Macchia v Nilant [2006] FMCA 1095

[5]

"21 It is necessary to examine briefly the history of litigation between the parties to understand the context in which the respondent brings his claim for summary dismissal or permanent stay. The matters set out below are based upon the reasons which were delivered in the course of this litigation.

22 The applicant was made bankrupt by a sequestration order made by this Court on 16 September 1991. The respondent was appointed as the trustee of the bankrupt estate of the applicant, pursuant to that order of the Court.

23 The sequestration order was made in these circumstances. On 16 May 1991 a creditor of the applicant presented a petition to the Court seeking a sequestration order against the estate of the applicant. On 16 July 1991, the applicant and his brother signed a joint authority under s 188 of the Act authorising the trustee to take control of their joint and several property and to convene a meeting of their creditors under Pt X of the Act. On 16 July 1991 the applicant and his brother gave the trustee a statement of their respective affairs and a joint statement of their joint affairs. The meeting of creditors rejected the composition which was offered by the applicant and his brother and resolved that the debtors be required to lodge their petitions in bankruptcy within 7 days. On 4 September 1991 the applicant and his brother each presented their respective petitions to the Registrar in Bankruptcy. Each petition was accompanied by a statement of affairs verified by an affidavit sworn on 4 September 1991. The Registrar in Bankruptcy, pursuant to s 55(3A) of the Act, referred the applicant's petition to this Court for a direction whether to accept or reject the petition. On 16 September 1991, this Court directed the Registrar in Bankruptcy to refuse to accept the applicant's petition and made a sequestration order against the estate of the applicant on the creditor's petition.

24 In October 1995 the applicant filed the first application directed towards adjusting the date of discharge of his bankruptcy to a date prior to the date of his mother's death. By that application, the applicant sought a declaration that he was discharged from bankruptcy on 17 September 1994, or alternatively, an order under s 33(1)(c) of the Act abridging the time limit under s 149 of the Act for the discharge of the applicant from the bankruptcy resulting from the sequestration order made by the Court on 16 September 1991. The respondent trustee objected to the discharge of the applicant from bankruptcy and the hearing of the application was adjourned for some time whilst the objections were taken on review.

25 The applicant's application was heard on 8 April 1997 and was opposed by the respondent. On 11 April 1997 Lee J delivered his judgment (Re; Mario Silverio Macchia Ex parte; Mario Silverio Macchia v Charles Philippe Louis Nilant as Trustee of the Bankrupt Estate of Mario Silverio Macchia [1997] FCA 246) and ordered that:

[12]

34 It is plain from the judgment that the reference to 'one or other of the statement of affairs' is a reference to the two statements of affairs which had been referred to by Lee J in his judgment, namely, the statement of affairs which was prepared and filed as part of the Pt X proceedings and the second statement of affairs which accompanied the debtor's petition presented to the Registrar in Bankruptcy by the applicant.

35 There is no reference in either of the decisions of Lee J or the Full Court referred to above, to any claim or argument being advanced by the applicant on the basis that he made and supplied the respondent with a statement of affairs on 7 October 1991.

36 After the Full Court decision in 1997, the applicant in March 1999 applied for and was given leave to file a further amended application. The application was heard on 12 October 1999. At that time, there were in existence further objections by the respondent to the discharge of the applicant from bankruptcy. The hearing was adjourned part heard. However, on 17 December 1999, and before the hearing of the application was resumed the respondent withdrew his objections to the applicant's discharge from bankruptcy. The withdrawal of the objections meant that the applicant was discharged from bankruptcy pursuant to s 149 of the Act with effect from 22 January 1997 - that being three years from the filing of the statement of affairs with the Registrar in Bankruptcy. However, as at 17 December 1999, the applicant had been treated as an undischarged bankrupt for almost three years beyond the date on which the bankruptcy terminated under the Act.

37 Thus, by the time the application came on for the resumed hearing before Lee J on 23 February 2000 the applicant had been discharged from his bankruptcy. At the resumed hearing the applicant further amended the application. In that amended application, the applicant relied upon s 30(1)(b) and s 306 of the Act to seek a declaration that a 'proceeding' under the Act had not been invalidated by a formal defect or irregularity. The 'proceeding' which the applicant sought to be validated was the statement of affairs prepared in relation to the Pt X proceedings, or alternatively the statement of affairs dated 4 September 1991 accompanying the debtor's petition. The declaration he sought was that either of those statements of affairs be deemed to have been filed in the office of the Registrar in Bankruptcy on 17 September 1991.

38 On 27 March 2000, Lee J, granting relief under s 306(1) of the Act, ordered that the statement of affairs signed by the applicant on 4 September 1991 and presented to the Registrar in Bankruptcy on that date be deemed to have been made out and filed in the office of the Registrar in Bankruptcy, and a copy furnished to the trustee of the sequestrated estate of the applicant, on 16 September 1991 in compliance with the requirements of s 54(1) of the Act (Macchia v Nilant [2000] FCA 353).

39 The respondent appealed that decision and the Full Court upheld the appeal finding that s 306 of the Act does not confer a power to treat a failure to comply with s 54(1) of the Act as compliance with it. The case is reported as Nilant v Macchia [2000] FCA 1528; (2000) 104 FCR 238.

40 The Full Court held that relief under s 306(1) of the Act was not available because the bankrupt had not made any attempt to comply with s 54(1) of the Act which required a filing of a statement of affairs after the date of sequestration.

41 Weinberg J said at 249, at [54]:

[34]

"7 Under the orders made by the Full Court there was a further rehearing on 12 October 1999. At that time the application was amended to seek a declaration that the Statement of Affairs be deemed to have been filed on 16 September 1991. The application was also amended to seek orders that the objections to discharge were invalid and that Mr Nilant's assessments under s 139W of the Act of income payable by Mr Macchia were invalid. At the hearing Mr Macchia's solicitors drew the primary judge's attention to the decision of the Full Court in Challen v Bendeich [1999] FCA 845, a judgment given on 25 June 1999. The effect of that decision was that an income contribution assessment could not be made retrospectively but had to be made during the contribution assessment period in question. Mr Nilant accepted that it followed from this that any objection to discharge lodged on the ground of an assessment so made would also be invalid. The hearing on 12 October 1999 was adjourned on the basis that Mr Nilant's solicitors would consider Challen v Bendeich in more detail and advise him of the effects of that decision on the Notices of Objection to discharge which he had lodged against Mr Macchia. He received legal advice subsequently that the effect of the decision in Challen v Bendeich was that the Notice of Objection to discharge against Mr Macchia dated 3 July 1996 could not stand and he should therefore withdraw that objection. The flow on effect would be that Mr Macchia would have been discharged from bankruptcy in January 1997 and that the two subsequent Notices of Objection dated 19 March 1997 would therefore also be invalid. On the basis of this legal advice, Mr Nilant said he withdrew all three objections to discharge in December 1999.

8 The hearing continued on 23 February 2000 but in view of the withdrawal of the objections was confined to the question of whether any declaration should be made. On 27 March 2000 the learned primary judge gave judgment declaring that Mr Macchia was discharged from bankruptcy in September 1994. In so doing, his Honour applied s 306(1) to overcome the difficulty caused in relation to the Statement of Affairs - Re Macchia; Ex parte Macchia v Nilant [2000] FCA 353; (2000) 172 ALR 158. An appeal against that decision was filed in the Full Court and was heard by the Full Court on 31 August 2000. On 27 October, the Full Court allowed the appeal on the basis that s 306 could not be applied to overcome a failure to file a Statement of Affairs under s 54 - Nilant v Macchia [2000] FCA 1528."

[35]

It was noted that all objections to discharge were withdrawn in December 1999 prior to the hearing before the primary judge, Lee J, taking place on 23 February 2000, resulting in his judgment on 27 February 2000 in Re Macchia; Ex parte Macchia v Nilant [2000] FCA 353 and the subsequent appeal from that judgment in Nilant v Macchia [2000)] [2000] FCA 1528; 104 FCR 238. It was submitted the Applicant was legally represented in both the 2000 proceedings before Lee J and the 2000 appeal. The issue now being raised in the present application, it was submitted, could have been raised in those proceedings but the Applicant failed to do so.

It was submitted by the Respondent that the issue being raised in the present application should have been raised in the 2000 proceedings. Given the Applicant had already been discharged from bankruptcy, the 2000 proceedings were not simply what could be described as an "academic exercise to determine the correct date of discharge from bankruptcy". It was submitted the only possible benefit to the Applicant as a discharged bankrupt in pursuing the 2000 proceedings was to try to have his date of discharge from bankruptcy backdated so that he, rather than his creditors, would get the benefit of his one-third interest in his mother's estate. The issue now being raised, it was submitted, should have been raised in the earlier proceedings.

It was submitted, applying the principles set out in the decision of Siopis J earlier in this judgment, that Anshun estoppel has not limited the issues already determined by the court and it also applies to an issue which was so relevant to the subject matter of the earlier action that it was unreasonable not to have raised it in the earlier proceedings.

In the alternative, it was submitted on behalf of the Respondent that the issues now raised in these proceedings should at the very least have been raised by the Applicant in the proceedings before Siopis J in the Federal Court. The application in those proceedings was filed on 2 June 2005, which, it was submitted, is almost six years after the Applicant became aware in December 1999 that objections had been withdrawn, resulting in his discharge from bankruptcy in January 1997. It was submitted by the Respondent that the present application should be dismissed under Anshun estoppel principles by virtue of the failure of the Applicant to include the relief now sought in his application before Siopis J.

It was further submitted by the Respondent that since the Applicant became aware in December 1999 of his 1997 discharge, the Respondent has contested three sets of proceedings (2000, Lee J; 2000, Full Court; and 2006, Siopis J) in order to maintain his right to the interest of the deceased estate. It was submitted the Respondent has incurred considerable costs in contesting those proceedings on the assumption that the bankrupt's rights to the interest in the deceased estate had vested in the Respondent. It was therefore submitted that it is entirely unreasonable for the Applicant to bring yet another set of proceedings at this late stage seeking to claim the interest in the deceased estate on the basis that the interest never vested in the Respondent at all.

As part of the Respondent's submissions, reference was made to paragraphs 77 and 88 of the judgment of Siopis J where his Honour states:

[36]

77 Secondly, although the degree of vexation which may be caused to a professional trustee, being sued in a representative capacity, could well be regarded as being of a different and less onerous character, than if he was sued in his private capacity, there are other considerations which must be taken into account in this case. There have already been four previous proceedings in which the question of the making of the statement of affairs has been litigated. The respondent would have had to expend his time and effort in participating in those proceedings. Further, the bankruptcy administration has been going on for 14 years and five years has elapsed since the Full Court decision in 2000. I do not, therefore, regard this circumstance, whether alone or in combination with the other circumstance already mentioned, as comprising a special circumstance that would cause me to exercise my discretion not to apply the Anshun estoppel principles.

...

88 Firstly, the factual issue as to the time at which the applicant first made a statement of his affairs for the purposes of the Act was of crucial importance in the earlier proceedings. Secondly, there was every opportunity available to the applicant to have advanced in the earlier proceedings a claim based on the factual assertion now made in the application. Thirdly, there are factual findings made in the earlier proceedings which are contrary to the factual position now being asserted in this application. As previously mentioned, the finding that no statement of affairs was made prior to 6 April 1993 at the earliest, was crucial to the Full Court's decision in 2000. Fourthly, the nature and the object of the relief claimed in the application, is substantially the same as in the earlier proceedings. Each of the earlier proceedings was concerned with the question of if, and when, the applicant had filed a statement of affairs under the Act. Fifthly, there is no plea by the applicant of fresh evidence, nor could there be such a plea. There was evidence available to the applicant and his legal advisers at the time of the hearing of the first application in 1997 before Lee J upon which the claims now made could have been advanced in the earlier proceedings. Sixthly, if the Court were now to make factual findings along the lines claimed in the current proceedings, the factual findings on which the courts acted and upon which decisions were made in the earlier proceedings would be undermined. This would have a tendency to adversely impact upon the finality of judicial determination and public confidence in the administration of justice. Further, the respondent has already been involved in four previous proceedings relating to the issue of the filing of the statement of affairs; and five years have elapsed since the Full Court decision in 2000."

[38]

Applying the authorities to which reference has been made and in particular the decision of the Full Court of the Federal Court in Wong which was applied by Siopis J in Macchia v Nilant 2006, it is my view that the Respondent's submissions in relation to Anshun estoppel are correct.

In this instance whilst I note that the Applicant has not made a discrete application seeking declaratory relief of the kind sought in the present application, it is clear on a proper reading of the detailed chronology of litigation between the parties that the current application properly belonged to the subject of the earlier litigation between the parties. In the circumstances the Applicant exercising what the Court's have described as "reasonable diligence" might well have brought forward this application for a declaration at the earlier litigation.

I accept the submissions by the Respondent that the clear intent of earlier proceedings of the Applicant was in part to at least achieve an outcome whereby the bankruptcy was backdated to enable the Applicant to obtain the benefit of his one-third interest in his mother's estate. The declaration now sought could have been raised in those earlier proceedings.

It is equally clear in my view that in past litigation Courts have given consideration to this precise issue and have made clear in the absence of a backdating of the bankruptcy the outcome in relation to the Applicant's interests in his mother's estate. So much is evident in the decision of Hill J in Nilant v Macchia (2000) 104 FCA 238 referred to in paragraph 14 of this judgment.

Specifically I accept the submission of the Respondent that the issue now being raised in this application ought to have been raised in the 2000 proceeding referred to earlier in this judgment. As indicated earlier, those proceedings were clearly designed, at least in part, to achieve the benefit to the Applicant of backdating the bankruptcy to enable him to obtain the benefit of his one-third interest in his mother's estate.

I further note and accept that in any event these matters at the very least ought to have been raised before Siopis J in the Federal Court in proceedings filed on 2 June 2005. It is correctly observed that those proceedings were filed some six years after the Applicant became aware in December 1999 that objection had been withdrawn to discharge from bankruptcy resulting in that discharge in January 1997. The relief now sought in this application in my view ought properly have been raised and/or might well have been raised by the Applicant in the proceedings before Siopis J.

For those reasons it follows in my view that the application should be dismissed with costs.

Macchia v Nilant [2006] FMCA 1095 - FMCA 2006 case summary — Zoe

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Cases Cited (7)