Tait v Merlo
[2007] FMCA 780
•23 May 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TAIT v MERLO | [2007] FMCA 780 |
| BANKRUPTCY – Application to transfer proceedings to Family Court of Australia. |
| Federal Magistrates Act 1999, s.39 Federal Magistrates Act 1999, r.8.02 Bankruptcy Act 1966, s.35A |
| Applicant: | RONALD VICTOR TAIT |
| Respondent: | ANNARITA MERLO |
| File number: | MLG1220 of 2006 |
| Judgment of: | McInnis FM |
| Hearing dates: | 16 March 2007, 26 March 2007 and 2 May 2007 |
| Delivered at: | Melbourne (and by video link to Adelaide) |
| Delivered on: | 23 May 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr W Sanger |
| Solicitors for the Applicant: | Watkins Boag O’Connor & Dunne |
| Respondent: | In person (by video link from Adelaide) |
| Solicitor for Supporting Creditor: | Ms J Hishon |
| Solicitors for Supporting Creditor: | Deacons |
ORDERS
Pursuant to s.39 of the Federal Magistrates Court Act 1999 the proceedings be transferred to the Family Court of Australia.
Costs reserved including costs of the Supporting Creditor.
IT IS NOTED –
That the Registrar of the Federal Magistrates Court shall be requested to bring to the attention of the Senior Registrar of the Melbourne Registry of the Family Court of Australia this order with a request that the pending property proceeding in the Family Court be given such priority as the Family Court deems appropriate.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG1220 of 2006
| RONALD VICTOR TAIT |
Applicant
And
| ANNARITA MERLO |
Respondent
REASONS FOR JUDGMENT
In these proceedings the Applicant is the Creditor (“the Applicant Creditor”) in a Petition filed on 28 September 2006. In the Creditors Petition a claim is made that the Respondent (“the Respondent Debtor”) owes the Applicant Creditor an amount of $23,849.30 being a claim for “legal costs and disbursements rendered to the Respondent Debtor”.
In the Petition the Applicant Creditor states,
“4.The following act of bankruptcy was committed by the respondent debtor within 6 months before the presentation of this petition:
The respondent debtor, having been required by a special resolution of a meeting of creditors passed on 22 March 2006 to present a debtor’s petition within 7 days failed, without sufficient cause, to present a debtor’s petition on or before 29 March 2006.”
The Respondent Debtor is the “wife” in Family Court proceedings number MLF4121/2002 (“the Family Court proceedings”).
For present purposes it is sufficient to note that the Respondent Debtor has opposed the Petition and relied upon a notice filed 14 November 2006. The notice setting out the grounds of opposition to the Petition asserts that the act of bankruptcy relied upon by the Applicant Creditor is “flawed and defective”. Criticism is made of the motion referred to at the meeting of creditors and a dispute raised as to whether or not the requisite majority was present to vote for the motion. The Respondent Debtor further argues that she did not have any contractual relationship with the creditor and “did not authorise, instruct or request the Applicant to incur legal costs and disbursements”. The Respondent Debtor disputes her indebtedness and it is noted in the grounds of opposition that the creditor has not obtained a judgment or order and cannot issue any execution in the amount claimed.
It is significant to note that the Debtor also claims to be solvent and in her notice of opposition relevantly states,
“5. The respondent is solvent and is able to meet her debts from her own money cash resources and proceeds of assets to which she is directly or beneficially entitled on the determination of the matrimonial pool in Family Court at Melbourne proceeding number MLF 4121/2003”.
In the notice the Respondent Debtor also foreshadows that if the Creditors Petition is not dismissed then it should be referred by the Court of its own motion by way of transfer to the Family Court of Australia. It is claimed,
“6.… Equities and/or cash resources available which the Respondent is entitled form part of the matrimonial pool and would be sufficient to expunge any indebtedness of the Respondent as determined by the Family Court.”
Orders were made by this Court, differently constituted, on
16 February 2007 which amongst other things required the Respondent Debtor to file and serve any application for transfer of the proceedings to the Family Court by 2 March 2007.
When the matter came before me on 16 March 2007 I made orders that the application be listed for 26 March 2007 and granted leave to the Respondent to file and serve further affidavits in opposition to the Petition by a certain date. Upon the matter returning to Court on
26 March 2007 it was clear that the application to transfer the proceedings to the Family Court should take precedence and I then made orders that that application could be listed “by video link hearing on a date to be fixed upon 5 days notice to the parties”. A date for the hearing for the application to transfer to the Family Court was fixed at a further hearing on 16 April 2007. The hearing of the application to transfer to the Family Court occurred on 2 May 2007. To the extent that it was required I dispensed with so much of the Rules that would prevent the Court from entertaining the application to transfer the proceedings to the Family Court of Australia pursuant to s.39 of the Federal Magistrates Act 1999 (the Federal Magistrates Act).
Section 39 of the Federal Magistrates Act relevantly provides:-
“(1) If a proceeding is pending in the Federal Magistrates Court, the Federal Magistrates Court may, by order, transfer the proceeding from the Federal Magistrates Court to the Federal Court or the Family Court.
(2) The Federal Magistrates Court may transfer a proceeding under this section:
(a) on the application of a party to the proceeding; or
(b) on its own initiative.
(3) …
(4) In deciding whether to transfer a proceeding to the Family Court under subsection (1), the Federal Magistrates Court must have regard to:
(a) any Rules of Court made for the purposes of subsection 40(4); and
(b) whether proceedings in respect of an associated matter are pending in the Federal Court; and
(c) whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and
(d) the interests of the administration of justice.”
That section should also be read in the light of Rule 8.02 of the Federal Magistrates Court Rules 2001 which relevantly provides:
“8.02 Transfer to Federal Court or Family Court
(1) The Court may, at the request of a party or of its own motion, transfer a proceeding to the Federal Court or the Family Court.
(2) Unless the Court otherwise orders, a request for transfer must be made on or before the first court date for the proceeding.
(3) Unless the Court otherwise orders, the request must be included in a response or made by application supported by an affidavit.
(4) In addition to the factors required to be considered by the Court under subsections 39 (3) and (4) of the Act for transfer of proceedings to the Federal Court or the Family Court, the following factors are relevant:
(a) whether the proceeding is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court or the Family Court on one or more of the points in issue;
(b) whether, if the proceeding is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceeding is not transferred;
(c) whether the proceeding will be heard earlier in the Federal Magistrates Court;
(d) the availability of particular procedures appropriate for the class of proceeding;
(e) the wishes of the parties;
(f) for family law or child support proceedings, whether the hearing of the proceeding is likely to take longer than 2 days.”
It is also important to note s.35A of the Bankruptcy Act 1996 (the Bankruptcy Act) which relevantly provides:-
“(2A) If a proceeding is pending in the Federal Magistrates Court, the Federal Magistrates Court may, on the application of a party to the proceeding or on its own initiative, transfer the proceeding to the Family Court.”
It is noted that s.35A(3) vests in the Family Court broad jurisdiction to hear and determine matters not otherwise within its jurisdiction upon transfer of a matter of the kind currently before this Court.
Throughout the proceedings the Respondent Debtor has been self-represented. It is evident that she has not received any or any adequate advice or representation to assist her either in her opposition to the Petition or in support of the application to transfer to the Family Court. So much was evident by the fact that she was unable to give precise details of the current status of what she described as “pending proceedings in the Family Court proceedings” referred to earlier in this judgment. Accordingly the Court then of its own motion requested that the Family Court file be produced to this Court. Unfortunately this required a further adjournment of proceedings in this Court as the Court was advised that the Family Court proceeding had been “archived”.
Upon production of the Family Court file it was evident that orders were made by Guest J on 11 December 2006 in the proceedings. His Honour made certain orders on that date including an order that the Respondent Debtor pay the husband’s costs. Significantly His Honour stated in his orders the following, “… payment of such costs be stayed until the final determination of the property proceedings …”.
A proper examination of the Family Court file satisfies me that the property proceedings between the Respondent Debtor and her former husband are still pending. I have not received any explanation as to why the Family Court file should have been archived. It is clear that there has been very little action taken in relation to the Family Court property proceedings which in part at least includes a property described as the “Buffalo River property”. The Respondent Debtor claims that a valuation of that property was undertaken in 2002 (Exhibit AM 16 Respondent’s affidavit sworn 31 January 2007) where a valuer expressed the view that “the market value of the whole 59.553 hectare property including all four titles, water and tobacco licences, houses, sheds and all operational plant and equipment is $1,450,000 (one million four hundred and fifty thousand dollars) exclusive of GST. I suspect that a significant reason for the delay in the Family Court is due to the fact that the Respondent Debtor in those proceedings does not have the benefit of proper and helpful legal advice to enable her to expedite the proceedings.
It is not necessary for the Court to consider in further detail the pool of assets save to note that that valuation occurred approximately 5 years ago and it is not unreasonable to conclude that the value of the property apparently occupied by the husband may well have increased over the past 5 years. It is relevant however to note that in the judgment of the Family Court of 11 December 2006 Justice Guest relevantly recites that Counsel for the husband, “made it clear that the wife could expect to receive a settlement of property from which any order of costs could be met”.
On the material before me I find that it is more likely than not that the distribution from the property pool in the Family Court proceedings is likely to result in an amount paid to the Respondent Debtor of an amount in excess of the claim by the creditor in the current Petition. The Court does not have sufficient information to make a proper assessment of the claimed indebtedness to the Supporting Creditor. Even if I am incorrect in that assessment then in my view having regard to the complexity of the issue before the Family Court and the significant and extensive nature of the property together with issues concerning valuation and the like, it would be more appropriate for that matter to be determined by the Family Court and for this Creditors Petition to then be determined by that Court. It follows therefore in my view it would be appropriate to transfer the Creditors Petition to the Family Court pursuant to the provisions set out earlier in this judgment.
I have come to that conclusion despite concerns I have regarding the lack of action in relation to the Family Court proceedings which at least in part appears to arise from the Respondent Debtor’s failure to properly prosecute any claim she may have for resolution of the pending property proceedings in the Family Court. Nevertheless the overriding factor which the Court ought to take into account in this application is whether it is in the interests of the administration of justice to transfer the application to the Family Court. In a matter of this kind where the amount claimed by the Creditor is relatively modest and the share of the family property pool of the wife likely to be an amount exceeding the amount claimed by the Creditor, it seems to me that it is more appropriate for the Family Court to deal with the Creditors Petition. It is clear that the Respondent Debtor has squarely raised the question of solvency and relied upon the potential payment she may receive as a result of any order made in the pending property proceedings in the Family Court.
I am also concerned to ensure that the parties including the Respondent Debtor can deal with outstanding property issues in the Family Court and then proceed to deal with the Petition in that Court in a manner to be determined by that Court.
Whilst I note that the Applicant Creditor has made strong submissions that this Court should not transfer the application to the Family Court, I do not regard the arguments advanced for and on behalf of the Applicant Creditor as persuasive in the sense that I am not satisfied in this particular case that there is any comparison between this application and other decisions referred to by Counsel for the Applicant. In this case there is a relatively modest amount claimed by the Creditor in the Petition and significant property issues yet to be resolved in pending proceedings in the Family Court. It is my view that the benefits of transferring the proceedings to the Family Court outweigh any benefits of the matter remaining in this Court. Those benefits are set out earlier in this judgment and the most important benefit is that the valuable property pool can be determined by the Family Court and I am satisfied that at least prime facie there would appear to be a sufficient amount in the pool of assets to satisfy the Petition even though there is pending an order for costs against the Respondent in favour of the husband in the family law proceedings which of course will need to be paid out of any proportion of the pool allocated to the Respondent. It is a more efficient use of Court time and resources in my view to permit the matter to be dealt with by the Family Court.
Accordingly is it appropriate that I make the following orders:
(1)Pursuant to s.39 of the Federal Magistrates Court Act 1999 the proceedings be transferred to the Family Court of Australia.
(2) Costs reserved.
I shall add a notation to the order that the Registrar of the Federal Magistrates Court bring to the attention of the Senior Registrar of the Melbourne registry of the Family Court of Australia this order with a request that the pending property proceeding in the Family Court be given such priority as the Family Court deems appropriate. In particular the notation will request that the pending Family Court proceedings be removed from archive and otherwise listed before a Family Court Judge at the earliest possible date along with the Creditors Petition which I have decided should be transferred to the Family Court.
The request which I have noted on the orders should not be seen as anything other than a desire on the part of this Court to bring this matter to the attention of the Family Court. It is not intended to otherwise interfere with the Family Court and nor do I presume to otherwise provide any indication to the Family Court as to the manner in which the pending proceeding in that Court should be managed other than to bring this matter to the attention of that Court.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 23 May 2007
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