVESI |
| Respondent: | STEVEN HEGYI |
| File Number: | SYG 2654 of 2014 |
| Judgment of: | Judge Street |
| Hearing date: | 16 July 2015 |
| Date of Last Submission: | 16 July 2015 |
| Delivered at: | Sydney |
| Delivered on: | 16 July 2015 |
REPRESENTATION
| Applicant appeared in person via telephone link |
| Solicitors for the Respondent: | Mr Horowitz Sweeney Tiggemann Solicitors |
ORDERS
The sequestration order made on 29 May 2015 by the registrar is set aside.
Set aside order 2 made by the registrar on 29 May 2015.
The period of time before which the petition expires is extended under s.52(5) of the Bankruptcy Act 1966 up to 23 September 2016.
The petition is adjourned for directions at 9:30 am on 4 December 2015.
The applicant pay the costs and expenses of the former trustee Joyce Fu on a trustee basis incurred from 29 May 2015 up to an including 16 July 2015.
Liberty to the former trustee to apply to have the costs and expenses fixed by the Court.
The costs in relation to the application for review are reserved.
Reserve the issue of the costs incurred to date in respect of the petitioning creditor.
Direct the respondent to notify both AFSA and Joyce Fu of this order on or before 5pm 17 July 2015.
Liberty to apply on two days’ notice.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2654 of 2014
| PAUL RAVESI |
Applicant
And
| STEVEN HEGYI |
Respondent
REASONS FOR JUDGMENT
This is an application of the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 (Cth). The Registrar made a sequestration order on 29 May 2015 and an application for review of the Registrar’s order was filed on 17 June 2015. The matter came before this Court on 2 July 2015 and orders were made as follows:
1. The matter be stood over to 16 July 2015 at 2:15 pm.
2. Pursuant to s.33 of the Bankruptcy Act 1966 time is extended under s.60(3) for the purpose of election by the Trustee up to and including 30 July 2015 or further order of the Court.
3. Direct the applicant notify the liquidator Peter Macks of the making of these orders, by forwarding a copy of the same to Peter Macks on or before 5 pm on 3 July 2015.
4. Direct the applicant forward a copy of this order to Joyce Fu of AFSA of this order on or before 5 pm on 3 July 2015.
5. Direct the applicant file and serve a statement of affairs by 10 July 2015.
6. Costs be reserved.
The nature of the review and the effect of the Registrar’s orders has been the subject of analysis in the decision of the Full Court of the Federal Court in Totev v Sfar [2008] FCAFC 35, relevantly at [17] pointing out the importance of dealing with a review of a Registrar’s orders if possible on the day that order is made, and otherwise with assiduity so as to avoid delay. Where the review application is dismissed the additional appropriate order given the nature of the de novo review of the matter is to affirm the sequestration order, see Cottrell v Nicholls (Trustee) in the matter of Cottrell (Bankrupt) [2004] FCA 102.
The nature of the process that provides the right for review is one which is not invoked by the applicant until 17 June 2015. No criticism is made of the parties in relation to the matter not being brought forward at an earlier point of time. The matter was listed, however, for hearing today and the parties provided proposed consent orders that would have had the matter stood over until 7 August 2015.
An affidavit had been filed by the judgment creditor that identifies that the Local Court had set aside the judgment debt on 9 July 2015. The reason why the proceedings were adjourned before this Court on 2 July 2015 was because the Court was informed that the matter was coming back before the Local Court on 9 July 2015 in relation to an application by the applicant to have the default judgment set aside.
The nature of an application for review is a hearing de novo. In circumstances where the underlying judgment debt has been set aside at the time of the hearing, a court would be slow to find that the parties should not be given the opportunity of having the benefit of the determination of those underlying proceedings consistent with the principles identified in Ahern v Deputy Commissioner of Taxation (Queensland) (1987) ALR 137 at [148] and Adamopoulos v Olympic Airways SA (1990) 95 ALR 525 at [531].
The petitioning creditor has sought an adjournment of the petition and, because the petition was filed on 24 September 2014, an extension of time under s.52 for a further 12 months so that the petition does not lapse if the Court sets aside the sequestration order. That adjournment of the petition is not opposed by the applicant.
For the reasons I have given, I am satisfied that this is an appropriate case to set aside the sequestration order made by the Registrar and to adjourn the creditor’s petition to a future date, as well as to extend time under s.52(5), so that the petition does not lapse. I will also set aside the Registrar’s order as to costs of the petitioning creditor.
An issue that has arisen though are the costs that have been incurred by the person who acted as trustee, being Joyce Fu, in the period of time between the making of the order by the Registrar and the orders I have made today setting aside the sequestration order. The proceedings are ones in which the creditor’s petition was filed on 24 September 2014 after the alleged service of the bankruptcy notice was effected on 29 August 2014.
The applicant disputes the service of the bankruptcy notice, however the Court sees no reason why the affidavit of Ricky Owen Wilson, sworn 29 August 2014, should not be accepted as to the service of the bankruptcy notice. It is clear that although steps were taken by the applicant debtor to set aside the judgment, those steps were not taken promptly or efficiently and it was due to the applicant debtor’s failure to file a defence that a further judgment was re-entered. The underlying merits of the debt are a matter that will be determined in the local Court and no doubt the Local Court will take into account the various documents between the parties, including the document dated 2 April 2007 signed by the applicant debtor purporting to acknowledge a loan due from him to the petitioning creditor in the sum of $40,000.
It is not, however, appropriate in this Court to determine the issue that will be before the Local Court. That said, it is clear that the conduct of the applicant debtor has given rise to costs being incurred by the trustee in the period of time from the making of the sequestration order up until the setting aside of the sequestration order today. Even though the applicant debtor has succeeded in the application to have the sequestration order set aside, I am satisfied that the applicant debtor’s conduct that has given rise to the incurring of those costs is sufficient to rebut the ordinary rule that would apply in relation to a successful party, specifically at this stage so far as concerns who should pay the costs and expenses of the trustee.
In the circumstances I am satisfied that the appropriate order is that the applicant pay the costs and expenses that the trustee, Joyce Fu, incurred from 29 May 2015 up until 16 July 2015 as taxed or agreed. I will grant liberty to the trustee to apply in relation to the fixing of those costs. The costs in relation to the application for review are reserved and I will stand the petition over for directions to 4 December at 9.30 am.
I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 22 July 2015
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