Tapp v Official Trustee in Bankruptcy - [2009] FMCA 1264

FEDERAL MAGISTRATES COURT OF AUSTRALIA

TAPP & ANOR v OFFICIAL TRUSTEE IN BANKRUPTCY

[2009] FMCA 1264

BANKRUPTCY – Application for leave to commence and take fresh steps in Supreme Court proceedings against bankrupt former solicitor – where proposed claim in contract and in tort.

Bankruptcy Act 1966 (Cth), ss.58, 82, 117
Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s.6

Allanson v Midland Credit Ltd and Another (1977) 30 FLR 108; [1977] FCA 14
Fraser v Commissioner of Taxation and Another (1996) 69 FCR 99
JN Taylor Holdings Limited (in liquidation) & Anor v Bond & Others (No. 11) [1992] SASC 3692
Lovell v Penkin (a bankrupt) and Another (2008) 101 ALD 335; [2008] FCA 637
Perpetual Trustees Victoria Ltd v Malouf [2008] NSWSC 834
Pucar & Ors v Grubb [2004] FMCA 42
Re Peter Lyle Sharp; Ex Parte: Tietyens Investments Pty Ltd (in liq) & Anor [1998] FCA 1367
The Owners - Strata Plan No.50530 v. Walter Construction Group Limited (In Liquidation) & Ors. [2007] NSWCA 124

Applicants:

PETER TAPP, KEITH TAPP

Respondent:

THE OFFICIAL TRUSTEE IN BANKRUPTCY (AS TRUSTEE OF THE ESTATE OF ROGER WINCHESTER GRAY)

File Number:

SYG2303 of 2009

Judgment of:

Barnes FM

Hearing date:

2 December 2009

Delivered at:

Sydney

Delivered on:

2 December 2009

REPRESENTATION

Counsel for the Applicants:

Mr N Furlan

Solicitors for the Applicants:

Mason Lawyers

Respondent:

No appearance

ORDERS

Subject to Orders 2 and 3 the applicants have leave pursuant to s.58(3) of the Bankruptcy Act 1966 (Cth) to commence proceedings in the Supreme Court of New South Wales for damages against Roger Winchester Gray by filing a statement of claim substantially in terms of the draft statement of claim annexed to the affidavit of Conrad Curray sworn on 16 September 2009 and marked “C” and to take any steps in those proceedings.
The grant of leave is conditional upon the applicants undertaking to the Court in writing within 14 days that:
(a)they will not seek final relief in the proceedings without having given 7 days notice to the Office of the Official Trustee; and
(b)they will not oppose any application by the Official Trustee to be joined or heard in the official proceedings.
Such leave does not extend to the taking of any step to enforce any judgment obtained in the proceedings without leave first being obtained in this Court.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG2303 of 2009

PETER TAPP, KEITH TAPP

Applicants

And

THE OFFICIAL TRUSTEE IN BANKRUPTCY (AS TRUSTEE OF THE ESTATE OF ROGER WINCHESTER GRAY)

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

The applicants, Peter and Keith Tapp, are brothers. Roger Winchester Gray was their solicitor between about 1994 and 29 June 2007 on which date, following a complaint by the Law Society of New South Wales to the office of the Legal Services Commissioner, Mr Gray’s practising certificate was suspended and a receiver appointed to manage his legal practice. Mr Gray was made bankrupt in April 2009.
The applicants seek leave to…

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.

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Details

Case: [2009] FMCA 1264
Decision Date: 2 December 2009

CaseChat Overview and Summary

The applicants in Tapp v Official Trustee in Bankruptcy sought leave to commence proceedings against Roger Winchester Gray for damages. The dispute arose under the Bankruptcy Act 1966 (Cth), with the applicants aiming to file a statement of claim in the Supreme Court of New South Wales. The application was brought before the Court, which needed to decide whether the applicants should be granted leave to proceed with their action against Gray.

The primary legal issue before the Court was whether the applicants should be granted leave to commence proceedings for damages against Gray. This involved a consideration of the statutory provisions of the Bankruptcy Act 1966 (Cth) and the appropriate conditions under which such leave should be granted. The Court had to balance the applicants’ rights to seek redress against the potential impact on the administration of the bankrupt estate and the interests of creditors.

The Court found that the applicants should be granted leave to commence proceedings, subject to certain conditions. These conditions included the applicants' commitment to provide seven days' notice to the Office of the Official Trustee before seeking final relief and to not oppose the Official Trustee's application to be joined or heard in the official proceedings. The Court also stipulated that the leave did not extend to enforcing any judgment obtained in the proceedings without further leave. This decision balanced the applicants' right to seek damages against the statutory responsibilities of the Official Trustee in managing the bankrupt estate.

Accordingly, the Court granted the applicants leave to commence proceedings, with the conditions outlined in Orders 2 and 3. The applicants must provide written undertakings within 14 days, and any enforcement of a judgment must be subject to further leave from the Court.

Orders

Orders of the court

Subject to Orders 2 and 3 the applicants have leave pursuant to s.58(3) of the Bankruptcy Act 1966 (Cth) to commence proceedings in the Supreme Court of New South Wales for damages against Roger Winchester Gray by filing a statement of claim substantially in terms of the draft statement of claim annexed to the affidavit of Conrad Curray sworn on 16 September 2009 and marked “C” and to take any steps in those proceedings.

The grant of leave is conditional upon the applicants undertaking to the Court in writing within 14 days that:

(a) they will not seek final relief in the proceedings without having given 7 days notice to the Office of the Official Trustee; and

(b) they will not oppose any application by the Official Trustee to be joined or heard in the official proceedings.

Such leave does not extend to the taking of any step to enforce any judgment obtained in the proceedings without leave first being obtained in this Court.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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