Somerset v Esanda Finance Corporation Ltd

[1992] QCA 169

IN THE COURT OF APPEAL

[1992] QCA 169

SUPREME COURT OF QUEENSLAND

BETWEEN

Appeal No. 660 of 1988

E.J. SOMERSET

Appellant

v.

ESANDA FINANCE CORPORATION LIMITED

Respondent

Appeal No. 4727 of 1987

BETWEEN:

E.J. SOMERSET

Appellant

AND:

G.M. AND N.M. HILLENBERG & ORS.

First Respondent

AND:

JALBIGA PTY. LTD.

Second Respondent

AND:

THE COUNCIL OF THE CITY OF TOOWOOMBA

Third Respondent

AND:

ELLIS M. BLANCH

Fourth Respondent

AND:

C.J. BLANCH

Fifth Respondent

AND:

ESANDA FINANCE CORPORATION LIMITED

Sixth Respondent

JUDGMENT OF THE COURT

Delivered the 26th day of June, 1992

The appellant, Elsie Joy Somerset, has appealed to this

Court from judgments delivered on 30 June 1989, 4 October
1989 and 30 January 1990 in action 4727 of 1987 and on 12
February 1990 in action 660 of 1988. Esanda Finance
Corporation Limited is a respondent to the appeals in both
actions, and there are a number of other respondents to the
appeals in action 4727 of 1987. Mrs Somerset is a bankrupt.

On 13 November 1991, a sequestration order was made against

her on the petition of the National Australia Bank Limited
and the Official Trustee in Bankruptcy was appointed the
trustee of her estate. The current applications before the
Court are applications by Esanda to strike out or stay Mrs
Somerset's appeals or alternatively for orders that she give
security for its costs and that the appeals be stayed until
she does so. Esanda's application in action 4727 of 1987 is
supported by a number of the other respondents to the appeal

in that action.

Both actions relate to a building consisting of six

accommodation units constructed on land which Mrs Somerset
owned in Toowoomba. Two of the units had ceiling heights
slightly less than those specified in the building plans and
slightly less than the minimum prescribed under the Standard
Building By-Laws. In action 4727 of 1987, Mrs Somerset sued
a variety of persons associated in one form or another with
the construction of the building, including Esanda which
provided the finance under a mortgage. In the later action,
660 of 1988, Esanda sued Mrs Somerset for possession of the
property, and all of the units have now been sold and
transferred either by Mrs Somerset or by Esanda as
mortgagee. There is no possible basis upon which Mrs
Somerset could now regain possession, and counsel for Mrs
Somerset accepted that there is no purpose in proceeding
with the appeal in action 660 of 1988, at least unless the
appeals in action 4727 of 1987 are continued.

It is convenient, therefore, to concentrate on action 4727 of 1987 in which Mrs Somerset claimed damages. All of the orders to which the appeals relate were made by Ambrose

J. who having, on various dates, refused leave to amend the Statement of Claim to add a cause of action based upon the Trade Practice Act 1976 (as amended) Commonwealth, made declarations that, in effect, determined that the Council of the City of Toowoomba had validly reduced the minimum permissible ceiling heights in the two units; dismissed Mrs Somerset's claim against all defendants except the builders of the units, Mr and Mrs Hillenberg; gave judgment for Mrs Somerset against Mr and Mrs Hillenberg for $2,120.00 with costs up to the date of service of the originating process; gave judgment in favour of Mr and Mrs Hillenberg against Mrs Somerset on a counter-claim in the sum of $13,500.00 with interest on the sum of $11,380.00 (being the difference between the two judgments) at 12 per cent per annum for a period of five years (the sum of $6,828.00); and ordered Mrs Somerset to pay Mr and Mrs Hillenberg's taxed costs of the action after the date of service of the originating process.

It is a considerable understatement to say that there

is scope for confusion in the course of the proceedings.
The declarations were initially made on 30 June 1989, prior
to the trial of action 4727 of 1987 and, at that point,
there was no appeal. The trial of that action commenced on
2 October 1989, and the issue with respect to the joinder of
a claim under the Trade Practices Act was determined
adversely to Mrs Somerset on 4 October 1989. Again, there
was no appeal at that point. On 2 November, 1989, notice of
appeal was given against the declarations made on 30 June
1989, which were repeated in the final judgment in action
4727 of 19787 which was delivered on 30 January 1990.
Notice of appeal against that judgment, including the
declarations, was given on time on 5 February 1990, which
was also the date upon which judgment was given in action
660 of 1988. The notice of appeal in action 660 of 1988 was
given on 12 February 1990. Then, on 15 February 1990,
notice was given of an application to amend the notice of
appeal in action number 4727 of 1987 to include reference to

the claim sought to be made under the Trade Practices Act.

More than two years after the first notice of appeal

and between one and a half and two years after the last
notice of appeal, Mrs Somerset was made bankrupt. There is
nothing to indicate that any serious attempt had been made
to prosecute the appeals in the intervening period, or for
that matter since that time. As stated, the sequestration
order was made on 13 November 1991 and, on the following
day, the solicitors for Esanda wrote to the Official Trustee
in Bankruptcy notifying him of both actions, numbers 4727 of
1987 and 660 of 1988, and that appeals had been instituted
by Mrs Somerset in those actions, and requesting him to
make an election within 28 days pursuant to s.60 of the
Bankruptcy Act 1966 (as amended) either to prosecute or
discontinue the actions. The letter was said to enclose
copies of the notices of appeal but did not do so, although
that is of little significance since it was a plain
notification of the existence of the actions and the
appeals. Further, the solicitor for one of the other
respondents to the appeal in action number 4727 of 1987 had
shortly after the sequestration order was made, informed the
Official Trustee of that action and the appeal on the
previous day. In any event, it is plain from subsequent
events that the Official Trustee was under no
misapprehension as to the position.

On 6 December 1991, the Australian Government

Solicitor wrote on behalf of the Official Trustee in

Bankruptcy to the solicitors for Esanda stating, inter alia:

"4. In order that the Official Trustee may make an
informed decision concerning the before mentioned
appeals, I request that you provide me with copies of
the decisions being appealed against and the relevant
notices of appeal. My opinion is that the 28 day
period referred to in section 60(3) of the Bankruptcy
Act should not begin to run until I have received such
documents to enable me to understand what the appeals

are all about."

On the same day, the Australian Government Solicitor

wrote to Mrs Somerset stating, inter alia:

"3. I confirm my advice that under section 60 of the
Bankruptcy Act the Official Trustee has 28 days in
which to elect whether to prosecute or discontinue any
action in the name of a bankrupt within 28 days of
obtaining notice of action.

4.    Accordingly, I request that you provide me with

sufficient information and evidence concerning the
Esanda Supreme Court Appeal to enable the Official
Trustee to make an informed decision on whether to
proceed or abandon the appeal, at your earliest
convenience."
Although Esanda had not provided copies of the

decisions and the notices of appeal, as requested, the
Official Trustee in Bankruptcy had made his decision by 20
December 1991, when the Australian Government Solicitor

again wrote to Mrs Somerset in the following terms:

"2. I am instructed that the Official Trustee has
decided not to prosecute the appeals in proceedings
numbered 4727 of 1987 and 660 of 1988. On its
assessment, there is insufficient merit in such appeals
to justify the expenditure of legal costs and any other
liability likely to be incurred as a result thereof.

3. The Official Trustee is prepared to assign its rights to the causes of action and rights of appeal attached thereto to you on the terms set out in the enclosed draft deed.

4. I note that under s.60(3) of the Bankruptcy Act

actions are deemed to have been abandoned after the
elapsement of 28 days from when notice of the action is
served on the bankrupt's trustee. Esanda's solicitors,
Messrs. Corrs Chambers Westgarth sent the Official
Receiver a letter dated 14 November 1991 attaching two
Notices of Motion, requesting the Official Receiver to
elect pursuant to s.60(2) of the Bankruptcy Act. I
have sought to delay the running of the 28 day period
by writing to those solicitors requesting copies of the
Notices of Appeal and the Judgments on which subject
appeals are based, arguing that the 28 day period
should not run until such documents were provided.

5.    As there is some doubt about when the 28 day

period runs from, it is in your interest to enter into
a Deed of Assignment quickly with the Official Trustee
and for you to prosecute the appeals with due
expedition. It is arguable that if the 28 day period
under s.60(3) has elapsed, the appeal has by operation
of that section been abandoned and cannot be
resurrected.

6.    Hence I suggest that you take this matter up with

Mr Battle (to whom I have sent a copy of this correspondence) and advise him of your decision."

Mr Battle was the lawyer representing Mrs Somerset and,

on 20 December 1991, the Australian Government Solicitor
also wrote to him stating, inter alia:

"2. Please find enclosed a copy of my letter to Mrs
Somerset and a draft Deed of Assignment.

3.    For the reasons set out in my letter to Mrs

Somerset, could you please advise your client and
arrange for her to make a decision about the Deed of
Assignment as quickly as possible."
Mrs Somerset signed the Deed of August on 23 December

1991 and it was subsequently executed by the Official
Trustee in Bankruptcy on or about 8 January 1992. It is a
curious document. In consideration of its terms and the sum
of $1.00, the Official Trustee purported to assign to Mrs
Somerset "the appeal rights and the cause of action" in
respect of actions 4727 of 1987 and 660 of 1988 and Mrs

Somerset agreed:

"(i) To initiate and prosecute the appeals and the

proceedings with reasonable expedition;

(ii) On making by the Court of an order avoiding
damages in favour of the Assignee or on the making of a
legally binding compromise of the said proceedings, to
pay any amount received from a Defendant in such
proceedings to the Assignor who shall administer such
funds in accordance with the provisions of the

Bankruptcy Act 1966."

On 20 January 1992, the Australian Government

Solicitor wrote to the solicitors for Esanda informing them
"that the Official Trustee in Bankruptcy has assigned its
interest in the cause of action the subject of these appeals
to the bankrupt Elsie Joy Somerset ...", and that the
letter was "intended to be notice to your client Esanda
Finance Corporation Limited of the assignment pursuant to
section 199 of the Property Law Act." Similar notification
was given on the same day to the other respondents to the

appeals in action 4727 of 1987.

It is unnecessary to consider whether a transaction

such as that recorded in the Deed of Assignment might have
legally and properly been entered into within the 28 day
period provided for by s.60 of the Bankruptcy Act. Plainly,
in this instance it was not. The Official Trustee in
Bankruptcy was given notice of the actions by the letter
from the solicitors for Esanda dated 14 November 1981.
Quite apart from the decision made by the Official Trustee
not to prosecute the appeals which was communicated by the
letter dated 20 December 1991 from the Australian Government
Solicitor to Mrs Somerset, more than 28 days had elapsed
when the first signature was placed on the Deed of
Assignment by Mrs Somerset on 23rd December 1991. The other
party, the Official Trustee in Bankruptcy, did not sign
until a little more than a fortnight later.

In such circumstances, by operation of s.60, action

4727 of 1987 was deemed to have been abandoned. Of course, that being so, the appeals in that action did not survive.

When the Deed of Assignment was executed, there was nothing

to assign.

When this emerged in the course of argument before this

Court, counsel for Mrs Somerset sought an extension of time
pursuant to s.33 of the Bankruptcy Act for the Official
Trustee's election under s.60. Even if it be assumed that
such an application could properly be made to this Court by
oral application from the Bar table, that the bankrupt and
not her trustee could make such an application, and that
there is power to extend time in such circumstances nunc pro
tunc, there is not the slightest basis shown for exercising
a discretion to extend time in Mrs Somerset's favour.

It is sufficient to refer to some of the factors which, on the contrary, strongly indicate that no order extending time should be made.

It is more than two years since final judgment was

given in both actions and the final notice of appeal was
filed. Nothing, or very little, has been done by Mrs
Somerset to prosecute the appeals, some of which were out of
time. It is approximately 18 months since her trustee
decided not to prosecute the appeals because "there is
insufficient merit in such appeals to justify the
expenditure of legal costs and any other liability likely to
be incurred as a result thereof". The material before the
Court indicates that there has not at any stage been a
meeting of creditors of Mrs Somerset's bankrupt estate and
that, although served with the notices of motion setting out
the relief which Esanda now seeks, the Official Trustee in
Bankruptcy decided not to appear on these applications. The
Official Trustee does not seek the prosecution of the
appeals and there is no advantage to Mrs Somerset in doing
so save such indirect benefit as might flow from an increase
in the assets available for distribution to her creditors if
she was successful and recovered some further amount. While
the Court is not in a position to make a definitive
assessment of the merits of Mrs Somerset's appeals, there is
certainly no reason to assume any likelihood for success of
a claim which, in its most extreme form, seeks an assessment
of damages on the basis of demolition of the units, which
have now been sold, and appears to involve complaints
against virtually everyone involved at any time, including
the trial judge. Further, some aspects of the relief which
Mrs Somerset seeks on the appeals are plainly of no benefit
to anybody; for example, her attempt to invalidate the
decision of the local authority reducing the minimum
permissible height of the ceilings, a course which might
involve serious detriment to the purchasers of the property
who are not even represented in the proceedings. However
strong Mrs Somerset's sense of grievance, there is a element
of futility, if not absurdity, in this attack on a decision
which, if it operated in any way to reduce Mrs Somerset's
damages, did so only because it diminished her loss.
Finally, of course, Mrs Somerset as a bankrupt is not in a
position to pay the costs if she is unsuccessful in the
appeals.

In all the circumstances, it is quite clear that no

indulgence ought be granted to Mrs Somerset to enable her to
pursue her appeals in action 4727 of 1987 and that,
accordingly, those appeals should be struck out. Since
there is no purpose to the appeal in action 660 of 1988 in
that event, it should suffer a similar fate.

The order of the Court is that the appeals in actions 4727 of 1987 and 660 of 1988 are struck out, with costs to be taxed.

IN THE COURT OF APPEAL

IN THE SUPREME COURT OF QUEENSLAND

BETWEEN

Appeal No. 660 of 1988

E.J. SOMERSET

Appellant

v.

ESANDA FINANCE CORPORATION LIMITED

Respondent

Appeal No. 4727 of 1987

BETWEEN:

E.J. SOMERSET

Appellant

AND:

G.M. AND N.M. HILLENBERG & ORS.

First Respondent

AND:

JALBIGA PTY. LTD.

Second Respondent

AND:

THE COUNCIL OF THE CITY OF TOOWOOMBA

Third Respondent

AND:

ELLIS M. BLANCH

Fourth Respondent

AND:

C.J. BLANCH

Fifth Respondent

AND:

ESANDA FINANCE CORPORATION LIMITED

Sixth Respondent

The President
Mr Justice McPherson

Mr Justice Demack

Judgment of the Court delivered the 26th day
of June, 1992

IN THE COURT OF APPEAL

IN THE SUPREME COURT OF QUEENSLAND

BETWEEN

Appeal No. 660 of 1988

E.J. SOMERSET

Appellant

v.

ESANDA FINANCE CORPORATION LIMITED

Respondent

Appeal No. 4727 of 1987

BETWEEN:

E.J. SOMERSET

Appellant

AND:

G.M. AND N.M. HILLENBERG & ORS.

First Respondent

AND:

JALBIGA PTY. LTD.

Second Respondent

AND:

THE COUNCIL OF THE CITY OF TOOWOOMBA

Third Respondent

AND:

ELLIS M. BLANCH

Fourth Respondent

AND:

C.J. BLANCH

Fifth Respondent

AND:

ESANDA FINANCE CORPORATION LIMITED

Sixth Respondent

JUDGMENT OF THE COURT

Delivered the 26th day of June, 1992

MINUTE OF ORDER:	Appeals in actions 4727 of 1987 and 660 of 1988 are struck out, with costs to be taxed.
CATCHWORDS:	Appeal and new trial - practice - time - extension - application/bankrupt appeals 2 years after final judgment - official trustee purported to assign its rights of appeal to applicant - whether as assignment not within 28 day period appeal deemed abandoned - whether extension ought to be granted - Bankruptcy Act s.60, s.33
Counsel:	Mr Battle for the Appellant Mr G.M. Hillenberg for the First Respondent Mr E. Blanch for the Second, Fourth and Fifth Respondents Mr A. Crowe for the Sixth Respondent
Solicitors:	Toowoomba Community Legal Service for the Appellant Messrs. Corrs Chambers Westgarth for the Sixth Respondent
Hearing Date:	17th June, 1992