Todisco v Reidy
[2013] FCCA 888
•18 July 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TODISCO v REIDY | [2013] FCCA 888 |
| Catchwords: BANKRUPTCY – Extempore ruling. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.77, 178 Federal Circuit Court Rules 2001 (Cth), pt.13 |
| Stillman v Pascoe [2010] FMCA 549 Dunwoody v the Official Receiver [2005] FMCA 1634 |
| Applicant: | FRANK TODISCO |
| Respondent: | GEOFFREY PHILLIP REIDY (AS TRUSTEE OF THE BANKRUPT ESTATE OF FRANK TODISCO) |
| File Number: | MLG 1055 of 2013 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 18 July 2013 |
| Date of Last Submission: | 18 July 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 18 July 2013 |
REPRESENTATION
| The Applicant: | In person |
| Counsel for the Respondent: | Mr Ng (by telephone) |
| Solicitors for the Respondent: | Matthews Folbigg Pty Ltd |
ORDERS
The matter be adjourned to this Court for trial before Judge Burchardt on 10 October 2013 at 10.00am.
The parties’ costs of today be reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1055 of 2013
| FRANK TODISCO |
Applicant
And
| GEOFFREY PHILLIP REIDY (AS TRUSTEE OF THE BANKRUPT ESTATE OF FRANK TODISCO) |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
These reasons which are of course being given ex tempore will be transcribed from the transcript and forwarded to the parties as soon as possible.
RECORDED : NOT TRANSCRIBED
I would presage my remarks by saying that whatever the ultimate outcome on a purely interim basis, I have a great deal of sympathy for Mr Todisco’s predicament.
The application that started this proceeding was filed on 12 July 2013 and it seeks, pursuant to s.178 of the Bankruptcy Act 1966 (“the Bankruptcy Act”), that the decision of the respondent to deny the applicant permission to travel overseas be set aside and the applicant be permitted to travel overseas immediately until 18 August 2013.
It seeks that the applicant’s name be removed from the Australian Federal Police Airport Watch List. As the affidavit filed in support makes clear, that second order was scarcely surprising in as much as the applicant had booked his flight to go overseas on 27 June 2013 on the understanding that this would be outside the three year date of his bankruptcy in June 2010. He was then unaware, he deposes, that in fact the three year period runs from the filing of his Statement of Affairs in August 2010.
He was effectively prevented from departing on 6 July 2013 in the company of his wife. They were intending, amongst other things, to visit her aged father
RECORDED : NOT TRANSCRIBED
93, who lives in Poland and Mr Todisco has informed me, and I am fully prepared to accept, that it is distressing to her to be in Europe without him, although it is clear that she can return to Australia if she needs to.
The Trustee was given notice of the abridged hearing and I gave time to the Trustee, although necessarily in the circumstances, limited, to put on material and substantial tranches of material and written submissions have been received.
It is sufficient for these purposes to say that the account deposed to in the two affidavits sworn on behalf of the Trustee gives rise to significant issues of dispute as to the extent to which Mr Todisco has or has not properly complied with his obligations to the administration of the estate pursuant to s.77 and otherwise of the Bankruptcy Act.
Mr Todisco tells me he has at all times responded in a timely and proper way to all requests for information and putting the matter admittedly rather generally, the fact is that the Trustee says that is not the case.
There is authority touching on the question of the legal principles to be applied to applications for travel of this sort and I propose to quote a helpful, in my respectful view, overview given by Judge Lucev in Stillman v Pascoe [2010] FMCA 549 at [10]-[15] where his Honour said under the heading “Legal principles - generally” as follows:
“It has been said that the following issues, whilst not necessarily conclusive, ought to be at the forefront of any consideration of the exercise of the Court’s discretion to review the exercise of the Trustee’s discretion to refuse to allow a bankrupt to travel:
a. whether the proposed visit is genuine;
b. whether the bankrupt is likely to return to Australia as promised; and
c. whether the visit will hamper the administration of the bankrupt’s estate.
In this matter the only contested, and key, issue is whether the proposed visit to the USA by Mr Stillman will hamper the administration of the bankrupt estate...
…It is a serious decision for a Court to interfere with the Trustee’s discretion, and the Court ought only to do so if Mr Stillman satisfies it that the Trustee’s conduct was incorrect, or other conduct would be preferable, and that justice and equity require the Court to intervene.
The Court must consider all relevant circumstances associated with the bankruptcy, including:
a. the opinion of the Trustee as to what is in the interests of the prompt and efficient administration of Mr Stillman’s bankrupt estate;
b. matters of “fundamental importance” relating not only to the circumstances of the bankruptcy, but also the freedom of the citizen, who is neither a criminal nor under criminal restraint, to travel to pursue a legitimate purpose, in this case, Mr Stillman’s son’s wedding;
c. whether there are any specific events requiring Mr Stillman’s personal presence in the jurisdiction for the purposes of the administration of the bankrupt’s estate; and
d. whether Mr Stillman might deal with money which might be that of his bankrupt estate, either for the purposes of the travel to the USA or whilst in the USA.
Any restriction imposed on Mr Stillman must be seen as being aimed at ensuring the proper administration of the bankrupt estate, and overseas travel may be subordinated to that which is necessary for the proper and efficient administration of the bankrupt estate and of bankruptcy law. However, the mere status of bankruptcy is not to be used to penalise Mr Stillman. If Mr Stillman is in default of any of his obligations, denial of permission to travel, or conditional permission to travel, may be appropriate as a means to encourage compliance with his obligations.
Mr Stillman bears the onus in these proceedings to establish that the Court ought to interfere with the Trustee’s discretion, and that the concerns of the Trustee related to the alleged hampering of the administration of Mr Stillman’s bankrupt estate are either not issues:
a. at all; or
b. which hamper the administration of the bankrupt estate to the extent that warrants a restriction of Mr Stillman’s travel for the purposes of his son’s wedding.
It must be borne in mind that there is no issue as to the genuineness of the proposed visit or the likelihood that Mr Stillman would return to Australia as promised, which were also factors to be weighed in the balance by the Trustee, and by the Court on review.”
I note that one of the cases footnoted by his Honour, Judge Lucev in that case, the matter of Dunwoody v the Official Receiver [2005] FMCA 1634 was a decision of Judge Riethmuller, as his Honour now is, in which his Honour observed that one of the reasons why a Court might refuse travel is in an endeavour to, as it were, compel the bankrupt more fully to cooperate with the Trustee. I note that that observation was quoted with clear approval by Judge Lucev in Stillman v Pascoe.
Here, the question that arises for today’s purposes is whether the facts of the matter are sufficiently clear that I can deal with this matter on a peremptory basis. There are two ways in which the Court would attach power to do that. One is under pt.13 of the Federal Circuit Court Rules 2001 and the other, which is the easier test to satisfy, is s.17A of the Federal Circuit Court of Australia Act1999 which provides relevantly that the Court may give judgment for a party against another in relation to the whole or any part of a proceeding if the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceedings, or prosecuting it, as the case may be.
In effect, although neither party has said so in terms, both parties wish me to deal with the matter in that fashion and if I could, I would be pleased to do so because putting the matter shortly, Mr Todisco’s reasons for wanting to travel of themselves are entirely reasonable and he is undoubtedly going to return to Australia, those being two of the matters that are clearly relevant.
The difficulty however, of course, is that there is a very significant argument about basal facts going to the extent of the cooperation of
Mr Todisco with the Trustee’s administration of the estate.
Counsel for the Trustee says I should dismiss the application forthwith because, so to speak, and I paraphrase, the material filed by the Respondent makes very clear the non-cooperation of the bankrupt. I am not in a position to make a finding against Mr Todisco of that sort. The matter would require testing of the evidence.
I am concerned about the matter because on one view the absence of Mr Todisco may not hamper the administration of the estate very significantly. The Trustee is pursuing information about an alleged loan to a property, if I understand the matter correctly. It doesn’t matter if I am not correct in my characterisation. He seeks that that material be provided before the bankruptcy ceases next month, and the Trustee has the capacity to extend the bankruptcy. But at the forefront of my consideration is this, if Mr Todisco has simply, as the Trustee as I understand it puts it, failed in the most contumelious way to cooperate as he should have done with the Trustee, something Mr Todisco vehemently denies, then that is obviously a very considerable and significant matter which might well give rise to a refusal to permit
Mr Todisco from travel in any event.
Very regrettably and contrary to the positions of both the parties, there will have to be a trial and very unfortunately, as I foreshadowed earlier, the trial could not be heard any earlier than 10 October 2013, which as I would understand the matter, is far too late for Mr Todisco’s travel plans, but that’s the best I can do and I am very sorry that I cannot do it any quicker. I will simply adjourn the matter to trial on 10 October 2013 at 10.00 am and I will reserve the costs of today and it is up to the parties whether they wish to put on more affidavit material and whether they wish to cross-examine. If they wish to cross-examine they should give notices of intention to do so in a decent period beforehand.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 22 July 2013
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