Fiore v Roufeil

1. Pursuant to r 10.23 of the Federal Court Rules 2011 (Cth), the application dated 25 October 2019 and the accompanying affidavit, both filed 28 October 2019, is deemed to have been served on the first and second respondents on 28 October 2019.
2. The application is refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLVIN J: 1 Mr Peter Fiore is a bankrupt. His trustee is Mr Mark Roufeil. On 4 October 2019, Mr Roufeil issued a notice under s 77A of the Bankruptcy Act 1966 (Cth) addressed to Stephen Browne Personal Injury Lawyers, Attention: Mr Stephen Browne (Notice). I will refer to the law firm as described in the Notice as the Lawyers. 2 The Notice sought production of the following documents: • A copy of payment receipts for all payments made by your office to the Bankrupt for your professional services; including the $534,829.60 transferred to the Bankrupt on 5 April 2017; and • Any other documents detailing the BSB and account number of the account where the payment of $534,829.60 was deposited into. 3 The Lawyers had acted for Mr Fiore in making a personal injury compensation claim. 4 Mr Roufeil is also proposing to examine various members of Mr Fiore's family and his de facto partner, Ms Kathryn McKelt. Examination summonses have been issued. There has been litigation in this Court about those summonses. : Roufeil v Fiore, in the matter of the Bankrupt Estate of Peter Andrew Fiore [2019] FCA 687; Roufeil v Fiore (No 2), in the matter of the Bankrupt Estate of Peter Andrew Fiore [2019] FCA 916; and Roufeil v Fiore (No 3), in the matter of the Bankrupt Estate of Peter Andrew Fiore [2019] FCA 1231. Examination of Ms McKelt is now scheduled for 26 November 2019. 5 In the meantime, Mr Roufeil, in his capacity as trustee, has commenced proceedings in the District Court of Western Australia against Ms McKelt, claiming that various payments that she received into her bank account in 2015 and 2016 were property of the estate in bankruptcy of Mr Fiore. 6 Mr Fiore and Ms McKelt now apply for urgent interim relief restraining the Lawyers from producing the documents the subject of the Notice on the basis that the Notice is allegedly invalid. Although the time for compliance with the Notice has passed, the Lawyers have indicated they will not produce documents in response to the Notice pending the outcome of the present application. 7 Solicitors acting for Mr Fiore and Ms McKelt raised concerns about the Notice in correspondence with Taylor David Lawyers for the trustee. By letter dated 15 October 2019 Taylor David Lawyers provided a substantive response on behalf of Mr Roufeil as trustee, noting that any application to quash the Notice would be opposed with costs being sought on an indemnity basis from lawyers acting for Mr Fiore. Taylor David Lawyers also acted for Mr Roufeil in the proceedings concerned with challenges to the examination summonses and they were the lawyers on the record, and remain the lawyers on the record, in the District Court proceedings, acting for Mr Roufeil. 8 The application for urgent interim relief was initially listed before me on the morning of 28 October 2019 and notice of the application had been provided to Taylor David Lawyers. 9 On the morning of that hearing, shortly prior to the hearing, my associate received a copy of an email from Taylor David Lawyers to the solicitors for Mr Fiore and Ms McKelt. It was in the following terms: We do not hold instructions to: 1. Accept service on behalf of any respondent of material in this proceeding. 2. Act on behalf of any of the respondents in this proceeding and are unsure if: (a) All respondents have been served. (b) Any respondent has engaged alternative representation. We will not be appearing this morning. 10 In circumstances where Taylor David Lawyers have been on the record in related proceedings in this Court and have engaged in providing a substantive response to the matters the subject of the present application including a response to the effect that indemnity costs would be sought against lawyers personally if the application was pressed and the fact that the trustee has duties to discharge to the Court, the provision of such a communication was entirely inappropriate. No reason is indicated as to why Mr Roufeil could not have instructed Taylor David Lawyers to appear. No explanation is offered as to why Taylor David Lawyers would be willing to act on the basis that a claim for indemnity costs would be threatened in circumstances where there were no instructions to appear. 11 In the result, the matter was adjourned to today for hearing and steps were taken by those acting for Mr Fiore and Ms McKelt to advise Taylor David Lawyers of the hearing today. That was done by telephone and by email and there was no response. In the above circumstances, I was satisfied that orders for deemed service should be made and that the matter could proceed for hearing today. I was satisfied because this was a claim for relief on the basis of matters to be addressed with some urgency. Taylor David Lawyers have plainly been engaged to deal with the matters the subject of the application and were on the record for the trustee in other proceedings concerned with the same bankruptcy affairs and in those circumstances the requirements of the rule in relation to it not being practicable to serve the document were satisfied. It is not necessary to demonstrate that it is impossible or not feasible to effect personal service. The applicant for an order for deemed service must show that it is not sensible or realistic to effect personal service: Commissioner of Taxation v Caratti (No 2) [2018] FCA 1500 at [9]-[10]. It is not sensible to require personal service in the present instance. It would reward the trustee for taking inappropriate steps as to the conduct of the dispute as to the Notice in circumstances where it is obvious that notice has been given. 12 The Lawyers have indicated that they do not wish to be heard on the application and that they will abide by the outcome. 13 Mr Fiore and Ms McKelt rely upon the jurisdiction conferred on this Court by s 30(1) of the Bankruptcy Act as providing the basis for ultimate relief, setting aside the Notice and restraining the production of any documents otherwise commanded by the Notice. A further order is sought restraining the examination of Ms McKelt pending the outcome of the District Court proceedings. However, as counsel properly observed, that aspect of the application is not relied upon to support the claim for interim relief. 14 Given the subject matter of the proceedings, I am satisfied that the Court has jurisdiction under s 30 of the Bankruptcy Act and can grant interim relief in aid of that jurisdiction if it is just to do so. 15 The matter was advanced before me on the basis that the interim relief needed to satisfy the principles applicable for an interlocutory injunction protecting the subject matter of the proceedings and I approach the matter on the basis that the usual principles for seeking injunctive relief are relevant to an application of this kind. Those principles were recently summarised by Jackson J in a matter of Frigger v Trenfield [2019] FCA 1746 at [6]. 16 Mr Fiore and Ms McKelt advance a number of alternative grounds upon which final relief setting aside the Notice may be justified. For the reasons I am about to give, I am not satisfied that there is sufficient merit in any of those grounds to support the claim for interim relief and, in my view, the balance of convenience is also against the grant of that relief and on that basis I refuse the application. 17 First, it is claimed that the information and documents the subject of the Notice could only have been the product of privileged communications and it was improper to issue a notice for the purpose of obtaining privileged documents. The Notice is confined as to the information it seeks. There is no evidence before me to support a basis for a claim to privilege that would extend to the documents the subject of the Notice. In particular, it is not explained how disclosure of the documents would reveal privileged communications. There is no evidence to support the existence of privileged communications in relation to the payment that was to be made in respect of the proceeds of the personal injuries claim that were held by the Lawyers. 18 The submission was put to me on the basis that it ought to be inferred that the Lawyers would have guided Mr Fiore through the process as to how payment of the proceeds of the personal injuries claim might be effectuated. I should infer, so it was submitted, that the instructions about where the moneys were to be paid would have been informed by advice provided by the lawyers. In particular, I should draw that inference because it occurred in a context where Mr Fiore was involved in matters related to his bankruptcy and the payment was of a kind where it would not form part of the property of the bankruptcy. 19 However, before me there is no evidence of there having been any communications between the Lawyers and Mr Fiore at the time of those payments and, in the view that I take, absent that evidence, matters related to the disbursement of the moneys received as a result of the personal injuries claim are simply matters about where those payments should be directed, the funds having been received pursuant to that claim. 20 Some further submissions were advanced to the effect that the payment also occurred in a context where Mr Fiore was involved in matrimonial proceedings. However, as counsel properly accepted, there is no evidence before me as to those matters. 21 In all those circumstances, on the affidavit material I do not accept that there is a sufficiently arguable case to support the basis for relief insofar as it relies upon the question of privilege. Even if I am wrong in that view, however, there remains the ability of the lawyers, in responding to the Notice, to advance a proper claim for legal professional privilege in respect of the documents sought to be produced. So, if indeed there were circumstances such that (a) particular advice was provided of a kind that would support the claim to privilege; and (b) the nature of the payments can be said to reveal some aspect of those communications, then that may be a matter upon which privilege might be claimed. That is to say, this is not a case where if relief is refused, then the opportunity to claim the privilege, properly supported by reference to particular circumstances, might be advanced. Section 77A does not abrogate the common law right to legal professional privilege. 22 Second, it is said that the documents sought relate to compensation payments for personal injury. It may be accepted that compensation payments of that kind do not form part of the bankrupt estate for division amongst creditors and it may also be accepted that there is material before the Court to establish that the documents sought relate to such compensation payments. However, it does not follow that the documents sought bear no connection to the examinable affairs of the bankrupt, Mr Fiore. The documents sought may relate to obtaining a proper understanding of the nature and extent of payments that had been received by particular parties from Mr Fiore or the manner in which moneys have been applied to discharge particular obligations. 23 The bare fact that the payments may be made from proceeds of a personal injuries claim made by Mr Fiore does not, in my view, mean that the documents concerning those payments are necessarily irrelevant to the affairs of the bankruptcy and it has not been demonstrated that the documents bear no relevance to the affairs of the bankruptcy. Given the manner in which that claim was articulated, it seems to me that it is not sufficiently arguable to support the claim to relief. 24 Third, it was claimed that the Notice is an abuse of process because it seeks to obtain information for the purpose of the District Court proceedings so as to impeach the credibility of Ms McKelt. There is no explanation of the basis for this claim which is simply asserted in an affidavit by the solicitors acting for Mr Fiore and Ms McKelt. This is not a case of a kind where a notice procedure is invoked in order to undertake an examination of a particular party. In this instance, all that is sought is the production of documents and in those circumstances, on the material before me, there is no evidence to support an inference as to some purpose associated with the cross-examination of Ms McKelt that might occur in the context of the District Court proceedings. In any event, it seems to me that the trustee would be entitled to investigate those matters provided that they do not rise to a circumstance where they confer some form of forensic advantage. 25 Fourth, and relatedly it was said that it can be inferred that Mr Roufeil has issued the Notice solely for the purpose of the District Court proceedings. It is said that purpose can be inferred because the Notice was issued after Mr Roufeil, as trustee, had issued examination summonses and had then caused the District Court proceedings to be commenced. The material before me does not rise to a claim that the issue of the Notice would afford Mr Roufeil a forensic advantage in the District Court proceedings that would not otherwise be available. 26 The trustee of a bankrupt estate can properly use the procedure afforded by s 77A in order to obtain information for the purposes of litigation that has been commenced. The trustee needs to understand the position as to matters relating to such litigation as much as any other party, but may not have the same access to information that may have been available to the bankrupt. In circumstances where the procedure does not lead to a forensic advantage there is no abuse: Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 at 90-91. 27 Finally, I note that submissions were advanced in reliance upon the fact that the power conferred by s 77A is conditioned upon the trustee conducting an investigation under s 19AA(1) which provides: The trustee of the estate of a bankrupt may investigate: (a) the bankrupt's conduct and examinable affairs; and (b) books, accounts and records kept by the bankrupt; so far as they relate to the bankruptcy. 28 The Notice in this instance, for reasons I have given, has not been demonstrated on the face of it to be a notice which does not relate to the bankrupt's examinable affairs, and for that reason it seems to me that it has not been demonstrated that the qualification upon the power in s 77A has not been met in this particular instance. 29 For those reasons I am not satisfied that the interim relief sought should be granted and I refuse the application. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.