Burhala v Yeo

1. The Applicant give security for the Respondents' costs of and incidental to the proceeding in the amount of $55,840 to be provided by payment into Court in this proceeding pursuant to r 2.42 of the Federal Court Rules 2011 (Cth).
2. In the event the security for costs is not provided within 28 days of the date of these orders, the proceeding be dismissed pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth).
3. The Applicant pay the costs of the Respondents of and incidental to this interlocutory application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 The applicant, Mr Burhala, is an undischarged bankrupt who resides in Romania. On 10 August 2016, under a sequestration order made by the Federal Circuit Court under s 43 of the Bankruptcy Act 1966 (Cth) (Act), Mr Burhala became bankrupt on a creditor's petition issued on behalf of the Deputy Commissioner of Taxation. The respondents (Trustees) were appointed as the joint and several trustees of Mr Burhala's bankrupt estate. 2 The evidence discloses that Mr Burhala departed from Australia on 2 October 2015 and, in his words, returned to Romania, his country of birth, where he has been living ever since. Prior to departing from Australia, Mr Burhala was a legal practitioner who practised in migration law as a senior associate at Macpherson Kelley and then as a principal of his own legal practice, Florin Burhala and Associates. 3 On 1 November 2018, upon the acceptance of her debtor's petition by the Official Receiver under s 54C of the Act, Mr Burhala's wife, Tania Louise Burhala, also became bankrupt. On 6 March 2019, the respondents were appointed as the trustees of Mrs Burhala's bankrupt estate. On 2 November 2021, Mrs Burhala was discharged from bankruptcy. Mrs Burhala also resides in Romania. 4 The Trustees have brought three proceedings in Romania relating to Mr Burhala's bankruptcy. Specifically, the Trustees seek to challenge Mr Burhala's purported transfer of Romanian real property to his children which vested in the Trustees. 5 On 14 March 2023, the Trustees filed an originating application in the Federal Circuit and Family Court of Australia Div 2 (Federal Circuit Court) seeking a declaration pursuant to s 90-15 of Sch 2 of the Act that: (a) the Trustees (as trustees of the bankrupt estate of Mr Burhala) are acting reasonably and therefore justified in seeking to recover sufficient assets in order to pay not less than $8,921,081.22 in the bankrupt estate in Romania; and (b) the Trustees (as trustees of the bankrupt estate of Mrs Burhala) are acting reasonably and therefore justified in seeking to recognise the bankruptcy in Romania. 6 The originating application in the Federal Circuit Court named Mr Burhala as first respondent and Mrs Burhala as second respondent. The Federal Circuit Court received evidence concerning difficulties in serving the originating application on the Burhalas in Romania, including a letter addressed to the Court from the Burhalas' Romanian lawyer advising that he did not have instructions to receive service of Australian proceedings on behalf of the Burhalas. The evidence disclosed that the Trustees and the Burhalas had communicated with each other during the administration of the bankruptcies via email, but the Burhalas refused to accept service of the originating process by that means. 7 The Trustees subsequently applied to have the Burhalas removed as respondents to the originating application in the Federal Circuit Court on the basis that they were not a necessary party to the application as the application would not affect any of their substantive rights or interests. 8 On 28 March 2023, the Federal Circuit Court made an order removing the Burhalas as respondents to that proceeding and made declarations pursuant to s 90-15 of Sch 2 of the Act as sought by the Trustees. 9 On 11 May 2023, Mr Burhala filed an application in this Court for an extension of time in which to seek leave to appeal against the decision of the Federal Circuit Court. The application was accompanied by a draft notice of appeal which stated the following proposed grounds of appeal: 1. The Appellant was denied natural justice by being removed from the proceedings thus preventing him from providing the Court with their defences for consideration. 2. The Orders made at paragraph 1 of the Orders made by the Federal Circuit and Family Court of Australia under section 90-15 of Schedule 2 of the Bankruptcy Act 1966 (Cth), (the Act) are beyond the scope and powers given to the Court under that section and it denied the Appellant natural justice by making orders pursuant to it as to the amount of debts admitted under the administration of the bankruptcy of Appellant, such powers being specifically regulated by Division 1 Part VI of the Act which has specific provisions as to the admission of proof of debts and the Court's powers to oversee such admissions of proof of debts. 10 On his application for an extension of time and leave to appeal, Mr Burhala provided an email address which matches the email address used by the Trustees to communicate with Mr Burhala in the administration of the bankruptcy, as referred to above, and by which the Trustees sought to serve Mr Burhala with the originating application in the Federal Circuit Court. Mr Burhala's address for service was an address in Heidelberg, a suburb of Melbourne in Victoria. 11 On 15 June 2023, the Trustees filed an interlocutory application seeking security for their costs of and incidental to Mr Burhala's application for an extension of time in which to seek leave to appeal. 12 These reasons concern the Trustees' application for security for costs. 13 The Trustees seek security in the sum of $55,840 to be paid into Court. The application is supported by an affidavit of the first respondent, Andrew Yeo, sworn 15 June 2023. On 27 June 2023, the Trustees also filed written submissions in support of the application for security. 14 On 27 June 2023, Mr Burhala filed written submissions in opposition to the application for security. The submissions purported to give an address for service in the proceeding at an address in Romania. That is inconsistent with the address for service stated on Mr Burhala's application for an extension of time in which to seek leave to appeal. On 25 July 2023, Mr Burhala filed an affidavit made by him on 21 July 2023. The affidavit purports to give a history of the circumstances of Mr Burhala's bankruptcy, and makes allegations of maladministration on the part of the Trustees. The matters deposed to in the affidavit have no material bearing on the application for security for costs. Significantly, Mr Burhala provides no evidence concerning his financial capacity to meet an order for costs in this proceeding. 15 The Trustees have filed two further affidavits made by Mr Yeo. The first affidavit was made on 3 August 2023 and, in part, responds to Mr Burhala's affidavit and, in part, provides additional information concerning Mr Burhala's current financial position. The second was made on 11 August 2023 and supplements the affidavit of 3 August 2023. 16 Mr Burhala is self-represented on this application for security for costs. 17 For the reasons that follow, I consider it appropriate to order that Mr Burhala provide security for costs and that, if security is not provided within 28 days, that his application for an extension of time in which to seek leave to appeal be dismissed.