Secure Parking (WA) Pty Ltd v Francis
[2010] FMCA 191
•26 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SECURE PARKING (WA) PTY LTD v FRANCIS & ANOR | [2010] FMCA 191 |
| BANKRUPTCY – Leave to commence and continue proceedings in Supreme Court of Western Australia – claim against bankrupt solicitor – power to make retrospective grant – factors for consideration in determining whether leave to be granted – whether leave ought to be granted on conditions. PRACTICE AND PROCEDURE – Grant of leave to a non-party to be heard – insurer of bankrupt’s legal practice. |
| Bankruptcy Act 1966 (Cth), ss.27(1) and 58(3)(b) Federal Magistrates Court Rules 2001 (Cth), r.1.06 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) r.2.04 Rules of the Supreme Court 1971 (WA) O.7, r.1 Trade Practices Act 1974 (Cth), s.52 |
| Cordes v Dr Peter Ironside Pty Ltd & Ors (2009) 7 ABC(NS) 297; [2009] QCA 302 Kobylinski & Anor v Walker [2008] FMCA 89 Lovell v Penkin (A Bankrupt) & Anor (2008) 101 ALD 335; [2008] FCA 637 Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales & Anor (2008) 171 FCR 380; [2008] FCAFC 172 Secure Parking (WA) Pty Ltd v Wilson & Anor [2005] WASC 264 Secure Parking (WA) Pty Ltd v Wilson (2008) 38 WAR 350; [2008] WASCA 268 Secure Parking (WA) Pty Ltd v Wilson (No. 2) [2009] WASCA 78 Singh v Official Trustee in Bankruptcy (2007) 5 ABC(NS) 607; [2007] FMCA 1367 |
| Applicant: | SECURE PARKING (WA) PTY LTD |
| First Respondent: | IAN CHARLES FRANCIS AS TRUSTEE OF THE BANKRUPT ESTATE OF MICHAEL JOHN MCPHEE |
| Second Respondent: | MICHAEL JOHN MCPHEE |
| Intervenor: | LAW MUTUAL (WA) |
| File Number: | PEG 6 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 18 March 2010 |
| Date of Last Submission: | 18 March 2010 |
| Delivered at: | Perth |
| Delivered on: | 26 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr G R Hancy |
| Solicitors for the Applicant: | Talbot Olivier Lawyers |
| Counsel for the First Respondent: | No appearance (a Notice of Intention to Abide by the judgment of the Court was filed) |
| Solicitors for the First Respondent: | Carles Solicitors |
| Counsel for the Second Respondent: | No appearance |
| Solicitors for the Second Respondent: | Pynt & Partners |
| Counsel for the Intervenor: | Mr S R Merrick |
| Solicitors for the Intervenor: | Pynt & Partners |
ORDERS
The applicant have leave under s.58(3)(b) of the Bankruptcy Act 1966 (Cth):
(a)nunc pro tunc, to commence, and take such steps as have already been taken, in proceeding CIV 1164 of 2009 in the Supreme Court of Western Australia (“the Supreme Court Proceedings”); and
(b)to take any fresh steps in the Supreme Court Proceedings.
The first respondent have liberty to apply in relation to the imposition of conditions upon the grant of leave under order (1).
There be liberty to apply with respect to the costs of this application.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 6 of 2010
| SECURE PARKING (WA) PTY LTD |
Applicant
And
| IAN CHARLES FRANCIS AS TRUSTEE OF THE BANKRUPT ESTATE OF MICHAEL JOHN MCPHEE |
First Respondent
| MICHAEL JOHN MCPHEE |
Second Respondent
REASONS FOR JUDGMENT
Introduction
Michael John McPhee, the named second respondent in these proceedings, is an undischarged bankrupt, having been declared bankrupt on 30 April 2008.[1]
[1] Affidavit of Peter Michael Woods, sworn 30 November 2009, para.16 and attachment PW 7 (“Mr Woods’ Affidavit”).
On 22 January 2009, the applicant, Secure Parking (WA) Pty Ltd,[2] purported to commence proceedings against Mr McPhee in the Supreme Court of Western Australia[3] in a proceeding numbered CIV 1164 of 2009.[4] In the Supreme Court Proceedings, Secure Parking’s Writ of Summons claims:
1.Damages for loss sustained by plaintiff and caused by the defendant’s :
(a)breach of contract;
(b) breach of duty of care; and
(c)misleading or deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth) or section 79 of the Fair Trading Act 1987 (WA),
[2] “Secure Parking”.
[3] “Supreme Court”.
[4] “Supreme Court Proceedings”.
by reason of:
(a) the manner in which Supreme Court of Western Australia action CIV 1074 of 2003 was constituted by the defendant; and
(b)in failing to advise the plaintiff that legal proceedings should be brought against Mr Alf Wilson seeking:
(1) a declaration that his lease of the car park at 18 The Esplanade Perth was held by him on trust for the plaintiff; and
(2) an order that Mr Wilson exercise his option to renew the lease pursuant to his contractual and fiduciary obligations to do so.
2.Interest at the rate of 6% pursuant to section 32 of the Supreme Court Act 1935 as amended; and
3.Costs.
Section 58(3)(b) of the Bankruptcy Act1966 (Cth)[5] provides that, except as otherwise provided under the Bankruptcy Act, it is not competent for a creditor to commence any proceeding against a bankrupt in respect of a provable debt, except with leave of a court having jurisdiction in bankruptcy under the Bankruptcy Act, and upon such terms as such a court thinks fit. Secure Parking commenced the Supreme Court Proceedings without the necessary leave of a court having jurisdiction in bankruptcy, namely, this Court or the Federal Court of Australia.[6] That leave is now sought.
[5] “Bankruptcy Act”.
[6] Bankruptcy Act, s.27(1). As to the nature of the exclusive jurisdiction in bankruptcy under s.27(1), see generally Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales & Anor (2008) 171 FCR 380; [2008] FCAFC 172 and Cordes v Dr Peter Ironside Pty Ltd (2009) 7 ABC(NS) 297; [2009] QCA 302.
The Trustee in Bankruptcy is the first respondent to this application, and has filed a Notice of Intention to Abide by the Court’s judgment, save as to any issue regarding costs.
Mr McPhee was the named second respondent in the application. At the first directions hearing on 5 February 2010 the Court raised the issue of the competence of Mr McPhee, as a bankrupt, to appear and instruct solicitors as to the conduct of the application, especially when the Trustee in Bankruptcy was prepared to abide by the Court’s judgment, save as to costs.
At hearing, Counsel sought to be heard for Law Mutual (WA), as an intervenor, instead of Mr McPhee. There was evidence before the Court that Law Mutual (WA) were in fact instructing the solicitors on the record for the second respondent,[7] and that it had yet to decide whether to indemnify Mr McPhee concerning the claims made in the Supreme Court Proceedings.[8] Secure Parking did not object to Law Mutual (WA) being heard. In the circumstances, the Court granted leave under r.2.04(1) of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)[9] for Law Mutual (WA) to be heard, and under r.1.06 of the Federal Magistrates Court Rules 2001 (Cth), waived relevant requirements under r.2.04 of the FMC (Bankruptcy) Rules.[10]
[7] Affidavit of Stephen Robert Merrick, affirmed 9 February 2010, para.3 (“Mr Merrick’s Affidavit”).
[8] Mr Merrick’s Affidavit, para.6.
[9] “FMC (Bankruptcy) Rules”.
[10] Such as the filing of an interim application for leave: FMC (Bankruptcy) Rules, r.2.04(6).
Issues
The issues which arise in this case are:
a)whether the Court can grant leave to Secure Parking to proceed with the Supreme Court Proceedings with retrospective effect;[11]
b)whether leave should be granted to Secure Parking to proceed with the Supreme Court Proceedings; and
c)if leave is granted to Secure Parking to proceed with the Supreme Court Proceedings, whether that leave should be granted on conditions.
[11] A “now for then” order, traditionally a “nunc pro tunc” order.
Order for leave with retrospective effect
For reasons set out in Singh v Official Trustee in Bankruptcy,[12] the Court has the power to grant leave to commence and continue proceedings with retrospective effect.[13] This is not disputed by Law Mutual (WA).
[12] (2007) 5 ABC(NS) 607; [2007] FMCA 1367 (“Singh”).
[13] Singh ABC(NS) at 610, 611 and 612 per Lucev FM; FMCA at paras.11, 13 and 17 per Lucev FM.
Whether leave should be granted
Should leave to commence and continue proceedings be granted in this case?
The grant of leave under s.58(3)(b) of the Bankruptcy Act does not require the Court to consider the merits of the various issues in contention. Rather, it requires the Court to determine:
a)whether the issues in the proceedings are complex;
b)whether the issues are able to be resolved more thoroughly and expeditiously in the proceedings sought to be commenced or continued than would be the case under the proof of debt process in respect of the bankrupt’s estate;
c)whether there are a multiplicity of claims and whether they ought all be resolved in one proceeding; and
d)whether conditions ought to attach to any grant of leave.[14]
[14] Singh ABC(NS) at 612 per Lucev FM; FMCA at paras.18 and 19 per Lucev FM, and cases there cited; Kobylinski & Anor v Walker [2008] FMCA 89 at para.3 per Lucev FM.
The Court has set out above the claim as per the Writ of Summons.[15]
[15] Para.2 above.
Mr Woods’ Affidavit in support of the application says that:
3. Between 2003 and 2005 Mr McPhee acted for the applicant in proceedings in the Supreme Court of Western Australia numbered CIV 1074 of 2003 against Alfred Wilson and Nullagine Investments Pty Ltd, alleging that Wilson had orally agreed to assign a lease of the ‘Esplanade Car Park’ to the applicant for the sum of $150,000. Nullagine was the lessor of the Esplanade Car Park and Wilson was the lessee.
4.On 14 October 2005, the Hon Justice Le Miere dismissed the applicant’s claim: Secure Parking (WA) Pty Ltd v Wilson & Anor [2005] WASC 264.[16]
5.In late 2005 Mr McPhee, acting for the applicant, commenced appeal proceedings CACV 141 of 2005 to the Western Australian Court of Appeal from the decision of the Hon Justice Le Miere.
6. In or about July 2006 the applicant instructed Woods & Day to act on its behalf in the appeal proceedings in lieu of Mr McPhee. Woods & Day instructed Talbot Olivier to act as its Perth agents in the appeal.
7. On 28 July 2006 the Court of Appeal gave the applicant leave to substitute grounds of appeal.
8. On 19 December 2008 the Court of Appeal allowed the applicant’s appeal and ordered that the matter be remitted for assessment of damages: Secure Parking (WA) Pty Ltd v Wilson & Anor [2008] WASCA 268.[17]
9.On 22 January 2009 the applicant issued a writ in Supreme Court of Western Australia action CIV 1164 of 2009 against Mr McPhee (the 2009 Supreme Court action) alleging (among other matters) negligence in the constitution of, and negligent advice concerning, Supreme Court action CIV 1074 of 2003.[18]
[16] “Secure Parking – Supreme Court”.
[17] (2008) 38 WAR 350 (“Secure Parking – Supreme Court Appeal”).
[18] Mr Woods’ Affidavit at paras.3-9.
In Secure Parking – Supreme Court, in which Mr McPhee acted as Counsel for Secure Parking, and the solicitors for Secure Parking were the firm which bears his name (with others), the nature of the issues included:
a)a claim for specific performance of a lease;
b)alleged consent to assignment of the lease of a car park;
c)intention of the parties in regard to assignment of the lease;
d)admissibility of pre and post-contractual conduct;
e)estoppel;
f)implied contractual terms; and
g)exercise of an option to renew the lease based on a letter of agreement.
In Secure Parking – Supreme Court Appeal, in which Secure Parking’s appeal was successful, and in which Secure Parking was represented by new solicitors and counsel, the appeal was confined to the issues of:
a)the proper construction of a letter of agreement;
b)the alleged obligation to give notice of the exercise of an option to renew the lease; and
c)the alleged obligation to give effect to such notice of exercise of an option by granting a renewed lease.
The Court of Appeal noted that there were numerous other issues raised unsuccessfully by Secure Parking at trial that were not being pursued.[19]
[19] Secure Parking – Supreme Court Appeal WAR at 368 per Buss JA (with whom Martin CJ agreed at 355); WASCA at para.66 per Buss JA (with whom Martin CJ agreed at para.1).
It is reasonably apparent that an action alleging:
a)negligence;
b)misleading or deceptive conduct under s.52 of the Trade Practices Act 1974 (Cth); and
c)breach of contract,
by a solicitor, in relation to litigation or proceedings of the type outlined immediately above, is likely to give rise to issues, especially as to determination of liability and quantification of damages, which are sufficiently complex so as to be more appropriately determined by a court (and in this case, the Supreme Court) rather than by way of, what would be, in this case, the “less satisfactory” proof of debt process,[20] and the Court so finds. Law Mutual (WA) does not dispute that view in any event.
[20] Lovell v Penkin (A Bankrupt) (2008) 101 ALD 335 at 338-339 per McKerracher J; [2008] FCA 637 at paras.14-15 per McKerracher J.
The Court also notes that as a consequence of the judgment in Secure Parking – Supreme Court Appeal those proceedings have been remitted to a judge of the Supreme Court for the assessment of damages.[21] There is no evidence that damages have been so assessed, and therefore there appears to be proceedings in a matter inter-related to the Supreme Court Proceedings presently before the Supreme Court. That is a consideration relevant, and favourable, to a grant of leave.[22]
[21] Secure Parking (WA) Pty Ltd v Wilson (No. 2) [2009] WASCA 78 at para.41 per Buss JA.
[22] Singh ABC(NS) at 612 and 613 per Lucev FM; FMCA at paras.19 and 21 per Lucev FM.
Law Mutual (WA) opposes the application on the basis that a grant of leave “now for then” may deprive the estate of a limitation defence in the Supreme Court action.[23] Mr Merrick’s Affidavit was filed in support of the Notice of Opposition. Mr Merrick’s Affidavit:
a)confirms opposition to the application for leave,[24] but says nothing about the bases for that opposition as set out in the Notice of Opposition; and
b)indicates that the firm of solicitors by which Mr Merrick is employed has received instructions from Mr McPhee’s insurers, Law Mutual (WA), but the insurers are yet to determine whether to indemnify Mr McPhee for the claim made in the Supreme Court Proceedings.[25]
[23] Notice Stating Grounds of Opposition to Application, filed 9 February 2010 (“Notice of Opposition”).
[24] Mr Merrick’s Affidavit, para.2.
[25] Mr Merrick’s Affidavit, paras.3 and 6.
There are no facts in Mr Merrick’s Affidavit which support, or could support, the basis for the Notice of Opposition, namely, that “the estate may be deprived of a limitation defence”. Beyond asserting that by reason of “delay” in service of the Writ of Summons a grant of leave “now for then” gave rise to the “possibility” that there “may” be a limitation defence lost, no detail of how that might occur was able to be pointed to in submissions for Law Mutual (WA), either on the evidence, or by way of even a hypothetical example. There was, in any event, no delay. The Writ of Summons was served within the prescribed time of 12 months.[26] The submission was entirely speculative and the basis for opposing a grant of leave was simply not made out.
[26] Rules of the Supreme Court 1971 (WA) O.7 r.1.
Whether leave should be granted on conditions
The Court raised issues as to whether, given the role of the Trustee in Bankruptcy, conditions ought be imposed. Secure Parking sought leave unconditionally. Law Mutual (WA) did not argue otherwise. The Trustee in Bankruptcy did not appear, and did not file a submission or draft order suggesting any relevant conditions upon the grant of leave. In the circumstances the Court does not consider it necessary to impose any conditions upon the grant of leave, but will provide for the Trustee in Bankruptcy to have liberty to apply in relation to the imposition of conditions on the grant of leave.
Conclusion, orders and costs
The Court considers that the Supreme Court Proceedings would be better and more appropriately dealt with by the Supreme Court than under the proof of debt procedure, and therefore warrants, retrospectively, leave being granted, to:
a)commence; and
b)continue,
the Supreme Court Proceedings, with the Trustee in Bankruptcy having liberty to apply in relation to the imposition of conditions on the grant of leave.
Having regard to the position of the Trustee with respect to costs, the Court directs the parties (including the Trustee) to confer, with a view to agreeing costs. The Court makes an order that there be liberty to apply with respect to costs, so as to facilitate the matter being brought back before the Court in the event of a disagreement as to costs. Hopefully, the liberty to apply as to costs will not need to be exercised.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: Sandra Gough
Date: 26 March 2010
9
5