Johnson v Powrie [2018] ACTCA 46 | Case summary | Zoe

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Johnson v Powrie [2018] ACTCA 46 | Case summary | Zoe

Unfortunately, it is necessary to rehearse much of the history of the relationship between the parties in order to understand the circumstances of this appeal.
Mr Johnson engaged Mr Powrie to act for him in respect of some taxation matters, which, because of his background and experience, was an area of practice with which Mr Powrie had a good deal of knowledge and familiarity.
In or about April 2000, however, Mr Johnson further engaged Mr Powrie to act for him in defamation proceedings, that he wished to take in the Supreme Court of New South Wales. On Mr Johnson’s instructions, Mr Powrie commenced those proceedings by having a Statement of Claim issued from that Court in 2000 against three defendants, an individual, Mr Colin J Alexander, and two companies. It was said that the Statement of Claim was, on 18 July 2001, served on Mr Alexander who, however, disputed that effective service had been effected. His lawyers drew to Mr Powrie’s attention the defects they identified, including a failure to comply with the Service and Execution of Process Act 1992 (Cth) and certain Practice Directions and Rules of the NSW Supreme Court.
Mr Alexander successfully moved the Court to have the purported service set aside. On 28 September 2002, the Court declared that the Statement of Claim had not been duly served on Mr Alexander: Johnson v Alexander [2002] NSWSC 824. Mr Johnson was ordered to pay the costs of the application.
By that time, of course, the Statement of Claim was no longer valid for service: Pt 7, r 7(1) of the Supreme Court Rules 1970 (NSW).
An application for an extension of time within which to serve the Statement of Claim was made by Mr Powrie acting for Mr Johnson and, on 30 September 2003, an order was made extending that time. The costs of the application were ordered to be costs in the cause. Service was apparently effected properly and the claim proceeded.
Ultimately, however, the defamation claim by Mr Johnson was unsuccessful and Mr Johnson was ordered to pay Mr Alexander’s costs as well as the costs of the other two defendants.
Mr Johnson then commenced proceedings in the ACT Supreme Court against Mr Powrie (SC 766 of 2005) for damages for negligence in the conduct of the defamation proceedings. I refer to these proceedings in these reasons as “the first ACT proceedings”. The damages claimed in them included the costs paid by Mr Johnson to Mr Powrie for the applications to set aside service of the Statement of Claim and to extend time within which to serve it. Mr Powrie entered an appearance and was represented by the lawyers appointed by his professional indemnity insurer.
Those proceedings, however, were resolved by negotiation and the resolution made by and recorded in a Deed of Release made on 24 April 2009 (“Deed of Release”).
It appears that, because the terms of Mr Powrie’s professional indemnity policy did not cover any claim for legal costs charged by Mr Powrie for the work done in relation to the defective service and the extension of time, the insurers were only able to indemnify Mr Powrie for that part of the negligence claim which did not include that part of the claim which sought from Mr Powrie the recovery of the costs which Mr Johnson had paid him.
The Deed of Release, which constituted as settlement of the proceedings, provided for a payment by Mr Powrie to Mr Johnson of $30,967.98 within 7 days from the making of the Deed and Mr Johnson’s costs of the first ACT proceedings as agreed or determined by a local costs assessor, Legalcost, such costs to be paid within 14 days of agreement or assessment.
Because of the insurer’s limit of interest, the Deed of Release made a separate provision for assessment and payment of the legal costs claimed by Mr Johnson to have been paid by him to Mr Powrie for the work in respect of the ineffective service of the Statement of Claim said to have been negligently undertaken and the consequent need for an extended time for its service. These latter costs, which assume significant prominence in these proceedings were called in the Deed “legal costs part of the proceedings”. It is convenient to call them here “the Legal Costs”.
In hindsight, it is unfortunate that the process for assessing the Legal Costs was not that which was successfully followed in respect of the first ACT proceedings and it is not clear why another process was thought appropriate. The correspondence from Mr Johnson’s lawyers to Mr Powrie’s lawyers simply referred to their client’s acceptance that “the best way of resolving this issue [that is, the amount of the Legal Costs] is for the Registrar of the Supreme Court to be appointed to assess those costs” and a reference by Mr Powrie’s lawyers to “the question of Mr Powrie’s costs [sic] shall be referred to the Deputy Registrar for binding determination”.
It appears that the reason a different regime was accepted for the Legal Costs was that, whereas the costs assessment by Legalcost would incur fees which the insurers would pay or share, it had no interest in the Legal Costs and so a method was chosen which would incur no such fees.
The Deed of Release then provided for a comprehensive release of Mr Powrie by Mr Johnson of all the claims relating to the NSW Supreme Court proceedings in consideration of the payment of the various sums provided for in that Deed including the Legal Costs upon their determination.
The provision made in the Deed of Release in respect of the Legal Costs was that the Deputy Registrar of the Supreme Court would determine the amount of those costs.
Upon assessment of this amount, the Deed of Release further provided that Mr Johnson would discontinue the first ACT proceedings by filing a Notice of Discontinuance within 14 days of the assessment. No costs were to be paid by Mr Johnson to Mr Powrie upon that discontinuance.
Despite this apparent resolution of the proceedings, matters did not proceed smoothly. Mr Powrie did pay the sum of $30,967.98 in time.
It appears that an assessment of the costs of the first ACT proceedings was undertaken by Legalcost and, when completed, that Mr Powrie paid that amount so assessed without any complaint by either party.
In the first proceedings, application was made to the then Deputy Registrar, Ms Elizabeth Trickett, for assessment of the Legal Costs. The Deputy Registrar of the Court was, as appears earlier in these reasons (at [18]), the officer designated in the Deed of Release to do so.
The letter from Mr Johnson’s lawyers to the Deputy Registrar requesting the assessment referred to the determination as one to “be resolved by the process outlined in Division 3.2.7 the Legal Profession Act 2006”. No complaint was made by Mr Powrie or his lawyers about that jurisdiction.
Section 294A of the Legal Profession Act 2006 (ACT), to be found in Div 3.2.7, permits a client to apply to the Supreme Court for an assessment of all or part of legal costs charged to the client whether the costs have been paid or not. This would permit Mr Johnson to make the application contemplated by the Deed of Release. The application, however, must be made within 12 months after the costs were paid (s 294A(5)(b)), though there is provision for an extension of time (s 294A(6)).
Under r 6250 of the Court Procedures Rules 2006 (ACT) the Court’s jurisdiction under Div 3.2.7 of the Legal Profession Act may be exercised by the Registrar and, under s 47(2) of the Supreme Court Act 1933 (ACT), any jurisdiction exercisable by the Registrar under that rule may be exercised by a Deputy Registrar.
Section 300 of the Legal Profession Act then sets out the criteria for the assessment to be carried out. Section 300(1) provides:

Strictly speaking the assessment required by the Deed of Release was directed to the quantification of damages, being the costs paid which, on a proper assessment of costs payable under these criteria, should not have been paid.
As the 12 month period had well expired when the application for an assessment of costs had been made to the Deputy Registrar, an extension of time was required to be made by the parties. The Deed of Release did not provide, as may have been prudent, that the parties would consent to an extension of time within which the assessment was to be made, though the terms of the Deed would inevitably imply such consent. Any decision to extend time was a discretionary one for the Court. Thus, while the consent of the parties would not be determinative of any such application, it would be a powerful factor to support the favourable exercise of the discretion.
It is to be accepted that the request for the assessment of costs was not made formally, that is by formal court process, but only by letter from Mr Johnson’s lawyers. It is not clear that it was then required. That has, since 1 July 2011, been regularised by the insertion of Div 3.11.3 in the Court Procedures Rules which regulates such applications. In an appropriate case, of course, the procedural requirements such as these can be waived under r 6 in any event.
The Deputy Registrar did carry out an assessment and set the costs of the work done for which Mr Johnson should not have paid Mr Powrie in the sum of $500. Unfortunately, no written decision was delivered and so it is not clear what the precise basis was for the decision. It appears that Mr Powrie has paid the amount of $500.
In any event, Mr Johnson’s lawyers, dissatisfied with the decision of the Deputy Registrar, sought that she reconsider her decision. This appears to be based on a mistaken belief that Pt 2.17 of the Court Procedures Rules applied in which r 1851 provides for such a reconsideration.
I note that Pt 2.17 of the Court Procedures Rules applies to the assessment of costs of proceedings which are ordered to be payable by a party to another party in those proceedings, as is clear from r 1800. Thus, the regime for assessment of costs, including a reconsideration and review by a judge, is not applicable to costs payable by a person (who may or may not be a party to litigation) to his, her or its solicitor.
There is, under r 6256 of the Court Procedures Rules, a provision for the appeal to the Supreme Court constituted by a judge or the associate judge, from a decision of the Registrar (or Deputy Registrar) about a decision under Div 3.2.7 of the Legal Profession Act. There is, however, no provision there for a reconsideration of the kind provided for in r 1851.
Nevertheless, the Deputy Registrar did reconsider her decision and confirmed her earlier decision. On this occasion, she delivered written reasons. A comment made in the written reasons may have betrayed a misunderstanding that the Deputy Registrar had about what Mr Johnson and Mr Powrie were asking her to do. She said:
Mr Johnson sought reimbursement of costs paid to Mr Powrie for legal work performed in September and October 2003 allegedly paid for twice.
This would appear to be a misunderstanding of the work she was to undertake. It was not a question of a double payment, but a question of the assessment of the costs paid by Mr Johnson but which were referable to work negligently done and for which no payment should have been required or which constituted compensation for the damage (being the Legal Costs unnecessarily incurred) that Mr Powrie’s claimed negligence had caused. This latter question was clearly set out in the letter to the Deputy Registrar from Mr Johnson’ solicitors which applied for the assessment. If this latter question was not the basis on which the original assessment was undertaken, and there is no reason to suppose otherwise from the terms of the written decision, then the Deputy Registrar had clearly addressed the wrong issue.
The Deputy Registrar described the circumstances of the earlier assessment and what material was available to her. She said of that earlier assessment as follows:
At the conclusion of the discussions both Mr Johnson and Mr Powrie appeared comfortable with the outcome. Neither party stated that they were unhappy and in accordance with the deed the matter was finalized.
She then embarked upon the reconsideration, noting that Mr Johnson had filed further documentation and that Mr Powrie had filed a response, in which he stated that the application for reconsideration “should be dismissed in accordance with the [Deed of Release]”.
The Deputy Registrar concluded that the further documentation “did not clarify that the costs had been charged twice” and that she was not “satisfied that the amount claimed or another specific amount should be reimbursed”. She further concluded that both parties had been heard fairly and confirmed her earlier decision.
Mr Johnson, still dissatisfied with the decision of the Deputy Registrar, applied for a review of the decision. The application was again made in the first ACT proceedings.
That application purported to be made under r 1854 of the Court Procedures Rules. Again, that provision was inapplicable. Properly considered, the Deputy Registrar was asked to and could only proceed in this case under Div 3.2.7 of the Legal Profession Act. That makes no provision for a reconsideration, though, until a sealed certificate of assessment or other sealed court order issued, the Deputy Registrar could properly recall her decision and reconsider it: Lewis v Australian Capital Territory [2018] ACTSC 218 at [9]-[20]. As later described by the Master (in Johnson v Powrie (Unreported, Australian Capital Territory Supreme Court, Master Harper, 13 August 2010), at p 33

I am not certain that jurisdiction, where there is none, can be conferred by consent: In the matter of an Application for Bail by Sebbens [2014] ACTSC 281 at [10]. Nor will a concession about jurisdiction bind a court. There is, however, in the analysis I have made above, an explanation of how there was jurisdiction though one which was perhaps exercised irregularly, but which irregularity could be, and apparently was, waived by the parties.
In any event, Mr Johnson’s application for review of the Deputy Registrar’s decision on reconsideration came before the Master on 13 August 2010. His Honour heard both parties and formed the view that the Deputy Registrar could only have been acting as a referee to determine the quantum of damages that was the Legal Costs. There were difficulties in the Deputy Registrar doing that because the approval of the Chief Justice had first to be obtained under r 1532(3) of the Court Procedures Rules, though that requirement could arguably be waived by the Deputy Registrar under r 6. His Honour further held that the Deputy Registrar had not been acting under Pt 2.17 of the Court Procedures Rules and so there was no power of reconsideration. Accordingly, his Honour held that there was no decision from which a review to the Court could be taken and he dismissed the application for a review. See the Master’s decision in Johnson v Powrie at page 33.
No-one drew his Honour’s attention to the provisions of Div 3.2.7 of the Legal Profession Act, strangely not even counsel for Mr Johnson, whose instructing solicitor had expressly stated in his letter to the Deputy Registrar seeking the assessment of costs that the application was made under those provisions.
Further, no-one drew the Master’s attention to the right of a judicial officer to reconsider a decision until the order was perfected or, indeed, the likely power of a referee or arbitrator (if that was the power the Deputy Registrar was exercising) to determine the procedure to be followed. Neither party challenged the power to reconsider the decision, though Mr Powrie said that “the application for reconsideration shall be dismissed in accordance with the deed agreed between the parties”.
The Deputy Registrar’s decision had features that suggested that the Master’s approach was incorrect. The letter seeking the assessment of costs referred expressly to Div 3.2.7 of the Legal Profession Act. The reconsideration decision itself was headed “Costs Assessment under the Legal Profession Act 2006”. There was, on the file, no sealed order or sealed Certificate of Assessment. There was, however, a single reference to the basis of the power to reconsider, namely r 1854 of the Court Procedures Rules, and that was inconsistent with a recall and reconsideration. The Deputy Registrar did state, however, that she had reconsidered the earlier decision at the request of a party and there was no objection by the other party to the reconsideration, though, not unreasonably, Mr Powrie submitted that there was no basis for a different assessment. Whether she should have reconsidered the assessment in the circumstances is another matter entirely.
Mr Johnson, still aggrieved, then commenced this appeal against the decision of the Master. He did not do so until the appeal period had expired but was granted an extension of time by Gray P on 6 October 2011.
The appeal came on for hearing before a Court comprised of Gray P, Katzmann J and myself on 13 May 2011. After hearing counsel for Mr Johnson, both Gray P and I expressed a provisional view that the reconsideration was a nullity because the Deputy Registrar had misapprehended the limit of the authority given by the legislation under which she was proceeding and that this would lead to the view that the appeal was incompetent. Mr Johnson’s counsel, though referring on the appeal to the provisions of the Legal Profession Act, did not give an analysis of the situation which I have suggested above may apply.
The Court did not, however, make a final ruling. Instead, Katzmann J put to the parties, particularly Mr Weller on behalf of Mr Powrie:

Given the events that had occurred, these claims seem at least exaggerated and perhaps, rather extreme. Mr Johnson had done nothing to repudiate the Settlement Agreement; indeed, he had done all that could have been required of him at that stage by having his lawyers prepare and submit a draft deed of release and indemnity for consideration by Mr Powrie, though after an unexplained and undesirable delay. While he had done that, the fact that both parties were to release and indemnify each other would, in any event, similarly entitle Mr Powrie to have his own lawyer prepare a draft deed and the Settlement Agreement did not mandate which party was to prepare the deed.
Mr Powrie had not only not done that, but he had failed to pay the $10,000 which he had agreed to pay. If anyone had repudiated the agreement, Mr Powrie had done so. Mr Johnson did not, on the evidence before me, repudiate the Settlement Agreement; indeed, he sought to enforce it.
Mr Johnson then commenced proceedings in the Magistrates Court on 12 December 2012, seeking payment of the agreed sum of $10,000 payable under the Settlement Agreement plus interest and costs.
This is evidence of Mr Johnson not accepting the alleged repudiation of the Settlement Agreement; he was trying to enforce it.
On 3 December 2012, Mr Johnson had also commenced proceedings in the Supreme Court (SC 408 of 2012) seeking an extension of time within which to commence proceedings for an assessment of costs under Div 3.2.7 of the Legal Profession Act (“the second ACT proceedings”). This appears to be a defensive claim in the event that this appeal was unsuccessful.
Curiously, though no Statement of Claim had been filed and leave had not been given to file a defence, Mr Powrie filed a what he called a Defence in the second ACT proceedings referring in it to numbered paragraphs of a document that I could not identify. The Defence also did not comply with the rules of pleadings: Inglis v Moore (1981) 51 FLR 293 at 296; J v Australian Capital Territory [2009] ACTSC 170; 172 ACTR 1 at 97.
On 9 April 2013, the second ACT proceedings came before Higgins CJ. The orders his Honour made are recorded on the bench sheet as follows:

These orders are difficult to match with the Court files. The Court file for the second ACT proceedings does not show two applications, but only one dated 30 November 2012 seeking an extension of time within which to lodge an Originating Application dated 27 November 2012. That Originating Application (not yet filed) sought an application for an assessment of legal costs under Div 3.2.7 of the Legal Profession Act. It appears that it was this application that was dismissed by Higgins CJ.
The “second application” seems to be one dated 28 February 2013, which was curiously filed in the first ACT proceedings which sought leave to appeal out of time from the decision made by the Deputy Registrar made on 24 June 2009. This decision was, of course, the decision by the Deputy Registrar on the reconsideration. It appears to be an attempt to commence the proceedings contemplated by Katzmann J referred to above (at [48]). It appears unfortunately to have directed at the wrong decision of the Deputy Registrar, though on the earlier analysis of the Deputy Registrar’s powers, that may not matter. Although that application was, in fact, made in the first ACT proceedings it seems that both were then heard together. This “second application” was not dismissed but adjourned generally.
The second ACT proceedings later came before Murrell CJ on 21 February 2014 when the court was advised that the proceedings were to be discontinued by filing a notice of discontinuance by 28 February 2014. No such document was filed. The matter was then referred to me.
Two significant matters have since occurred. On 27 May 2013, Mr Powrie was made bankrupt on his own petition. It appears that Mr Stephen Hundy was appointed his trustee in bankruptcy but there was no express evidence of this.
I was informed that Mr Hundy had elected to prosecute what was said to be the chose in action constituted by an alleged right of Mr Powrie to apply for costs in these proceedings. No details of that election were provided to me other than an assertion in the written submissions that it had been made.
The second matter was that, on 17 October 2017, Mr Powrie’s name was removed from the roll of practitioners kept in this Territory under the Legal Profession Act: Law Society (ACT) v Powrie [2017] ACTSCFC 4; 12 ACTLR 184. The basis was Mr Powrie’s misconduct when he was acting for Mr Johnson.
Since the completion of the mediation, the three proceedings – these proceedings and the two Supreme Court proceedings have been mentioned from time to time without any apparent resolution, despite the Settlement Agreement, the Deed of Release, the mediation and various attempts to discontinue some of the proceedings. The status of each proceeding is one of some complexity.

In particular, there are provisions which restrict the proceedings that can be taken by and against persons who become bankrupt so that property otherwise available to creditors is not depleted to the advantage of a particular creditor and to the disadvantage of the creditors generally (Talacko v Bennett [2017] HCA 15; 91 ALJR 565 at 570; [35]), to relieve a debtor who is subject of a creditor’s petition from process instituted against him or her because of failure to pay a provable debt (Storey v Lane (1981) 147 CLR 549 at 555-6) and to ensure that control over all the bankrupt’s proceedings passes to his or her trustee (Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 130-1).
These proceedings have not been taken by Mr Powrie, thus s 60(2) of the Bankruptcy Act, which stays an action commenced by a bankrupt until the trustee of the bankrupt makes an election, does not seem prima facie to apply.
The proceedings have been commenced by Mr Johnson. They are in respect of a provable debt because, although they relate to a claim for damages, being the money alleged to have been paid by Mr Johnson to Mr Powrie for work negligently done, they relate to the recovery of the Legal Costs, a liquidated demand as defined in Spain v Union Steamship Company of New Zealand Ltd (1923) 32 CLR 138 at 142.
Under s 58(3) of the Bankruptcy Act, a creditor cannot commence proceedings or take a step in proceedings in respect of a provable debt.
The High Court has held that the phrase “in respect of a provable debt” should be given a wide meaning: Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 47. This approach has been accepted as applying to this section: Fraser v Deputy Commissioner of Taxation (1996) 69 FCR 99 at 112-5. As there stated, the nexus between the proceedings and the provable debt may be indirect.
In my view, these proceedings fall within the ambit of s 58(3) of the Bankruptcy Act and so Mr Johnson cannot take any further step in the proceedings other than with the leave of the Federal Circuit Court or the Federal Court, both of which relevantly have exclusive jurisdiction to consider granting such leave under s 27(1) of the Act.
I have not considered in detail whether the chose in action asserted by Mr Hundy is one that exists and has vested in him under s 58(1) of the Bankruptcy Act. Certainly a chose in action which a bankrupt has to enforce equitable rights does vest in the bankrupt’s trustee: Pridmore v Magenta Nominees Pty Ltd [1999] FCA 152; 161 ALR 458 at 464; [34]. That, however, is not the limit of the choses in action that vest in the trustee. For example, the right to receive a refund of taxation on earnings received before the bankruptcy is a chose in action that vests in the trustee: Re Evans; Ex parte Sweeney v Evans (1995) 61 FCR 556.
It has also been held that the right to make applications in proceedings of which the bankrupt is a defendant constitute a chose in action that vests in the trustee: Freeman v National Australia Bank Ltd [2006] QCA 260 at [9]-[15].
Accordingly, I am prepared to accept that any claim by Mr Powrie that might be made in this appeal such as that they be dismissed or that Mr Johnson pay Mr Powrie’s costs, is a chose in action which has vested in the trustee under s 58(1) of the Bankruptcy Act.
I am by no means certain that the trustee has to make an election to take over such proceedings. An election is required under s 60(2) of the Bankruptcy Act, but only in respect of “[a]n action commenced by a person who subsequently becomes bankrupt”. Despite the width to be given to the meaning of action, namely “any civil proceedings whether at law or equity” as defined in s 60(5), I do not think it comprehends an interlocutory application within an action.
On the other hand, as the High Court said in Cummings v Claremont Petroleum NL at 136, “a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy”. It seems to me that an interlocutory application in these proceedings to have the appeal dismissed and costs awarded against Mr Johnson would fall within this prohibition.
Though the right to apply for costs in this situation may fall into this category, that right in this case depends on the outcome of the appeal. It has not been heard to a conclusion. Until that occurs, Mr Powrie’s right is contingent on the Court dismissing the appeal. Though strong statements were made by members of the Court, they were provisional and subject to a full hearing. As is clear from these reasons, it is far from clear that those provisional views would survive more careful consideration.
In any event, the interests that Mr Powrie may have had, including any right to apply for costs, has now vested in his trustee in bankruptcy and so Mr Powrie no longer has any right to make that claim; only the trustee can do so.
There is a procedural problem, however, for the trustee, Mr Hundy, is not a party to the proceedings. While the relevant property vests in him, he is not in a position to enforce the chose in action unless and until he becomes a party to the proceedings. See Re Davies [1961] ALR 886 at 888. This should be done by Application in Proceedings under r 5103 of the Court Procedures Rules.
Of course, once made a party, the trustee will take on the whole of the proceedings thereafter; he must “take it as he finds it” and will be liable to pay costs if Mr Johnson succeeds in the appeal: Borneman v Wilson (1884) 28 Ch D 53 at 55. The trustee cannot adopt part of the proceedings and leave the rest, which is why I have analysed the proceedings as carefully as I have done. The trustee who becomes a party puts himself or herself entirely in the place of the bankrupt with respect to costs: Watson v Holliday (1882) 20 Ch D 780 at 785. The modification to these rules as articulated by the UK Supreme Court in BPE Solicitors v Gabriel [2015] UKSC 39; [2015] 3 WLR 1, so far as it is applicable, does not affect these principles so far as they relate too this appeal.
If the trustee does apply to become a party, I note that, among the considerations when considering an application under r 5103 of the Court Procedures Rules, the Court will consider the nature of the relief sought and the identity of the parties: Markisic v Magistrate David Heilpern [2011] NSWSC 410 at [31].

If Mr Hundy wishes to proceed with the enforcement of the rather inchoate chose in action that is, as put in the submissions made on his behalf, constituted by “[a]ny right in Mr Powrie to receive an order for costs”, he must apply to be made a party to the proceedings under r 5103 of the Court Procedures Rules”.
That application would be made by Application in Proceedings under Pt 6.2 of the Court Procedures Rules together with appropriate supporting material. It is not my function to state what such material should be, but it would obviously include relevant details of his appointment and, if appropriate, details of any election made.
Given that the relief sought will be relevant to the application, an important matter would be whether Mr Johnson has filed with him a proof of debt for the $10,000 payable under the first clause of the Settlement Agreement. Such a proof may be lodged at any time, even after the discharge of Mr Powrie from bankruptcy which, given the date of the bankruptcy, may have occurred earlier this year. See Tarea Management (North Shore) Pty Ltd (in liq) v Glass (1991) 28 FCR 93. If the proof of debt has been accepted or, if rejected, the rejection has been reversed or varied on a successful appeal under s 104 of the Bankruptcy Act, then upon payment of a dividend by Mr Hundy, Mr Powrie will, under s 153, be released from the debt. That may be sufficient compliance with the Settlement Agreement to require under clause 2 that these proceedings be discontinued with no order as to costs. That would be a relevant consideration to which the Court will have regard on the application of the trustee to be made a party.
Accordingly, it is not appropriate to give any directions at this stage. Unless or until Mr Hundy applies to be joined or substituted as a party, the proceedings cannot continue.
I have not heard the parties on the issue, but it may be that, if Mr Hundy does nothing, then any application that could have been made by him will be deemed to be abandoned.
Without leave of the Federal Circuit Court or the Federal Court, Mr Johnson cannot proceed with his appeal, though if he wishes to bring it to an end, where Mr Hundy does not apply to be joined or substituted as a party, he may seek that leave.
The parties, after giving such consideration as they wish to these proceedings, may then make such applications as they are advised. In the meantime, I will simply decline to make any order or give any directions, other than ordering that no further proceedings can be taken unless and until Mr Powrie’s trustee seeks to be made a party.