Sims v SUDA LTD
[2016] FCCA 2633
•12 October 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SIMS v SUDA LTD | [2016] FCCA 2633 |
| Catchwords: BANKRUPTCY – proceedings in connection with sequestration order – actions by and against bankrupt – Trustee’s election to prosecute or discontinue actions – extension of time for election. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.33, 60 |
| Cases cited: Hunter Valley Developments v Cohen (1984) 3 FCR 344; (1984) 58 ALR 305; (1984) 7 ALD 315 Newman v Bain [2013] FCA 558; (2013) 213 FCR 370 Vince v Sellers [2004] FMCA 564 |
| Applicant: | DOUGLAS ARTHUR SIMS |
| Respondent: | SUDA LTD |
| File Number: | PEG 448 of 2016 |
| Judgment of: | Judge Lucev |
| Hearing date: | 12 October 2016 |
| Date of Last Submission: | 12 October 2016 |
| Delivered at: | Perth |
| Delivered on: | 12 October 2016 |
REPRESENTATION
| For the Applicant: | In person |
| Counsel for the Respondent: | Mr NC Ebbs |
| Solicitors for the Respondent: For the Trustee in Bankruptcy: | Bennett+Co Mr G Dudley, the Trustee in Bankruptcy |
ORDERS
That the date for election by the applicant’s trustee in bankruptcy is extended until 4pm on 1 December 2016.
That costs be reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 448 of 2016
| DOUGLAS ARTHUR SIMS |
Applicant
And
| SUDA LTD |
Respondent
REASONS FOR JUDGMENT
(Edited ex tempore reasons)
Introduction
This is an application in a case by the applicant, Mr Sims, he being an applicant for review of a decision of a Registrar to issue a sequestration order against him (“Review Application”). The application in a case seeks to extend the time in which the Trustee in Bankruptcy (“Trustee”) must make an election in writing to prosecute or discontinue any action brought by Mr Sims.
Mr Sims has sworn an affidavit, which was filed on 11 October 2016, which does no more than indicate that there were some discussions and possibly a measure of agreement between certain persons (that is, Mr Sims and certain creditors) as to an extension of time to a period two to three weeks after the hearing of the Review Application, which is listed for hearing at 10.15 am on 1 December 2016. The Court accepts that it would not have been possible for a lawyer acting properly to bind other persons by an agreement without the necessary instructions and that indeed is the position adopted by Mr Ebbs on behalf of the respondent in these proceedings today.
Extension of time
Section 60(2) and (3) of the Bankruptcy Act1966 (Cth) (“Bankruptcy Act”) provide as follows:
(2) An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.
(3) If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.
Pursuant to s.33 of the Bankruptcy Act, time under s.60(3) of the Bankruptcy Act can be extended by the Court. The factors which allow the Court to extend time are the subject of discretion to be exercised judicially, having regard to all relevant factors. The factors in broad terms are those set out in Hunter Valley Developments v Cohen (1984) 3 FCR 344; (1984) 58 ALR 305; (1984) 7 ALD 315 at 348-349 per Wilcox J. They include:
a)the length of the delay;
b)the explanation for the delay;
c)prejudice to the respondent, or in a bankruptcy other parties;
d)and the merits of any relevant proceedings,
and, adjusted to take account the particular nature of bankruptcy proceedings as explained in Newman v Bain [2013] FCA 558; (2013) 213 FCR 370 at [56]-[57] per Gilmour J and Vince v Sellers [2004] FMCA 564:
e)prejudice to the Trustee if forced to abandon a meritorious claim; or
f)prejudice to creditors of the bankrupt estate by reason of a lack of finality in relation to the pending proceedings.
The Court notes that the Trustee has today said to the Court that if an extension of time were not to be granted today then he would most likely be in a position where he would have to make an application for an extension of time by reason of his not being in a position presently – and understandably, given the nature of the proceedings which are likely to be concerned in respect of which he has to form a view – not to make an informed decision as to the merits, or otherwise, of the various proceedings on foot involving Mr Sims.
In this case delay is not a factor. The application for an extension of time has been made within time. The length of any likely delay is minimal, that is, it is likely to be around six weeks until the Review Application is heard on 1 December 2016, and perhaps an additional two to three weeks on at least one version of what has been put forward today. The Court has to be conscious of the demands imposed upon not only the respondent, but other persons, including those creditors for whom Mr Ebbs has indicated he otherwise acts, of litigation which has been ongoing for several years, but the Court takes that into account in the context where the delay, as it has already indicated, is likely to be minimal.
With respect to prejudice arising from the various proceedings on foot, there is no real information before the Court as to proceedings presently on foot involving Mr Sims and likely creditors of Mr Sims’ bankrupt estate. The Court is aware, as it indicated in the course of argument, that it is handing down reasons for judgment next week on a costs matter in this Court involving at least two of the persons in respect of whom Mr Ebbs says he otherwise acts, but otherwise there is no information as to which proceedings involving Mr Sims and various persons remain on foot. The Court is, however, conscious of the nature of proceedings that have been brought by, or involving, Mr Sims and that they involve some complexity in some cases, and certainly have involved considerable prolixity, and that a combination of those factors might make the Trustee’s task of assessment of the merits of those proceedings, at least in the short-term, a difficult one. And, as the Trustee told the Court today, he is not presently in a position to make an informed decision and, as the Court indicated in the course of arguments, it is clear from the Court’s knowledge of those proceedings which have at least been in this Court, and its knowledge of other matters which have been in the Supreme Court of Western Australia, the District Court of Western Australia, the State Administrative Tribunal, and in the Federal Court, that there might be a lot to come to grips with in a relatively short time. The Court takes the view that the Trustee should not be prejudiced by time limitations in that respect.
The Court also has regard to the fact that there is a live and undecided Review Application, and as the Court indicated in the course of hearing, it does not express any view as to the Review Application, and indeed it is not necessarily capable of doing so as it has done no more at this stage than scan the papers and has certainly not read them in detail and not formed any view, preliminary or otherwise, as to the merits or otherwise of the Review Application. The Court therefore bears in mind that one possible outcome of the Review Application is that the sequestration order might be set aside and if that were to be the case then that might be an outcome in respect of which prejudice might be caused if the Trustee had been caused to act in the intervening period. The safe course in that respect is to extend the time in which the Trustee is required to make the election.
The Court has had regard to the submissions made by the respondent in respect of seeking an undertaking from Mr Sims as to the conduct of any litigation by Mr Sims subsequent to the determination of the Review Application, and in particular if the Review Application were to be dismissed. In practical terms, the Court has doubts as to the efficacy of any such undertaking and also as to its ability to impose any practical limitation on Mr Sims subsequently seeking review of any decision by this Court in relation to the Review Application, or any practical limitation imposed in respect of any other proceedings by this Court. The question of what Mr Sims does subsequent to any decision of this Court, if that decision were to be to dismiss the Review Application, is a matter for Mr Sims, and possibly the Federal Court if Mr Sims acts in a particular way, and the Court does not consider that it should necessarily seek to preclude or foreclose on any of those matters.
Conclusion
Having regard to what has been said above, the Court has concluded that an extension of time for the Trustee to make the election required by s.60(2) of the Bankruptcy Act should be granted. That period of time should be no longer than is absolutely necessary at this stage, and the extension of time will be until 4 pm on 1 December 2016. That is the day the Review Application is to be heard. If it is necessary to further extend time following the hearing of the Review Application, the Court will hear the parties, including the Trustee, in that respect. So there will be an order as indicated. There will be a further order that the costs of today be reserved.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Judge Lucev
Date: 27 October 2016
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