Stankovic v Baulkham Hills Shire Council
[2013] FMCA 178
•11 March 2013
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| STANKOVIC v BAULKHAM HILLS SHIRE COUNCIL | [2013] FMCA 178 |
| BANKRUPTCY – Sequestration order – review – where applicant seeks to reopen proceedings in which sequestration order was made – where sequestration order subject to stay of 21 days – where during 21 day stay applicant paid debt owed to petitioning creditor – where other creditors not paid – where prior application for annulment dismissed with consent of solicitor of applicant – where trustee appointed during period of 21 day stay – whether appointment of trustee renders administration of bankruptcy wrongful – whether property wrongfully sold – whether property may be reinstated – whether orders made were appropriately made. |
| Bankruptcy Act 1966 (Cth), ss.153A, 153B |
| Stankovic v The Hills Shire Council (No 3) [2012] FCA 523 |
| Applicant: | MILOVAN STANKOVIC |
| Respondent: | BAULKHAM HILLS SHIRE COUNCIL |
| File Number: | SYG 1333 of 2008 |
| Judgment of: | Raphael FM |
| Hearing date: | 11 March 2013 |
| Date of Last Submission: | 11 March 2013 |
| Delivered at: | Sydney |
| Delivered on: | 11 March 2013 |
REPRESENTATION
| For the Applicant: | Mr Stankovic in person |
| Solicitors for the Respondent: | Watson & Watson |
ORDERS
Application dismissed.
Applicant to pay the costs of the Respondent to be taxed if not agreed in accordance with the Federal Magistrate Court (Bankruptcy) Rules 2006.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1333 of 2008
| MILOVAN STANKOVIC |
Applicant
And
| BAULKHAM HILLS SHIRE COUNCIL |
Respondent
REASONS FOR JUDGMENT
Mr Stankovic comes to the court today seeking to reopen a proceeding which resulted in a sequestration order being made against him on 12 May 2009. All proceedings under that sequestration order were, by Order 3, stayed for a period of 21 days. The reason for the stay was that Mr Stankovic told the court that he was the owner of some very valuable land and that he was in the process of making arrangements with the ANZ bank for a loan upon it. If that loan had materialised he would have been able to pay the petitioning creditor. The stay was granted so that Mr Stankovic could obtain the signature of his wife, who was the co-owner of the land, to the loan arrangements. It is not clear whether that loan materialised. I believe it did not. But in any event, before the end of the 21 days Mr Stankovic paid the amount of money claimed by the creditor on the petition.
The payment of a petitioning creditor’s debt does not automatically avoid the sequestration order. It is necessary for an applicant to seek and obtain an annulment from the court. There are two bases for annulments. One is under s.153A of the Bankruptcy Act 1966 (Cth) that all the applicant’s debts have been paid and the other, under s.153B, is that the sequestration order should not have been made. In the latter case the court has a discretion in the matter.
Mr Stankovic returned to the court seeking an extension of time of the stay. He appeared before Barnes FM. At the time the court had not got a hearing loop available for him and therefore his ability to conduct his case was limited because of his hearing disability. Barnes FM, in her judgment, made note of this and adjourned the matter to a further hearing on 2 June on which date another matter was to be heard before the Registrar.
It should be made clear at this point that although Mr Stankovic had paid the principal creditor there were other creditors and these began to appear between May and when the matter finally came before this court again in October 2009. On that date, Mr Stankovic was represented by a solicitor. He had applied for the annulment but the annulment application was based upon the fact that Mr Stankovic had paid the principal creditor. It did not take into account the fact that there were other creditors whose debts I am told today may have amounted to as much as $800,000.00. It was probably because of the existence of these other creditors that on behalf of Mr Stankovic his solicitor consented to the application for the annulment being dismissed. In any event that is what happened. Today Mr Stankovic tells the court that he gave his solicitor no authority to make that concession. But this is something between him and the solicitor as almost four years have passed since the annulment application was dismissed. With the withdrawal of the annulment application the bankruptcy proceeded and apparently Mr Stankovic’s principal asset, the land, was sold. However, because of complex family law proceedings orders were put in place which prevented any distribution from the estate.
On 4 May 2012 Mr Stankovic sought leave from the Federal Court to file and serve out of time a notice of appeal from the sequestration order made on 12 May 2009. That matter was heard by Emmett J whose judgment Stankovic v The Hills Shire Council (No 3) [2012] FCA 523, has been placed with these papers. His Honour’s judgment covers some nine pages and deals with all the matters raised at that time by Mr Stankovic. These include the fact that he had paid the Balkham Hills Shire Council the amount of money that they had claimed. His Honour dismissed the application on two grounds. Firstly, that it was so out of time that there would be prejudice to parties from leave being granted and secondly, that the merits of any appeal were so miniscule that it was not appropriate to grant leave.
In his affidavit in support of the application made today Mr Stankovic exhibits a certificate of appointment of trustee. This was dated 12 May 2009 which was during the period of the stay. Mr Stankovic claims that the appointment of the trustee at that time was wrongful and proceeds from that position to argue that the whole of the administration was wrongful and that the sale of his property was also wrongful. He seeks to be reinstated as the owner of the property.
I have not been given an explanation of why the trustee was appointed during the course of the stay, the order being that all proceedings under that order be stayed for a period of 21 days. That may well have included the appointment of the trustee. However, I am of the view that if there was a mistake in the appointment of the trustee it does not signify. In the end the sequestration order against Mr Stankovic took effect. He was unable to obtain an annulment of his bankruptcy and the trustee was entitled to carry out his duties. It is important to understand that when a sequestration order is stayed it does not result in any end to the order as I stated earlier. That can only be achieved by a dismissal on appeal or by an annulment. The sequestration order was not dismissed on appeal and the annulment did not take place.
Mr Stankovic’s principal argument before me today was that in the judgment that the court gave on 12 May 2009 much was made of him repaying the debt owed to the Balkham Hills Shire Council. Although I made that order, I am not so clear about all the matters that took place on that day. I do not believe that there was any supporting creditor on the day. My recollection is that Mr Kent, a solicitor, appeared on that day, indicating that his firm had a debt against Mr Stankovic but he had not filed an appearance as a supporting creditor and he had done so for good reason. This was because his bill of costs had not been assessed in accordance with the requirements of the Legal Practitioners Act. So whilst there was little doubt that there was some debt due from Mr Stankovic the amount of it could not be ascertained at that time.
Mr Stankovic’s take upon what was said to him by the court was that if only he paid his principal creditor all would be well. And I am prepared, for the purposes of these proceedings, to accept that this is an interpretation that was possibly open to him, although it seems clear from subsequent events that he was aware that he needed to obtain an annulment. He obtained legal advice on that annulment and presumably that legal advice was to the effect that whilst he had paid his principal creditor, there were other creditors in the wings, and therefore it could not be said that the sequestration order should not have been made. It could not be said that he had paid all his creditors and therefore neither s.153A nor s.153B could not be complied with. In all probability that was why he consented to the dismissal of the application for the annulment even though he now tells me that he did not do so. Whether he did give those instructions to his solicitor or not is really not to the point. The fact is that no court, aware of all those matters, was likely to grant an annulment, and so the bankruptcy would have continued.
Whilst Mr Stankovic believes that the actions of his solicitor were collusive and fraudulent that is a matter between him and the solicitor and not a matter for this court if the court is satisfied that the orders that were made, were made appropriately, and it is. Any damage done to Mr Stankovic as a result of the alleged inappropriate actions of his solicitors must be dealt with in proceedings between Mr Stankovic and his solicitor. That is not a ground for reopening this very old bankruptcy.
Mr Stankovich’s bankruptcy is now over. He is able to bring such proceedings as he wishes against his solicitors. He is cautioned against wasting more of his money on fruitless legal proceedings because this could well end in another sequestration order against him. However, that is a matter for him.
The application is dismissed. Mr Stankovic is to pay the costs of the respondent to be taxed if not agreed in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Raphael FM
Date: 13 March 2013
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