17. It was submitted by Mr Norris for the Applicant that the lodgment of a proof of debt to comply with the time limit imposed by the trustee should not be seen as an acceptance by the Applicant that the most appropriate forum was the procedures available in this Court pursuant to the Bankruptcy Act. He asserts quite properly in my view that the Respondent had indicated from the start that it would seek leave to proceed against the bankrupt.

18. During the course of submissions Mr Norris referred me to the following passage from McDonald Henry and Meek "Australian Bankruptcy Law & Practice" where at paragraph 58.3.25 the learned authors state:-

"The Court can grant leave to take fresh steps in existing proceedings where satisfied that the existing proceeding will have the "relevant issues better and more comprehensively dealt with" than allowing the dispute to be litigated in the Federal Court in the context of an appeal against a trustee's disallowance of a proof of debt (Re Midland Credit, The Official Trustee and Allanson [1982] FCA 244; (1982) 68 FLR 53). Or where it will be "less satisfactory" for some reason to have the dispute litigated there than to allow the existing proceeding to continue: Allanson v Midland Credit (1977) 30 FLR 108, 114."

19. In the present case Mr Norris submitted that the creditor proceeded as the Plaintiff in the Supreme Court proceedings and obtained judgment. In the circumstances he submitted that it was more appropriate that the assessment be completed by the Court in which judgment had been obtained.

20. In relation to the foreshadowed denial of debt by the bankrupt it was submitted by Mr Norris that that matter could also be dealt with as a separate issue before the Supreme Court of Victoria and/or in the course of the process of the assessment of damages before that Court.

21. Mr Norris submitted that the bankrupt would be entitled to lodge any Affidavit in opposition to the assessment of damages.

22. Mr Lhuede appeared on behalf of the Respondent indicated that the application is not opposed. He then proceeded to indicate that some reservations were expressed by way of concern at the course to be embarked upon by the Applicant is potentially not the appropriate course and that the matter may be better dealt with pursuant to s 82 of the Bankruptcy Act.

23. Mr Lhuede conceded however that there are options and that the Court has a discretion pursuant to s 58(3) of the Act.

24. Whilst indicating that the trustee was aware the bankrupt has and continues to maintain or deny any liability at all to the Applicant, Mr Lhuede agreed that although that is a relevant consideration as it is a factor which the Court could give weight to in exercising its discretion, it was unable to take the matter much further. He conceded that the solicitors acting for the bankrupt could fully participate in any assessment of damages which may occur in the Supreme Court.

25. Mr Lhuede agreed that there is no evidence that the bankrupt has taken any steps whatsoever to set aside the default judgment obtained against him in the Supreme Court.

26. Mr Lhuede properly made reference to other options which may be pursued against other Defendants in the Supreme Court proceeding but acknowledged that it is open to a Plaintiff in proceedings where judgment is obtained against multiple defendants to select the defendant which it wishes to pursue by way of recovery of damages.

27. It was suggested that if orders were made then they should be subject to the condition that if a claim is made in respect of any property which is otherwise vested in the trustee in bankruptcy no step is taken to recover that without leave of the Court. He asserted this was simply because "we may need to argue about those matters".

28. There is no suggestion by the Respondent at all that the Applicant is to blame for any delay.

29. Mr Lhuede did not take issue that a default judgment with a declaration and order for assessment of damages would be insufficient to constitute a provable debt. He did refer to examples such as fraud and specifically referred to s 82(2) of the Act which deals with claims other than claims arising by virtue of breach of trust, contract or promise. Putting the argument at its highest he was prepared to accept that a declaratory judgment with damages to be assessed may constitute a provable debt. Finally Mr Lhuede stated, "I don't take strong issue at all with a finding that this is in respect of a proof of debt".

30. Having regard to the material to which I have referred and the submissions of law, it is my view that in this case it is appropriate to make the orders sought in the application.

31. I am satisfied that s 58(3) provides a power to the Court to grant leave to the Applicant to take a fresh step in a proceeding in respect of a provable debt and that such a step includes assessment of damages.

32. I am further satisfied that there is a discretion which can be exercised by the Court in a matter of this kind.

33. In this matter a complex assessment of damages will be required in relation to the bankrupt and other defendants in the Supreme Court proceedings where a default judgment has already been granted. That process of an assessment of damages will be better undertaken by the Court in which the proceedings have been commenced and presumably documents filed which relate to the issue of damages.

34. The parties are already before the Supreme Court and in the event that the bankrupt seeks to set aside judgment and/or participate in the assessment of damages he will have the opportunity to do so before a Court where judgment has been entered.

35. The assessment of damages in a case of this kind is a complex matter and in my view would be better dealt with by the Supreme Court in the normal course of an assessment of damages. It would be artificial and unreasonable to expect a Court in bankruptcy to undertake a discreet task of assessment of damages in circumstances where effectively re-litigation may occur arising out of the same facts in the Supreme Court proceedings where judgment has already been entered. This is an undesirable course to follow and granting leave to pursue the assessment of damages in all the circumstances will provide an opportunity to deal with the issues better and more comprehensively than allowing the dispute to be issued in this Court.

36. For the sake of completeness I should also refer to the fact that Counsel for the Respondent did suggest that any leave granted should be conditional that to the extent that a claim is made in respect of any property which it otherwise vested in the trustee in bankrtupcy, no step is taken to recover that without leave of the Court. I do not believe it is appropriate to impose that condition on the leave granted in this application though I will grant general liberty to apply to the parties should any difficulties arise out of the orders made by this Court. The trustee otherwise has remedies available pursuant to the Bankruptcy Act which he may wish to pursue at a later date.

37. I am satisfied that in the present case having regard to the Amended Statement of Claim in the Supreme Court proceedings to which I have referred that the unliquidated damages in this case do arise by reason of contract, promise or breach of trust and accordingly the debt is a provable debt for the purpose of the Act. It cannot be regarded as a debt that is not provable pursuant to s 82(2) of the Act.

1. The Applicant have leave to proceed with an application to assess damages in the judgment it obtained against Fotis Zafiris (also known as Frank Zafiris) in Supreme Court proceeding number 2272 of 1996.

2. The Applicant have leave to proceed with an application to have costs taxed by the Taxing Master of the Supreme Court in the judgment it obtained against Fotis Zafiris (also known as Frank Zafiris) in Supreme Court proceedings number 2272 of 1996.

3. Costs including reserved costs be payable out of the bankrupt estate.

I CERTIFY THAT THE PRECEDING PARAGRAPHS NUMBERED 1 TO 38 CONSTITUTE A TRUE COPY OF THE REASONS FOR JUDGMENT OF McINNIS FM