FEDERAL COURT OF AUSTRALIA
Sarkis v Moussa [2013] FCA 373
Citation: Sarkis v Moussa [2013] FCA 373 Appeal from: Sarkis v Moussa [2012] FMCA 717 Parties: TOUFIC LABA SARKIS v MAHMOUD MOUSSA and ANTONY DE VRIES AND DAVID SOLOMONS File number: NSD 1198 of 2012 Judge: FARRELL J Date of judgment: 24 April 2013 Catchwords: BANKRUPTCY AND INSOLVENCY – control of trustees – appeal against trustee’s decision – election to prosecute or discontinue bankrupt’s proceedings – whether just and equitable to make orders – Bankruptcy Act 1966 (Cth) ss 60, 178 Legislation: Bankruptcy Act 1966 (Cth) ss 60, 178
Evidence Act 1995 (Cth) s 160
Federal Circuit Court of Australia Amendment Act 2012 (Cth)Cases cited: Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170
Freeman v National Australia Bank Limited [2004] FCAFC 318
Frost v Sheahan (Trustee) [2009] FCAFC 20
Haskins v The Official Trustee in Bankruptcy (as Trustee of the Bankrupt Estate of Haskins and anor) (unreported, Sundberg J, 10 April 1996)
Healey v Prentice (No 2) [2000] FCA 1598
In re the Will of F B Gilbert (deceased) (1946) 46 SR (NSW) 318
John Weeks Pty Ltd v Foodland Associated Ltd (1986) 12 FCR 1
Laba-Sarkis v Moussa [2012] FMCA 717
Ogawa v University of Melbourne (No 2) [2004] FCA 1275
Toufic Laba Sarkis v Mahmoud Moussa [2011] NSWSC 1172
Sarkis v Moussa [2012] NSWCA 357Date of hearing: 8 March 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 54 Counsel for the Appellant: The Appellant appeared in person Counsel for the First Respondent: Mr M K Rollinson Solicitor for the First Respondent: Sally Nash & Co Lawyers Counsel for the Second Respondent: Mr S Golledge Solicitor for the Second Respondent: Benjamin & Khoury Solicitors
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1198 of 2012
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN: TOUFIC LABA SARKIS
AppellantAND: MAHMOUD MOUSSA
First RespondentANTONY DE VRIES AND DAVID SOLOMONS
Second Respondent
JUDGE:
FARRELL J
DATE OF ORDER:
24 APRIL 2013
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal is dismissed.
2.The appellant is to pay the first respondent’s costs of the appeal on an indemnity basis, such costs to be paid from the estate of the bankrupt.
3.The appellant is to pay the second respondent’s costs of the appeal on the ordinary basis, such costs to be paid from the estate of the bankrupt.
Note:Entry of orders is dealt with in r 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1198 of 2012
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN: TOUFIC LABA SARKIS
AppellantAND: MAHMOUD MOUSSA
First RespondentANTONY DE VRIES AND DAVID SOLOMONS
Second Respondent
JUDGE:
FARRELL J
DATE:
24 APRIL 2013
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an appeal from the decision of Raphael FM (as he then…
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- AGLC
- Sarkis v Moussa [2013] FCA 373
- Case
- [2013] FCA 373
- Decision Date
CaseChat Overview and Summary
In the matter of Sarkis v Moussa, the respondent, Mr Moussa, sought to enforce a judgment debt against the appellant, Mr Sarkis, who was declared bankrupt. The issue before the court was whether the Federal Magistrates Court had the jurisdiction to review the decision of the trustees in bankruptcy not to prosecute Mr Sarkis' appeal against the Local Court judgment. The court found that the application for review was time-barred as it was not made within the 60-day period mandated by the Bankruptcy Act. The court held that the 60-day period must be calculated from the day on which the bankrupt became aware of the trustee's act, omission or decision. In this case, Mr Sarkis did not become aware of the trustees' decision until 20 February 2012, which was outside the 60-day period. The appeal was dismissed, and Mr Sarkis was ordered to pay the costs of the appeal on an indemnity basis, to be paid from the estate of the bankrupt.
Orders
Orders of the court
1. The appeal is dismissed.
2. The appellant is to pay the first respondent’s costs of the appeal on an indemnity basis, such costs to be paid from the estate of the bankrupt.
3. The appellant is to pay the second respondent’s costs of the appeal on the ordinary basis, such costs to be paid from the estate of the bankrupt.
Note: Entry of orders is dealt with in r 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
At the outset I note that the Federal Circuit Court of Australia Amendment Act 2012 (Cth) came into effect at midnight on 11 April 2012. The Federal Magistrates Court now continues its existence as the Federal Circuit Court of Australia and a Federal Magistrate is now known as a judge of that Court. In preparing these reasons, I have retained the terminology of Federal Magistrate and Federal Magistrates Court for convenience and because that terminology was current both at the time the impugned decision was made and the appeal was heard. BACKGROUND On 9 August 2010, O’Shane LCM in the Local Court of New South Wales gave judgment in favour of Mr Moussa for the sum of $53,136.50 plus interest. Magistrate O’Shane accepted the existence of an oral contract which was alleged by Mr Moussa but denied by Mr Sarkis. Mr Sarkis then filed a summons in the Supreme Court of New South Wales seeking leave to appeal against the Magistrate’s judgment. Mr Sarkis disputed, amongst other things, the basis upon which O’Shane LCM assessed damages. On 30 September 2011 Latham J dismissed Mr Sarkis’ summons with costs: Toufic Laba Sarkis v Mahmoud Moussa [2011] NSWSC 1172. On 14 October 2011 Mr Sarkis filed a further summons seeking leave to appeal to the New South Wales Court of Appeal (Court of Appeal). On 31 October 2011, a sequestration order was made against Mr Sarkis rendering him bankrupt on the basis of the judgment debt in favour of Mr Moussa. Trustees in bankruptcy were appointed (the second respondents in this proceeding). Registrar Morgan of the Federal Magistrates Court refused to stay the sequestration order against Mr Sarkis notwithstanding evidence that a summons seeking leave to appeal against Latham J’s decision had been filed. On 4 November 2011, Mr Sarkis applied to the Federal Magistrates Court for a review of Registrar Morgan’s decision and a stay of the sequestration order until his application for leave to appeal to the Court of Appeal had been determined. On 14 November 2011, Mr Tibor Karolyi, a manager employed by the Trustees, sent an email to Mr Sarkis’ lawyer. The email acknowledges that Mr Moussa’s solicitors had provided the Trustees with a copy of Mr Sarkis’ summons seeking leave to appeal to the Court of Appeal. The Trustees asserted that an appeal was an asset of the bankrupt estate. The email then said:Whilst the trustees have not been formally served with a Notice under s60 (2) of the Act, the Trustee is seeking the following information to assist them to obtain legal advice in respect of the appeal currently on foot:1) Copy of an advice from Counsel as to the prospect of success.2) Copies of all pleadings relating to the appeal.3)A bank cheque for $3,000 made payable to the “Bankrupt estate of Toufic Laba Sarkis to cover the Trustee’s anticipated legal expenses. On 18 November 2011, Mr Sarkis and his then-Counsel held a teleconference with Mr Solomons, one of the Trustees. I accept that Mr Solomons indicated that, as an accountant, he questioned the calculation of the damages by O’Shane LCM and that Mr Sarkis’ Counsel indicated that an appeal may have some prospects of success, especially on the damages issue.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The substantive application before the Federal Magistrate was an application for review of a decision by the Trustees to not prosecute Mr Sarkis’ application for leave to appeal from Latham J’s decision (proposed order 2A referred to in paragraph [12] above). The application to the Federal Magistrate was made under s 178 of the Bankruptcy Act which provides:178 Appeal to Court against trustee’s decision etc.(1)If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.(2)The application must be made not later than 60 days after the day on which the person became aware of the trustee’s act, omission or decision. There was no dispute about Mr Sarkis’ standing to make an application under s 178. Timing The Federal Magistrate determined that Mr Sarkis’ application under s 178 was not made within the 60 day period mandated by subsection (2) and found it unnecessary to determine whether an application for extension of time could properly be made: see paragraph [20]. At paragraph [17] of his reasons the Federal Magistrate observed that the Trustees made their election on 20 December 2011 or, alternatively, were deemed to have abandoned Mr Sarkis’ application to the Court of Appeal on 31 December 2011. While this may be a correct statement of the dates on which the Trustees in fact made their decision, or failing that, they are taken to have abandoned the action under s 60(3), s 178(2) requires the 60 day period be calculated from the “day on which the person became aware of the trustee’s act, omission or decision”. Tibor Karolyi, an employee of the Trustees, at paragraph [12] of his affidavit of 15 March 2012, refers to a conversation that took place on 27 January 2012 with Mr Sarkis concerning the failure of Mr Sarkis to provide information relating to the prospects of success of the leave application to the Court of Appeal. Mr Karolyi says that during that conversation, Mr Sarkis stated that he did not remember having received a letter. At paragraph [13] Mr Karolyi says that, following the conversation that day, he sent an email to Mr Sarkis in which he attached a copy of the letter which is in the following terms (errors in the original): I refer to our telephone conversation this afternoon. Please find enclosed a copy of the Trustee’s letter dated 20 December 2011, original of which was previously sent to you, informing you that the Trustees will not continue with your summons for leave to appeal and the Trustee’s reasons.The attachments line of the email says “s60(2) election - letter to bankrupt - 20.12.11.pdf”. The contents of the letter said to be attached are set out at paragraph [11] above. In his affidavit of 9 March 2012, at paragraphs [16] and [18], Mr Sarkis says that he first saw a copy of the Trustees’ election letter when a copy of the letter was given to his Counsel at a directions hearing before a judge of the Court of Appeal on 20 February 2012. A similar statement was also made in the Supreme Court Affidavit.
Ratio Decidendi
Legal Principle Established
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