Singh v Official Trustee in Bankruptcy
[2011] FMCA 677
•6 September 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SINGH v OFFICIAL TRUSTEE IN BANKRUPTCY & ANOR | [2011] FMCA 677 |
| BANKRUPTCY – Leave to commence, continue and take fresh steps in proceeding – whether leave to be granted – where failure to comply with undertaking – costs – payment by solicitor personally. |
| Bankruptcy Act 1966 (Cth), ss.27(1), 58(3)(b), 149(3) Federal Court Rules (Cth), O.37 r.5 Federal Court Rules 2011 (Cth), rr.41.02, 42.11, 42.12, 42.16 Federal Magistrates Act 1999 (Cth), ss.78, 79, Schedule 1 Federal Magistrates Court Rules 2001 (Cth), rr.1.05(2), 16.03(1), 16.06 |
| Cordes v Dr Peter Ironside Pty Ltd & Ors (2009) 235 FLR 94; [2009] QCA 302 Rodway v White & Anor (2009) 233 FLR 262; [2009] WASC 201 Singh v Official Trustee in Bankruptcy & Anor (2007) 214 FLR 84; [2007] FMCA 1367 |
| Applicant: | SARDUL SINGH |
| First Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY |
| Second Respondent: | MAN MAHAN SINGH |
| File Number: | PEG 239 of 2011 |
| Judgment of: | Lucev FM |
| Hearing date: | 2 September 2011 |
| Date of Last Submission: | 2 September 2011 |
| Delivered at: | Perth |
| Delivered on: | 6 September 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr E Carlose |
| Solicitors for the Applicant: | Eapon Carlose |
| Counsel for the First Respondent: | No appearance |
| Solicitors for the First Respondent: | No appearance |
| Counsel for the Second Respondent: | Mr G Cobby |
| Solicitor for the Second Respondent: | Mr S S Sandhu |
ORDERS
The applicant have leave under s.58(3)(b) of the Bankruptcy Act 1966 (Cth) to commence, take such steps as have already been taken, and allow the trial in proceeding CIV 1009/2005 in the Supreme Court of Western Australia (“Supreme Court Proceeding 1009/2005”) commencing on 7 September 2011, and any steps subsequent to the trial up to and including the taking of judgment, to proceed, subject to the following undertakings:
(a)following the trial commencing on 7 September 2011, that the applicant will not take any further steps in Supreme Court Proceeding 1009/2005 without giving 7 days notice to the Official Trustee in Bankruptcy;
(b)that the applicant will not oppose the Official Trustee in Bankruptcy being joined in Supreme Court Proceeding 1009/2005 at any time;
(c)that the applicant will hold any property or any monies received in Supreme Court Proceeding 1009/2005 for the Official Trustee in Bankruptcy on behalf of the bankrupt estate of the second respondent;
(d)that the applicant will notify the Official Trustee in Bankruptcy of any settlement proposed to be entered into in respect of Supreme Court Proceeding 1009/2005 and not enter into any settlement unless consented to by the Official Trustee in Bankruptcy; and
(e)that the applicant will pay the costs, if any, of any involvement of the Official Trustee in Bankruptcy in Supreme Court Proceeding 1009/2005.
The undertakings in Order 1 are to be filed by 2.00pm on
6 September 2011, and if those undertakings are not filed by that time, the leave granted in Order 1 will lapse immediately.The applicant’s solicitor personally pay the second respondent’s costs of these proceedings in the sum of $3,218, payable by 4.00pm on
6 September 2011.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 239 of 2011
| SARDUL SINGH |
Applicant
And
| OFFICIAL TRUSTEE IN BANKRUPTCY |
First Respondent
| MAN MAHAN SINGH |
Second Respondent
REASONS FOR JUDGMENT
Application
Primarily, the applicant seeks an order under s.58(3)(b) of the Bankruptcy Act 1966 (Cth)[1] for retrospective leave to commence, take such steps as have already been taken, and allow the trial of, an action in the Supreme Court of Western Australia,[2] numbered CIV 1009/2005[3] to proceed on 7 September 2011. The application is opposed by the second respondent (who is the applicant’s brother), but not opposed by the first respondent, the Official Trustee in Bankruptcy.[4]
[1] “Bankruptcy Act”.
[2] “Supreme Court”.
[3] “Supreme Court Proceeding 1009/2005”.
[4] “Official Trustee”.
The final order sought by the applicant is as follows:
The applicant be given retrospective leave, pursuant to s.58(3)(b) of the Bankruptcy Act 1966, to commence the ACTION and take such steps as have been taken and to proceed to the trial of the ACTION in the Supreme Court on 7 September 2011.
Background – earlier orders
The parties have a prior history in this Court. In Singh v Official Trustee in Bankruptcy & Anor[5] this Court found that there was no impediment to exercising discretion to grant leave in a case where proceedings had been commenced without leave but with knowledge of the bankruptcy, provided that the Court in its discretion otherwise considered it appropriate to grant leave.[6] In Singh (No 1) leave was granted to the present applicant to proceed against the present second respondent in the Supreme Court in a proceeding numbered CIV 1264/2006,[7] subject to certain conditions.[8] Those conditions were as follows:
a)that the applicant will seek an amendment of the Statement of Claim filed in the Supreme Court proceedings so as to delete the claim for an order that the net proceeds of sale be applied in satisfaction or partial satisfaction of amounts due and owing from Man Mahan Singh to Sardul Singh;
b)that the applicant will not take any further steps in the Supreme Court proceedings without giving 7 days notice to the Official Trustee in Bankruptcy;
c)that the applicant will not oppose the Official Trustee in Bankruptcy being joined in the Supreme Court proceedings at any time;
d)that the applicant will hold the property the subject of the Supreme Court proceedings or any monies received in the Supreme Court proceedings for the Official Trustee in Bankruptcy on behalf of the bankrupt estate of Man Mahan Singh;
e)that the applicant will notify the Official Trustee in Bankruptcy of any settlement proposed to be entered into in respect of the Supreme Court proceedings and not enter into any settlement unless consented to by the Official Trustee in Bankruptcy; and
f)(vi) that the applicant will pay the costs, if any, of any involvement of the Official Trustee in Bankruptcy in the Supreme Court proceedings.[9]
[5] (2007) 214 FLR 84; [2007] FMCA 1367 (“Singh (No 1)”).
[6] Singh (No 1) FLR at 88 per Lucev FM; FMCA at para.17 per Lucev FM.
[7] “Supreme Court Proceeding 1264/2006”.
[8] Singh (No 1) FLR at 91 per Lucev FM; FMCA at para.25 per Lucev FM.
[9] Singh (No 1) FLR at 90-91 per Lucev FM; FMCA at paras.23-24 per Lucev FM (“2007 Conditions”).
In Singh v Official Trustee in Bankruptcy & Anor (No 2)[10] the Court considered whether it was appropriate to grant leave in the exercise of its discretion, now for then,[11] to commence and take such steps as had already been taken in Supreme Court Proceeding 1009/2005, and to take any fresh steps in Supreme Court Proceeding 1009/2005. In Singh (No 2) the Court found that Supreme Court Proceeding 1009/2005 was a proceeding in respect of a provable debt, as follows:
30.In this case where declarations that the Second Respondent’s transfer of a half share in his family home and a share in a company carrying on a restaurant business are fraudulent alienations under s.89 of the Property Law Act 1969 (WA), and which, if successful, will likely have the effect of making that property available as part of the pool of [the] bankrupt Second Respondent’s assets, the proceedings are proceedings in respect of a provable debt.[12]
[10] [2008] FMCA 521 (“Singh (No 2)”).
[11] Traditionally leave “nunc pro tunc”.
[12] Singh (No 2) at para.30 per Lucev FM.
With respect to whether or not leave ought to be granted the Court found in Singh (No 2) as follows:
32.To grant leave does not require the Court to consider the merits of the issues raised. Rather, it requires the Court to determine whether the issues are complex, and able to be resolved more thoroughly and expeditiously in the proceedings in respect of which leave is sought, than under the proof of debt procedure. In making the determination the Court may consider whether there are multiple claims arising in the proceedings, and whether they all ought to be resolved at once. Further, if, in the court in which proceedings for which leave is sought, there are other interrelated proceedings ongoing, this Court considers that to be a relevant consideration.
33.The Court considers the Supreme Court Proceeding [1009/2005] for which leave is sought is better dealt with by the Supreme Court because:
a)the object and reach of s.89(1) of the Property Law Act 1969 (WA) which deals with alienation of property with intent to defraud creditors is in issue;
b)the Supreme Court Proceeding [1009/2005] has commenced and advanced in the Supreme Court; and
c)the Supreme Court is already dealing with inter‑related proceedings involving the Applicant as plaintiff and the Second Respondent as defendant, where not dissimilar issues to, and issues inextricably intertwined with, some of those set out above have arisen.[13]
[13] Singh (No 2) at paras.32-33 per Lucev FM
In Singh (No 2) the applicant offered undertakings in relation to the conduct of Supreme Court Proceeding 1009/2005 which the Court considered to be appropriate.
In conclusion in Singh (No 2) the Court said:
38.The Supreme Court Proceeding [1009/2005] is sufficiently complex, sufficiently progressed in the Supreme Court, and sufficiently inter-related to other proceedings involving the Applicant and Second Respondent, to warrant leave being granted for the Supreme Court Proceeding [1009/2005] to be commenced and continued, rather than being dealt with under the proof of debt procedure. The leave to commence and continue will be retrospective. The leave will be conditional upon the undertakings and additional costs conditions as set out … above.[14]
[14] Singh (No 2) at para.38 per Lucev FM.
In Singh (No 2) the Court therefore made the following order on 24 April 2008 with respect to leave to commence and take steps, including fresh steps, in Supreme Court Proceeding 1009/2005:
(2)That under s.58(3)(b) of the Bankruptcy Act, 1966 (Cth) the Applicant have leave nunc pro tunc, to commence, and take such steps as have already been taken in proceeding CIV1009/2005 in the Supreme Court of Western Australia (“Supreme Court Proceeding”) and to take any fresh steps in the Supreme Court Proceeding, subject to the Applicant having filed in the Registry of this Court undertakings as follows:
(a)that the Applicant will not take any further steps in the Supreme Court Proceeding without giving 7 days notice to the Official Trustee in Bankruptcy;
(b)that the Applicant will not oppose the Official Trustee in Bankruptcy being joined in the Supreme Court Proceeding at any time;
(c)that the Applicant will hold any property or any monies received in the Supreme Court Proceeding for the Official Trustee in Bankruptcy on behalf of the bankrupt estate of Man Mahan Singh;
(d)that the Applicant will notify the Official Trustee in Bankruptcy of any settlement proposed to be entered into in respect of the Supreme Court Proceeding and not enter into any settlement unless consented to by the Official Trustee in Bankruptcy; and
(e)that the Applicant will pay the costs, if any, of any involvement of the Official Trustee in Bankruptcy in the Supreme Court Proceeding.[15]
[15] “24 April 2008 Order”. Paragraphs (a) to (d) reflected the undertaking offered by the applicant, paragraph (e) was added by the Court: Singh (No 2) at paras.35-36 per Lucev FM.
The grant of leave was thus subject to the applicant filing an undertaking in this Court. The applicant filed an undertaking in this Court on
23 August 2011.[16] The 2008 Undertaking is dated 25 April 2008, that is a day after the making of the 24 April 2008 Order, but more than three years elapsed before it was filed in this Court.[16] “2008 Undertaking”.
Facts relevant to this application
Certain facts relevant to the current application are detailed in:
a)the affidavit of the applicant’s solicitor,[17] filed on 29 August 2011, including an affidavit annexed to Mr Carlose’s Affidavit of the second respondent dated 25 August 2011,[18] which was filed in Supreme Court Proceeding 1009/2005; and
b)the second respondent’s affidavit dated 1 September 2011.[19]
[17] “Mr Carlose’s Affidavit”.
[18] “Second Respondent’s Supreme Court Affidavit”.
[19] “Second Respondent’s September 2011 Affidavit”.
Essentially the facts are as follows:
a)since 24 April 2008, various steps have been taken in Supreme Court Proceeding 1009/2005. Those steps have included the following:
i)a defendant has been removed and the second respondent’s wife added as a co-defendant;
ii)a new cause of action, namely, the tort of conspiracy has been added;
iii)the statement of claim has been amended six times;
iv)there has been a mediation conference;
v)a schedule of damages has been filed by the applicant (as plaintiff in Supreme Court Proceeding 1009/2005) showing the damages claimed under each head of claim; and
vi)the damages claimed now include a claim for exemplary and punitive damages which are not compensatory;[20]
[20] Second Respondent’s September 2011 Affidavit, paras.2 and 3 and Annexure MMS1.
b)the applicant has not given the Official Trustee seven days notice, or any notice, before taking each further step thereafter in Supreme Court Proceeding 1009/2005;[21]
[21] Second Respondent’s September 2011 Affidavit, para.4.
c)since the 24 April 2008 Order there have been 69 separate steps taken in Supreme Court Proceeding 1009/2005 without notice to the Official Trustee;[22]
[22] Second Respondent’s September 2011 Affidavit, para.2 and Annexure MMS1.
d)the second respondent was discharged from bankruptcy, pursuant to s.149(3) of the Bankruptcy Act, on 14 February 2009 after the statutory three year period;
e)
the applicant filed the 2008 Undertaking in this Court on
23 August 2011;
f)the applicant did not serve a copy of the 2008 Undertaking filed in this Court on the second respondent, but rather an undated undertaking signed by the applicant,[23] which was in a form different to the 2008 Undertaking, and in fact in the form of the 2007 Conditions, save that the undertaking to pay the costs of the Official Trustee had been omitted;[24]
g)no affidavit has been filed by the applicant explaining how it is that the 2008 Undertaking was filed in this Court, and the Undated Undertaking was served on the second respondent, both signed by the applicant, and filed and served in purported compliance with the 24 April 2008 Order;
h)it is solely the fault of the applicant’s solicitor, and not the applicant, that the 2008 Undertaking was not filed in accordance with the 24 April 2008 Order, and due to “the long lapse of time” the applicant’s solicitor is unable to offer any explanation “except to say that … [he] must have … inadvertently overlooked the matter.”;[25]
i)at a directions hearing on 26 August 2011 in the Supreme Court:
i)the second respondent submitted that the failure on the part of the applicant to meet the conditions imposed in the 24 April 2008 Order rendered all steps thereafter taken by the applicant in Supreme Court Proceeding 1009/2005 a nullity; and
ii)the Supreme Court “prompted” the making of this application;[26]
j)the Official Trustee does not oppose Supreme Court Proceeding 1009/2005 proceeding to trial;[27] and
k)Supreme Court Proceeding 1009/2005 is listed for trial for six days commencing on 7 September 2011.
[23] “Undated Undertaking”.
[24] Second Respondent’s September 2011 Affidavit, paras.6-7 and Annexure MMS2.
[25] Mr Carlose’s Affidavit, para.6.
[26] Mr Carlose’s Affidavit, paras.4 and 5.
[27] Mr Carlose’s Affidavit, Annexure EC2.
The second respondent also relies upon certain facts arising from Supreme Court Proceeding 1264/2006 including:
a)the taking out of an order by the applicant for judgment and declarations in the Supreme Court on 22 March 2010, in breach of the 2007 Conditions, by reason of the failure to delete the claim for an order that the net proceeds of sale be applied in satisfaction or partial satisfaction of amounts due and owing from the second respondent to the applicant, and also of the requirement to notify the Official Trustee of any further steps taken in Supreme Court Proceeding 1264/2006;[28]
b)the applicant’s offer (following inquiries by a lawyer acting on behalf of the second respondent, and apparent inquiry from the Official Trustee) to consent to an order deleting that part of the Supreme Court order of 22 March 2010 which applied the net proceeds in satisfaction or partial satisfaction of any amounts due and owing from the second respondent to the applicant;[29]
c)the applicant’s failure to disclose the 2007 Conditions to the Supreme Court; and
d)the obtaining of an Order for an irrevocable power of attorney to be signed by the second respondent in relation to the property the subject of the Supreme Court Order which included terms broader than those contained in the 2007 Conditions.[30]
[28] Second Respondent’s September 2011 Affidavit, para.8(ii) and Annexure MMS4.
[29] Second Respondent’s September 2011 Affidavit, Annexures MMS7 and MMS8.
[30] Second Respondent’s September 2011 Affidavit, para, Annexure MMS6.
The second respondent also points to a letter of 17 May 2011 from the solicitor for the applicant to the Official Trustee in relation to Supreme Court Proceeding 1009/2005 in which the Official Trustee is told that upon conclusion of the trial, if the applicant is successful, it is intended to orally apply to the Supreme Court for orders that payment to the applicant of all sums recovered by the applicant under any orders made be subject to firstly, payment of the applicant’s costs and expenses incurred in relation and incidental to the action, secondly, in payment of the Official Trustee’s fees and costs, and thirdly, to the applicant in satisfaction or partial satisfaction of an earlier judgment debt.
The second respondent submits, correctly, that such an order would be in breach of the 2008 Undertaking.[31]
[31] Second Respondent’s September 2011 Affidavit, Annexure MMS7.
Finally, although not the subject of evidence, Counsel for the applicant (who is also the applicant’s solicitor) seemed to indicate to this Court on the hearing of the application that he had in fact been aware since April 2011 of his failure to file an undertaking in compliance with the 24 April 2008 Order.[32] That is arguably contrary to what is said in
Mr Carlose’s Affidavit, namely, the assertion that “the omissions to comply with the … [2008 Undertaking] was most definitely not intentional and not in defiance or contempt of the court”.[33] It is also relevant to note that further steps have been taken in Supreme Court Proceeding 1009/2005 since April 2011.
[32] Transcript, pp.5-7.
[33] Mr Carlose’s Affidavit, para.6.
Consideration
The Federal Court and this Court have exclusive “jurisdiction in bankruptcy” under s.27(1) of the Bankruptcy Act.[34] The exercise of jurisdiction to commence or take any fresh step in a proceeding in respect of a provable debt is the exercise of jurisdiction in bankruptcy for the purposes of s.27(1) of the Bankruptcy Act. That jurisdiction continues to be exercisable notwithstanding the second respondent’s discharge from bankruptcy, because:
Discharge of a bankrupt does not spell the end of the trustee’s duties to distribute to creditors such property as remains vested in the trustee. Property, including choses in action, which has vested in a trustee by reason of bankruptcy continues to be so vested after the discharge of the bankrupt. … It would seem to be implicit in the continuing responsibility of the trustee for the distribution of the former bankrupt’s estate to creditors, in respect of proof of all debts, that the leave requirement under s58(3) remains in place to the extent that there is a dispute about the existence of such debt. Such leave could authorise a resolution of that dispute in separate proceedings. The leave requirement is not expressly limited in time. ….[35]
[34] Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales & Anor (2008) 171 FCR 380 at 383-384 and 387 per Branson J, 399 per Greenwood J and 429 per Perram J; [2008] FCAFC 172 at paras.4 and 20 per Branson J; 80-81 per Greenwood J and 201 per Perram J (“Meriton Apartments”); Cordes v Dr Peter Ironside Pty Ltd & Ors (2009) 235 FLR 94 at 100-105 per Holmes and Chesterman JJA; [2009] QCA 302 at paras.24-40 per Holmes and Chesterman JJA (“Cordes”), noting that exclusive jurisdiction in bankruptcy does not extend to a State court determining whether the jurisdiction it is exercising is or is not jurisdiction in bankruptcy within the exclusive jurisdiction of the federal courts: see Cordes as cited above, including therein the passages cited from Meriton Apartments; nor does it include the exercise of jurisdiction conferred on State courts of summary jurisdiction in relation to offences under the Bankruptcy Act: Rodway v White & Anor (2009) 233 FLR 262; [2009] WASC 201.
[35] Norilya Minerals Pty Ltd v Ireland [2006] FCA 1235 at para.32 per French J.
The considerations applicable as to whether leave ought be granted in relation to commencing or continuing with the Supreme Court Proceeding have not changed since judgment was given by this Court in Singh (No 2). The facts actually considered in Singh (No 2) have not changed, and the analysis of the law in relation to those facts does not require re-consideration. On the face of it therefore it would appear appropriate that the applicant have leave to commence, take such steps as have already been taken, and allow the trial of Supreme Court Proceeding 1009/2005 to proceed on 7 September 2011.
Whilst Counsel for the second respondent properly conceded that the grant of leave is a matter entirely at the discretion of this Court, the second respondent argues that there are new facts and issues which require proper consideration by this Court. In particular, the following:
a)
the failure to give the 2008 Undertaking to this Court until
23 August 2011 or to explain the serving of the Undated Undertaking in a different form to the 2008 Undertaking;
b)the taking of steps in Supreme Court Proceeding 1009/2005 without the leave of this Court by reason of the failure to give the 2008 Undertaking, and the consequent failure to give the required seven days notice of each such step to the Official Trustee in Bankruptcy; and
c)the failure of the applicant to comply with the 2007 Conditions in Supreme Court Proceeding 1264/2006.
In relation to the failure to give the 2008 Undertaking, r.16.03(1) of the Federal Magistrates Court Rules 2006 (Cth)[36] provides:
(1) Unless the Court otherwise orders, if an order (other than a parenting order) requires a person to do an act, the person must do so within 14 days after service of the order on the person.
[36] “FMC Rules”.
The 2008 Undertaking has the same force and effect as an order, because r.16.06 of the FMC Rules provides that:
Unless the Court otherwise orders, an undertaking to the Court has the same force and effect as an order of the Court.
Because the Court has not otherwise ordered under r.16.06 of the FMC Rules, under r.16.03(1) of the FMC Rules the applicant was obliged to file the 2008 Undertaking within 14 days of the 24 April 2008 Order. The applicant did not do so until more than three years later, a very significant delay.
The provisions of the Federal Magistrates Act 1999 (Cth)[37] and the FMC Rules dealing with enforcement do not specifically deal with a situation where a party has failed to comply with an undertaking which has the effect of an order, that is, failed to comply with a condition necessary to give effect to the order. In those circumstances, this Court may look to the Federal Court Rules to fill the gap.[38] Specifically, the Federal Court Rules applicable at the time of the failure to comply with the 2008 Undertaking[39] provided in O.37 r.5 that:
Where a person is entitled under a judgment subject to a fulfilment of a condition, and there is a failure to fulfil the condition, then, unless the Court otherwise orders:
(a)he shall lose the benefit of the judgment; and
(b)any other person interested may take any steps which:
(i)are warranted by the judgment; or
(ii)might have been taken if the judgment had not been pronounced or the order had not been made.
[37] “FM Act”, see FM Act, s.78.
[38] FMC Rules, r.1.05(2).
[39] The 1976 Federal Court Rules, hereafter “FC Rules 1976”. The FC Rules 1976 were repealed with effect from 1 August 2011. The Federal Court Rules 2011 (“FC Rules 2011”) commenced on 1 August 2011.
If a party is granted relief upon a condition, and declines or fails to comply with the condition, that party shall “… unless the Court otherwise orders … lose the benefit of the judgment”. In the circumstances, the applicant has lost the benefit of the judgment comprised by the 24 April 2008 Order, “unless the Court otherwise orders”. However, the Court can no longer otherwise order under O.37 r.5 because the FC Rules 1976 had been repealed at the time of the making of this application on 29 August 2011. Nor can the Court make an order under the equivalent new rule, r.41.02 of the FC Rules2011, which provides that:
(1)If an order is made in favour of a party subject to the fulfilment of a condition, the party cannot enforce the order until the condition is fulfilled.
(2)However, the party may apply to the Court for an order for the revocation of the condition or the variation of the order.
The Court cannot vary an order the benefit of which has already been lost.[40] For the same reason the Court cannot extend time for compliance with the 24 April 2008 Order where the benefit of the judgment has already been lost. It follows that the failure to give the 2008 Undertaking until 23 August 2011, the service of the Undated Undertaking in a different form to the 2008 Undertaking, and the failure to give notice to the Official Trustee of steps taken in Supreme Court Proceeding 1009/2005, are all immaterial because the benefit of the judgment had already been lost.
[40] Talbot v Blindell [1908] 2 KB 114 at 117 per Walton J.
It is apparent that the applicant:
a)in Supreme Court Proceeding 1264/2006:
i)extracted an order from the Supreme Court contrary to the 2007 Conditions; and
ii)failed to inform the Supreme Court of the 2007 Conditions; and
b)in Supreme Court Proceeding 1009/2005:
i)evinced an intention to seek costs orders in the Supreme Court which would have been contrary to the 2008 Undertaking had it been given within time;
ii)failed to inform the Supreme Court of the 24 April 2008 Orders; and
iii)has taken steps without informing the Official Trustee which would have been contrary to the 2008 Undertaking had it been given within time.
Each of the matters in sub-paragraphs (a)(i) and (b)(i) and (iii) of the previous paragraph are matters which, on the face of it, the applicant conceded may constitute a contempt of this Court,[41] which, if correct, would make them actionable upon application by the second respondent.[42] However, any question as to whether the applicant is in contempt, and as to matters surrounding the delay in giving the 2008 Undertaking, the serving of the Undated Undertaking, and in relation to the 2007 Conditions, are a different questions and issues to whether leave ought now be given to the applicant under s.58(3)(b) of the Bankruptcy Act.[43] On the authorities, those issues are not relevant considerations for this Court, in relation to the grant of leave. The grant of leave is conditioned by the factors which were outlined in Singh (No 2), and which are set out above. As also set out above, the applicability of those factors to the relevant circumstances of this case remain unchanged, and Supreme Court Proceeding 1009/2005 is sufficiently complex, sufficiently progressed in the Supreme Court, and sufficiently inter-related to other proceedings involving the applicant and second respondent to warrant the leave sought being granted. Perhaps perversely in the circumstances, that is now particularly so having regard to the further steps taken in the Supreme Court which sees Supreme Court Proceeding 1009/2005 on the eve of trial.
The grant of leave will be in the same terms as previously granted, subject to a time limitation. Given the proximity of the trial, and the applicant’s previous failure to file the 2008 Undertaking in time, that time limitation is that the undertaking must be filed by 2.00pm today.
If the undertaking is not filed by that time then the leave lapses immediately. The consequence of the leave lapsing immediately would be that there would be no leave to proceed with Supreme Court Proceeding 1009/2005.
[41] See applicant’s Brief Outline of Submissions, paras.1-3.
[42] FC Rules2011, rr.42.11, 42.12 and 42.16.
[43] Street & Ors v Hearne & Anor [2007] NSWCA 113 at paras.60-69 per Ipp JA, Basten JA and Handley AJA.
Conclusion and orders
The Court has therefore concluded that leave under s.58(3)(b) of the Bankruptcy Act ought to be granted to the applicant for retrospective leave to commence, take such steps as have already been taken, and allow the trial in Supreme Court Proceeding 1009/2005 commencing on 7 September 2011, and any steps subsequent to the trial up to and including the taking of judgment to proceed, subject to the following undertakings:
a)that following the trial commencing on 7 September 2011, the applicant will not take any further steps in Supreme Court Proceeding 1009/2005 without giving 7 days notice to the Official Trustee in Bankruptcy;
b)that the applicant will not oppose the Official Trustee in Bankruptcy being joined in Supreme Court Proceeding 1009/2005 at any time;
c)that the applicant will hold any property or any monies received in Supreme Court Proceeding 1009/2005 for the Official Trustee in Bankruptcy on behalf of the bankrupt estate of the second respondent;
d)that the applicant will notify the Official Trustee in Bankruptcy of any settlement proposed to be entered into in respect of Supreme Court Proceeding 1009/2005 and not enter into any settlement unless consented to by the Official Trustee in Bankruptcy; and
e)that the applicant will pay the costs, if any, of any involvement of the Official Trustee in Bankruptcy in Supreme Court Proceeding 1009/2005.
Costs
It is admitted by the applicant’s solicitor that the failure to comply with the 24 April 2008 order is his fault, and not that of the applicant.
The necessity for this matter to be brought on for hearing, and to be heard urgently, is entirely the fault of the applicant’s solicitor by reason of his failure to file the 2008 undertaking in accordance with this Court’s 24 April 2008 order. In those circumstances, it is appropriate that the applicant’s solicitor personally, and not the applicant, pay the second respondent’s costs of these proceedings. Counsel for the applicant (who is also the applicant’s solicitor) agreed with that proposition when it was put to him by the Court at hearing.[44] There will accordingly be an order that the applicant’s solicitor personally pay the second respondent’s costs of these proceedings in the sum of $3,218, payable by 4.00pm today. In the exercise of the Court’s broad discretion as to costs[45] it has used the Court’s costs schedule[46] to calculate the costs, and the sum of $3,218 has been calculated on the basis of stage 2 (including a daily hearing fee for a half day plus an advocacy loading) plus the stage 6 sum for taking judgment.
[44] Transcript, p5.
[45] FM Act, s.79.
[46] FM Act, Schedule 1.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 6 September 2011
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