Samootin v Wagner

[2007] FMCA 1100

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SAMOOTIN v WAGNER & ANOR [2007] FMCA 1100

BANKRUPTCY – Annulment of bankruptcy – whether sequestration order ought not have been made – no fresh evidence justifying going behind judgment – bankruptcy notice not invalidly issued – discretion to continue bankruptcy – application dismissed.

Bankruptcy Act 1966 (Cth), ss.41(2), 41(3)(b), 52, 52(2)(a), 52(2)(b), 109(1)(a), 153A(1), 153B, 153B(1)

Commissioner of Taxation v Stuart‑Jones (2000) 102 FCR 296
Rigg v Baker (2006) 155 FCR 531
Samootin v Shea and Ors (No 2) [2003] NSWSC 695
Samootin v Shea & Ors [2005] NSWCA 398
Samootin v Wagner & Anor [2005] FMCA 1512
Samootin v Wagner [2006] FCA 945
Stankiewicz v Plata [2000] FCA 1185
Wagner & Anor v Samootin [2006] FMCA 688
Wren v Mahony (1972) 126 CLR 212

Applicant: ALEXANDRA SAMOOTIN

First Respondent: GISELLE MONIKA WAGNER

Second Respondent: ADRIAN HOLMES

File Number: SYG836 of 2007

Judgment of: Smith FM

Hearing date: 4 July 2007

Delivered at: Sydney

Delivered on: 4 July 2007

REPRESENTATION

Counsel for the Applicant: Applicant in person

Counsel for the Respondents: Ms K Dawson

Solicitors for the Respondents: Mallesons Stephen Jacques

Counsel for the Official Trustee in Bankruptcy: Mr B Miles

Solicitors for the Official Trustee in Bankruptcy: Sally Nash & Co

ORDERS

1. The applicant’s interlocutory applications filed on 15 May 2007 and 15 June 2007 are dismissed. 

2. The application for annulment is dismissed. 

3. The respondent creditors’ costs, including all reserved costs, be taxed and paid from the estate of the applicant bankrupt in accordance with the Bankruptcy Act 1966 in the priority fixed by s.109(1)(a) of the Bankruptcy Act 1966 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG836 of 2007

ALEXANDRA SAMOOTIN

Applicant

And

GISELLE MONIKA WAGNER

First Respondent

ADRIAN HOLMES

Second Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. I have before me an application filed on 14 March 2007, in which the applicant applies for an order under s.153B of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) that a sequestration order made against her estate on 24 May 2006 should be annulled. The sequestration order was made by Lloyd‑Jones FM after hearing all the parties (see Wagner & Anor v Samootin [2006] FMCA 688). The order was upheld on appeal by Wilcox J on 21 July 2006 (see Samootin v Wagner [2006] FCA 945). The applicant has now brought the present proceeding for annulment, after attempting to obtain the annulment of her bankruptcy in the Family Court, those proceedings now being discontinued.

2. The applicant’s bankruptcy arises out of proceedings in the Supreme Court of New South Wales commenced by the applicant in 2001.  After very protracted interlocutory stages involving numerous appeals on interlocutory issues, the matter reached a seven‑day hearing in July 2003.  On 1 August 2003 Palmer J delivered a reserved judgment in Samootin v Shea and Ors (No 2) [2003] NSWSC 695. His Honour introduced his reasons for judgment:

   1This is a tragic case for all who have been involved in it.  The Plaintiff, Ms Samootin, has developed a fixation that she has been a victim of a fraudulent conspiracy between her ex‑husband, the First Defendant (“Mr Shea”), and the Second Defendant (“Mr Deans”) whereby she has been cheated out of her home.  She has commenced proceedings in the Family Court, in this Court and in the Federal Court, all of which she has conducted herself without legal assistance. 

   2The reality is that, while Ms Samootin’s share of the net proceeds of sale of her jointly owned former matrimonial property was invested in the properties the subject of these proceedings and her name did not appear on the title to those properties, Mr Shea and Mr Deans have never denied that Ms Samootin had a beneficial interest in the properties commensurate with the proportion of her contribution to the parties’ equity in the properties.  Indeed, at Ms Samootin’s request Mr Shea and Mr Deans signed an acknowledgement to that effect in July 1998, well before Ms Samootin commenced these proceedings. 

   3As far as I am able to determine, these proceedings and the proceedings in the Family Court were never necessary in order to establish Ms Samootin’s interest in the properties because that interest was not in contest. 

3. Palmer J then identified the allegations made by Ms Samootin against Mr Shea, Mr Deans and the present respondent, Ms Wagner, who had acted as solicitor for Mr Shea.  He said that, even if her allegations were proved, the relief to which she would be entitled would be declarations as to a resulting trust, and a referral to the Master for inquiry as to contributions and consequential orders for registration of title and an adjustment in relation to losses.  Palmer J then addressed the factual contentions in the matter, reciting the evidence presented, and ruling upon the areas in dispute.  He found against the applicant in her principal contention that money from the sale of her former matrimonial home had been applied to purchase property in the name of the third defendant, a company owned by Mr Deans, without her knowledge and consent or acquiescence.  His Honour, therefore, rejected her contention that she was a victim of fraud conducted by Mr Deans and his companies with the connivance of Mr Shea’s solicitor, Ms Wagner. 

4. Mr Holmes, the second respondent to the present application, who was a co‑petitioner with Ms Wagner in the sequestration proceeding, had been joined to the Supreme Court proceedings by order of Palmer J on 3 June 2003, in response to an application by the applicant for the joinder of the legal firm “Northern Beaches Legal Service” which had acted in the conveyance which she challenged.  Ms Samootin had discovered that proprietorship of this firm had passed from Ms Wagner, or was in the process of passing, to another solicitor, Mr Holmes.  She contended that all persons with an interest in the firm should be joined. Ultimately, in his judgment given on 1 August 2003, Palmer J ruled that the applicant had not made out any claim against Mr Holmes. 

5. The orders made by Palmer J as against Mr Shea and Mr Deans and his company, as revised on 28 June 2004 and entered on 4 August 2004, comprised a declaration that Mr Deans’ company held the two properties known as 24 and 26 Oxford Falls Road, Beacon Hill: 

   2.… upon trust for [Ms Samootin, Mr Shea and the company itself], the respective interests being in proportion to the equity contributed by or on behalf of such parties to the Acquisition Costs of the said properties (as hereinafter defined). 

6. His Honour then made orders referring the proceedings to the Master to inquire into those contributions and to determine the proportionate interests of the three persons identified.  His orders also referred to the Master to inquire into and take accounts between the plaintiff and the two other persons as to moneys respectively owing by them to other parties, so as to arrive at: 

   5.g)what is the net amount owing by, or to, each of the Plaintiff, and the First and Third Defendants after ascertaining their respective liabilities and entitlements in accordance with the foregoing declarations and enquiries. 

   In his order addressing these parties, Palmer J ordered Ms Samootin to pay the costs and reserved costs of Mr Deans, and his companies up until 29 September 2003.  It would seem that the implementation of this costs order is still awaiting the outcome of the accounting procedures between those parties. 

7. As will be apparent, the orders for an inquiry and account by the Master did not concern the present respondents, Ms Wagner and Mr Holmes.  Their involvement in the proceedings came to an end by reason of orders made by Palmer J on 1 and 27 August 2003, which were entered on 4 August 2004.  These, in effect, dismissed all claims brought against them, and ordered Ms Samootin to pay “the costs of these proceedings of the 5th and 6th Defendants on the party/party basis”.  His orders expressly excused them from further appearance in the proceedings.  It is therefore clear that his Honour’s costs orders were final. 

8. Acting upon those orders, the present respondents obtained an  assessment of their costs in relation to some of the first instance and appeal proceedings.  At their request on 13 May 2005 the prothonotary ordered two judgments, which were forthwith entered as orders of the Supreme Court.  As amended within the Court, one order is described as being made in the Common Law Division in a file referred to as No. 11967 of 2005, and orders Ms Samootin to pay to the respondents the sum of $155,522.69.  The second order is shown as being made in file No. 11966 of 2005, and orders Ms Samootin to pay them the sum of $9,006.44.  Each of the orders provided that: “this judgment takes effect on the date of entry”. 

9. Based upon those two judgment debts, a bankruptcy notice was issued at the request of the two respondents.  It was served on the applicant and required compliance by payment of the total of the two judgments, being $164,529.13.  The applicant applied to set aside that notice, but her application was refused by McInnis FM, after a hearing in which the applicant sought to challenge Palmer J’s costs orders (see Samootin v Wagner & Anor [2005] FMCA 1512). The sequestration petition, which was upheld by Lloyd‑Jones FM, relied upon an act of bankruptcy arising from non‑compliance with that bankruptcy notice. The petition was based on the existence of the same debt, being the total of the two judgments.

10. In support of her present application for annulment of the sequestration order, the applicant has presented extensive material and submissions, much of a repetitive and argumentative nature.  The respondents have also filed bulky material, including copies of the lengthy written submissions made by Ms Samootin to Lloyd‑Jones FM and to Wilcox J, and some of the judgments in matters pursued by Ms Samootin in the Court of Appeal and High Court.  I also have before me an affidavit by the applicant’s trustee in bankruptcy, who is the Official Receiver. 

11. Ms Samootin’s contentions in support of her application for annulment were summarised at the start of her outline of written submissions: 

    1.This outline of submissions is arranged as follows:-

    i.My nature of my current applications before the Court. 

    ii.The newly discovered evidence was obtained after the interlocutory hearing held before Justice Palmer, Equity Division, Supreme Court, 1973/01, i.e. the Defendants committed perjury in the matter Equity Division, Supreme Court, 1973/01, out of which matter the bankruptcy arose. 

    iii.That the newly discovered evidence could not have been found by me prior to the time that the interlocutory hearing was held before Justice Palmer. 

    iv.Pursuant to Uniform Civil Procedure (NSW) Pt 36 r 36.15 I do not have to establish that “due diligence” would have led to the discovery of the fraud. 

    v.That the newly discovered evidence is so material that its production at the interlocutory hearing would probably have affected the outcome; and when the fraud charged consists of perjury. 

    vi.I have not had the opportunity to present my Statement of Cross‑claim and/or set‑off and supporting affidavit in the matter 1973/01, Equity Division, Supreme Court.  This matter is still concurrent.  Messrs Wagner and Holmes are still parties to these proceedings. 

    vii.My solvency – The Insolvency and Trustee Service Australia – “Report to Creditors”. 

    viii.Pursuant to the Bankruptcy Act 1966 Subsection (3): Paragraph (b) – stay of execution…there are Family Court Injunction Orders of Judicial Registrar Knibbs of 21 April 1999 which are in situ over my assets, i.e. 24 and 26 Oxford Falls Road, Beacon Hill.  This had the effect of removing my ability to make payment of the judgment debt. 

    ix.M/s Wagner had in a business sense put my assets beyond my reach when she transferred the Shea/Samootin assets, i.e. 24 and 26 Oxford Falls Road, Beacon Hill, into the hands of Mr Peter John Deans under company title; and the amount of $47,598.00 of the Shea/Samootin marital cash into the hands of Mr Deans.  This was done without my knowledge and authorisation. 

    x.The principles of resulting trust have not been applied to my case, i.e. I have been denied natural justice.  There has been a contravention of UDHR Articles 10 and 17. 

    xi.In my initiating summons in the matter Equity Division, Supreme Court, 1973/01, I had sought the return of my marital home and monies. 

    xii.Mr Deans who had stolen my home and monies is a family friend of Justice Kirby of the High Court. 

12. Essentially, the contentions made in this written submission fall into three areas.  First, Ms Samootin argues that annulment of the bankruptcy should be ordered on the ground that the sequestration order should not have been made on the ground that “other sufficient cause” arose for dismissing the petition under s.52(2)(b) of the Bankruptcy Act. This was because Palmer J’s costs orders were tainted by denial of procedural fairness in the course of the proceedings, and by fraud and perjury on the part of the defendants to the proceedings, including Ms Wagner. Ms Samootin seeks to establish these contentions by inviting the Court to investigate the conduct of the hearing, and to determine afresh the factual controversies addressed by Palmer J, by reference to evidence which she claims that either she was denied an opportunity to present to his Honour or which she discovered only after his Honour gave judgment.

13. Ms Samootin’s second area of contentions raises whether the sequestration order ought not have been made by reason of the fact that “she is able to pay … her debts” within s.52(2)(a) of the Bankruptcy Act. She argues that, once the inquiry into her equitable interest in the two properties is conducted and accounts are taken in relation to amounts owing between the parties, she will be found to possess assets which exceed her debts.

14. Ms Samootin’s third area of contentions includes issues additional to those in her written submissions which are raised at various points in the documents which she has filed in the Court.  This area of controversy challenges the validity of the bankruptcy notice upon which the act of bankruptcy was found to have occurred by Lloyd‑Jones FM. 

15. Section 153B(1) provides:

    (1)If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy. 

16. The principles upon which I should address an application for annulment under s.153B(1) were recently summarised by French J in the Full Court in Rigg v Baker (2006) 155 FCR 531 at [59]‑[69]. I have sought to apply those principles. More concisely, they were summarised in another Full Court judgment, Stankiewicz v Plata [2000] FCA 1185 at [19] and [20]:

    19In Re Williams (1968) 13 FLR 10, Gibbs J explained the approach to be taken to the then equivalent of s 153B of the Bankruptcy Act (at 23): 

    “In determining the question whether the sequestration order ought not to have been made, the court is entitled to consider not only the case as disclosed at the time the order was made, but as it would have been disclosed had all the true facts been before the Court on the making of the order.  If the Court is satisfied that the order ought not to have been made, it is not bound as a matter of course to annul the order, but must consider in the light of all the circumstances of the case whether the order ought to be annulled.” (Citations omitted.) 

    20In Re Ditford; ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347, Gummow J observed (at 350) that the “true facts” which are to be considered include those known at the hearing of the annulment application to have existed at the time the sequestration order was made, but exclude those facts that have occurred since the order was made. See also Re Ginnane; ex parte Ginnane (1994) 60 FCR 429, at 445‑446; Re Gollan; ex parte Gollan (1992) 40 FCR 38, at 40‑41.

17. In short, I must address whether this Court was “bound” to dismiss the bankruptcy petition in May 2006, but may take into account not only the material which was before Lloyd‑Jones FM, but also any other material now presented which bears upon a relevant state of facts as at that time. 

18. In support of her argument that the Court should investigate the fairness and correctness of Palmer J’s dismissal of the proceeding against Ms Wagner and Mr Holmes and his costs order in their favour, the applicant presented “fresh evidence” in a documentary form, all of which I have considered.  She also sought leave to request the Court to issue subpoenas to nine persons to attend Court to give oral evidence.  I declined to give that leave, since I considered that Ms Samootin had not raised “substantial reasons for questioning” Palmer J’s judgment (cf. Wren v Mahony (1972) 126 CLR 212 at 225), so as to justify going behind his orders.

19. The proposed witnesses included three of the natural defendants to the Supreme Court proceeding, Mr Shea, Mr Deans and Ms Wagner, and an employee of Ms Wagner at the relevant time, Ms Knowles, all of whom gave evidence before Palmer J and were cross‑examined by the applicant.  The applicant claims that she now has further information, has studied their evidence more closely, and has noted discrepancies in their evidence which she says would support her contention of fraud on their part. 

20. In relation to the other five persons whose attendance Ms Samootin sought to compel, she presented to this Court affidavits from these persons prepared in 2005, which she had attempted to present to the High Court.  She told me that the contents of these affidavits is the evidence which she would wish to present to this Court.  Their evidence deposes to some events in 1997 which Ms Samootin believes to be relevant to the consideration of the purchase of the two properties at Oxford Falls Road, Beacon Hill. 

21. All of this “fresh evidence” appears to have been previously presented by Ms Samootin in one form or another, both to the Supreme Court and to this Court in the previous bankruptcy proceedings.  As I have indicated, she also sought to present it to the High Court in support of special leave applications.  Although this is not clear on the material before me, in the Supreme Court it appears that it was addressed in two judgments of the Court of Appeal, which took the view that it would not significantly advance the applicant’s case on appeal nor in any proceedings to set aside Palmer J’s orders for fraud (see the judgment of Bryson JA given on 16 May 2005 in matter 40603/04, particularly at [15] and following, and also Giles JA at [28] referring to additional material sought to be presented.  See also the judgment of the same two judges on 17 November 2005 in Samootin v Shea & Ors [2005] NSWCA 398). It appears to me also that this material was presented to McInnis FM and to Lloyd‑Jones FM in Ms Samootin’s previous bankruptcy proceedings. They both took the view that it did not justify the Court setting aside the bankruptcy notice in the first case, and declining to make a sequestration order in the second.

22. I have endeavoured to understand the applicant’s fresh evidence and her explanations as to its relevance and cogency, and I find myself in agreement with previous judges who have considered this material. In the context of s.52 of the Bankruptcy Act, and an application for annulment under s.153B, I am not satisfied that the material presented and sought to be presented would justify the bankruptcy court embarking on the extensive factual rehearing of the matter before Palmer J which the applicant seeks to obtain. I am not satisfied by the material going to this issue that the applicant has established that the sequestration order “ought not to have been made” by reason of any of the contentions now made by the applicant in relation to her fresh evidence. 

1. In relation to the applicant’s solvency as at May 2006, this was examined by Lloyd‑Jones FM in his judgment. His Honour referred to the relevant tests in relation to s.52(2)(a), including by reference to Stankiewicz v Plata (supra) where the Full Court said at [29] and [30]:

   29There are authorities which suggest that a bankrupt whose assets exceed his or her debts at the date of the sequestration order ordinarily will be entitled to an annulment of the bankruptcy, at least if the bankrupt gives undertakings to pay the costs of the petitioning creditor and the trustee’s costs of administration: Re Gollan, at 41‑42, per Spender J; Re McDonald; ex parte Deputy Commissioner of Taxation (1996) 33 ATR 1 (Spender J). This principle is said to follow from s 52(2)(a) of the Bankruptcy Act, which provides that if the Court is satisfied that the debtor “is able to pay his or her debts”, it may dismiss the creditor’s petition. In general, a debtor who so satisfies the Court will succeed in having the creditor’s petition dismissed: Sarina v Wollondilly Shire Council (1980) 48 FLR 372 (FC), at 376; Re Stubberfield; ex parte Paradise Grove Pty Ltd (1995) 134 ALR 169; cf Trojan v Corporation of Hindmarsh (1987) 16 FCR 37 (FC), at 47. We are content to assume, without deciding, that the authorities to which we have referred correctly state the position.

   30In order to satisfy the Court that he or she is “able to pay his or her debts”, it is not necessary for the debtor to show that he or she has cash resources immediately available for this purpose.  But the debtor must be able to realise assets, sufficient to pay the debt, within a relatively short time.  As Barwick CJ said in Sandell v Porter (1966) 115 CLR 666, at 670, the resources to be considered

   “extend to moneys which [the debtor] can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time – relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor.  The conclusion of insolvency ought to be clear from a consideration of the debtor’s financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity.  It is the debtor’s inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency.” 

2. Essentially, Lloyd‑Jones FM accepted submissions by the petitioning creditors, the present respondents, that “no definite end point” could be identified when the accounting procedure then on foot in the Supreme Court would be completed, and when further proceedings in the Family Court between Ms Samootin and Mr Shea would be completed, so as to give rise to a prospect of funds from which the applicant could pay her creditors.  His opinion was that it was impossible to be satisfied that funds to meet the 2005 judgment debt relied upon in the petition would be available within a “relatively short time” or any longer period which might be reasonable in the circumstances.  His Honour also considered submissions that it was not clear that a surplus in the applicant’s financial position would eventuate after all the accounting had been done, all the adjustments had been made in the Family Court, and all the costs orders incurred by the applicant had been paid. 

3. Before me, the evidence reflecting on Ms Samootin’s solvency as at May 2006 has not materially improved the picture.  The Supreme Court inquiries have still not yet been completed, and there is still no clear evidence indicating an ability to pay debts as at May 2006.  Ms Samootin attempted to provide evidence and submissions, in effect, inviting me to conduct an accounting to determine her interest in the property at Beacon Hill, and the likely funds which will become available to her.  However, on the material she has presented this would have required an extensive exercise, in effect duplicating something which is already happening in the Supreme Court.  I do not consider it appropriate for me to embark on that exercise.  

4. The present respondents presented an estimate suggesting that the Supreme Court inquiry and accounts might result in a deficit in Ms Samootin’s financial position of $298,660, even without taking into account additional costs owing to them for which they have lodged a proof of debt adding a further $300,000 or more to the judgment debts upon which the sequestration order was made.  On the part of Ms Samootin, she presents calculations suggesting that she will emerge with a surplus of assets just short of $1 million.  On all the evidence before me, I find it impossible to form a clear picture as to where, between these estimates, Ms Samootin’s true financial situation will emerge. 

5. Moreover, I accept the principal submission of the respondents that Ms Samootin has not established that “she has cash resources” available to meet the present debt within a reasonable time, even as at today’s date. 

6. Ms Samootin’s response to the arguments in relation to solvency presented by the respondents was to say that she should not be required to answer the judgment debt owed to the respondents, because they were the authors of the legal proceedings which have still yet to be determined in the Supreme Court.  However, this contention requires me to make findings supporting her contention that Palmer J’s findings which dismissed the claims against the respondents, and his costs orders in their favour, were wrongly arrived at.  I have not been so satisfied on the evidence before me. 

7. Ms Samootin’s other responses are appropriately dealt with in relation to the third area of controversy, which I shall now deal with.  This covers her challenges to the bankruptcy notice.  She made a number of contentions in this respect.  Most, if not all of them, appear to have been included in the submissions she made to Lloyd‑Jones FM and Wilcox J.  Although their judgments do not expressly address some issues, it is reasonable to assume that they probably considered all her arguments and were unpersuaded by them.  I also have not been persuaded that Ms Samootin has identified a flaw in the bankruptcy notice which establishes that the sequestration order “ought not to have been made”. 

8. Essentially, she made three attacks on the bankruptcy notice.  The first attacked the form of the two Supreme Court judgments for the amounts of costs which I have referred to above.  She noted that the prothonotary had directed that the judgments be entered with file numbers different to any other file number given in the Supreme Court to her proceedings, whether at first instance or on appeal.  She argued that this gave rise to an irregularity, particularly since the form of the order showed her as a plaintiff in the new files, without her filing any documents with those file numbers.  However, I have not been persuaded by her submissions that this was contrary to any legal requirements in the rules of Court or otherwise.  Rather, it seems to me that it concerns a matter of internal practice within the Supreme Court in relation to the issuing of judgments based on assessed liabilities under costs orders.  A presumption of regularity, in my opinion, attaches in this respect to the judgments issued by the Court, and I have not been persuaded that a bankruptcy court should not rely upon that presumption in the circumstances of the present case. 

9. The second attack on the bankruptcy notice was that the judgments upon which it relied were not “final judgments within s.41(2)”, and were in effect “stayed” within s.41(3)(b) of the Bankruptcy Act, due to the continuation of the Supreme Court proceedings in which most of the costs had been awarded were still on foot. However, as I have indicated above, the costs orders were part of final orders so far as the involvement of the judgment creditors was concerned. The applicant has not pointed to any order or rule of the Supreme Court which created a stay on execution in relation to enforcement of the judgment debts. The expressed terms of the costs orders themselves are to the contrary.

10. A further contention invoking s.41(3)(b) was that “in a practical and business sense” the applicant was prevented from paying the judgment debt, due to an interim injunction made on 21 April 1999 by the Family Court which is still operative (cf. Commissioner of Taxation v Stuart‑Jones (2000) 102 FCR 296 at [26] and the authorities discussed by Mathews J in that case). This restrained Mr Shea, Mr Dean and his company from “doing any act or thing or signing any document” which has effect “of transferring, disposing, selling, mortgaging or encumbering or purchasing” the properties at Beacon Hill. Ms Samootin argued that the order has had the effect of preventing the sale of the two properties the subject of the equity proceedings. However, the applicant was not subject to any restraint by the Family Court orders, and it appears to me that she has at all times been legally free to dispose of her equitable interests in the properties, including by using them as collateral to raise money to pay her debts. Moreover, I am not persuaded that their “practical effect” on her financial situation was to prevent all measures of execution being taken against all the applicant’s financial interests. I do not consider that the applicant’s arguments based on s.41(3)(b) of the Bankruptcy Act have established that the sequestration order should not have been made.

11. The third attack on the bankruptcy notice and petition was that the Supreme Court judgment shown as entered in file No. 11966 of 2005 for $9,006.44 improperly required payment to both respondents, and not just Ms Wagner.  Ms Samootin argued that this judgment related only to costs incurred by Ms Wagner alone, since they were incurred before Mr Holmes was joined to the proceeding in June 2003.  Whether this was correct was obscure on the material before me. 

12. Moreover, on the evidence presented to me, I am not persuaded that Mr Holmes was improperly included in that judgment as a person jointly entitled to the benefit of the costs orders which gave rise to the judgment.  To establish this would require an investigation into the arrangements between Ms Wagner and Mr Holmes as to his taking over of the solicitor’s practice known as “Northern Beaches Legal Service”, which Ms Samootin had applied to be joined to the proceeding.  Ms Samootin has not presented evidence which addresses these arrangements.  It is readily conceivable, that their arrangements may have made Mr Holmes an assignee or joint beneficiary of any costs orders in the litigation which had embroiled the practice before and after his becoming a proprietor.  Considering all the evidence, I am not satisfied that the judgment for $9,006.44, upon which the bankruptcy notice and petition were partly based, has been shown to have been improperly entered, or that sufficient reason has been raised for a bankruptcy court to go behind the apparent and legal effect of the judgment.  I therefore do not accept this argument in support of annulment. 

13. There were other arguments presented in the papers and submissions by Ms Samootin which embellished the points I have addressed above, or which presented obviously irrelevant or insubstantial arguments. I do not feel it necessary expressly to address any of her arguments other than those which I have addressed above. I have considered all that she has put before the Court, and am not satisfied in terms of s.153B(1) as to the precondition to the Court’s power to annul the bankruptcy. I am not satisfied that a sequestration order “ought not” have been made.

14. However, even if I had arrived at a different conclusion, I would not be required to annul the bankruptcy. As authorities have established, s.153B(1) gives the Court a discretion to decline to do this, taking into account the relevant circumstances at the time of the annulment application and the circumstances in which it was brought.

15. In the present case, I have formed a firm view that I would have declined to annul the bankruptcy, even if a sequestration order ought not have been made on 24 May 2006. 

16. Ms Samootin is plainly insolvent at present, in the sense of being able to pay her debts within a reasonable time.  In my opinion, the extensive material before me reveals a clear public interest in allowing the Official Receiver, as trustee of the applicant’s bankrupt estate, to continue with his present involvement in the control and supervision of the realisation of the assets forming part of Ms Samootin’s bankrupt estate for the benefit of the creditors in that estate.  It is also in the interests of Ms Samootin’s present creditors generally. 

17. I consider also that a continuation of this involvement is also for the benefit of Ms Samootin herself, including her interests in her Family Court proceedings which have been adjourned to await the outcome of the Supreme Court proceedings. 

18. As Counsel for the respondents pointed out, for three years after Palmer J’s orders for an inquiry and accounting and before she was made bankrupt, Ms Samootin continued to engage in extensive litigation in the Supreme Court and other courts, which had the effect of complicating, protracting, and making far more expensive to everyone concerned, the proceedings in relation to that accounting process.  Since Ms Samootin has been made bankrupt, evidence before me suggests that the trustee has become sensibly involved in the Supreme Court proceedings, and this has assisted efforts to bring that account to a hearing in the not‑distant future. 

19. In my opinion, there is a public interest, relevant to considerations of discretion under s.153A(1), now to continue the involvement of the trustee in the Supreme Court proceedings and in the supervision of the applicant’s estate and interest in the Beacon Hill properties. I consider that this involvement has real prospects of preventing or reducing the diminution of Ms Samootin’s assets through further futile and expensive litigation. It is not necessary for me to make findings that her past litigation has been either vexatious or abusive, but there are clear reasons in the history of litigation shown in the papers before me to have some concerns in that respect.

20. On all the circumstances shown on the material before me, including the circumstance which I have just referred to and the countervailing personal concerns of Ms Samootin, I would therefore have declined to have annulled this bankruptcy at this point in time. 

21. For the above reasons I shall therefore dismiss this application. 

22. In the respondents’ notice of objection of opposition they apply for an order that I should direct the Registry not to accept further applications by Ms Samootin in relation to her bankruptcy except by leave of the Court.  The power to give such directions has been upheld on numerous occasions in relation to this Court’s migration jurisdiction, where the Court has been troubled by litigants‑in‑person repeatedly bringing totally unmeritorious applications in an attempt to achieve a collateral purpose of protracting their stay in the country.  In these cases, the Court has formed a clear opinion that there is a likelihood of plainly abusive processes being again brought in the future. 

23. In the present case I am not so satisfied.  This is Ms Samootin’s first approach to the bankruptcy court since being made bankrupt, and I am satisfied that she has had genuine points to present the Court which I have ruled upon.  Were she to seek to re‑present them in further litigation without any justification, then further consideration could be given to whether she needs a further reminder of the need to accept the judgments of the courts. 

I certify that the preceding forty‑five (45) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate:  Lilian Khaw

Date:  16 July 2007