Stojanovski v Stojanovski

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FEDERAL COURT OF AUSTRALIA

Stojanovski v Stojanovski [2018] FCA 580

File number: NSD 2146 of 2017
Judge: FLICK J
Date of judgment: 27 April 2018
Catchwords: BANKRUPTCY AND INSOLVENCY – application for leave to prosecute proceedings in Supreme Court of New South Wales – where proceedings already commenced when sequestration order made against First Respondent – whether leave should be granted
Legislation:

Bankruptcy Act 1966 (Cth) ss 58, 116

Conveyancing Act1919 (NSW) s 37A

Family Provision Act1982 (NSW)

Cases cited:

7Steel Building Solutions Pty Ltd v Wright [2011] FCA 328

Allanson v Midland Credit Ltd (1977) 30 FLR 108

Macquarie Bank Ltd v Bardetta [2005] FCA 507, (2005) 216 ALR 670

Morris Finance Ltd v Brown [2017] FCAFC 97, (2017) 350 ALR 86

Re Rose; Ex parte Devaban Pty Ltd (unreported, Hill J, 7 October 1994)

Sturdy Components Pty Ltd v Trustee of the Bankrupt Estate of Sturt [2000] FCA 884

Swaab v Stojanovski [2017] FCCA 1509

Date of hearing: 24 April 2018
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 19
Counsel for the Applicant: Mr C J Bevan
Solicitor for the Applicant: One Legal Group
Solicitor for the First, Second and Third Respondents: The First, Second and Third Respondents did not appear
Solicitor for the Fourth Respondent: Mr J Carswell-Doherty of Foulsham & Geddes
Solicitor for the Fifth and Sixth Respondents: Ms Nicola Bailey of Polczynski Robinson Lawyers

ORDERS

NSD 2146 of 2017
BETWEEN:

STEVEN STOJANOVSKI

Applicant
AND:

ROBERT STOJANOVSKI

First Respondent

JOVANKA STOJANOVSKI

Second Respondent

JORDAN STOJANOVSKI (and others named in the Schedule)

Third Respondent

JUDGE:

FLICK J

DATE OF ORDER:

27 APRIL 2018

THE COURT ORDERS THAT:

1.The Applicant has leave to continue to prosecute to its conclusion proceeding No. 2012/0089349 in the Supreme Court of New South Wales (the “Supreme Court proceeding”) on the conditions specified in order 2 below pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”).

2.The following conditions referred to in order 1 above shall apply to the grant of leave under s 58(3) of the Bankruptcy Act which is made in order 1 above:

(a)Prayer 9 in the Applicant’s Proposed Fifth Further Amended Statement of Claim in the Supreme Court proceeding (the “5FASOC”) be amended so that the words appearing before the word “comprising” are replaced with the words:

“Alternatively, an order that the Plaintiff be entitled to equitable compensation which is to constitute a provable debt in the First Defendant’s bankrupt estate comprising of … [(a)] – [(c)]”;

(b)Prayer 10 in the 5FASOC be amended to read:

“Order that the First Defendant, Robert Stojanovski, and the Fourth Defendant, Angelina Stojanovski, jointly and severally pay the Plaintiff’s costs and the costs of the Second Defendant, Jovanka Stojanovski, of and incidental to the proceedings, including all reserved costs, on the indemnity basis and, in the case of…

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Details
Case
[2018] FCA 580
Decision Date

CaseChat Overview and Summary

In the matter of Stojanovski v Stojanovski, the parties involved in the dispute are primarily Robert Stojanovski, who is the First Respondent and has been declared bankrupt, and Steven Stojanovski, who is the Applicant seeking equitable compensation and legal costs. The case revolves around an application for leave to continue prosecuting proceedings in the Supreme Court of New South Wales, which were already underway when the sequestration order was issued against Robert Stojanovski. The central legal issue before the court was whether leave should be granted for the continuation of these proceedings, given the bankruptcy of the First Respondent.

The court was tasked with determining the conditions under which the Applicant could proceed with the litigation. It was established that there are two categories of property that would be vested in the trustees in bankruptcy: non-divisible property, which is held as bare trustees for Steven Stojanovski, and divisible property, which is subject to distribution among creditors. The court concluded that while leave should be granted, a condition must be imposed to prevent Steven Stojanovski from assuming any preferential rights over other creditors in respect of the divisible property. This decision was based on ensuring equitable treatment of all creditors.

The reasoning behind the court's decision was to maintain the integrity of the bankruptcy proceedings by ensuring that all creditors have equal access to divisible assets. The court found that the proposed conditions, including specific amendments to the statements of claim and restrictions on enforcing judgments against divisible property, were reasonable and necessary to uphold the principles of fairness and equity. The final orders of the court granted leave to continue the proceedings under specified conditions and dismissed the proceeding with no order as to costs. The court also noted an agreement between the parties that the costs of the proceeding in the Federal Court would be borne by the parties in the Supreme Court.

Orders

Orders of the court

1. The Applicant has leave to continue to prosecute to its conclusion proceeding No. 2012/0089349 in the Supreme Court of New South Wales (the “Supreme Court proceeding”) on the conditions specified in order 2 below pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”).

2. The following conditions referred to in order 1 above shall apply to the grant of leave under s 58(3) of the Bankruptcy Act which is made in order 1 above:

(a) Prayer 9 in the Applicant’s Proposed Fifth Further Amended Statement of Claim in the Supreme Court proceeding (the “5FASOC”) be amended so that the words appearing before the word “comprising” are replaced with the words:

“Alternatively, an order that the Plaintiff be entitled to equitable compensation which is to constitute a provable debt in the First Defendant’s bankrupt estate comprising of … [(a)] – [(c)]”;

(b) Prayer 10 in the 5FASOC be amended to read:

“Order that the First Defendant, Robert Stojanovski, and the Fourth Defendant, Angelina Stojanovski, jointly and severally pay the Plaintiff’s costs and the costs of the Second Defendant, Jovanka Stojanovski, of and incidental to the proceedings, including all reserved costs, on the indemnity basis and, in the case of the First Defendant, that the Plaintiff be entitled to claim any such costs as a provable debt in the First Defendant’s bankrupt estate”; and

(c) The Applicant not enforce any judgment or orders obtained by him against the property of the First Respondent, Robert Stojanovski, being property which is divisible amongst the creditors of his bankrupt estate within the meaning of s 116(1) of the Bankruptcy Act, other than by way of lodgement of a proof of debt with the Fifth and Sixth Respondents, in their capacity as joint and several trustees in bankruptcy of the First Respondent, Robert Stojanovski, pursuant to Part VI of the Bankruptcy Act, without the leave of this Court pursuant to s 58(3) of the Bankruptcy Act or otherwise.

3. The proceeding is otherwise dismissed and there be no order as to costs.

AND THE COURT NOTES:

The agreement between the parties that the costs of the present proceeding in this Court will be their costs in the Supreme Court.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Although leave should be granted, it is further concluded that a condition should be imposed in respect to property that would be divisible amongst creditors. The reason for caution arises because there are two categories of property which are vested in the trustees in bankruptcy pursuant to s 58(1) of the Bankruptcy Act, namely:·property to be transferred back to Mr Robert Stojanovski by Ms Angelina Stojanovski, being property held as trustees for Mr Jordan Stojanovski as executor of Ms Nada Stojanovski’s estate or as trustees for Mr Steven Stojanovski either under the testamentary agreement or as notional estate of Ms Nada Stojanovski which is gifted to Mr Steven Stojanovski in consequence of orders for his provision under the Family Provision Act; and·property held for Mr Robert Stojanovski’s benefit which is to be transferred back to him by Ms Angelina Stojanovski out of which Mr Steven Stojanovski seeks (inter alia) monetary relief in the form of equitable compensation and legal costs in the Supreme Court.The former category of property, referred to as the “non-divisible property” is held by the trustees, or will be so held when it is transferred to them by Ms Angelina Stojanovski, as bare trustees for Mr Jordan Stojanovski and ultimately Mr Steven Stojanovski. The latter category of property, however, would be divisible between the creditors of Mr Robert Stojanovski pursuant to s 116(1) of the Bankruptcy Act. A condition should thus be imposed to ensure that Mr Steven Stojanovski would not assume any preferential right over other creditors to that “divisible property” to satisfy any orders that may be obtained for equitable compensation and costs. The drafting of conditions was the subject of agreement between the Applicant and the trustees. CONCLUSIONS Leave should be granted pursuant to s 58(3)(b) of the Bankruptcy Act but a condition should be imposed to ensure that Mr Steven Stojanovski does not secure any preferential right in respect to property otherwise divisible between creditors in accordance with s 116 of the Bankruptcy Act. Although the Fourth Respondent appeared represented by her solicitor and neither consented to nor opposed the grant of leave, no costs order should be made in her favour by this Court.THE ORDERS OF THE COURT ARE:1.The Applicant have leave to continue to prosecute to its conclusion proceeding No. 2012/0089349 in the Supreme Court of New South Wales (the “Supreme Court proceeding”) on the conditions specified in order 2 below pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”).2.The following conditions referred to in order 1 above shall apply to the grant of leave under s 58(3) of the Bankruptcy Act which is made in order 1 above:(a)Prayer 9 in the Applicant’s Proposed Fifth Further Amended Statement of Claim in the Supreme Court proceeding (the “5FASOC”) be amended so that the words appearing before the word “comprising” are replaced with the words:“Alternatively, an order that the Plaintiff be entitled to equitable compensation which is to constitute a provable debt in the First Defendant’s bankrupt estate comprising of … [(a)] – [(c)]”;(b)Prayer 10 in the 5FASOC be amended to read:“Order that the First Defendant, Robert Stojanovski, and the Fourth Defendant, Angelina Stojanovski, jointly and severally pay the Plaintiff’s costs and the costs of the Second Defendant, Jovanka Stojanovski, of and incidental to the proceedings, including all reserved costs, on the indemnity basis and, in the case of the First Defendant, that the Plaintiff be entitled to claim any such costs as a provable debt in the First Defendant’s bankrupt estate”; and(c)The Applicant not enforce any judgment or orders obtained by him against the property of the First Respondent, Robert Stojanovski, being property which is divisible amongst the creditors of his bankrupt estate within the meaning of s 116(1) of the Bankruptcy Act, other than by way of lodgement of a proof of debt with the Fifth and Sixth Respondents, in their capacity as joint and several trustees in bankruptcy of the First Respondent, Robert Stojanovski, pursuant to Part VI of the Bankruptcy Act, without the leave of this Court pursuant to s 58(3) of the Bankruptcy Act or otherwise.3.The proceeding is otherwise dismissed and there be no order as to costs. AND THE COURT NOTES:The agreement between the parties that the costs of the present proceeding in this Court will be their costs in the Supreme Court.

Ratio Decidendi

Legal Principle Established

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