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Sutherland v Jatkar

Sutherland v Jatkar

Case [2014] FCA 532 22 May 2014

Provable Debt

Contingent Liability

Contribution

Exclusive Jurisdiction

Abuse of Process

Bankruptcy Law

Civil Litigation & Procedure

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FEDERAL COURT OF AUSTRALIA
Sutherland v Jatkar [2014] FCA 532

Citation: Sutherland v Jatkar [2014] FCA 532

Parties: DR BRUCE SUTHERLAND and JOYBELLE TRIANGLE PTY LTD (ACN 005 126 036) v
DR SUHAS VISHNUPANT JATKAR

File number: VID 1176 of 2013

Judge: PAGONE J

Date of judgment: 22 May 2014

Catchwords: BANKRUPTCY – meaning of ‘provable debt’ – whether claim for contribution under s 23B of the Wrongs Act 1958 (Vic) a provable debt – whether claim a contingent debt or liability – whether claim a demand in the nature of unliquidated damages arising otherwise than by reason of contract, promise or breach of trust – whether claim within exclusive jurisdiction of Federal Court and Federal Circuit Court – whether claim an abuse of process.

Legislation: Bankruptcy Act 1966 (Cth), ss 5, 35, 35A, 58(3), 60, 82
Companies (Tasmania) Code, s 556(1)
Trade Practices Act 1974 (Cth), ss 82, 87
Wrongs Act 1958 (Vic), ss 23A, 23B

Cases cited: Ansett Australia Ltd v Travel Software Solutions Pty Ltd (2007) 65 ACSR 47
Arthur Young v Brunswick NL [1999] 1 VR 387
Australian Competition and Consumer Commission v Black on White Pty Ltd [2004] FCA 363
Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213
Coventry v Charter Pacific Corporation Ltd (2005) 227 CLR 234
Fielding v Vagrand Pty Ltd (in liq) (1992) 39 FCR 251
Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52
Geor v Delany [2009] ASC 14
Harvey v RG O’Dell Pty Ltd [1958] 2 QB 78
James Hardy v Seltsam Pty Ltd (1998) 196 CLR 53
John Holland (Construction) Pty Ltd v Jordin (No 2) (1998) 79 FCR 210
Lofthouse v Commissioner of Taxation (2001) 164 FLR 106
Lovell v Jenkin [2008] FCA 637
Lyford v Cary (1985) 3 ACLC 515
Meriton Apartments Pty Ltd v Industrial Court of New South Wales (2008) 171 FCR 380
Morris v Maroudeas (1986) 12 FCR 346
Official Trustee in Bankruptcy v CS & GJ Handby Pty Ltd (1989) 21 FCR 19
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Re Hide; ex parte Llynvi Coal and Iron Company (1871-2) LR 7 Ch App 28
Van Win Pty Ltd v Eleventh Mirontron Pty Ltd [1986] VR 484
WA Brown & Sons Pty Ltd [1964-5] NSWR 575
Wintle v Stevedoring Industry Finance Committee [2003] VSC 102

Date of hearing: 15 and 24 April 2014

Date of last submissions: 24 April 2014

Place: Melbourne

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 22

Solicitor for the Applicants: John W Ball & Sons

Counsel for the Applicants: Mr SM Anderson SC with Dr EJ Boros

Solicitor for the Respondent: Marsh & Maher

Counsel for the Respondent: Mr GT Bigmore QC with Mr C Brown

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 1176 of 2013

BETWEEN:
DR BRUCE SUTHERLAND
First Applicant

JOYBELLE TRIANGLE PTY LTD (ACN 005 126 036)
Second Applicant

AND:
DR SUHAS VISHNUPANT JATKAR
Respondent

JUDGE:

PAGONE J

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 Sutherland v Jatkar

Details

AGLC: Sutherland v Jatkar [2014] FCA 532
Case: [2014] FCA 532
Decision Date

CaseChat Overview and Summary

The applicants, Dr Bruce Sutherland and Joybelle Triangle Pty Ltd, sought a declaration that their claim for contribution against the respondent, Dr Suhas Vishnupant Jatkar, was not a provable debt and, therefore, that Dr Jatkar was not released from it upon his discharge from bankruptcy. Dr Jatkar had been made bankrupt on 20 November 2002 and was discharged from bankruptcy on 28 November 2006. The applicants and Dr Jatkar were co-defendants in a proceeding in the Supreme Court which had been commenced by a husband and wife (the plaintiffs) in relation to an alleged misdiagnosis of the foetus during the wife’s pregnancy. The plaintiffs alleged in that proceeding that the defendants had caused them loss and damage by misdiagnosing the conditions of the foetus. On 3 March 2003 the plaintiffs commenced the proceedings in the Supreme Court seeking damages against the applicants and Dr Jatkar alleging that the plaintiffs had suffered loss as a result of the negligence of the applicants and Dr Jatkar and, or alternatively, as a result of the breach of an implied contractual term to exercise reasonable care in connection with the medical treatment provided to the wife. On 4 March 2005, before Dr Jatkar was discharged from bankruptcy, the applicants filed and served on Dr Jatkar in the Supreme Court proceedings a notice by one tortfeasor claiming contribution from Dr Jatkar under s 23B of the Wrongs Act 1958 (Vic). On 24 March 2005, also during the period of bankruptcy, Dr Jatkar filed and served a similar notice for contribution upon the applicants. The commencement of the proceedings against Dr Jatkar, and the service of notices of contribution between the potential joint tortfeasors, occurred without leave having been sought under s 58(3) of the Bankruptcy Act 1966 (Cth). On 8 June 2012 the applicants settled with the plaintiffs and, on 29 June 2012, the applicants paid the settlement sum to the plaintiffs. That resulted in the discontinuation of the plaintiffs’ claim in the Supreme Court proceedings against all three defendants (including Dr Jatkar), leaving the contribution claim between Dr Jatkar and the applicants for the determination by the Supreme Court. That claim was fixed for trial before a judge and jury and was to commence on 17 June 2013 on an estimate of 20 hearing days. In May 2013 Dr Jatkar sought a stay of the contribution claim against him and the vacation of the trial date on the basis that the applicants’ contribution claim had been commenced without leave when the respondent was bankrupt and could no longer be maintained as it was a provable debt in his bankruptcy from which he has been released. On 27 June 2013 Williams J granted a temporary stay of the contribution claim upon her Honour concluding that the contribution claims were provable debts in the bankruptcy. The applicants contended that their claim against Dr Jatkar for contribution was not a provable debt or liability within the meaning of s 82(1) of the Bankruptcy Act 1966 (Cth) because any liability to them did not arise until their liability to the plaintiffs was ascertained. Dr Jatkar contended, in respect of s 82(1), that the claim against him was a contingent claim and, therefore, that it was provable in his bankruptcy. The applicants contended that their claim for contribution against Dr Jatkar was a demand in the nature of unliquidated damages and that it arose otherwise than by reason of a contract, promise or breach of trust, namely, by way of a statutory right to contribution. Dr Jatkar contended that the demand was not for, or in the nature of, damages and that, if it was a claim for damages, it arose from the plaintiffs claim in contract. Dr Jatkar also contended that the application in this court was an abuse of process because the issue which they sought to have determined had been considered by Williams J in the Supreme Court when considering the application for those proceedings to be stayed. The liability which arises between joint tortfeasors under provisions such as s 23B of the Wrongs Act 1958 (Vic) has been described as peculiar and anomalous. Joint tortfeasors may not have direct claims against each other in respect of a joint liability which they may have to a person who has been wronged by them and, in such cases, the claims between the joint tortfeasors for contribution are independent from the claim of the plaintiff against them in tort or contract and do not arise until “payment of the liability to which [the right to contribution] relates and not before” notwithstanding that “litigation on the indemnity [can] take place before there is any liability”. The parties were agreed that Dr Jatkar’s obligation to the plaintiff was a provable debt in his bankruptcy and, therefore, that he was released from that liability by force of the Bankruptcy Act 1966 (Cth); but the parties were in disagreement about whether the separate and independent claim of the applicants against Dr Jatkar for contribution was similarly released. The applicants’ claim for contribution was made against Dr Jatkar on 4 March 2005 at a time when he was liable in respect of the claims made by the plaintiffs, but, at that time, s 58(3) of the Bankruptcy Act 1966 (Cth) prohibited commencing any legal proceedings against him in respect of a provable debt or the taking of any fresh step in any such proceeding against him without the leave of the court. The plaintiffs’ action against Dr Jatkar and the applicants’ claims for contribution against him both occurred without leave having been sought, or obtained, from the Court pursuant to s 58(3). However, at the time the claims for contribution were made, Dr Jatkar was a person liable in respect of the damage claimed by the plaintiffs against both him and the applicants. The applicants were entitled under s 23B to claim contribution from him although that entitlement was qualified by the need to seek leave under s 58(3) of the Bankruptcy Act 1966 (Cth) if the claim was a provable debt. The case was conducted on the basis that the failure to have obtained leave under s 58(3) was a procedural anomaly but not that the failure to have sought leave vitiated the applicants’ notice for contribution against Dr Jatkar. The separate and independent liability which Dr Jatkar had to the applicants, however, did not arise until 8 June 2012 when the applicants settled with the plaintiff. The first question which arises is, therefore, whether that claim was nonetheless a contingent debt or liability within the meaning of s 82(1) and therefore whether it was provable in the bankruptcy. The object of s 82(1) is to capture and to have proved in the bankruptcy a broad range of debts and liabilities extending to past and future debts

Orders