SWERSKY and Velos v Alexopoulos - [2002] FMCA 328

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SWERSKY & VELOS v ALEXOPOULOS & ANOR

[2002] FMCA 328

BANKRUPTCY – whether sequestration order should be set aside – review of Registrar’s decision – Application for review not opposed – whether other creditors interests should be taken into account – whether publication in law list sufficient notice to creditors – Trustee’s role on application to set aside compared with annulment.

Bankruptcy Act 1966, s.153B

Demostine Nominees Pty Ltd v Raymond Theodore Osborne [2002] FMCA 235 (26 September 2002)

Applicant:

SWERSKY & VELOS

Respondents:

ALEXOPOULOS & ANOR

File No:

MZ 718 of 2002

Delivered on:

25 November 2002

Delivered at:

Melbourne

Hearing Date:

25 November 2002

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

(the petitioning creditor)

Mr P Fary

Solicitors for the Applicant:

Velos & Davis

Counsel for the Respondents:

(the debtors)

Mr M Galvin

Solicitors for the Respondents:

Pryles & Defteros

ORDERS

The orders made by the court on 8 October 2002 be set aside.
The creditors petition filed on 23 July 2002 be dismissed.
Leave is granted to the trustee, Clyde Peter White, to seek to make application to be heard and, if permitted, to make application for an order, if any, for payment of his remuneration and/or expenses incurred in the administration of the estates of the applicant debtors.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ718 of 2002

SWERSKY & VELOS

Applicant

And

GEORGE ALEXOPOULOS & DIMITRA ALEXOPOULOS

Respondents

REASONS FOR JUDGMENT

(Revised from Transcript)

In this application George Alexopoulos and Dimitra Alexopoulos (the debtors) were the respondents to a creditor's petition filed with the court and the subject of a sequestration order made on 8 October 2002. The Applicants seek to set aside that order by application for review filed 29 October 2002. When the matter was heard before the court this day counsel for the debtors had sought an order that the orders made by the court on 8 October 2002 be set aside and an order that the creditors' petition which had been filed with the court on 23 July 2002 be dismissed. No further order was sought.
Counsel representing the petitioning creditors who are the respondents to this application for review neither consented to nor opposed the orders sought for and on behalf of the debtors. When the matter was before me a representative, however, of the trustee had indicated that there would be a claim arising out of the expenses and remuneration to be charged by the trustee who I note in this instance is Mr Clyde Peter White who consented to act as trustee, on 19 July 2002.
The court needs to consider whether it would permit the trustee to, firstly, intervene in the proceedings at this stage in a way that would otherwise lead to an order other than the orders sought by the debtors, and then if leave were to be granted, whether indeed the trustee should then be heard, not simply on the question of the orders to be made, but on other orders, and indeed, whether or not an opportunity should be given to what are said to be potential, if not current, creditors of the debtors. In particular, the issue then arises as to whether or not the trustee has a right, having persuaded the court that he should be heard, to have the court consider orders if any which may be made in favour of the trustee against either of the parties in relation to remuneration and/or expenses incurred by the trustee in the administration of the bankrupts’ estate.
Where there is clearly an application to set aside orders made by the court on an earlier occasion it should be inferred that proper notice was given. In the present case where proper notice is given in the daily law list to potential creditors of this application this day, at least against the entities listed in the published law list, that is sufficient notice to any potential creditors on an application of this kind to enable them to intervene or seek to intervene in this proceeding.
Where a sequestration order has been made with consequential orders I am satisfied that in normal circumstances if there are other creditors who may be affected by the sequestration order, and who otherwise have an interest, that it is appropriate to permit intervention. So much is clear from the decision that I made in the matter of Demostine Nominees Pty Ltd v Raymond Theodore Osborne [2002] FMCA 235 (26 September 2002).
In the present case the court has noted, though not formally received as evidence, two items of correspondence from the trustee. The first is a letter dated 1 November 2002 and the second a letter dated

25 November 2002. It is noteworthy that in this case the application for review in its original form had sought alternative orders. The first was that the petition be dismissed. In the alternative an order was sought pursuant to section 153B of the Bankruptcy Act 1966 annulling the debtors’ bankruptcies. It is important to be aware that that was the state of the application for review when it was filed with this court on 29 October 2002.
Mr Galvin, counsel for the debtors, has informed the Court that when this matter was before the registrar on 4 November 2002, his clients indicated in open court in the presence of the representative of the trustee that the annulment alternative in the application would not be pursued and that rather the debtors would pursue the order that the petition be dismissed. It is clear therefore that the correspondence which has been placed on the court file dated 1 November 2002 from the trustee seeking expenses would have greater relevance and effect if indeed the court were now to consider an annulment application.
I accept that in the circumstances of annulment application that there is a statutory duty and obligation on the part of the trustee to provide a report to the court. There can be no criticism of the trustee in providing the report. However, as the matter has unfolded, given the abandonment of the application for annulment, it seems to me that the facts and circumstances changed considerably and as a matter of law there does not appear in my view to be any basis upon which the trustee can and should make representations to this court for and on behalf of any other creditors. Nor should the trustee report in a way otherwise than consistent with an annulment application.
To that extent the letter of 25 November 2002 also seeking expenses which is now before the court is not in my view a letter which could properly be acted upon by the court. In any event, even if I were to accept for the moment that the trustee has standing to be heard in this application, and even if I were to accept that the trustee has been able to bring to the court's attention issues which may touch upon the rights of other creditors, I am satisfied on the material before me that there is very little by way of evidence that would otherwise persuade the court to not proceed to make the orders requested by the debtors unopposed by the petitioning creditors.
In circumstances where at best there are some minor debts alleged to be owed to other creditors who may or may not be able to pursue rights which may include obtaining judgments and then if necessary issuing bankruptcy notices and filing creditors' petitions, it seems to me that where there is no conduct of that kind that is contemplated, nor is there any evidence of such conduct being contemplated, and in the absence of any further evidence or the interests of creditors directly from those creditors, it is inappropriate to delay further the making of orders in this matter. Accordingly, I should make orders as follows:
(1)The orders made by the court on 8 October 2002 be set aside.
(2)The creditors petition filed on 23 July 2002 be dismissed.
I am concerned, however, about whether or not a trustee in circumstances of this kind where, on the face of it, expenses have been incurred and no doubt a claim for remuneration otherwise be made, does not have an opportunity to be heard or at least to indicate to the court that he should have such an opportunity to be heard and then to at least seek to persuade the court, if being granted that opportunity, that the court has power to make any orders in favour of the trustee in relation to the remuneration and expenses.
In the limited time available to me, and indeed available to the trustee this day, I do not think it would be fair to ultimately conclude that matter in the absence of an opportunity being given to the trustee to make application to be heard and for the court to consider that along with, if successful, any application which may be made concerning the trustee's remuneration and expenses. I will therefore further order:
(3)Leave is granted to the trustee, Clive Peter White, to seek to make application to be heard and, if permitted, to make application for an order, if any, for payment of his remuneration and/or expenses incurred in the administration of the estates of the applicant debtors.

Note – The Trustee did not pursue an application to be heard or to make a claim for payment of remuneration.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 25 November 2002