Zahos v Hatzistergos - [2012] FMCA 780

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ZAHOS v HATZISTERGOS

[2012] FMCA 780

BANKRUPTCY – Application for leave to proceed against bankruptcy in NSW Supreme Court by creditor – where leave previously granted limited to a Statement of Claim – where Statement of Claim to be amended – further leave required.

Conveyancing Act 1919, s.39

Niland v Macchia (1997) 78 FCR 419
Kassem, in the matter of Koutavas v Struthers [2011] FCA 322

Applicant:

TERRY ZAHOS

Respondent:

HARRY HATZISTERGOS

File Number:

SYG 978 of 2012

Judgment of:

Raphael FM

Hearing date:

22 August 2012

Date of Last Submission:

22 August 2012

Delivered at:

Sydney

Delivered on:

22 August 2012

REPRESENTATION

Counsel for the Applicant:

Mr C Wood

Solicitors for the Applicant:

Robertson & Associates

Solicitors for the Respondent:

Beazley Singleton

ORDERS

That the condition imposed by paragraph 2a of orders made 2 July 2012 herein, the orders be amended, with effect from the date of this order, to include within the definition of “the Permitted Relief” in the document attached and marked A entitled “Proposed Amended Statement of Claim” (“the Additional Claims”).
Without giving any indication as to the merits of the Statement of Claim, leave be granted to Mr Zahos pursuant to section 58(3) of the Bankruptcy Act 1966 to commence and prosecute the additional claims by amendment to the Statement of Claim in proceedings 2012/88916 in the Supreme Court of New South Wales subject to the same conditions as set out in paragraphs 2 and 3 of the orders made 21 July 2012.
Applicant to pay the Trustee’s costs of and incidental to the application dated 7 August 2012.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 978 of 2012

TERRY ZAHOS

Applicant

And

HARRY HATZISTERGOS

Respondent

REASONS FOR JUDGMENT

On 2 July 2012 I made orders that the applicant have leave to proceed in certain proceedings in the Supreme Court of New South Wales, pursuant to which he sought declarations under s.37A of the Conveyancing Act 1919 that the respondent bankrupt had alienated property with the intention to defraud creditors. The orders were made, eventually, with the consent of the bankruptcy trustee and were restricted to a statement of claim that had been annexed to the short minutes of order that were handed up to me. In matters of this nature it is normal for the trustee to bring any proceedings of the type envisaged as any right of the bankrupt is now vested in him. But I was satisfied that in this particular case, given the lack of funds of the trustee, it was more appropriate that the applicant bring those proceedings.
After the orders were made on 2 July some further investigations were made and it was revealed that the bankrupt may well have alienated approximately $185,000.00, in addition to, or possibly as an alternative to, the claims that were made in the original statement of claim. As a result the applicant brought the matter back for leave to amend the orders made on 2…

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.

Continue reading Zahos v Hatzistergos

Details

AGLC: Zahos v Hatzistergos [2012] FMCA 780
Case: [2012] FMCA 780
Decision Date

CaseChat Overview and Summary

The Federal Magistrates Court of Australia dealt with an application by Terry Zahos, the creditor, to obtain leave to amend the scope of a previous order allowing him to proceed with a claim against Harry Hatzistergos, the bankrupt, in the New South Wales Supreme Court. The original order, made on 2 July 2012, allowed Zahos to pursue certain claims under section 37A of the Conveyancing Act 1919 to determine if Hatzistergos had alienated property with intent to defraud creditors. Subsequent investigations revealed that Hatzistergos may have alienated an additional $185,000, prompting Zahos to seek leave to amend the statement of claim to include these new allegations.

The court had to determine whether the amendment of the scope of the original order was appropriate, considering the lack of funds in the bankrupt's estate to pursue the new claims and the fact that the trustee had neither consented to nor opposed the amendment. The court also needed to consider the appropriate allocation of costs between the parties involved. The court considered the case of Niland v Macchia (1997) 78 FCR 419, which influenced Zahos to withdraw a claim for an extension of Hatzistergos’ bankruptcy. Further, it drew on the reasoning in Kassem, in the matter of Koutavas v Struthers [2011] FCA 322, which supported granting leave to the creditor.

Raphael FM concluded that the amendment of the original order was appropriate given the circumstances. The court accepted that the new claims were not based on new facts but rather a reformulation of the basis of the original claim. It was noted that the trustee had no funds to pursue the new claims and there was no special benefit to Zahos in the proposed amendment. The court made orders to amend the definition of "Permitted Relief" to include the additional claims in the "Proposed Amended Statement of Claim." It granted leave to Zahos to commence and prosecute the additional claims in the Supreme Court of New South Wales, subject to the same conditions as previously set out. The court ordered that Zahos pay the trustee's costs of and incidental to the application dated 7 August 2012 and made no order as to the costs between Zahos and Hatzistergos, considering that Hatzistergos had objected to the orders being made.

Orders