Troiani v Peldan Trustee in Bankruptcy of Troiani

[2005] FCAFC 44

FEDERAL COURT OF AUSTRALIA

Troiani & Anor v Peldan Trustee in Bankruptcy of Troiani [2005] FCAFC 44

BANKRUPTCY – where application to annul bankruptcies based on claim that there was no underlying debt – where no evidence available to support the application.

PRACTICE AND PROCEDURE – where applicant appealing a decision not to exercise discretion to make an order for discovery – where there is no cause of action worthy of trial.

National Australia Bank v Troiani & Anor [2003] FMCA 396 cited

SANTE TROIANI AND ANOR V MICHAEL PELDAN T/TEE IN BANKRUPTCY OF SANTE AND RITA TROIANI
QUD 171 OF 2004

HILL, FINN & GYLES JJ
4 MARCH 2005
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD171 OF 2004

BETWEEN:	SANTE TROIANI AND ANOTHER APPLICANT
AND:	MICHAEL PELDAN T/TEE IN BANKRUPTCY OF SANTE AND RITA TROIANI RESPONDENT
JUDGE:	HILL, FINN, GYLES JJ
DATE OF ORDER:	4 MARCH 2005
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. The application for leave to appeal against the decision of Driver FM be dismissed.
2. The applicants for leave pay the respondent’s costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLANDDISTRICT REGISTRY	QUD171 OF 2004

BETWEEN:	SANTE TROIANI AND ANOTHER APPLICANT
AND:	MICHAEL PELDAN T/TEE IN BANKRUPTCY OF SANTE AND RITA TROIANI RESPONDENT

JUDGE:	HILL, FINN & GYLES JJ
DATE:	4 MARCH 2005
PLACE:	BRISBANE

REASONS FOR JUDGMENT

HILL J:  

1. The applicants for leave, Mr and Mrs Troiani, became bankrupt as a result of a sequestration order made on 16 May 2003, upon a petition by the second respondent, the National Australia Bank Limited (“NAB”).  That sequestration order was made by Baumann FM, who gave reasons for his decision, which are reported in National Australia Bank v Troiani & Anor [2003] FMCA 396. Before that time, judgment had been obtained in a summary proceeding against the applicants for leave in the Supreme Court of Queensland. Subsequently, an appeal was brought to the Court of Appeal of the Supreme Court of Queensland and, ultimately, judgment in the amount of $3,451,599.24 was entered.

2. The petition of the NAB was made on the basis of a failure to comply with a bankruptcy notice, which was based upon the Court of Appeal's judgment.  The petition was contested and the applicants were unsuccessful. They were also unsuccessful in proceedings to set aside the bankruptcy notice.  The proceedings before Driver FM, with which the present application is concerned, were applications by the applicants seeking to annul their bankruptcies.  The proceedings also sought an application for compensation and return of property against the second respondent. 

3. In the proceedings before the learned magistrate, the applicants relied upon allegations that there was no true debt owing to the NAB.  As the learned magistrate said in his reasons, those allegations had been made before in a number of proceedings, but had not been substantiated. 

4. It is not a matter of any dispute that in an appropriate case, a bankruptcy might be annulled on the basis that it should not have been made, because there was no underlying debt.  However, it must also be said that there are difficulties in that course being taken, where the matter has already been agitated in prior proceedings. 

5. Be that as it may, the applicants sought discovery before the learned magistrate.  The application for discovery was refused by the learned magistrate on the basis that it was not appropriate in the interest of the administration of justice to make the order.  His Honour did that on the basis that he was not satisfied that there was a cause of action worthy of a trial on the material before him.  The learned magistrate ultimately dismissed the application for annulment.  He did so on the basis that it was doomed to fail and could not possibly succeed.  He said that there was nothing in the material before his Honour that would give him any cause to believe that there was anything in the judgment debt that warranted further examination.

6. Further, there was material before his Honour that the bankrupts had been uncooperative in the administration of the bankrupt, in particular, they had not filed a statement of affairs.  It was never suggested, that the applicants were other than insolvent.  Accordingly, the learned magistrate disposed of the application pursuant to r 13.10(a) of the Federal Magistrate Court Rules, by way of summary dismissal.  Those proceedings are, of course, interlocutory proceedings.  The learned magistrate also formed the view that the annulment application was vexatious.  His Honour referred to the history of this matter and ordered that no further application made by the applicants in relation to the bankruptcy be accepted for filing, except by leave of the Court. 

7. Before us, Mr Bell, who has legal qualifications but is not yet admitted, was permitted by leave to speak for the applicants.  He sought an adjournment of the present proceedings for an unspecified period of time on the basis that he believed, although he had no evidence that he could put before us in support of that belief, that with further time, the applicants might be able to bring a case demonstrating, perhaps, fraud or other misconduct on the part of the respondents, which would lead to a conclusion that there was, in fact, no real debt underlying the judgment which the respondents had obtained in the Court of Appeal. 

8. It was put by the Court to Mr Bell that what was before the Court was an application for leave to appeal against the judgment of the magistrate.  On that application, it was necessary for the applicants, in accordance with established authority (see Dart Industries Inc v David Bryar & Associates Pty Ltd (1997) 38 IPR 389), for an applicant to demonstrate, particularly where a matter of practice and procedure is involved (here, the making of a discovery order), that there was an error of principle in the exercise of discretion by the magistrate, and that it was in the interest of justice that leave be granted.

9. Mr Bell conceded that there was nothing that he was able to put before us to indicate why leave should be granted.  He did not suggest that at some later time, he would be in a position to adduce evidence that would found a case that would entitle his client to an annulment.  All Mr Bell could say was that, at some later time it was possible that he might be able to put material before the Court that would found a fresh application for an annulment, on the basis that there was no real debt underlying the judgment of the Supreme Court.  If he were then able to do this, it would be necessary then to demonstrate why the matter had not been brought forward in the earlier proceedings, where an opportunity to do so had existed and where the issue had been raised and decided adversely to the applicants.

10. In my view, there is no point in an adjournment being granted.  There is nothing that Mr Bell has said, which would indicate that any different result would follow in the future, even if it were possible for him to obtain evidence that might have been able to present in future proceedings.  On the material before the magistrate, there is nothing to suggest that he, in any way, made an error of principle, and there is no basis upon which leave should be granted to appeal against the magistrate's decision.  It is not unimportant to observe here that there is no impediment against Mr and Mrs Troiani bringing fresh proceedings seeking annulment of the bankruptcy if, in fact, there is evidence, which permits that course to be taken. It would be open then for leave to be granted for the filing of such an application.

11. No doubt, if indeed evidence were obtained in proper form, that leave would be likely to be given, but that would be a matter for the magistrate in the event that further proceedings were brought. 

12. Despite the suggestion by Mr Bell that the refusal of an adjournment would be a denial of natural justice to the applicants, I do not see this to be the case.  Rather, it seems to me that an adjournment would prolong, unnecessarily, the present proceedings and increase the expense of the respondents in defending it.  I would accordingly dismiss the application for leave, and order the applicants to pay the respondent's costs.

13. The order of the Court will be: that the application for leave to appeal against the decision of Driver FM be dismissed and that the applicants for leave pay the respondent's costs.

    
    

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD171 OF 2004

BETWEEN:	SANTE TROIANI AND ANOTHER APPLICANT
AND:	MICHAEL PELDAN T/TEE IN BANKRUPTCY OF SANTE AND RITA TROIANI RESPONDENT
JUDGE:	HILL, FINN, GYLES JJ
DATE OF ORDER:	4 MARCH 2005
WHERE MADE:	BRISBANE

REASONS FOR JUDGMENT

FINN J:  

1. I agree with the reasons for judgment of Hill J and the orders proposed by him.

   
   

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD171 OF 2004

BETWEEN:	SANTE TROIANI AND ANOTHER APPLICANT
AND:	MICHAEL PELDAN T/TEE IN BANKRUPTCY OF SANTE AND RITA TROIANI RESPONDENT
JUDGE:	HILL, FINN, GYLES JJ
DATE OF ORDER:	4 MARCH 2005
WHERE MADE:	BRISBANE

GYLES J:  

1. I agree with the reasons for judgment of Hill J and the orders proposed by him.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Hill, Finn & Gyles.

Associate:

Dated:             4 April 2005

Speaking for the Applicant with leave of the Court:	Mr Bell
Solicitors for the Respondent:	Mallesons Stephen Jaques
Date of Hearing:	4 March 2005
Date of Judgment:	4 March 2005