Zegarac v Rambaldi [2010] FCA 219 (16 March 2010)

Last Updated: 16 March 2010

FEDERAL COURT OF AUSTRALIA

Zegarac v Rambaldi [2010] FCA 219

Citation:		Zegarac v Rambaldi [2010] FCA 219
Appeal from:		Application for leave to appeal: Zegarac v Rambaldi [2009] FCA 1463
Parties:		SLAVICA ZEGARAC v MR GESS RAMBALDI and MR ANDREW YEO
File number(s):		VID 905 of 2009
Judge:		GRAY J
Date of judgment:		16 March 2010
Catchwords:		PRACTICE AND PROCEDURE – judgment – original application dismissed as abuse of process of court – whether judgment interlocutory – whether leave to appeal required – whether any utility in original proceeding – whether reasonable prospect of success BANKRUPTCY – discharge – automatic discharge – bankrupt attempting to sue trustees in bankruptcy after discharge – whether utility in application to set aside sequestration order – whether sufficient specification of acts or omissions of trustees and of time at which applicant became aware of them – whether sufficient ground to inquire into conduct of trustees
Legislation:		Bankruptcy Act 1966 (Cth), ss 149(2), 149A, 153B(1), 154, 154(1), 154(1)(a), 154(1)(b), 154(1)(c), 154(2), 178, 178(1), 178(2), 179, 179(1), 179(1)(b) Federal Court of Australia Act 1976 (Cth), ss 24(1A), 31A, 31A(2), 31A(3) Federal Court Rules, O 14 r 5A, O 20 r 5(1)(b) and (2), O 35 r 2, O 52 r 10(2A)(b)
Cases cited:		Cubillo v Commonwealth of Australia [2001] FCA 1213 (2001) 112 FCR 455 referred to Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 referred to Marketing Advisory Services (MAS) v Football Tasmania Ltd [2002] FCAFC 165 referred to Trkulja v Morton [2005] FCA 659 applied Walton v Gardiner (1993) 177 CLR 378 applied Zegarac v Pitcher Partners [2009] FCA 804 cited Zegarac v Rambaldi [2009] FCA 1463 cited
Date of hearing:	4 February 2010
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	50
Counsel for the applicant:	The applicant appeared unrepresented
Counsel for the respondents:	The respondents did not appear

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 905 of 2009

BETWEEN:	SLAVICA ZEGARAC Applicant
AND:	MR GESS RAMBALDI First Respondent MR ANDREW YEO Second Respondent

JUDGE:	GRAY J
DATE OF ORDER:	16 MARCH 2010
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The motions the subject of the notice of motion filed on 18 December 2009 be dismissed.
2. There be no order as to the costs of the proceeding.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 905 of 2009

BETWEEN:	SLAVICA ZEGARAC Applicant
AND:	MR GESS RAMBALDI First Respondent MR ANDREW YEO Second Respondent

JUDGE:	GRAY J
DATE:	16 MARCH 2010
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

The nature and history of the proceeding

1. By notice of motion filed on 18 December 2009, the applicant applied for leave to appeal from the judgment of a single judge of the Court, in proceeding no VID 518 of 2009 (“the principal proceeding”). The learned primary judge ordered that the title of that proceeding be amended by substituting Mr Gess Rambaldi and Mr Andrew Yeo as respondents in place of the originally named respondent, Pitcher Partners. His Honour also ordered that the principal proceeding be dismissed and that the applicant (also the applicant in the present motion) pay the respondents’ costs of the proceeding. See Zegarac v Rambaldi [2009] FCA 1463.
2. The principal proceeding was an application for the following orders:
   1. That this Honourable Court makes an Order under s 153 of the Bankruptcy Act 1966, which states that: “if the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.
      
   2. Consequently, that this Honourable Court makes an Order under s 154 (1) (c) of the Bankruptcy Act 1966, for the property of the former bankrupt still vested in the trustee, to revert to the former bankrupt.
      
   3. That this Honourable Court makes an Order that all costs in Bankruptcy and incidental costs ordered against me and my property be dismissed due to Fraud of the Trustee
      
   4. That this Honourable Court makes an Order that the Bankruptcy of the Applicant be annulled and that the Bankruptcy of the property be annulled in full, due to Trustee’s fraud and contradiction of various Court Orders (Court Orders in Federal Court and other Courts are contradicting).
      
   5. That this Honourable Court makes an Order for Compensation for my pain and suffering and damages due to dismissal of my Negligence Claim against the Creditor (who made me bankrupt) and loss in other proceedings, consequential to Trustee’s involvement and Consent Orders.
      
   6. That this Honourable Court makes an Order for Compensation for my damages due to dismissal of my Negligence Claim against the Creditor (who made me bankrupt) and loss in other proceedings, consequential to Trustee’s involvement.
      
   7. That this Honourable Court makes an Order for damages consequential to Trustee’s instituting other proceeding under my name, without informing me about it, and when I found out about it, Trustee and his Solicitor Schetzer Brott and Appel, who acted as my Solicitors, refused to give me any information about it or any documents to this day.
      

Under the Law Trustee does not have right to institute the proceeding in my name during Bankruptcy period.

8. That this Honourable Court makes an Order for damages consequential to Trustee’s Consent Order without informing me about it and without my Consent.
   

Under the Law Trustee does not have the right to do that.

9. I am making this Application under the s 178 of the Bankruptcy Act 1966.
   
10. Trustee refused to give me any information (including the information of the balance owing up to date).
    

Under the Law Trustee does not have the right to do that.

11. Leave of the Court to amend my Application, due to lack of information. Trustee and ITSA did not provide me any information to this day. As mentioned above, need “URGENT” Discovery of documents and file further Affidavits, due to lack of time (I found some of these information only last Thursday (9 July 2009), Friday (10 July 2009) and today (13 July 2009).
    
12. Trustee committed fraud.
    
13. I have complained numerous times to ITSA, but they have never done anything about it.
    
14. That this Honourable Court makes an Order for an investigation of the Trustee and consequently punish them under the Law and suspend their licence to practice as Trustee.
    
3. The applicant also sought by way of interim orders the following:
   15. That this Honourable Court makes an Order for “URGENT” Discovery of all documents and books bearing my name or property name of 6 Wadham Rd, Ivanhoe, or referring to me/my property in any name shape or form, on all files, under the Freedom of Information Act, Privacy Act and Bankruptcy Act kept by:
       
       • Pitcher Partners Office
       • [the creditor on whose petition the applicant was made bankrupt]
       • ITSA
       • Official Receiver’s Office
         

This is necessary because the Trustee declined to give me the any information, saying they are not obligated to tell me anything or provide any information to me. I do not have the right to know anything.

16. Leave of the Court to Cross-Examine Trustee in Bankruptcy.

17. Leave of the Court to Issue the Subpoenas for witnesses.

4. The application was accompanied by what was said to be an affidavit. The typed contents of that document simply repeated the text of the orders and interim orders sought in the application (with the addition of an unspecified application for an abridgement of time, also found in the application but altered by handwriting in that document, which is of no present concern). In the affidavit there were two handwritten additions. The first was a statement that the applicant was made bankrupt on 18 May 2006 to the best of her information and belief, and that she was supposed to be discharged on 14 July 2009, the day following the making of the affidavit and the filing of the application and the affidavit. The second addition was a paragraph numbered 19, in the following terms:

I did not make this Application earlier because I was not aware of the facts and because Trustee has given a consent in secret, not informing me about it. Also my Affidavit is not being written properly because of insufficient time. I will file comprehensive Affidavit within next couple of Days

5. Solicitors acting on behalf of Pitcher Partners filed a notice of appearance and an affidavit of the first respondent, Mr Rambaldi on 23 July 2009. On 27 July 2009, those solicitors also filed an affidavit of Samuel Maxwell Bond. Also on 27 July 2009, the applicant filed an affidavit some nine pages long. This affidavit contained material about her dealings with the creditor on whose petition she was made bankrupt (“the petitioning creditor”), prior proceedings related to the bankruptcy, and her allegations against the trustees in bankruptcy. On the same day, the applicant filed a notice of motion, seeking orders for: the case to be heard by a jury; discovery of documents held by Pitcher Partners, the petitioning creditor, and the Insolvency and Trustee Service Australia; and the issue of subpoenas for witnesses, without specifying the identities of those witnesses. The fact that the applicant sought discovery of documents held by the petitioning creditor caused the petitioning creditor to file a notice of appearance in the proceeding on 28 July 2009. On that date, the primary judge refused each of the motions notice of which was given on 27 July 2009. His Honour’s reasons for judgment were published as Zegarac v Pitcher Partners [2009] FCA 804. Those reasons for judgment include his Honour’s reasons for refusing an application that he disqualify himself from dealing with the proceeding by reason of bias.
6. On 21 August 2009, Pitcher Partners filed a notice of motion, seeking orders that: insofar as the applicant’s application related to allegations against the trustees, it be dismissed as frivolous or vexatious; alternatively, the dismissal of the applicant’s application as an abuse of process on the basis that the applicant sought to re-agitate issues already heard and determined by the Court. The notice of motion also sought an order that the applicant pay the respondent’s costs of the application and the notice of motion. The notice of motion was accompanied by a brief affidavit of Mr Rambaldi.
7. At a directions hearing on 4 September 2009, the primary judge directed that the respondent file contentions of fact and law in support of its motion and that the applicant file and serve answering contentions of fact and law.
8. Pitcher Partners filed written submissions in response to this order. The applicant did not comply with the order.
9. The motions of Pitcher Partners came on for hearing on 4 December 2009. The applicant sought an adjournment of the hearing. She said that she sought the adjournment so as to obtain fresh evidence. She made a submission in the following terms:

The fresh evidence being that Pitcher Partners have opened a lot of accounts in the banks under my name, changed name, excuse me. Changed name and corporations names. So I need some time to obtain those documents.

The primary judge asked how the applicant had become aware of this fresh evidence. The applicant replied in the following terms:

I do not want to tell you how. It doesn’t matter how, what matters is what is there. If I tell you how, then you will do things to fix it so I can’t do it again. So that’s why I don’t want to say how. Because if I explain to you how I’ve done it, because I have done that in the past, I said to people how I’ve done it, then they blocked me from doing it. So I am not going to say that anymore. What matters is the evidence, when the – when the actual hearing comes, the evidence that I will produce, or that I will make it be present in the court. So that’s what matters.

The applicant also complained that she had asked for people from Pitcher Partners and their solicitors, and the petitioning creditor, to make themselves available for cross-examination. The primary judge commented that there was no evidence to support any of the matters the applicant had raised and refused the application for adjournment. His Honour then gave the applicant several opportunities to make submissions in opposition to the motions of Pitcher Partners. She did not do so. She again sought permission to cross-examine the petitioning creditor, Mr Rambaldi and Mr Yeo. The primary judge ruled that she was not entitled to do that. A similar application was made with respect to Mr Bond, but the primary judge did not allow the application. His Honour then reserved judgment.

10. On 11 December 2009, the primary judge delivered judgment on the motion. He pronounced the orders and published his reasons for judgment. The applicant then sought to engage in a dispute with his Honour about the propriety of the orders, and to interrogate him about the reasons for them.

The primary judge’s reasons for judgment

11. In his reasons for judgment, at [1]-[2], the primary judge recited the history of the bankruptcy. A sequestration order was made on 18 May 2006, on the petition of the petitioning creditor. The order was based on a judgment of the Magistrates Court of Victoria, which was the subject of an unsuccessful appeal to the Supreme Court of Victoria. Mr Rambaldi and Mr Yeo were appointed joint and several trustees of the bankrupt estate of the applicant. They are members of the firm Pitcher Partners.
12. At [3]-[7], the primary judge referred to a number of previous proceedings. The applicant applied unsuccessfully to set aside a bankruptcy notice. Leave to appeal out of time against the judgment dismissing that application was refused. An application to review the sequestration order was dismissed. The applicant applied unsuccessfully for special leave to appeal to the High Court from the order refusing leave to appeal out of time against the dismissal of the application to set aside the bankruptcy notice. An appeal from the dismissal of the application to review the sequestration order was also unsuccessful.
13. At [8]-[10], his Honour summarised the history of the principal proceeding. At [11]-[13], his Honour gave reasons for refusing the applicant’s application for an adjournment on 4 December 2009. He recounted the applicant’s submissions in support of her application for an adjournment. His Honour gave two reasons for refusing the adjournment. The first was the absence of evidence to support the allegations on which the application was based, or the allegations of fraudulent conduct on the part of the trustees. Second, his Honour pointed out that all of the allegations against the trustees related to their conduct after their appointment as trustees, and would not provide evidence that could be relied on to support the annulment of the sequestration order.
14. At [14], his Honour recounted that he had given the applicant opportunities to make submissions in response to the application by Pitcher Partners to dismiss the proceeding, but she had advanced no contrary submissions.
15. At [15], the primary judge referred to s 153B(1) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”), which empowers the Court to annul a bankruptcy if the Court is satisfied that a sequestration order ought not to have been made. The rest of his Honour’s reasons for judgment, at [16]-[22], were in the following terms:

[16] Pitcher Partners submitted that the present application seeks to relitigate matters which were determined adversely to Ms Zegarac in the earlier proceedings to which I have referred. They submit further that, in any event, the Court should refuse the application as a matter of discretion because Ms Zegarac has not co-operated in the administration of her estate and because of the considerable and unexplained delay in bringing the application for annulment.

[17] I put the latter submission to one side. The question of the exercise of the Court’s discretion under s 153B would arise only in the event that the Court were persuaded, at trial, that the original bankruptcy order ought not to have been made.

[18] The power to dismiss a proceeding on the ground that it is frivolous or vexatious or an abuse of process is not to be exercised lightly: see General Steel Industries Inc. v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129-130. If, however, a proceeding is an abuse of process, it may be dismissed: see O 20 r 5 of the Federal Court Rules. A proceeding will constitute an abuse of process if it is “foredoomed to fail”: see Walton v Gardiner (1993) 177 CLR 378 at 393.

[19] This proceeding has been before the Court for almost five months. During that time Ms Zegarac has not put on any evidence to support a claim that the sequestration order which was made against her ought not to have been made. She has had ample opportunity to do so. At the last minute, she has claimed that she has discovered “fresh evidence” but has failed to support that claim with any evidence. Furthermore, she has given no indication of where the “fresh evidence” is to be found or the person or persons said to be in possession of it. Her description of the “fresh evidence” suggests that it would, in any event, not be relevant on the hearing of any application for annulment of her bankruptcy.

[20] While I am conscious that Ms Zegarac has been unrepresented, the position is that she has failed for almost five months to adduce any evidence which would support the making of an order under s 153B(1) of the Bankruptcy Act. She has been on notice, since at least 21 August 2009, that the respondent was seeking to have her application struck out, inter alia, as an abuse of process. Although some of the things which she has said in argument suggest that she may wish to relitigate some of the issues which had been dealt with in the earlier proceedings, the paucity of evidence prevents me from making the necessary comparison. As a result, I am unable to conclude that, were this application to proceed further, the respondent would be able to rely on some form of issue estoppel. I am, however, satisfied that on the present state of the pleadings and evidence, the application is bound to fail. Despite having had the opportunity to do so, Ms Zegarac has advanced no submission to the contrary.

[21] The application must be dismissed as an abuse of process. Ms Zegarac should pay the respondents’ costs of the application.

[22] The proper respondents are Mr Rambaldi and Mr Yeo. I will direct that they be substituted as the respondents to the proceeding.

The hearing of the motions

16. At the outset of the hearing of the applicant’s motions on 4 February 2010, the applicant was present but there was no appearance by or on behalf of the respondents. I indicated that my associate had received a letter, dated 22 January 2010, from solicitors acting for the respondents, which contained the following:

We advise that neither our office nor our client has been served with the Notice of Motion or any affidavit in support.

In any event, as is apparent from the history of this matter, our client is a trustee in bankruptcy with no funds available in the bankrupt estate for the payment by him of his legal costs.

In those circumstances, and with respect to the court, our client does not propose to appear at the hearing of the Notice of Motion for Leave to Appeal and will abide by the determination of the court.

17. I made reference to the statements in this letter about the lack of funds in the bankrupt estate to pay legal costs. The applicant was obviously aware of the letter. She took issue with the statement that the notice of motion and affidavit in support had not been served. I advised her that I was prepared to accept, for the purposes of the hearing, that service had been effected. The applicant attempted to make an issue out of the statement that there were no funds in the bankrupt estate to pay legal costs. She appeared to regard this statement as a basis on which she could use the Court to conduct an investigation of the administration of her bankrupt estate. She also asserted that the non-appearance of the respondents entitled her to the orders sought in her notice of motion by way of judgment in default of appearance.
18. The applicant said that she wished to inspect the Court files in the principal proceeding and in this proceeding. I stood down the hearing of the motions for approximately 40 minutes, to enable the applicant to inspect those files under the supervision of my associate. I authorised my associate to make photocopies of documents from the Court files of which the applicant said she wanted copies.
19. On numerous occasions during the hearing of the motions, I endeavoured to focus the attention of the applicant on the need to demonstrate that she had an arguable case that there was error on the part of the primary judge in the reasons his Honour gave for the orders he made on 4 December 2009. The applicant made very little in the way of submissions addressing those reasons or referring to any possible error on the part of his Honour. The applicant treated the argument on the motions as an opportunity to canvass a range of issues unrelated to the correctness of the primary judge’s judgment. She said that she would like to go into the witness box and give evidence. She made a large number of allegations about her trustees in bankruptcy and other persons. After she had inspected the Court files, she wished to make an issue of the reference in the label on the file in this proceeding to “Anor”, the abbreviation for “Another”. She demanded to know who the other was. She attempted to interrogate me about a variety of subjects.
20. The applicant attempted to raise the issue of the appearance by counsel for the petitioning creditor at a directions hearing before the primary judge on 4 September 2009. She seemed to be under the misapprehension that the petitioning creditor was the other party referred to in the label on the file in this proceeding.
21. After referring briefly to the primary judge’s refusal of an adjournment on 4 December 2009, to enable the applicant to get her “fresh evidence”, the applicant then went into a catalogue of her grievances about many things. She alleged that secret cases were conducted in the Court, under other names, that were really about her. She said that the trustees in bankruptcy had made the petitioning creditor into a controlling trustee. Then the petitioning creditor had married the applicant in secret under a changed name. Then the petitioning creditor had obtained a grant of the probate from the Supreme Court of Victoria, which was granted by an Associate Justice of that court while the applicant was in court. She said that, on that occasion, counsel was present, claiming to act for both the petitioning creditor and the applicant. She complained of the action of the trustees in having her claim for negligence against the petitioning creditor dismissed by the Supreme Court of Victoria.
22. At one point, the applicant focused on certificates of compliance attached to documents filed by parties for whom solicitors were acting, in accordance with O 14 r 5A of the Federal Court Rules. She demanded to know the meaning of compliance. She claimed that this issue was connected with Pitcher Partners and the primary judge not allowing her to obtain the evidence to bring all her complaints to Court, the complaints being about fraud and criminal offences by Pitcher Partners. This was the trigger for another round of allegations by the applicant concerning changing her name, obtaining a grant of probate on the basis that she was dead, opening numerous bank accounts without any authority and using her house to obtain security for loans. She also alleged that the petitioning creditor had become a tenant and was paying rent. I referred to the fact that she had refused to tell the primary judge how she found out about these matters. She insisted that she was correct to refuse to tell him. She said that her identity had been stolen to create thousands of cases and that funerals had been conducted that were not real. She linked these allegations with the fact that the petitioning creditor was represented at interlocutory hearings before the primary judge and that the primary judge had not allowed the applicant to have discovery of documents. She referred to the fact that her trustees in bankruptcy had commenced a proceeding against her former de facto husband in relation to the house, but had withdrawn. She alleged that they wanted her to be a slave and, after her death, to make all the generations of her family slaves forever, so they entered themselves into her family tree, stole her identity, kept on changing names and are “even now tampering with the DNA”. She said that God had revealed these things to her. She said that the primary judge had not given her a fair hearing. She had asked for a jury because she could not get justice in any court. She said that they had put surveillance on her house. They are listening 24/7, annoying her and her whole family. She said that she could not even have a conversation with her own mother “because they’re just playing with me, they’re just doing whatever they like, they’re cutting me off whenever they like.” She said she could not go on the computer because “they’re taking everything from my computer.”
23. The applicant said that at the Children’s Court Clinic at the back of the Supreme Court, “That’s where you make people crazy when they’re not crazy and all of these bogus hearings about the bogus people.”
24. The applicant returned to the issue of who the “Another” was. She returned to the issue of the failure of the trustees to appear at the hearing of the motions and to her entitlement to default judgment. She returned to the issue of the lack of funds in the bankrupt estate and to how the money had been spent.
25. The applicant then moved to the question of her entitlement to call for cross-examination the petitioning creditor and the two trustees and the solicitor appearing for the trustees.
26. The applicant complained that she had been given late advice by someone in the Court registry to the effect that the judgment of the primary judge was an interlocutory judgment, so she had very little time to prepare her application for leave to appeal and her affidavit. She returned to the allegation that the petitioning creditor had become a controlling trustee in bankruptcy. She alleged that the petitioning creditor had brought a proceeding in the name of the applicant in the Supreme Court of Victoria.
27. The applicant argued that it was wrong for the primary judge to make an order for costs because his Honour entertained the application of the trustees to have her proceeding dismissed but did not entertain her application, which has never been heard. She said the trustees should not be asking for costs in that situation and that they had never served her with a bill or any other document. She confused this issue with the question of the absence of funds in the bankrupt estate to pay legal costs, referred to in the trustees’ solicitor’s letter of 22 January 2010.
28. The applicant then asked me to give her an interpretation of a file note on the Court’s file, particularly of an abbreviation in that file note. She again alleged that the petitioning creditor was a party to the proceeding. She referred to one of the interlocutory hearings before the primary judge, and to the fact that the primary judge would not interpret for her Latin terms used by counsel, or explain other terminology. She complained that the primary judge had not read his reasons for judgment. She complained that he would not explain to her why he had changed the name of the respondent in her application. She referred to an earlier interlocutory hearing, when she had told the Court that she did not have copies of two affidavits filed on behalf of the trustees. She said that the trustees’ solicitor gave her two copies of one affidavit instead of a copy of each of the two affidavits. She said that the Federal Court portal had registered the petitioning creditor as a third party in the principal proceeding. She began repeating some of her allegations against the trustees and the petitioning creditor. She referred to the judge’s duty to help an unrepresented litigant as to procedure, and to explain things the litigant did not understand. She said that the primary judge had refused to tell her under what rule he made decisions or rulings, even though she had asked. In order to avoid repetition, I reserved my judgment and adjourned the Court.

The principles to be applied

29. Section 153B(1) of the Bankruptcy Act provides relevantly that, if the Court is satisfied that a sequestration order ought not to have been made, the Court may make an order annulling the bankruptcy. Section 154 makes quite detailed provisions concerning the consequences of annulment of bankruptcy. In particular, by s 154(1)(a), all acts done by the trustee in bankruptcy or any person acting under the authority of the trustee in bankruptcy or the Court before the annulment are taken to have been validly made or done. By s 154(1)(b), the trustee in bankruptcy may apply the property of a former bankrupt still vested in the trustee in payment of the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee. By s 154(1)(c), any remaining property of the bankrupt, vested in the trustee during the bankruptcy, becomes vested in the former bankrupt again. By s 154(2), if the property of the former bankrupt is insufficient to meet the costs, charges and expenses, the amount of the deficiency is a debt due by the former bankrupt to the trustee and is recoverable by the trustee in Court.
30. Part VIII of the Bankruptcy Act makes detailed provisions concerning trustees in bankruptcy. Section 178(1) provides relevantly that, if a bankrupt is affected by an act, omission or decision of the trustee, he or she may apply to the Court and the Court may make such order as it thinks just and equitable. By s 178(2), the application must be made not later than 60 days after the person became aware of the trustee’s act, omission or decision. Section 179 gives the Court power, on the application of (among others) the bankrupt, to inquire into the conduct of a trustee in relation to a bankruptcy. The Court may remove the trustee from office and make such order as it thinks proper. In Trkulja v Morton [2005] FCA 659 at [4], I said with reference to the power in s 179:

In its terms, this power is plainly concerned with “the conduct” of the trustee “in relation to a bankruptcy”. As Macchia v Nilant [2001] FCA 7 (2001) 110 FCR 101 at [49]–[50] demonstrates, the Court must first consider whether it should inquire into the conduct of the trustee. If an inquiry is undertaken, the next question is whether the trustee should be removed from office and/or whether any other order should be made. The Court should be reluctant to undertake an inquiry, unless there are substantial grounds for believing that the trustee erred in the administration. If an inquiry is unlikely to reveal misconduct, it should not be undertaken. The Court should not unduly interfere with the day-to-day administration of a bankrupt’s estate by the trustee. In order to remove a trustee in bankruptcy, it is necessary to find misconduct on the part of the trustee.

31. Order 20 r 5(1)(b) and (2) empower the Court to dismiss a proceeding that is an abuse of the process of the Court. In Walton v Gardiner (1993) 177 CLR 378 at 392-393, Mason CJ, Deane and Dawson JJ summarised the circumstances in which a power to stay proceedings on grounds of abuse of process can be exercised. They included circumstances in which a proceeding “can be clearly seen to be foredoomed to fail” and circumstances in which “it is sought to litigate anew a case which has already been disposed of by earlier proceedings”. As well as its power to dismiss a case as an abuse of process, the Court now has power under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”) to give judgment for a respondent against an applicant if satisfied that the applicant “has no reasonable prospect of successfully prosecuting the proceeding”. By s 31A(3), it is not necessary that the proceeding be hopeless or bound to fail for it to have no reasonable prospect of success.
32. By s 24(1A) of the Federal Court Act, leave to appeal from an interlocutory judgment is required. The test for determining whether a judgment is interlocutory or final is whether it finally determines the rights, or the substantive rights, of the parties. See Cubillo v Commonwealth of Australia [2001] FCA 1213 (2001) 112 FCR 455 at [182] and the cases there cited. It seems clear that an order dismissing a proceeding as an abuse of the process of the Court is an interlocutory judgment, in respect of which s 24(1A) of the Federal Court Act requires leave to appeal. See Marketing Advisory Services (MAS) v Football Tasmania Ltd [2002] FCAFC 165 at [29] and the cases there cited. The principles governing the grant or refusal of leave to appeal from an interlocutory judgment are well-established. They are expressed in Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 at 398-399. The first question is whether, in all the circumstances, the interlocutory judgment is attended with sufficient doubt to warrant its being reconsidered on appeal. The second question is whether substantial injustice would result if leave were refused, supposing the interlocutory judgment to be wrong.

The application of the principles

33. There is no doubt that the judgment of the primary judge given on 11 December 2009 is an interlocutory judgment. It was given without a hearing on the merits and therefore does not dispose finally of the rights of the parties to the proceeding. Although the effect of the judgment is to dispose of the proceeding itself, a judgment that a proceeding amounts to an abuse of the process of the Court leaves open the possibility that the applicant could pursue any rights available to her legitimately in a properly constituted proceeding. The judgment of the primary judge would not be a bar to such a proceeding by way of res judicata estoppel or issue estoppel. For this reason, the judgment is not regarded as final.
34. In [18] of his reasons for judgment, the primary judge identified correctly the test of whether a proceeding amounts to an abuse of process. He focused on whether the applicant’s proceeding was bound to fail.
35. In one respect, it might be arguable that his Honour was in error in the way that he characterised the nature of the applicant’s proceeding. In [8], his Honour described the applicant’s application as “seeking an order that her bankruptcy be annulled and various consequential orders including the payment to her of compensation”. At [12], his Honour pointed out that the impugned conduct of the trustees in bankruptcy occurred after their appointment and that the complaints about them could not be relied on to support the annulment of the sequestration order. From those passages in his reasons for judgment, and from the fact that he referred only to s 153B(1) of the Bankruptcy Act, it appears that his Honour did not think of characterising the applicant’s proceeding as having any possible basis in s 178 or s 179(1) of the Bankruptcy Act, particularly in the power of the Court to make such order as it thinks proper pursuant to s 179(1)(b) of that subsection.
36. An analysis of what the applicant sought in the first 14 paragraphs of her application, set out in [2] above, suggests that the relief she sought in some of those paragraphs might have been other than consequential upon annulment of the sequestration order. The first order sought was apparently the annulment itself. The orders sought in paras 3, 5, 6, 7, 8, 10 and 12 are capable of standing independently as applications either under s 178 or s 179 of the Bankruptcy Act. In ground 9, the applicant expressly invokes s 178. In part, ground 14 could be taken to invoke s 179(1).
37. This error on the part of the primary judge does not establish that his Honour’s judgment is attended by sufficient doubt to warrant its reconsideration by a Full Court. Still less does the error establish the other criterion for the grant of leave to appeal, that substantial injustice will result from it. In order to give proper consideration to those two criteria, it is necessary to examine the applicant’s claims in her application, together with the material in the affidavits she filed and the statements she made from the bar table, for the purpose of determining whether there is doubt as to the correctness of the order dismissing her application, or substantial injustice resulting from the applicant being unable to proceed with her application.
38. The applicant’s application for annulment of her sequestration order was made after her discharge from bankruptcy upon the expiration of the three-year period specified in s 149(2) of the Bankruptcy Act, and in the absence of any objection to automatic discharge pursuant to s 149A. There must be considerable doubt whether there would be any utility in an annulment of a sequestration order after the discharge of the bankrupt, particularly as the provisions of s 154(1) of the Bankruptcy Act would apply. Effectively, s 154(1) prevents the undoing of whatever the trustee in bankruptcy has done during the period between the making and the annulment of a sequestration order. Whatever has been done during the whole of the period of the bankruptcy is validated. In any event, the material on which the applicant relied in support of her application for annulment, found in paras 1 to 24 of her affidavit filed on 27 July 2009, consists entirely of attempts to revisit issues already decided against her and confirmed on appeal in various proceedings she has commenced before. The applicant would not be permitted to revisit those issues. Any court would regard those issues as concluded, and the applicant as estopped from attempting to litigate them. The applicant’s attempt to have her sequestration order annulled was bound to fail.
39. The application in para 2 of the applicant’s application, seeking an order under s 154(1)(c) of the Bankruptcy Act was unnecessary. Section 154(1)(c) of the Bankruptcy Act has the consequence that remaining property of a former bankrupt still vested in the trustee reverts to the bankrupt, without the necessity for any court making any order.
40. Much of what the applicant seeks to accomplish in the remaining grounds in her application would be rendered impossible by the validating effect of s 154(1)(a) of the Bankruptcy Act, or by the express power conferred on the trustees in bankruptcy by s 154(1)(b). In particular, all acts done by the trustees in bankruptcy or any person acting under their authority before annulment are taken to have been validly made or done. It may be that the effect of this validation provision is to put a limit on the supervisory jurisdiction of the Court under ss 178 and 179 of the Bankruptcy Act. In any event, to invoke s 178(1), it is necessary for the bankrupt to point to a particular act, omission or decision of the trustee in respect of which he or she applies to the Court. Such an application must be made no later than 60 days after the bankrupt becoming aware of the act, omission or decision, by virtue of s 178(2).
41. Apart from para 25 of her affidavit of 27 July 2009, the applicant’s grounds, and her affidavit material and her statements from the bar table, are silent about the dates on which acts about which she complains occurred and dates when she became aware of those acts. Paragraph 25 of that affidavit alleges that the trustees:

took steps for administration of Bankruptcy. Any of these steps are WERE NOT KNOWN TO ME UNTIL YESTERDAY – 15 JULY 2009 at approximately 1.40 pm I was given a letter, dated 2nd of July 2009.

The letter to which the applicant referred was not in evidence, either in the principal proceeding, or in this proceeding. There is no indication as to what constituted the “steps” referred to in para 25 of the applicant’s affidavit of 27 July 2009. For instance, it is not clear whether they included any acts leading to the dismissal of the applicant’s claim in negligence against the petitioning creditor, or to the institution of a proceeding in the name of the applicant without informing her about it, or to having a consent order made. The applicant’s statement that she was in court when a grant of probate was made against her, while straining credulity, suggests that she had some participation in at least some of the acts of her trustees in bankruptcy, and was therefore aware of them. Without precise references to acts in respect of which she may be invoking the jurisdiction of the Court under s 178 of the Bankruptcy Act, with the dates on which those acts occurred and the dates on which the applicant became aware of them, it is impossible to determine whether there is anything in respect of which that jurisdiction has been invoked within the period of 60 days specified in s 178(2). It does not appear that the limitation period in s 178(2) of the Bankruptcy Act is capable of enlargement by the Court.

42. The power in s 179(1)(b) for the Court to make such order as it thinks proper is not expressed to be subject to any time limit. It is expressed to be cumulative upon the removal of a trustee from office, rather than an alternative to the removal of a trustee from office. A retrospective removal, after the automatic discharge of the bankrupt, would certainly lack utility, and may very well be beyond the power of the Court. Consequential orders as to damages and compensation, such as the applicant seeks, would therefore appear to be beyond the power of the Court as well. Certainly, if the validating provisions in s 154(1)(a) of the Bankruptcy Act are taken at face value, it would appear to be quite impossible for a bankrupt to make these claims after discharge. This interpretation is consistent with the view that s 179 of the Bankruptcy Act is intended to confer on the Court a supervisory jurisdiction with respect to a trustee in bankruptcy during the bankruptcy, and not a general jurisdiction to revisit at any time thereafter any aspect of the conduct of a trustee in bankruptcy. That policy is also expressed by the short limitation period in s 178(2), within which an application must be made to review an act, omission or decision of a trustee.
43. Even if the applicant were able to overcome these difficulties, she would find it necessary to convince the Court under s 179(1) that there were grounds for inquiring into the conduct of the trustees in bankruptcy. In this respect, because of the way in which her application has been put, the applicant would be in serious difficulty. Her allegations of fraud are not accompanied by any particulars. Her allegations generally lack specificity. They descend into suggestions that are so improbable they would have to be classed as fanciful. It is difficult to suppose that the petitioning creditor could actually have become the controlling trustee of the bankrupt estate, as the applicant alleged in her affidavit of 27 July 2009 and again from the bar table on the hearing of the application for leave to appeal. It is even more difficult to believe that the petitioning creditor changed the name of the applicant, married her and obtained a grant of probate in the Supreme Court of Victoria on the basis that she had died. Not only do the applicant’s allegations lack specific information, or particulars, they suffer from a number of other defects. The applicant appears to lack an understanding of the extent of the trustees’ powers in relation to her bankrupt estate, and any property that was part of it, and their obligations to administer the estate for the benefit of the creditors. When the factual allegations she makes are examined, it becomes impossible to distinguish fact from fantasy. In the circumstances, the Court would be bound to say that no sufficient ground existed for the Court to inquire into the conduct of the trustees in relation to the bankruptcy, pursuant to s 179(1) of the Bankruptcy Act.
44. For these reasons, even if the primary judge had looked at the allegations of the applicant on the basis that they were made pursuant to s 178(1) or s 179(1) of the Bankruptcy Act, his Honour would have been bound to reach the same conclusion that he did, namely that the applicant’s proceeding was bound to fail. It follows that the orders that his Honour made are not open to sufficient doubt to warrant their reconsideration by a Full Court. More importantly, it also follows that there is no injustice done by refusing leave to appeal. If his Honour’s judgment were to be overturned on appeal, it is clear that a further application could be brought pursuant to s 31A of the Federal Court Act, in which the Court would be bound to hold that the applicant’s claims as they have been put have no reasonable prospect of success. There is therefore no injustice to the applicant in having them dismissed by the primary judge on 11 December 2009. There would be injustice to the trustees in forcing them to continue to face the applicant’s claims in the form in which they appear in the documents filed in the principal proceeding.

Other issues

45. As I have said, the applicant had great difficulty focussing on submissions that were relevant to her motion for leave to appeal from the judgment of the primary judge of 11 December 2009. She seemed to think that her appearance before me was the occasion for her to pursue all her complaints, not only against the trustees in bankruptcy, but also against the petitioning creditor and the primary judge. This was not the case. Any grant of leave to appeal depended on the applicant addressing the reasons for judgment and indicating the arguments she had about errors in those reasons. Pursuing other issues was not capable of helping her.
46. It would have been entirely inappropriate for the applicant to go into the witness box in the course of the hearing of the motion for leave to appeal. The issue whether the primary judge was in error in some relevant way could not depend on evidence that was not before his Honour at the time the judgment was given. Nor was the applicant entitled to judgment in default of appearance on the motion. As I have said in [32], before the Court grants leave to appeal from an interlocutory judgment, it must be satisfied that the judgment is attended by sufficient doubt to warrant the granting of leave, and that if leave is not granted and the interlocutory judgment is wrong, substantial injustice will result. The requisite satisfaction of the Court is not achieved as a result of the mere absence of the respondents. In a case in which a properly-advised respondent consents to the grant of leave, the Court may be satisfied that leave is appropriate without investigating the question thoroughly, but this is not such a case.
47. It was not open to the applicant to argue the correctness of interlocutory judgments of the primary judge, given in the principal proceeding, prior to 11 December 2009. Section 24(1A) of the Federal Court Act requires leave to appeal before those judgments could be questioned. The applicant had made no application for leave to appeal from those judgments. The time fixed by O 52 r 10(2A)(b) for the making of any application for leave to appeal from those judgments had long since expired, and the applicant made no application for the extension of that time limit. Thus, the Court could not entertain the applicant’s submissions that an order should have been made for trial of the proceeding by a jury, or that discovery of documents should have been ordered. Her complaint about the representation of the petitioning creditor at an interlocutory hearing in the principal proceeding (which no doubt occurred because the applicant was seeking discovery of documents against the petitioning creditor) was out of order on the hearing of the application for leave to appeal.
48. The fact that solicitors on behalf of the trustees in bankruptcy asserted that there were no funds left in the estate to pay legal costs for the trustees to appear on the application did not entitle the applicant to question the truth of that statement on the hearing of her application for leave. It is not the Court’s function to allow the applicant to pursue any question that troubles her, and to have it resolved by the Court. Nor is it the Court’s function to answer any question put to any judge by the applicant. The primary judge was not obliged to explain his reasons for judgment after he had delivered judgment, or engage in dialogue with the applicant about those reasons for judgment, and to answer her questions about them. Similarly, the applicant was not entitled to interrogate me about matters such as the use of the abbreviation “Anor” in the label on the Court file in this proceeding, or the significance of certificates of compliance on the file in the principal proceeding. Her suspicions about these matters were unfounded. The label is affixed to the file for the convenience of the Court in its administration. For the sake of that convenience, the practice is adopted of naming only one respondent. The abbreviation “Anor” is added to make it clear that there is another respondent, in this case, the second trustee in bankruptcy. Had there been more than two respondents, the abbreviation would have been “Ors”. A certificate of compliance is required by O 14 r 5A of the Federal Court Rules when a legal practitioner acts for a party in a proceeding, in order to direct the attention of the practitioner to the need for any document filed in the Court to comply with the requirements as to form.
49. The applicant’s complaint that the primary judge had not read his reasons for judgment aloud in court when he delivered judgment is unfounded. Order 35 r 2 of the Federal Court Rules expressly permits the Court to publish its reasons for judgment in written form by delivering them to an associate or other officer of the Court in open court. Reasons for judgment are published in this manner as a regular practice of the Court. The practice saves time and money. His Honour was certainly entitled to publish his reasons for judgment on 11 December 2009 by delivering them to his associate in open Court. He was not obliged to read them aloud.

Conclusion

50. For these reasons, the motion for leave to appeal from the judgment of the primary judge, given on 11 December 2009, must be dismissed. As the respondents to that motion, the trustees in bankruptcy, did not appear and contest the motion, there is no occasion to

make any order for costs in their favour. There should be no order as to the costs of the motion.

I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.

Associate:

Dated: 16 March 2010