Symes v Holbrook

Case [2005] FCAFC 219

FEDERAL COURT OF AUSTRALIA

Symes v Holbrook [2005] FCAFC 219

BANKRUPTCY – appeal - trustee’s and controlling trustee’s costs, charges and expenses – annulment of bankruptcy – whether Federal Magistrate in error of law in concluding that defence and counter-claim to trustee’s action for payment of costs, charges and expenses precluded as an abuse of process – prior consider of trustee’s conduct in exercise of discretion on costs for annulment

PROCEDURE – abuse of process – trustee’s and controlling trustee’s claim for payment of costs, charges and expenses – trustee’s conduct in relation to bankrupt estate - consideration of such conduct in exercise of discretion in relation to costs on annulment – subsequent defence and counter-claim for breach of contractual statutory and common law duties by trustee – whether defence and counter-claim an abuse of process because of prior litigation

Bankruptcy Act 1966 (Cth) ss 30, 153A, 153B, 154, 154(2), 188, 189A, 210

Connelly v Director of Public Prosecutions [1964] AC 1254 referred to
DA Christie Pty Ltd v Baker [1996] 2 VR 582 referred to
Holbrook v Symes [2004] FMCA 798 cited
Hunter v Chief Constable of the West Midlands Police [1982] AC 529 considered
Maxwell-Smith v S & E Hall, in the matter of Maxwell-Smith [2004] FCA 840 referred to
McKay v Mobil Oil Australia Ltd [1999] FCA 1124 referred to
Miller v University of New South Wales (2003) 132 FCR 147 cited
Nominal Defendant v Manning (2000) 50 NSWLR 139 referred to
Reichel v Magrath (1889) 14 App. Cas. 665 considered
Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 referred to
Rogers v The Queen (1994) 181 CLR 251 considered
State Bank of New South Wales Limited v Stenhouse Ltd (1997) Aust Torts Reports 81-423 cited
Symes v Holbrook (No. 2) [2004] FMCA 6 cited
Symes v Holbrook (No. 3) [2004] FMCA 71 cited
Symes v Holbrook [2002] FMCA 26 cited
Symes v Holbrook [2003] FCA 96 referred to
Walton v Gardiner (1993) 177 CLR 378 cited

FREDERICK KEITH SYMES v KIM DAVID HOLBROOK
WAD 9 of 2005

LEE, MOORE AND NICHOLSON JJ
24 OCTOBER 2005
PERTH


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 9 OF 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

FREDERICK KEITH SYMES
APPELLANT

AND:

KIM DAVID HOLBROOK
RESPONDENT

JUDGES:

LEE, MOORE AND NICHOLSON JJ

DATE OF ORDER:

24 OCTOBER 2005

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The appeal be allowed.

2.The orders made by Federal Magistrate McInnis on 8 December 2004 be set aside.

3.Costs reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 9 OF 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

FREDERICK KEITH SYMES
APPELLANT

AND:

KIM HOLBROOK
RESPONDENT

JUDGES:

LEE, MOORE AND NICHOLSON JJ

DATE:

24 OCTOBER 2005

PLACE:

PERTH

REASONS FOR JUDGMENT

THE COURT

  1. This is an appeal from orders made by the Federal Magistrates…

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AGLC
Symes v Holbrook [2005] FCAFC 219
Case
[2005] FCAFC 219
Decision Date

CaseChat Overview and Summary

The Federal Court of Australia heard an appeal from the Federal Magistrates Court in Symes v Holbrook, where the appellant's points of defence and counter-claim were struck out, and the counter-claim was permanently stayed as an abuse of process. The appellant was granted an opportunity to file amended points of defence and ordered to pay the respondent's costs. The appellant, who was married and employed at the Argyle Diamond Mine, returned to Perth after his wife's suicide to find significant credit card debt. He sought advice from a financial counsellor and was referred to the respondent, an insolvency expert. The respondent registered a caveat against the family home and claimed to have been appointed as the controlling trustee of the appellant's estate. The appellant denied the respondent's claims and sought to amend his defence and counterclaim.

The primary legal issues in the appeal were whether the Federal Magistrates Court correctly exercised its discretion to strike out the appellant's points of defence and counter-claim and whether there was an abuse of process. The Federal Court found that the Magistrate erred in concluding that there was an abuse of process and striking out the points of defence and counter-claim. The court considered that the issues raised by the defence and counter-claim were different from those in a previous proceeding and should not have been dismissed. The court emphasised the importance of resolving the litigation through mediation and suggested transferring the case to the Federal Court for further directions.

The Federal Court allowed the appeal and set aside the orders made by the Federal Magistrates Court. The court ordered that the respondent pay the appellant's costs on the appeal and the costs of the proceeding in the Federal Magistrates Court. The court clarified that any costs payable by the respondent would not be paid from the appellant's estate as a former bankrupt. The appeal outcome allowed the appellant to pursue his defence and counter-claim, correcting the error made by the Federal Magistrates Court.

Orders

Orders of the court

1. The appeal be allowed.

2. The orders made by Federal Magistrate McInnis on 8 December 2004 be set aside.

3. Costs reserved.

Background

Background to the litigation

This is an appeal from orders made by the Federal Magistrates Court on 8 December 2004 following the delivery of reasons by a Magistrate of that court on 12 November 2004. In those orders the appellant’s points of defence and counter-claim in a proceeding commenced by the respondent in that court were struck out and the counter-claim permanently stayed as an abuse of process. The appellant was given an opportunity to file and serve amended points of defence and was ordered to pay the respondent’s costs. FACTUAL BACKGROUND To properly understand his Honour’s reasons it is necessary to trace the history of litigation between the parties and to set out the factual background from which this proceeding emerged. The relevant facts were set out in reasons of his Honour delivered on 20 February 2002 in Symes v Holbrook [2002] FMCA 26 (‘Symes v Holbrook (No 1).’) The following account is based on those findings. The appellant, 56, was married on 31 March 1985. In April 1986 the appellant and his wife, as joint tenants, acquired their matrimonial home in a suburb of Perth. Between June 1994 and 17 March 2000 the appellant was employed as a plant operator at the Argyle Diamond Mine in the north of the State of Western Australia. It appears that the appellant was a ‘fly in/fly out’ employee who worked a roster of shifts at the mine over 4 or 6 weeks and then returned to Perth for one week’s leave. The appellant’s salary was paid into the joint bank account of the appellant and his wife. The account was operated almost exclusively by the wife who managed the family’s finances. On 16 March 2000 the appellant’s wife committed suicide, leaving two children to be cared for, a daughter aged 14 and a son aged 10. The appellant immediately terminated his employment at the Argyle Mine and returned to Perth. On his return the appellant learned that approximately $85 000 was outstanding on a number of credit cards. Most of the cards were in the name of the appellant, and the balance in the joint names of the appellant and his wife. The appellant maintained that he had not applied for the cards and had no liability for most of the debts incurred. Although the amount due under the mortgage against the family home was substantially more than the appellant had understood to be owing, his equity in the property was sufficient to meet debts owed by the appellant apart from the amounts debited to the appellant on the disputed credit cards. The appellant consulted an accountant and a financial counsellor for advice on his financial circumstances. The accountant referred the appellant to the respondent, a person with expertise in insolvency, for further advice. On or about 6 April 2000 the appellant instructed an agent to sell the family home. His Honour found that the appellant first met with the respondent to receive advice on 14 April 2000. It is to be noted, however, that in a letter to creditors dated 13 April 2000 the respondent stated that the appellant had appointed the respondent as controlling trustee of the appellant’s estate under s 188 of the Bankruptcy Act 1966 (Cth) (‘the Act’) by a notice of appointment dated 10 April 2000. It is to be noted also that on the 14 April 2000 at 11.14 am the respondent registered a caveat against the interest of the appellant in the family home.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

LEE, MOORE AND NICHOLSON JJ
The orders will make apparent that any costs payable by the respondent are not to be paid out of the estate of the appellant as a former bankrupt.CONCLUSION For these reasons we consider that the appeal must be allowed, the orders made by the Federal Magistrates Court on 8 December 2004 be set aside; and the respondent ordered to pay personally the appellant’s costs of this appeal and the costs of the proceeding below.

Ratio Decidendi

Legal Principle Established

Established by: LEE, MOORE AND NICHOLSON JJ

We are, therefore, of the opinion that the issues raised by the defence and counter-claim are quite clearly a different issue from that which was before the Court in the most limited way in Symes v Holbrook (No 3) concerning the exercise of a discretion for costs. We are of the opinion, therefore, that the Magistrate erred in law when he concluded that there was an abuse of process and made the order striking out the points of defence and counter-claim.ADDITIONAL CONSIDERATIONS We are concerned at the history of this litigation. It clearly has imposed, and continues to impose, considerable burdens on both parties, in particular the appellant. In our view, it should be capable of resolution by mediation and each party should give serious consideration to that course. We consider that in the circumstances it may be appropriate for the parties to consent to the proceeding to be transferred to this Court. It would then be for a judge of this Court to make appropriate directions in respect of mediation and, should mediation fail, to proceed to determine the issues raised in the proceeding. COSTS In our view costs must follow the event; that is, the respondent will be ordered to pay the costs of the appellant on this appeal and of the proceeding in the court below. The orders will make apparent that any costs payable by the respondent are not to be paid out of the estate of the appellant as a former bankrupt.CONCLUSION For these reasons we consider that the appeal must be allowed, the orders made by the Federal Magistrates Court on 8 December 2004 be set aside; and the respondent ordered to pay personally the appellant’s costs of this appeal and the costs of the proceeding below.