Glover & Anor v Roche & Anor [2004] ACTSC 44 (11 June 2004)

Last Updated: 23 June 2004

Jurisdiction of Courts (Cross-Vesting) Act 1993

PETER RICHARD GLOVER and PETER LENNOX SHEILS v CHRISTOPHER ROCHE and BARRY JOSEPH ROCHE [2004] ACTSC 44 (11 June 2004)

COURTS AND TRIBUNALS - cross-vesting application - defendants both bankrupt - relevance of provisions of Bankruptcy Act.

Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT), s 5(1)

Commonwealth of Australia Constitution Act, s 75

Bankruptcy Act 1966 (Cth), s 27, 5, 58(3), 266, 272

Bankinvest AG v Seabrook (1988) 90 ALR 407

Dawson v Baker (1994) 120 ACTR 11

No SC 665 of 2002

Judge: Crispin J

Supreme Court of the ACT

Date: 11 June 2004

IN THE SUPREME COURT OF THE )

) No. SC 665 of 2002

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: PETER RICHARD GLOVER

PETER LENNOX SHEILS

Plaintiff

AND: CHRISTOPHER ROCHE

BARRY JOSEPH ROCHE

Defendant

ORDER

Judge: Crispin J

Date: 11 June 2004

Place: Canberra

THE COURT ORDERS THAT:

1. proceedings SC 665 of 2002 be remitted in their entirety to the Federal Court of Australia pursuant to s 5 of the Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT);

2. a copy of this judgment and a copy of the affidavit of Mr Robert Montagnino, sworn 24 March 2004, be served upon the ACT Chief Police Officer and the ACT Law Society.

1. This is an application for an order that the remainder of the proceedings be transferred in their entirety to the Federal Court of Australia pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT) ("the Cross-Vesting Act").

2. The proceedings originally concerned a claim for the balance payable under a Deed of Agreement dated 6 July 1998 pursuant to which the plaintiffs effectively sold their legal practice to the defendants, who were practising as solicitors interstate. On 4 April 2003, I ordered that the plaintiffs have leave to enter judgment against the defendants in the sum of $448,897.21. In doing so, I found that, despite hearing both defendants give evidence and be cross-examined about issues raised in an amended defence, I was unable to be satisfied that there was any bona fide dispute as to their liability under the relevant deed. I recorded my impression that the defences had been raised only to delay judgment and perhaps provide some escape for negotiation.

3. On 16 May 2003 I ordered the defendants to pay the plaintiffs costs of the action with those costs incurred on and from 26 February 2003 to be assessed on an indemnity basis.

4. On 11 September 2003, I ordered that the proceedings, insofar as they related to Mr Christopher Roche, be remitted to the Federal Court of Australia pursuant to s 5 of the Cross-Vesting Act. I ordered that the proceedings, insofar as they related to Mr Barry Roche, be stood over generally, with the parties to have liberty to apply.

5. On 30 October 2003, sequestration orders were made in respect of the estates of both defendants.

6. The present application has been made by PIA Services Ltd, a company against whom I made an ex parte order restraining it from executing or perfecting certain transactions until further order of the Court. It has not been joined as a party to the proceedings and would appear to have had no standing to make the application. However, this point was not taken by the plaintiffs and Mr Rangott, the trustee for the estate of both defendants, apparently consents to the course proposed. In any event, I have taken the view that I am entitled to make an order of this kind on my own motion when, as in this case, the parties have been given an adequate opportunity to be heard.

7. An applicant seeking transfer need not discharge any onus of persuasion (see Bankinvest AG v Seabrook (1988) 90 ALR 407). The only requirement is that it "appear" to the court that it be in the interests of justice that the proceedings be transferred to another court, (see Dawson v Baker (1994) 120 ACTR 11).

8. The application was based on the contention that since both Christopher and Barry Roche had been made bankrupt, it was at least "arguable" that the majority of the issues remaining for determination in the proceedings fell to be determined under the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"), and that only the Federal Court and the Federal Magistrates Court have jurisdiction in bankruptcy.

9. The defendants oppose the application on a number of grounds set out in written submissions prepared by Dr O'Hair on their behalf which raise significant legal and factual issues that, in other circumstances, might have provided a compelling case for refusal of the present application. In particular, they pointed to the existence of further proceedings instituted against Mr and Mrs Blumer, whom it was alleged had purchased the practice from Mr Barry Roche, after his brother had retired from the firm, with knowledge that the balance payable under the deed of agreement dated 6 July 1998 was secured by a deed of charge over the practice. Since this claim could not be affected by the provisions of the Bankruptcy Act, it was clearly appropriate that it remain in this court. In the circumstances, it was submitted that it would be more appropriate for these proceedings to remain in the same court rather than be remitted to the Federal Court when the proceedings against Mr Christopher Roche had already been remitted from that court to the Federal Magistrates Court.

10. However, s 58(3) of the Bankruptcy Act provides that except as otherwise provided by the Act, after a debtor has become a bankrupt it is not competent for a creditor to enforce any remedy against the person or property of the bankrupt in respect of a provable debt or, except with the leave of "the Court" and on such terms as the court thinks fit, commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding. Section 5 defines the term "the Court" to mean a court having jurisdiction in bankruptcy under the Act and s 27 provides, not only that the Federal Court and the Federal Magistrates Court have concurrent jurisdiction in bankruptcy, but that such jurisdiction is exclusive of the jurisdiction of all courts other than the jurisdiction of the High Court under s 75 of the Constitution. The term "bankruptcy" is defined by s 5 of the Bankruptcy Act to mean, in relation to jurisdiction or proceedings, "any jurisdiction or proceedings under or by virtue of" the Bankruptcy Act.

11. Consequently, it seems relatively clear that the plaintiffs may not seek to enforce any remedy against the defendants in respect of the judgment debt or, save with the leave of the Federal Court or the Federal Magistrates Court, take any fresh step in the current proceedings.

12. The balance of these proceedings are clearly intended as a means of enforcement of the provable debt arising from the judgment of 4 April 2003. Hence, the provisions of s 58(3) of the Bankruptcy Act apply. There would appear to be little point in permitting the plaintiffs to maintain the present proceedings in this court when they would need to approach the Federal Court or the Federal Magistrates Court each time they wished to take a further step. In those circumstances, it does appear to me that the interests of justice require that they be transferred to the Federal Court of Australia.

13. No application has been made in relation to proceedings numbered SC 175 of 2004 and they will remain in this court. I can see no reason to conclude that they should be heard with any enforcement proceedings against Mr Barry Roche.

14. Before leaving the matter, however, I should observe that the affidavit of Mr Robert Montagnino sworn on 24 March 2004 and other evidence filed in the proceedings before me strongly suggest that one or both of the defendants may have embarked upon a course of conduct calculated to enable them to defeat and perhaps defraud creditors and that their conduct following the entry of judgment had involved deliberate defiance of court orders, apparently for the purpose of thwarting enforcement proceedings and enabling them to defraud creditors. Furthermore, in addition to any offence or offences which he may have committed under s 266 of the Bankruptcy Act, Mr Christopher Roche's conduct in leaving Australia in the circumstances mentioned earlier appears to have involved an offence under s 272 of that Act. The defendants are both solicitors and, irrespective of whether any criminal offences are ultimately established, such conduct, if proved, might well provide evidence of professional misconduct sufficient to justify further proceedings against them.

15. In the circumstances, I think it is appropriate to order that a copy of this judgment and the affidavit of Mr Montagnino be served upon both the ACT Chief Police Officer and the ACT Law Society.

16. Since the application was brought by a company which was not a party to the proceedings it would plainly be inappropriate to make any order as to costs.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Associate:

Date: 11 June 2004

Counsel for the applicant: Mr R Cowen

Solicitor for the applicant: Tucker & Cowen

Counsel for the plaintiffs: Dr B O'Hair

Solicitor for the plaintiffs: Peter R Glover

Date of hearing: 23 April 2004

Date judgment reserved: 2 June 2004

Date of judgment: 11 June 2004