Rambaldi (Trustee), in the matter of Atkinson (Bankrupt) v Woodward

Federal Court of Australia|2012-12-13|Before: Mr P, Streeton J

INTRODUCTION 1 On 13 December 2012, I made the orders set out above, and gave brief extemporary reasons which are amplified below. 2 The applicants, Gess Rambaldi and Andrew Yeo (as trustees of the property of John Edward Atkinson, a bankrupt) sought leave, by an interlocutory application dated 6 December 2012, to file a further amended application in the form exhibited to the affidavit of Bradley James Parker affirmed on 6 December 2012. 3 In the existing proceeding, the applicants claimed from the respondent, Kim Woodward (the former wife of the bankrupt) up to 50 per cent equitable interest of a property situated at 41 Roseville Avenue, Roseville or the proceeds of sale thereof, based on trust or alternatively, applied for an order under s 139EA of the Bankruptcy Act 1966 (Cth) ("the Act"). 4 The further amended application sought to add an alternative claim under s 120 of the Act as follows: 8 Alternatively, a declaration that the transfers made by the bankrupt set out in Schedule A in respect of mortgage and interest payments for 41 Roseville Avenue are void pursuant to section 120 of the Bankruptcy Act (Void Transfers). 9 Orders that the total amount of the Void Transfers is liable to be repaid to the Applicants by the Respondent. 9 In order to give effect to Orders 8 and 9, a declaration that the Applicants are entitled deduct to [sic] the total amount of Void Transfers (or part thereof) from the amount of the funds held in Controlled Monies. 5 The proposed amendment also entailed extending the relation back period of the bankruptcy by approximately five months. 6 The application was supported by: 1. The affidavit of Bradley Parker affirmed on 6 December 2012. 2. Written submissions dated 10 December 2012. 7 The application was opposed by the respondent, who, as a qualified legal practitioner, appeared on her own behalf. Written submissions dated 12 December 2012 were filed in opposition.

Mr Parker's affidavit 27 In support of the application to amend, Mr Parker deposed that: The reason that the Amendment has been sought at this time is that the Applicants have instructed new counsel, Peter Fary, who has advised the Applicants that this amendment should be made to the application. The proposed Further Amended Application is substantially the same as the form that was emailed to the Respondent on 24 November 2012. However, the amount set out in the Schedule of Payments which is referred to in the proposed Further Amended Application has increased because the Applicants seek to rely on an earlier act of bankruptcy of the bankrupt that occurred on 7 July 2009, which, if allowed by the Court, would allow the relation back period to be extended. 28 Mr Parker deposed that on 24 November 2012, he sent a proposed amended application and schedule of payments to the respondent, who did not consent to the amendment.

The applicants' submissions 29 The applicants' written submissions stated: 4 The Proposed Application is substantially in the form that was previously provided to the Respondent on 24 November 2012 (see page 5 of the Parker affidavit). 5 The Applicants also seek to rely on an earlier act of bankruptcy of the bankrupt that has been identified. 6 Extracts of bank statements recording each Commonwealth Bank of Australia mortgage payment are set out at Exhibit BJP-5 (pages 28 to 164 of the Parker affidavit). Factors supporting leave to amend being granted 7 The matter is set down for trial on 6 March 2013 with an estimated duration of two days. 8 It is unlikely that the amendments will delay the trial date because the Respondent has sufficient time to respond to them. 9 The amendments do not add any new party to the proceeding, nor do they raise any substantial evidentiary matters that are not already addressed in the evidence before the court. 10 The Applicants have sought to assist the Respondent and the court in understanding the claim (together with amendments) by preparing points of claim. 11 The Applicants are conducting this litigation for the benefit of creditors as trustees of the bankrupt estate of the Respondent's estranged husband. 30 In oral submissions, counsel for the applicants submitted that when retained, he identified the proposed new claim as logically applicable to the issues arising in the case.

The respondent's submissions 31 The respondent submitted that leave should be refused principally because the amendment, if allowed would require preparation which she could not reasonably complete prior to the scheduled trial date, which, in consequence, would be lost. 32 The respondent submitted that taking account of the impending legal vacation, the trial date was less than six sitting weeks away. Further, the current hearing estimate of two days was based on the matters raised in the existing claim, and may be exceeded if the amendment were allowed. 33 The respondent submitted that the applicants had on numerous occasions failed to comply with orders and deadlines and failed to file points of claim as ordered. In contrast to the hitherto slow pace of the matter, if the amendment was allowed, the respondent would have to take many steps within a very tight timeframe, including drawing a defence to the amended application, considering the ramifications of the new claim and preparing evidence in response. The respondent submitted that if the amendment were allowed, she would dispute the alleged payments, which was unnecessary on the basis of the applicants' existing claims (as the respondent contended that the value of the property had not been enhanced). Further, the respondent submitted that defence of the new claim would require her to examine voluminous accounts and records in order to establish that she gave consideration and address additional matters due to the expansion of the temporal ambit of the applicants' claims. 34 The respondent submitted that she required more than five weeks for the above, as, although a qualified legal practitioner, she was not a specialist in insolvency law, was employed full time and was responsible for the care of her four children. 35 In written submissions, the respondent stated that: 15. The Applicants are experienced trustees specialising in this area of law and they have been legally represented throughout these proceedings and had the benefit of the advice of several Counsel who have acted in these and related proceedings. 16. The Proposed Application has not arisen, either in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceedings. The Applicants could reasonably have been expected to have sought leave to amend the Application at a much earlier point in these proceedings. No cogent reason for their failure to do so has been raised. … 20. If leave is granted in relation to the proposed amendment, it is almost inevitable that the determination of the proceedings will be delayed and that the cost of the determination of the proceedings will escalate. It is envisaged that the Respondent will make an application to vacate the hearing date of 6 March 2013 if leave to further amend the Amended Application is granted.

DISCUSSION 36 The principles relevant to amendment, were discussed by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 ("AON"), were uncontroversial. In AON, the High Court recognised that there was no automatic entitlement to raise an arguable issue by amendment subject to the payment of costs. The plurality expressly accepted that the payment of costs, even on an indemnity basis, may not compensate for the adverse effects of the delay, including the strain imposed by pendant litigation on litigants (particularly personal litigants) and on court lists (at [100]-[101]). 37 The proceeding was commenced in January 2011 and thus had been on foot for approximately two years. The trial date had been fixed for seven months. The proceeding has a history of considerable delay, repeated non-compliance with orders and extension of time for preparation. Points of claim, which the applicants were ordered, by consent, to file by 23 November 2012 were provided to the respondent and filed only at the hearing of the application and the agreed statement of facts has not yet been filed. 38 While the applicants submitted that the proposed new claim of transfer at an undervalue under s 120 of the Act would largely depend on the evidence already filed in relation to the existing claims, the respondent contended, reasonably in my view, that it would widen the issues in dispute and entail substantial additional preparation and evidence on her part. 39 The application to amend was filed very close to the commencement of the legal vacation, excluding which, there was little more than one month until the trial was due to commence. Further, the respondent, who was not expert in insolvency law, had employment obligations and significant family responsibilities. I considered that the maintenance of the existing trial date would deprive the respondent of a reasonable time to complete the steps and further preparation which the amendment would entail, particularly when combined with discharging her employment and parental responsibilities. 40 If amendment were allowed, adherence to the trial date would unfairly compromise the respondent's ability to prepare. The amendment would also potentially increase the time required for trial which could independently jeopardise the existing trial date. Accordingly, leave to amend would, in the circumstances, almost certainly lead to vacation of the trial date, thereby prolonging litigation which has already been on foot for some time.

CONCLUSION 41 In such circumstances, I concluded that leave to amend be refused. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dodds-Streeton.

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