Tzovaras v Jeandin

Case [2014] FCCA 2039

FEDERAL CIRCUIT COURT OF AUSTRALIA

TZOVARAS v JEANDIN [2014] FCCA 2039

Catchwords:
BANKRUPTCY – Application to set aside bankruptcy notice – whether at the time the bankruptcy notice was issued the respondent was a “creditor” within the meaning of s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (Act) – whether a judgment creditor is a “creditor” for the purposes of s.40(1)(g) of the Act if at the time the bankruptcy notice is issued the judgment creditor requires the leave of the court in which judgment was entered to issue a writ of execution under that judgment – whether by the respondent assigning the judgment debt, there was a change in the persons entitled to execution under the judgment within the meaning of r.39.1(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW) with the consequence that the respondent or the assignee of the judgment debt had to seek the leave of the court in which judgment was entered to issue a writ of execution under the judgment.

BANKRUPTCY – Application to set aside bankruptcy notice – whether at the time the bankruptcy notice was issued the respondent was a “creditor” within the meaning of s.40(1)(g) of the Act – whether, by operation of the rule against double recovery, a judgment creditor is a “creditor” for the purposes of s.40(1)(g) of the Act if, by the time the bankruptcy notice is issued, the judgment creditor, in addition to recovering the judgment debt on which the bankruptcy notice is issued, had recovered judgment for the same loss against another person, and that person satisfied in full the judgment entered against that person – whether the respondent recovered a judgment from another person for the same loss for which the respondent obtained judgment against the applicant and on the basis of which the respondent issued the bankruptcy notice – whether by receiving the payment from the indemnity insurer the respondent fully recouped the loss for which the respondent recovered judgment against the applicant.

EQUITY – Equitable assignments of legal choses in action – whether an assignor under an equitable assignment of a legal chose in action holds the legal title in the legal chose of action in trust for the assignee.

Legislation:

Bankruptcy Act 1966 (Cth), ss.5, 40(1)(g), 40(3)(d), 41(1)

Conveyancing Act 1919 (NSW), s.12
Federal Circuit Court Rules 2001 (Cth), r.1.06(1)
Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), r.3.02
Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s.6(1), 6(4)
Uniform Civil Procedure Rules 2005 (NSW), r.39.1(1)(a)

Abigroup Limited v Abignano (1992) 39 FCR 74

APT Finance Pty Ltd v Bajada [2008] WASCA 73
Baxter v Obacelo Pty Ltd (2001) 205 CLR 635
Boncristiano v Lohmann (1998) 4 VR 82
Burrell v Reavill Farm Pty Ltd & Ors [2014] FCCA 1449

Carob Industries Pty Ltd (In Liq) v Simto Pty Ltd [2000] WASCA 362
Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR (NSW) 159
Cawood v Cawood [2000] FCA 1786
Corney v Brien

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AGLC
Tzovaras v Jeandin [2014] FCCA 2039
Case
[2014] FCCA 2039
Decision Date

CaseChat Overview and Summary

This case concerned an application by Mr. Tzovaras to set aside a bankruptcy notice issued by Mr. Jeandin. The dispute arose from a judgment debt of $1,946,130.13 entered against Tzovaras Legal in favour of Mr. Jeandin. Subsequently, a deed of assignment was executed between Mr. Jeandin and LawCover, which involved a settlement of proceedings and the assignment of Mr. Jeandin's rights to enforce a judgment against George and Ted Tzovaras to LawCover. The application was heard in the Supreme Court of New South Wales.

The primary legal issues before the court were whether Mr. Jeandin was a "creditor" within the meaning of s.40(1)(g) of the *Bankruptcy Act 1966* (Cth) at the time the bankruptcy notice was issued. This question involved two sub-issues: first, whether a judgment creditor requires leave to issue a writ of execution if they have assigned the judgment debt, and second, whether the rule against double recovery applied, preventing Mr. Jeandin from being considered a creditor if he had already recovered the same loss from another party. The court also considered whether the assignment of the judgment debt constituted a change in the persons entitled to execution under the Uniform Civil Procedure Rules 2005 (NSW), requiring leave to issue a writ.

The court reasoned that the relevance of payments made under the deed of assignment was crucial to determining whether Mr. Jeandin remained a creditor for the purposes of the bankruptcy notice. The court assumed, for the purposes of its judgment, that LawCover had paid Mr. Jeandin the settlement sum of $1,992,500. This payment was significant because it related to the third ground on which Mr. Tzovaras sought to set aside the bankruptcy notice, which concerned whether Mr. Jeandin had been fully recouped for the loss for which he had obtained judgment against the applicant. The court's analysis would therefore depend on the effect of this payment and the assignment on Mr. Jeandin's status as a creditor.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 1 December 2011 McDougall J published reasons for judgment on matters that had not been finalised in his Honour’s reasons for judgment of 4 November 2011.[6] That resulted in his Honour directing that judgment in the amount of $1,946,130.13 be entered against Tzovaras Legal, and judgment to that effect was entered on 7 December 2011 (Tzovaras Legal Judgment debt). His Honour also declared that Mr Jeandin was entitled to enforce a charge against LawCover pursuant to s.6 of the LRMP Act over all insurance moneys payable in respect of the liability Tzovaras Legal had to Mr Jeandin, the amount of such charge not to exceed $1,992,500, and further ordered that LawCover pay $1,946,130.13 to Mr Jeandin.[6] Jeandin v Tzovaras [2011] NSWSC 1511 On or about 21 December 2011 Mr Jeandin and LawCover executed the deed of assignment. The deed of assignment deals with three things. The first is Mr Jeandin and LawCover each releasing the other from:a)the decision of McDougall J of 4 November 2011;b)the judgment and some of the orders made against LawCover on 1 December 2011 and entered on 7 December 2011; andc)all “Claims” that Jeandin has or may have against LawCover and Tzovaras Legal Pty Limited “in respect of the facts, matters and circumstances giving rise to the proceedings against LawCover and Tzovaras Legal Pty Limited”. Second, the deed records an agreement “to a full and final settlement” of the proceedings before McDougall J and the judgment and orders made in those proceedings against LawCover “on terms that Jeandin is to be paid $1,992,500 inclusive of the entitlement to his costs . . . by or on behalf of LawCover”. That sum was to be paid within fourteen days of 8 December 2011. The third matter the deed deals with is the assignment by Mr Jeandin to LawCover of “all of his rights absolutely and interests at law, equity or by statute to enforce and recover from each of George Tzovaras and Ted Tzovaras the judgment sum of $1,890,575.31 including interest to 4 November 2011 entered against them on 4 November 2011”. The assignment is stated to take effect from 22 December 2011. At the hearing of the application to set aside the bankruptcy notice, Mr Tzovaras called for the production by Mr Jeandin of documents recording payments made under the deed of assignment. Counsel for Mr Jeandin resisted producing such documents on the ground that whether or not any payments were made under the deed of assignment was not relevant to the application to set aside the bankruptcy notice. Because at that stage I did not fully understand the issues raised by Mr Tzovaras’s application to set aside the bankruptcy notice, I ruled that I would not deal with that call unless it appeared to me that whether or not payment was made under the deed of assignment was relevant. As I will discuss later, whether or not payment was made is relevant to the third ground on which Mr Tzovaras seeks to set aside the bankruptcy notice. At any rate, for the purpose of these reasons for judgment, I will assume, as I think is in fact the case, that LawCover did pay Mr Jeandin the $1,992,500 it agreed to pay to him under the deed of assignment.

Ratio Decidendi

Legal Principle Established

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