Sopikiotis, in the matter of Sopikiotis (Bankrupt) v Vince

Federal Court of Australia|2013-04-18|Before: Ross JJ, Kenny J

REASONS FOR JUDGMENT 1 By an application filed on 7 March 2013, Ms Sopikiotis applies for a stay of the judgment of a Full Court of this Court, constituted by Gray, Tracey and Ross JJ, delivered on 27 February 2013. The application is opposed by the respondent, who is the trustee of the bankrupt estate of Ms Sopikiotis. 2 Ms Sopikiotis relies on her affidavit of 7 March 2013. The respondent has filed an affidavit sworn by Ned John Mahony on 20 March 2013. There is a second affidavit also sworn by Mr Mahony that day, which is marked as if to be filed in proceeding VID 149 of 2013 although a copy of the transcript of the Full Court hearing that precedes this stay application is exhibited to it. 3 This application was heard on 22 March 2013 at the same time as Ms Sopikiotis' application for leave to appeal from the judgment of the Federal Magistrate refusing her an extension of time in which to seek review of the Registrar's decision to make a sequestration order against her estate. These reasons can be read with my reasons for dismissing that application: see Sopikiotis v Owners Corporation RP011740 [2013] FCA 353.

BACKROUND 4 On 5 July 2011, in the Federal Magistrates Court, a Registrar made a sequestration order against the estate of Ms Sopikiotis. The respondent was appointed trustee of her bankrupt estate. 5 On 26 September 2012, Ms Sopikiotis applied for a review of the Registrar's decision out of time. She also sought an extension of time in which she might make her review application. On 22 February 2013, a Federal Magistrate refused to grant the extension of time that Ms Sopikiotis sought. On 4 March 2013, Ms Sopikiotis filed an application for leave to appeal against his Honour's decision. For the reasons stated with respect to that application, I refused her application. 6 On 21 February 2012, pursuant to s 30 of the Bankruptcy Act 1996 (Cth) ("Bankruptcy Act") the respondent applied for orders: ● requiring Ms Sopikiotis to deliver up to the Trustee the duplicate certificate of title to the Camberwell property; ● requiring Ms Sopikiotis to give vacant possession of the Camberwell property to the Trustee within 30 days; ● granting a warrant of possession in the event that Ms Sopikiotis fails to give vacant possession; and ● that the Trustee's costs of the application are proper costs in the bankruptcy. Reasons for judgment in that matter were published as Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298 ("the Primary Judgment"). See the Primary Judgment at [2]. 7 After hearing the respondent's application on 2 October 2012, the primary judge ordered, on 21 November 2012, that: 1. The respondent deliver up to the Trustee the duplicate certificate of title to the property at 2A Trafalgar Road, Camberwell in the State of Victoria, being the property identified in certificate of title volume 9470, folio 676 ("the property"). 2. The respondent vacate that property within 60 days of this order. 3. In the event that the respondent fails to deliver vacant possession in accordance with order 2, a warrant of possession shall issue forthwith. 4. The applicant's costs of this application be paid out of the bankrupt estate of the respondent. 8 On 27 February 2013, the Full Court heard and determined an appeal by Ms Sopikiotis against these orders. The Full Court dismissed the appeal, with costs. It further ordered that: (1) the respondent's costs of the appeal be paid out of the bankrupt estate; and (2) the stay granted on 20 December 2013 be extended for 30 days. 9 At the hearing before me on 22 March 2013, the stay was further extended, by consent, until the current application was resolved.

THE PRIMARY JUDGE'S DECISION 10 The primary judge found that Ms Sopikiotis is the sole proprietor of property at 2A Trafalgar Road, Camberwell, in the State of Victoria: see the Primary Judgment at [2]. His Honour also found (at [6]-[10]) that: Ms Sopikiotis resides at the Camberwell property alone. On 27 October 2011, the Trustee wrote to Ms Sopikiotis informing her that he was prepared to allow her time to obtain a mortgage facility on the Camberwell property sufficient to obtain funds to pay out all creditors, or alternatively to vacate the property to allow the Trustee to sell the property with vacant possession. Ms Sopikiotis was advised that if she refused to obtain finance or vacate the property, the Trustee would commence eviction proceedings to ensure an orderly sale of the property. The Australia and New Zealand Banking Group Limited ("ANZ") advised the Trustee that the duplicate certificate of title to the Camberwell property was released by the bank to Ms Sopikiotis in September 2011 and that ANZ had also released its mortgages on that property at that time. Ms Sopikiotis did not dispute that she holds the duplicate certificate of title. I am satisfied that Ms Sopikiotis holds the duplicate certificate of title to the Camberwell property. On 11 November 2011, the Trustee wrote to Ms Sopikiotis demanding that she deliver the duplicate certificate of title for the Camberwell property. Despite the demands made upon Ms Sopikiotis by the Trustee, Ms Sopikiotis has failed to deliver the duplicate certificate of title and has failed to vacate the Camberwell property in order to facilitate its sale. The Trustee considers that the most likely and efficient way in which he will be in a position to make a distribution to Ms Sopikiotis's creditors is by way of sale of the Camberwell property. The value of the property substantially exceeds Ms Sopikiotis's likely indebtedness. On the basis of the material before me, I am satisfied that the Camberwell property has vested in the Trustee and that the Trustee has a right to possession of that property. Nothing has been submitted by Ms Sopikiotis which suggests that she has a right to remain in possession against the lawful demands of the Trustee. 11 The primary judge rejected what he regarded as effectively a stay application made by Ms Sopikiotis. His Honour declined to accept Ms Sopikiotis' submissions impugning: (1) the validity of the debts said to be owing by her; and (2) the validity of her bankruptcy: see the Primary Judgment at [11], [13]-[21]. His Honour went on to note (at [26]-[30]) that: … Ms Sopikiotis has failed to file a completed Statement of Affairs in accordance with both her obligation under s 54(1) of the Act and also in accordance with orders that I made on 7 May 2012. In reasons for judgment published as Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis [2012] FCA 573, I outlined the failure of Ms Sopikiotis to file a completed Statement of Affairs despite a number of demands that she do so. I made orders requiring Ms Sopikiotis to file a Statement of Affairs and, in order to clearly identify the nature of the deficiencies in the information previously provided by Ms Sopikiotis, those orders identified with specificity the information which Ms Sopikiotis was required to include in that Statement of Affairs. On 21 May 2012, Ms Sopikiotis filed with the Insolvency and Trustee Service Australia ("ITSA") a document which purported to be her Statement of Affairs. ITSA regarded the document to be incomplete and refused to accept the document for filing. On 12 June 2012, ITSA wrote to Ms Sopikiotis and advised her that the document filed by her had been rejected. Her failure to provide specific information and answer particular questions was specified in that correspondence. Assertions which had been made by Ms Sopikiotis that she was excused from providing information by reason of privacy considerations were rejected and an explanation was given to Ms Sopikiotis as to why privacy principles were inapplicable. At the hearing on 15 June 2012, to which I earlier referred, I also informed Ms Sopikiotis that privacy considerations did not excuse her from compliance with the order the Court had made that she file a Statement of Affairs. On 21 June 2012, the solicitors for the Trustee wrote to Ms Sopikiotis warning her about non-compliance with the orders made on 7 May 2012 and demanding that she comply. Beyond the document filed on 21 May 2012, Ms Sopikiotis has not filed any further document as her Statement of Affairs. The document filed on 21 May 2012 fails to include a range of information required, including a range of information specifically spelt out by the order of the Court made on 7 May 2012. I am satisfied that Ms Sopikiotis has substantially failed to comply with the order made by the Court on 7 May 2012. … At the hearing, Ms Sopikiotis continued to assert her right to not provide the information required, by reference to privacy considerations. 12 The primary judge rejected Ms Sopikiotis' alternative submission that she ought not be ordered to vacate the Camberwell property until the date of settlement of any sale: see the Primary Judgment at [32]. His Honour ordered instead that she would have 60 days to vacate the property and made the orders the respondent sought. 13 On 10 December 2012, Ms Sopikiotis filed a notice of appeal against the judgment of the primary judge. Another judge subsequently granted her a stay and made an order for an expedited hearing of the appeal.

THE DECISION OF THE FULL COURT 14 In its reasons for dismissing the appeal (see Sopikiotis, in the matter of Sopikiotis (Bankrupt) v Vince (Trustee) [2013] FCAFC 24) heard on 27 February 2013, the Full Court said (at [8]-[17]): The only ground of appeal appearing in Ms Sopikiotis's notice of appeal was that: "Documentation that provides evidence in support of the Appellant was not made available until after the Federal Court Hearing date of 2nd October 2012." No particulars were provided which identified the "evidence" to which this ground referred. No application to amend the grounds of appeal has been made. Ms Sopikiotis filed an outline of her submissions in support of the appeal. The outline failed to identify any material "evidence" which had come to light after the hearing of the trustee's application before Bromberg J on 20 October 2012. For the most part the submissions set out various provisions of the Bankruptcy Act and summaries of some curial decisions on the construction and application of the Bankruptcy Act. None of these dealt with the ground appearing in her appeal notice. Nor did these submissions identify any other error which Ms Sopikiotis sought to attribute to the trial judge. Indeed, many of the statutory provisions and case law had not been relied on or raised in argument at trial. They dealt with matters such as the trustee's entitlement to remuneration, the unlawful receipt of money by a trustee, the requirement that a trustee administer an estate as efficiently as possible and the exercise of the Court's supervisory jurisdiction. One matter which was raised at trial (but which is not raised by the sole ground of appeal) was the alleged refusal, by the trustee, to allow Ms Sopikiotis to make a proposal for a composition in satisfaction of her debts. Section 73 of the Bankruptcy Act provides for the making of such a proposal. There exists, however, an antecedent requirement that a bankrupt file a statement of affairs: see ss 6A and 54(1). Unless the trustee and the creditors are aware of the bankrupt's financial position they cannot be expected to be able to make an informed decision on any composition proposal. Bromberg J had ordered that Ms Sopikiotis file such a statement following an earlier hearing on 7 May 2012: see Vince (Trustee), In the Matter of Sopikiotis (Bankrupt) v Sopikiotis [2012] FCA 573. His Honour's orders required that the statement be filed on or before 21 May 2012. In her written submissions Ms Sopikiotis asserted that she had filed such a statement on 21 May 2012. Ms Sopikiotis had, in fact, purported to file a statement on that day. The Insolvency and Trustee Service Australia refused to accept the document which she presented on the ground that it was incomplete. This matter was considered by Bromberg J in his reasons on 21 November 2012. His Honour found that the document which Ms Sopikiotis sought to file on 21 May 2012 failed to include a range of information which she was specifically required, pursuant to the orders made on 7 May 2012, to provide. His Honour regarded this as a substantial failure to comply with the orders. He set out, in Schedule 1 to his reasons, the extent of that non-compliance. We agree with his Honour's characterisation. Ms Sopikiotis had failed to provide a large amount of relevant information. She has not since done so. More significantly, for present purposes, she has not demonstrated that the trial judge had erred in concluding that a statement of affairs of the kind contemplated by the Bankruptcy Act had not been filed. There was, accordingly, no scope for the operation of s 73 of the Bankruptcy Act. In oral argument Ms Sopikiotis identified the documents which she contended constituted the unavailable "evidence" as being documents which she had received in November 2012 which related to proofs of her debts. They included a series of invoices which had been rendered by solicitors acting for one of her creditors. Ms Sopikiotis had subsequently placed these documents before the Federal Magistrates Court to support an application which she had made for an extension of time within which to review the making of the sequestration order. They were considered by Burchardt FM in the course of providing reasons for rejecting her application: see Sopikiotis v Owners Corporation RP017740 [2013] FMCA 122. Ms Sopikiotis alleged that some of the documents which formed part of the proof of debt were fraudulent. She provided no cogent evidence to support this serious allegation. In any event, the efficacy of the proofs of debt was not an issue which the trial judge was called upon to consider. Indeed he expressly held (at [13] and [14]) that this was not an issue which fell for his consideration. His Honour was undoubtedly correct in this conclusion. The orders that his Honour made concerned the trustee's attempts to administer the bankrupt estate of Ms Sopikiotis, consequent upon the making of the sequestration order against her, by obtaining the control of an asset that vested in the trustee by virtue of s 58(1) of the Bankruptcy Act. His Honour's functions did not include reviewing the correctness of the debts said to be owing, the legality of the steps preceding the making of the sequestration order, or the propriety of the trustee's administration of the estate generally. Similar attempts at collateral challenge were found by Burchardt FM to lack merit. Having considered Ms Sopikiotis's written and oral submissions and having carefully examined the trial judge's reasons, we can detect no appellable error. 15 Accordingly, the Full Court dismissed the appeal, with costs.

CONSIDERATION OF CURRENT APPLICATION 16 Ms Sopikiotis presumably makes her current application for a stay on a basis akin to a stay application to preserve the subject matter of the litigation pending her foreshadowed application for special leave to appeal to the High Court. In this regard, counsel for the respondent helpfully referred me to Murdaca v Accounts Control Management Services Pty Ltd [2007] FCA 964 ("Murdaca") at [5], in which there was a stay of proceedings under a sequestration order pending the hearing or earlier determination of Mr Murdaca's application to the High Court for special leave from a judgment of this Court. The purpose of the order was to preserve the value of Mr Murdaca's interest in property, which was his home, until the application to the High Court was resolved. 17 In this case, there is no evidence that any special leave application has been filed within the time allowed. When this stay application was heard on 22 March 2013, Ms Sopikiotis had not yet filed a special leave application, although she stated that she intended to do so. If she has not done so by now, she is out of time. Notwithstanding this, I approach the question whether a stay should be granted on the assumption favourable to Ms Sopikiotis - that that such an application has been, or will be, made in a way conformable to the issues agitated in the proceeding to date. 18 When an application is made to the High Court for special leave to appeal, the court below has jurisdiction to grant a stay. Indeed, the stay application should be made to that court. 19 In Murdaca, Branson J referred to the test set out by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681 ("Jennings") at 684-685, where Brennan J said: A stay to preserve the subject-matter of litigation pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted. … In exercising the extraordinary jurisdiction to stay, the following factors are material to the exercise of this Court's discretion. In each case when the Court is satisfied a stay is required to preserve the subject matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies. 20 As Branson J said in Murdaca at [7]: Subject to the second of the above considerations having no relevance, the above passage provides valuable guidance as to the proper approach to be taken on the present application. I understand Brennan J's reference to the prospect of a grant of special leave being 'substantial' to be intended to convey no more than that there should be a real, as opposed to a remote or insubstantial, possibility of special leave being granted. 21 Section 35A of the Judiciary Act 1903 (Cth) sets out matters relevant to special leave applications as follows: In considering whether to grant an application for special leave to appeal to the High Court under this Act or under any other Act, the High Court may have regard to any matters that it considers relevant but shall have regard to: (a) whether the proceedings in which the judgment to which the application relates was pronounced involve a question of law: (i) that is of public importance, whether because of its general application or otherwise; or (ii) in respect of which a decision of the High Court, as the final appellate court, is required to resolve differences of opinion between different courts, or within the one court, as to the state of the law; and (b) whether the interests of the administration of justice, either generally or in the particular case, require consideration by the High Court of the judgment to which the application relates. 22 In the present case, for the reasons I am about to state, it does not seem to me that Ms Sopikiotis' foreshadowed special leave application would be likely to involve a question of law that is of public importance because of its general application. Nor does it seem to me that the interests of the administration of justice would be likely to be understood to require consideration by the High Court of the Full Court of this Court's judgment because authoritative guidance is not available, or for any other reason: see Judiciary Act 1903 (Cth), s 35A. 23 It will be evident from the forgoing account that the matter that fell for the primary judge's consideration was whether the respondent was entitled to orders pursuant to s 30 of the Bankruptcy Act, including an order for possession of the property that is her home. Most of the factual matters on which his Honour's decision depended were not capable of being reasonably disputed. As already noted, the primary judge made the orders sought by the respondent. 24 As noted above, Ms Sopikiotis identified only one ground in her notice of appeal, namely: Documentation that provides evidence in support of the Appellant was not made available until after the Federal Court Hearing date of 2nd October 2012. This ground was apparently reiterated in the supporting affidavit that Ms Sopikiotis filed in support of her stay application. The Full Court discussed this ground in some detail: see [14] above. Ms Sopikiotis failed to make out this ground before the Full Court because, amongst other reasons, she failed to identify any relevant "fresh" or "further" evidence (and the Court did not therefore address the admissibility or relevance of any such evidence). 25 At the hearing of this application, Ms Sopikiotis identified the relevant documentation as documentation relating to proof of debts. Some of this documentation was, however, before the primary judge: see exhibits to the affidavit of Peter Robert Vince sworn on 21 February 2012 and the affidavit of Christine Margaret Cantwell sworn on 29 June 2012. The primary judge and the Full Court both observed that issues relating to proof of debt were matters for the respondent and not the Court. Certainly, there would appear to be little in this issue that would justify a grant of special leave to appeal. 26 I return to the general subject of documentation below, because, on one view, certain of Ms Sopikiotis' submissions at the hearing of the current application were merely another way of putting this "failure to provide documentation" ground: see [30] below. 27 None of the other matters touched upon by the Full Court would appear likely to justify a grant of special leave to appeal. 28 In her affidavit in support of the current application, Ms Sopikiotis also claimed that the bankruptcy notice was a nullity because it failed to meet the requirements of the Bankruptcy Act. This issue was not raised before the primary judge or in Ms Sopikiotis' subsequent notice of appeal. The issue was not developed in this proceeding and cannot properly fall for consideration on this application. I note, however, that Ms Sopikiotis made submissions to this effect in support of her extension of time application in the Federal Magistrates Court and in support of her application for leave to appeal in this Court. For the reasons stated in Sopikiotis v Owners Corporation RP011740 [2013] FCA 353, Ms Sopikiotis' submissions about the invalidity of the bankruptcy notice failed. 29 Also in her supporting affidavit, Ms Sopikiotis stated that she had made an application to the Victorian Civil and Administrative Tribunal ("VCAT") regarding breaches by the Owners Corporation under the Owners Corporation Act 2006 (Vic). She also spoke of her VCAT application at the hearing on 22 March 2013, although its precise nature remained unclear. The respondent has not consented to the commencement of the new VCAT proceeding and has not been served, or, save for the first page, otherwise been given, a copy of the application. This is not a factor that militates in Ms Sopikiotis' favour. 30 Finally, Ms Sopikiotis complained about the respondent's conduct, including that she had not received documents relating to proof of debts. Part of her complaint was that she had not received documentation relating to proof of debts until after the hearing before the primary judge. On her own account, however, the documentation was given before the Full Court hearing. To the extent that these complaints were the subject of the Full Court's consideration, they were rejected: see [24] above. To the extent that these complaints involved generalised allegations about the respondent's conduct, introduced for the first time on this application, they would not properly fall for consideration. 31 In any event, the gist of Ms Sopikiotis' complaints in the above regard was that the respondent had acted improperly in various respects, including with respect to the provision of documentation. Her complaints about the respondent's conduct were, however, clearly unsubstantiated and, accordingly, must be rejected. 32 On the question of loss to the respondent were a stay to be granted, the respondent made no submission, although he correctly observed that he had a statutory duty to administer the estate of the bankrupt, which included an obligation to realise the bankrupt's property for the benefit of creditors (who number more than Owners Corporation). 33 As to the balance of convenience more generally, the general position of Ms Sopikiotis is plain enough: she not only desires to preserve the value of her property but to remain in occupation of it whilst she exhausts all avenues of appeal. Ms Sopikiotis has, however, adduced no specific or additional evidence on the balance of convenience point. 34 As the respondent submitted, however, the stay orders made by the Full Court did not include a stay of proceedings on the sequestration order: see De Robillard v Carver (2007) 240 ALR 675 at 696 [125]; Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297; and Murdaca at [2]. The sequestration order, which was made on 5 July 2011, has not been stayed. The respondent has duties as trustee of the bankrupt's estate that must be met. 35 There is also the history of the litigation to be considered. This is clear enough from the Primary Judgment and the Full Court's reasons. There are also the matters evident in my reasons dismissing Ms Sopikiotis' application for leave to appeal and in the reasons for the judgment of the Federal Magistrate from which Ms Sopikiotis sought to appeal. This history militates against the grant of a stay. Further, it appears that Ms Sopikiotis has still not filed a proper statement of affairs. Whilst Ms Sopikiotis claims to be solvent, she has apparently adduced no evidence in this Court in support of her claim. 36 For the reasons stated, Ms Sopikiotis has not persuaded me that the extraordinary jurisdiction to stay should be exercised in her favour. Her application for a stay should be dismissed, with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Bankruptcy Act 1996(Cth)

Owners Corporation Act 2006(Vic)

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