Scott, In the matter of an application for leave to issue a proceeding

This matter concerned an application by Mr Scott for leave to issue a proceeding against the respondent, the Commonwealth Bank of Australia. The application was brought pursuant to s 104(1) of the *Bankruptcy Act 1966* (Cth), which requires a creditor to obtain leave of the court before commencing proceedings against a bankrupt. Mr Scott sought to bring a claim alleging that the Bank had engaged in misleading and deceptive conduct in contravention of s 52 of the *Trade Practices Act 1974* (Cth) (now s 18 of the *Australian Consumer Law*). The application was heard by Crennan J of the Federal Court of Australia.

The central legal issue before the Court was whether Mr Scott had established sufficient grounds to warrant the granting of leave to commence the proceeding. Specifically, the Court had to determine whether Mr Scott had demonstrated a *prima facie* case that the Bank had engaged in conduct that was misleading or deceptive, and whether it was just and equitable to grant leave, considering the purpose of s 104(1) of the *Bankruptcy Act*. This provision is designed to protect bankrupts from vexatious or oppressive litigation and to ensure that any proposed proceedings have a reasonable prospect of success.

Crennan J applied the principles established in cases such as *Re Foti; Ex parte Foti v Foti* and *Re Klevan; Ex parte Klevan v Klevan*. His Honour noted that the applicant bears the onus of establishing a *prima facie* case and that the Court must be satisfied that there is a real question to be tried. While the Court is not required to determine the ultimate merits of the proposed claim at this preliminary stage, it must be persuaded that the claim is not frivolous or vexatious and has some substance. In this instance, Crennan J found that Mr Scott had not provided sufficient evidence to establish a *prima facie* case of misleading or deceptive conduct by the Bank. The material before the Court did not demonstrate that the Bank's conduct was likely to mislead or deceive a reasonable person in the position of Mr Scott.

Consequently, Crennan J dismissed the application for leave to issue the proceeding.