Pearce v Korda Mentha Trustees [2011] FMCA 85 (14 February 2011)

Federal Magistrates Court of Australia

[Index] [Search] [Download] [Help]

---

Pearce v Korda Mentha Trustees [2011] FMCA 85 (14 February 2011)

Last Updated: 22 February 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PEARCE v KORDA MENTHA TRUSTEES

[2011] FMCA 85

BANKRUPTCY – Application for annulment – application summarily dismissed.

Bankruptcy Act 1966, ss.153, 170 Federal Magistrates Court Rules, r.13.10

Applicant:

GRANTLEY MYLES PATRICK PEARCE

Respondent:

KORDA MENTHA TRUSTEES

File Number:

ADG 262 of 2010

Judgment of:

Lindsay FM

Hearing date:

14 February 2011

Date of Last Submission:

14 February 2011

Delivered at:

Adelaide

Delivered on:

14 February 2011

REPRESENTATION

The Applicant:

In Person

The Respondent:

No appearance

ORDERS

(1) That the oral application of the applicant for the appointment of a McKenzie Friend is dismissed.
(2) That the application filed by the applicant on 22 September 2010 is summarily dismissed pursuant to Rule 13.10 of the Federal Magistrates Court Rules 2001.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE

ADG 262 of 2010

GRANTLEY MYLES PATRICK PEARCE

Applicant

And

KORDA MENTHA TRUSTEES

Respondent

REASONS FOR JUDGMENT

1. This is an application by the bankrupt, filed on 22 September of last year, supported by a brief affidavit of his and by an affidavit of a Mr Rossetto who is an associate of his who claims to have, and I accept, has paid significant sums of moneys to certain of the creditors of the applicant. The application is made pursuant to section 153A of the Bankruptcy Act 1966 which provides that if the trustee is satisfied that all the bankrupt’s debts have been paid in full the bankruptcy is annulled, “by force of this subsection” on the date on which the last such payment was made.
2. Of course section 153B of the Act, which is not relied upon in this application, provides for a mechanism by which a bankrupt can apply to this Court to have the bankruptcy annulled because the bankruptcy order ought not to have been made. So that is the first difficulty. The first difficulty is the application is brought pursuant to a section which is really intended to render legal proceedings otiose if the trustee is satisfied that the bankrupt’s debts have been paid in full. Section 153A (1) provides that on account of that section the bankruptcy is annulled. So to bring an application under section 153A is really a contradiction in terms. If there is a genuine dispute about whether the trustee should have accepted that all the bankrupt’s debts have been paid then of course there are other mechanisms in the Act. Section 170, for example, which would give the Court the power to review the exercise of the trustee’s powers to see whether they have been in accordance with his or her obligations and in accordance with the Act. But that is not what is sought. That is the first difficulty.
3. The second difficulty is that the pre requisite to the applicability of subsection (1) is the trustee’s satisfaction that the debts have been paid in full. That is the first jurisdictional fact, as it were, that has to be established and an affidavit has been filed by one of the two trustees of the bankrupt estate and Ms Trenfield indicating that she does not accept that the bankrupt’s debts have been paid in full. In other words, she is not so satisfied and she describes some miscellaneous debts in paragraph 17, page four of her affidavit which are unpaid - Andersons Solicitors, Giorgio Cavuoto, Shane Hall, Tucker and Cowen Solicitors. They are debts totalling about $85,000, something like that. In addition to that she says in paragraph 17 of her affidavit that her co-trustee’s costs of administering the bankrupt estate in the amount of $60,091.44 and the petitioning creditor’s costs of $1,474.30 have not been paid.
4. The trustee’s costs at least (and not necessarily the petitioning creditor’s costs) fall within the definition of bankrupt’s debts in subsection (6) of section 153A.
5. So there are two fairly significant difficulties confronting the application. Rule 13.10 of the Rules of Court picks up section 17A of our Act in providing a mechanism for disposal by summary judgment.
6. The Rule applies if, in a proceeding in relation to the whole or part of a party’s claim that there is evidence of the facts on which the claim or part is based and provides:
   • The Court may order that a proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
   • (a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim.
7. Then there is also a provision for doing that in circumstances where the claim for relief is frivolous or vexatious or where there is an abuse of the process of the Court.
8. Secondly, subsection (a) appears to be brought into focus here. There is no evidence filed on behalf of the applicant indicating that the trustee considers that all of the bankrupt’s debts have been paid. The material I have in affidavit form from Ms Trenfield is in fact quite to the contrary. There is nothing before me to indicate that the applicant can satisfy in terms of relevant or admissible evidence proof of that jurisdictional fact. The problems go further than that, as I have indicated. The trustee does not simply deny that the debts have been paid in full but goes on to provide detail of that (and detail which could only come from her) in terms of the calculation of the amount still owing in respect of the trustee’s costs of administration which Mr Pearce tells me from the bar table today he acknowledges have not been paid.
9. It is not a question of the trustee having himself or herself to obtain a judgment in respect of such costs and charges. Their entitlement to levy such costs and charges arises from their authority to administer the bankrupt estate that arises from the Act itself.
10. A combination of those two matters satisfies me that this application is bound to fail and ought to be summarily dismissed.
11. There are other complications which, because of the view I have taken as to the fatal flaws described, and the way in which the application has been brought, are probably unnecessary for me to remark upon but I think the Court has an obligation to at least note when it is that serious allegations arise in respect of the probity of the conduct of the persons involved in litigation before the Court.
12. Ms Trenfield’s affidavit, to which I have referred, the affidavit of 9 December contains a very serious allegation. It suggests that material that was annexed to Mr Rossetto’s affidavit which has its provenance in communications between the office of the trustee and the applicant’s wife are, to use her expression in paragraph 12 of her affidavit, “forgeries”. She goes on in paragraphs 13 to 15 inclusive of her affidavit to put forward what she says are the matters that are indicative of that. Because of the fact that these proceedings have been brought to an end early I will not have the occasion to invigilate that claim which is very serious. I have no idea what Mr Rossetto or Ms Pearce would say in answer to it and I do not have any view about whether the allegations would be made out but if the matter were to go any further they are certainly matters that would compel the Court’s urgent attention.
13. In addition to that I had the circumstance that when the matter first came before me in September there was no appearance on behalf of the trustee and that was notwithstanding that an affidavit of service had been filed, an affidavit of one Cait Pearce sworn at Brighton on 3 November in which it was said that the documents had been served and corroborating that were the particulars of a conversation of 20 October 2010 at 11.15am with one Natasha Jonga from Korda Mentha, the company for whom the trustees work. The passage in paragraph 6 of the affidavit of service went on:
    • ...who has been our sole contact and she confirmed she had received them and would not be opposing the application or attending the hearing.
14. On the strength of that I was asked to finalise the proceedings on the return date. Ms Trenfield rather unorthodoxly has annexed to her own affidavit a statutory declaration of Ms Jonga and Ms Jonga’s statutory declaration says that contrary to the passage I just read she did not have a telephone conversation with Ms Pearce on 20 October at that time.
    • I have never discussed receipt of the service documents with Cait Pearce or any other party representing Mr Grantley Myles Pearce nor did I advise any party the application would not be opposed and there would be no appearance for or on behalf of the Respondent or the Trustees. Further, I am not and have never been the sole contact in relation to the Bankrupt Estate of Grantley Myles Pearce, Claire Packer was also a point of contact.
15. So that is the scope of that controversy. I think my obligation is to set it out on the transcript in case matters do go further. I express no view about the matter other than to repeat what would be obvious I think to anyone in any event, that if the matter proceeds we would have to get to the bottom of those serious contentions, serious allegations.
16. The final matter I need to deal with and before I formally pronounce my orders (and I will be giving Mr Pearce the chance to put some other matters to me as he indicated that was something he wanted to do), but the other matter is that there was apparently some material filed in the registry of the Court late last week being an application by Mr Pearce supported by brief affidavit renewing the application that was made before me on the return date of the application for the appointment of a McKenzie Friend. I indicated then that in order to be able to adjudicate such an application we would need detailed evidence of the medical or psychological or other disabilities or impediments that the bankrupt had such as would require that step to be taken.
17. The affidavit and application were rejected apparently, something to do with the filing fee, but I did not want that to stop me looking at the documents. I have looked at them today and there is an absence of any kind of corroborative material in relation to that contention. So for those reasons I dismiss the application for the appointment of a Mackenzie Friend but I do not think in the light of what has happened, in the light of the other difficulties that confronted the application that that would have made any difference.
18. Those additional matters Mr Pearce put to me do not cause me to resile from proceeding in the way that I had foreshadowed.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Lindsay FM

Associate:

Date: 18 February 2011