Sommer v C Pty Ltd - [2020] FCCA 1412

FEDERAL CIRCUIT COURT OF AUSTRALIA

SOMMER v C PTY LTD

[2020] FCCA 1412

Catchwords:
BANKRUPTCY – PRACTICE AND PROCEDURE – Application under s.35A(2A) of the Bankruptcy Act 1966 (Cth) for an order that a proceeding for the setting aside of a bankruptcy notice be transferred to the Family Court of Australia (FCoA) to be heard together with a proceeding in the FCoA in which the applicant in the proceeding to set aside bankruptcy notice is a party – whether there are overlapping issues between the bankruptcy proceeding and the FCoA proceeding – whether the transfer of the bankruptcy proceeding will reduce costs or enhance convenience – application for transfer dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.35A(1), 35A(2A)

Legal Profession Uniform Law Application Act 2014 (NSW), s.70
Legal Profession Uniform Law (NSW), ss.172(2), 172(3), 175, 198

Cases cited:

Combis v Jensen (No 2) [2009] FCA 1383

Firth v Centrelink and Anor [2002] NSWSC 564

Horne v Tebb [2013] FCA 585

Obrart v Grego [2017] FCCA 929

Applicant:

MS SOMMER

Respondent:

C PTY LTD

File Number:

SYG 697 of 2020

Judgment of:

Judge Manousaridis

Hearing date:

29 May 2020

Date of Last Submission:

29 May 2020

Delivered at:

Sydney

Delivered on:

5 June 2020

REPRESENTATION

Applicant in person, by video

Counsel for the Respondent:

Mr D Edney

Solicitors for the Respondent:

ICL Lawyers

ORDERS

The application in a case filed by the applicant on 27 April 2020 for an order under s.35A(2A) of the Bankruptcy Act 1966 (Cth) that this proceeding be transferred to the Family Court of Australia is dismissed.
The applicant pay the respondent’s costs of the application in a case, such costs to be assessed by Judge Manousaridis.
By 19 June 2020:
(a)the respondent file and serve an affidavit and short submissions in relation to the assessment of the respondent’s costs, such submissions to state whether the respondent would consent to Judge Manousaridis assessing the respondent’s costs of the application in a case on the papers; and
(b)the applicant file and serve any additional affidavit or affidavits on which the applicant intends to rely in support of her application to set aside the bankruptcy notice.
By 3 July 2020:
(a)the applicant file and serve an affidavit and short submissions in response to any affidavit and submissions the respondent may file pursuant to order (3)(a), such submissions to state whether the applicant would consent to Judge Manousaridis assessing the respondent’s costs of the application in a case on the papers; and
(b)the respondent file and serve any additional affidavit or affidavits on which the respondent intends to rely in opposition to the application to set aside the bankruptcy notice.

IT IS NOTED that publication of this judgment under the pseudonym Sommer & C Pty Ltd is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 697 of 2020

MS SOMMER

Applicant

And

C PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

The applicant applies for an order under…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sommer v C Pty Ltd

Details

AGLC: Sommer v C Pty Ltd [2020] FCCA 1412
Case: [2020] FCCA 1412
Decision Date: 5 June 2020

CaseChat Overview and Summary

The applicant sought an order under section 35A(2A) of the Bankruptcy Act 1966 (Cth) to transfer a proceeding for the setting aside of a bankruptcy notice to the Family Court of Australia. The applicant was a party to a separate proceeding in the Family Court and argued that the bankruptcy proceeding should be heard concurrently to address overlapping issues and enhance convenience and cost-effectiveness. The respondent opposed the application.

The court was required to determine whether there were sufficient overlapping issues between the bankruptcy proceeding and the Family Court proceeding to warrant a transfer. It also had to consider whether such a transfer would genuinely reduce costs or enhance convenience for the parties involved.

Judge Manousaridis dismissed the application, finding that the necessary conditions for a transfer under section 35A(2A) of the Bankruptcy Act were not met. The court concluded that the potential for overlapping issues and the benefits of convenience and cost reduction were not sufficiently demonstrated to justify the transfer. The applicant was ordered to pay the respondent's costs of the application.

Orders

Orders of the court

The application in a case filed by the applicant on 27 April 2020 for an order under s.35A(2A) of the Bankruptcy Act 1966 (Cth) that this proceeding be transferred to the Family Court of Australia is dismissed.

The applicant pay the respondent’s costs of the application in a case, such costs to be assessed by Judge Manousaridis.

By 19 June 2020:

(a) the respondent file and serve an affidavit and short submissions in relation to the assessment of the respondent’s costs, such submissions to state whether the respondent would consent to Judge Manousaridis assessing the respondent’s costs of the application in a case on the papers; and

(b) the applicant file and serve any additional affidavit or affidavits on which the applicant intends to rely in support of her application to set aside the bankruptcy notice.

By 3 July 2020:

(a) the applicant file and serve an affidavit and short submissions in response to any affidavit and submissions the respondent may file pursuant to order (3)(a), such submissions to state whether the applicant would consent to Judge Manousaridis assessing the respondent’s costs of the application in a case on the papers; and

(b) the respondent file and serve any additional affidavit or affidavits on which the respondent intends to rely in opposition to the application to set aside the bankruptcy notice.

Background

Background to the litigation

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Evidence

Evidence Before The Court

Fourth, there is the following passage from the Applicant’s Costs Submissions (emphasis added): [15]I then met with Mr E upon his request, for a conference at C Lawyers on 6 March 2019 where Mr E gave me evidence from his brother to support his claim that we could, at best case, receive a limited amount of money from the asset pool which he said words to the effect of could be used to cover their final fees and maybe leave me with a little.Following the meeting, out of fear, I asked Mr E and Ms A to see what their proposed settlement offer was and I advised that I would visit my brother the following day to review it and get back to them.The next day, Thursday 7 March 2019, I was unable to visit my brother due to the immense stress which had triggered my medical condition L [[16]] . . . . On the same day, I was sent an updated Tax Invoice. . . .[15] Affidavit of Ms A 12.05.2020, [36]; annexure “M”, page 146, [60][16] At paragraph 95 of the Applicant’s Costs Submissions the applicant states she “was diagnosed with medical condition L in 2006. It drastically impacts my day to day life and ability to work and I am currently taking medication.” The applicant explained the bold portion of this passage in the following passage from the Applicant’s Costs Submissions (emphasis in original):[17]I will also note that Mr E appeared to ask his brother ‘Stick’ loaded questions in order to obtain a favourable answer (Annexure N – Email from Mr E to his Brother).[17] Affidavit of Ms A 12.05.2020, [36]; annexure “M”, page 147, [67]. The email referred to in this passage is not in evidence before me. On 7 March 2019 Ms A sent a letter to the applicant in which Ms A confirmed “our agreement to the deferred payment option for your legal fees”; and, after stating that C Lawyers “always strive to conduct your matter in the most cost effective manner and to keep you updated on all aspects including costs incurred to date”, the letter attached a “draft tax invoice of your fees and disbursements”. The letter stated the draft invoice was provided “for your information purposes only and no payment is required at this point”.[18] Ms A acknowledges she sent this letter to the applicant; and Ms A says she did so because at that time “the Respondent was of the view that it had security for the majority of its unpaid fees and disbursements given the orders . . . made 5 November 2018 which entitled the Applicant to an interim payment of $400,000 from the marital assets which in accordance with clauses 7.2.1.1 and/or 7.2.1.2 of the [STE] was required to be paid to the Respondent”.[19][18] Applicant’s affidavit 19.03.2020, [9]. The affidavit does not annex the “draft tax invoice of your fees and disbursements” referred to in the letter.[19] Affidavit of Ms A 12.05.2020, [13] On 8 March 2019 Ms A sent the applicant the following email:[20] [20] Affidavit of Ms A 12.05.2020, [15], [16]; annexure “D”, page 41I note that I have not heard from you despite your discussion with Mr E [that is, the barrister] on Wednesday, stating that you would contact us by yesterday afternoon to advise as to your intentions. I confirm my phone calls and email to you yesterday requesting an urgent response without reply.I confirm that you terminated our instructions on Tuesday at our meeting with Mr E.I asked that you take some time to reconsider your position.Later that day you spoke to me and the following day met with Mr E in an effort to assist you in coming to a settlement of the matter.Mr E informed you that if you wish to re-engage us to undertake negotiations to settle the matter or continue to represent you in any capacity, that monies would need to be placed in trust and you were to speak to your family as to their assistance and views of Mr E’s settlement advices.Under all of the circumstances that have developed and in view of the fact that the hearing is listed in the Family Court on Wednesday next week, unfortunately, I cannot allow this situation to go on as I have an obligation to the Court to inform the Court and the other parties of the situation.I have not as yet contacted or responded to the other parties or the Court. However, unless I hear from you by 4PM today I will have no option but to inform the Court and the other parties that you have terminated our retainer and that you are, at this stage, self-represented.I will send to you today a Notice of Address for Service that you will need to complete and file on the Court portal or at the Registry. . . . . It is most unfortunate that the case has taken this course, however, the effect of the significant downturn in the property market has had a pivotal impact on your case and is a matter beyond our control. It is incumbent on us as your legal advisers to provide you with realistic advices as to your risks and prospects as the case has now developed. We would not be performing our duties to you diligently if we were to ignore the current state of facts and just continue to litigate a case which will likely result in just further increasing your legal debt with no real prospect of recovery.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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