FEDERAL COURT OF AUSTRALIA
Sherman v Lamb (No 2) [2024] FCA 689
File number: QUD 209 of 2022 Judgment of: LOGAN J Date of judgment: 21 June 2024 Catchwords: BANKRUPTCY AND INSOLVENCY – where the trustee of the bankrupt estate applies for orders under s 30 of the Bankruptcy Act 1966 (Cth) (the Act) for a production order akin to the trustee’s power under s 77A of the Act – where the orders are directed at an incorporated legal practice (ILP) that previously advised the bankrupt in relation to defamation proceedings – where the ILP has outstanding legal fees and did not actively oppose the application – where the bankruptcy trustee requires the documents held by the ILP for the purposes of a costs assessment process – where the bankrupt retains a right of legal professional privilege in some or all of the documents sought – whether the Court should exercise its discretion under s 30 of the Act and make the orders sought – application allowed
BANKRUPTCY AND INSOLVENCY – where there is a lacuna in the definitions of associated company (s 5B) and associated natural person (s 5C) in the Act – where power in s 77A of the Act is conditioned on the person subject to the s 77A request holding “books of an associated entity of the bankrupt” – whether apparent legislative drafting error provides grounds for exercising discretion in s 30 of the Act to make orders sought
Legislation: Bankruptcy Act 1966 (Cth) ss 5B, 5C, 5D, 5E, 30, 77A
Uniform Civil Procedure Rules (Qld) r 692
Cases cited: Bennett & Co v CLC Corporation (2001) 23 WAR 344
Karageozis v Sherman [2023] QCA 258
Karageozis v Sherman (No 2) [2024] QCA 12
Lamb v Sherman [2023] FCAFC 85
Re Simersall; Blackwell v Bray (1992) 35 FCR 584
Re Steele; Ex parte Official Trustee of Bankruptcy v Clayton Utz (1994) 48 FCR 236
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 18 Date of hearing: 21 June 2024 Counsel for the Applicant: The applicant did not appear Counsel for the Respondent: The respondent did not appear Counsel for the Interested Person: Mr M Downes Solicitor for the Interested Person: Mahoneys ORDERS
QUD 209 of 2022 BETWEEN: SHELDON SHERMAN
Applicant
AND: SIOBHAN LAMB
Respondent
BILL KARAGEOZIS AS TRUSTEE FOR THE ESTATE OF SIOBHAN LAMB
Interested Person
ORDER MADE BY:
LOGAN J
DATE OF ORDER:
21 JUNE 2024
THE COURT ORDERS THAT:
1.Pursuant to s 30 of the Bankruptcy Act 1966 (Cth), Gorval Lynch Pty Ltd ACN 612 918 662 (Gorval Lynch) produce the following specific books to the applicant within 14 days of the bankrupt providing written consent to Gorval Lynch producing those documents:
(a)All documents in Gorval Lynch’s power, possession or control in respect of the bankrupt’s file(s) in relation to the following proceedings:
(i)the District Court of Queensland proceeding bearing the…
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- AGLC
- Sherman v Lamb (No 2) [2024] FCA 689
- Case
- [2024] FCA 689
- Decision Date
CaseChat Overview and Summary
The Court considered whether the trustee had a sufficient basis to apply for the orders and whether the ILP's lack of opposition constituted a valid reason to proceed. The Court also examined the potential for legal professional privilege over some or all of the documents sought and whether this affected the exercise of discretion. Additionally, the Court considered whether a lacuna in the definitions of associated company and associated natural person in the Act provided any grounds for exercising discretion in section 30 of the Act to make the orders sought.
The Court found that the trustee had a legitimate need for the documents and that the ILP's lack of opposition was a significant factor. The potential for legal professional privilege did not bar the application outright but required further investigation. The Court also noted that while there was a drafting error in the Act, it did not provide a sufficient ground to deny the orders. Consequently, the Court allowed the application and made orders for the ILP to produce specific documents within a set timeframe. The orders also included provisions for electronic submission of documents, preservation of any lien on the documents, and the right for the trustee to apply for further orders regarding legal professional privilege. The costs of the application were to be borne by the applicant.
Orders
Orders of the court
1. Pursuant to s 30 of the Bankruptcy Act 1966 (Cth), Gorval Lynch Pty Ltd ACN 612 918 662 (Gorval Lynch) produce the following specific books to the applicant within 14 days of the bankrupt providing written consent to Gorval Lynch producing those documents:
(a) All documents in Gorval Lynch’s power, possession or control in respect of the bankrupt’s file(s) in relation to the following proceedings:
(i) the District Court of Queensland proceeding bearing the proceeding number BD1634/2020;
(ii) the Federal Court of Australia proceeding bearing the proceeding number QUD209/2022; and
(iii) the Federal Court of Australia proceeding bearing the proceeding number QUD60/2023.
(b) All documents in Gorval Lynch’s power, possession or control that records monies paid by or for the benefit of Siobhan Lamb to Gorval Lynch.
(c) All documents in Gorval Lynch’s power, possession or control in respect of bills rendered by Gorval Lynch to Siobhan Lamb.
(d) Any written document recording an agreement between Gorval Lynch and Siobhan Lamb regarding the provision of legal services.
2. The production of documents pursuant to this order does not prejudice any lien that Gorval Lynch has on such documents.
3. Liberty to apply be reserved to the applicant to relist the application on notice to Gorval Lynch and the bankrupt to seek orders as to whether documents otherwise required to be produced by this order are or are not subject of legal professional privilege if the bankrupt does not provide her consent in writing by 30 June 2024.
4. Order 1 can be complied with by providing electronic copies by email to amahoney@mahoneys.com.au.
5. Costs of and incidental to the application to date be the applicant’s costs in the administration of the bankrupt estate.
6. Save as aforesaid, there be no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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