Gore v Prentice

REASONS FOR JUDGMENT 1 In November last year, Mr Craig Kirrin Gore (Mr Gore) sought a review pursuant to s 104 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) of a decision made earlier that month to accept particular proofs of debt. He sought further orders which, in lieu of the decision to accept those proofs of debt, rejected them. Events since then have materially included the presentation by Mr Gore of a debtor's petition. He had hitherto had the benefit of a personal insolvency agreement. The application in the Court for review concerned a decision made in the context of the administration of that personal insolvency agreement. 2 The trustee of Mr Gore's bankrupt estate is the Official Trustee in Bankruptcy (Official Trustee). The official trustee decided earlier this month under s 60(2) of the Bankruptcy Act to elect to discontinue the application. I am satisfied that the term "action" in s 60(2) is one which, as a matter of construction, is apt to include an application under s 104 of the Bankruptcy Act. That term 'action' in s 60(2) is not one narrowly to be construed having regard to the subject matter, scope and purpose of s 60 in the context of the Bankruptcy Act. 3 None of the parties to the proceeding wishes further to prosecute it. The only controversy and perhaps it is one more of academic interest than anything else is whether the Court's orders ought to be not just an order in respect of costs but rather an order of dismissal as opposed to an order providing for discontinuance. It is true, as was highlighted on behalf of the official trustee, whose appearance today was welcome, that the subsection in terms makes reference to discontinuance or prosecution. It is evident though from authorities that, even where an election has been made to discontinue, orders of dismissal have nonetheless been made. 4 Sometimes, in lieu of an order of dismissal, an order is made to stay a proceeding. That is particularly so where there exists the contingency that a review may be sought of the trustee's decision to make an election to discontinue. It is also the case that dismissal is sometimes not ordered because of an apprehension that so to do might be to prevent the prosecution later of the cause of action concerned. It is though moot whether an order of dismissal in circumstances such as the present would give rise to an inability further to prosecute a cause of action (see: Willoughby v Clayton Utz [No 2] [2009] WASCA 29). 5 That though is a general position. Here, the very circumstance of the presentation of a debtor's petition renders otiose any anterior controversy in the context of the personal insolvency agreement as to whether or not particular proofs of debt should or should not have been admitted. Mr Gore by his own actions has rendered that question academic. He has further, by his solicitors, indicated that he has no present disposition to seek to challenge the decision made by the trustee to elect to discontinue. 6 Where a trustee has not made any decision and the proceedings are instead treated as abandoned by virtue of s 60(3) of the Bankruptcy Act, orders of dismissal have been made (see: Cole v Challenge Bank Limited [2002] FCAFC 200). In Savage v Australian Unity Funds Management Ltd [2011] NSWCA 270, Young J also surveyed authorities in relation to whether orders of dismissal could be made. In the result, his Honour made an order for dismissal. In Denlay v Commissioner of Taxation (No 3) [2012] FCA 317 and in the context of a decision by a trustee in bankruptcy to discontinue a taxation appeal which was presently part heard, I also made an order of dismissal. 7 It seems to me that the alternatives prosecute or discontinue posited by s 60(2) are cast at a level of abstraction which does not foreclose an ability to order dismissal. In other words, the use of the term 'discontinue' is not used so as to confine the order that a Court may make to one of permitting discontinuance. 8 Because the proceeding is one which has been overtaken by the subsequent bankruptcy and because there is no apparent prejudice to Mr Gore or, for that matter, any of the other parties or the trustee, the view that I have reached is that the appropriate order to make is one of dismissal. 9 As to costs, there is agreement between the parties that an order of costs in these terms should be made: the applicant pay the second, third and fourth respondents' costs, including reserved costs, as agreed or failing agreement, as taxed on a party and party basis. It is within power to make such an order notwithstanding Mr Gore's present subsisting bankruptcy. That is because the liability to costs is not one which ante-dates or will ante-date the date of his bankruptcy. Rather, the obligation in terms of costs will arise only after bankruptcy upon the making of an order. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.