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

JUDGE: GORDON J DATE: 17 june 2013 PLACE: MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 432 of 2013

AND: PETER ROBERT VINCE AS TRUSTEE OF THE BANKRUPT ESTATE OF MARIA SOPIKIOTIS

JUDGE: GORDON J DATE: 17 june 2013 PLACE: MELBOURNE

INTRODUCTION 1 The applicant, Ms Sopikiotis, is bankrupt. The trustee of her bankrupt estate is Peter Robert Vince (Mr Vince). There are two proceedings: VID 430 of 2013 and VID 432 of 2013. Ms Sopikiotis is the applicant in each proceeding. VID 432 of 2013 will be dealt with first.

VID 432 of 2013 2 In VID 432 of 2013, Ms Sopikiotis sought the following orders pursuant to ss 179(1)(a) and (b) of the Bankruptcy Act 1966 (Cth) (the Act): 1. that Mr Vince be removed as trustee; 2. an order restraining Mr Vince from taking any further action in the administration of her bankrupt estate; and 3. that the caveat lodged by Mr Vince over the property at 2A Trafalgar Road, Camberwell (the Property) be removed. Mr Vince opposed the application. 3 The application was filed in the Federal Circuit Court of Australia on 23 April 2013. It was transferred to this Court on 30 May 2013. An affidavit in support sworn by Ms Sopikiotis stated that, pursuant to s 179 of the Act, she was seeking an inquiry into the administration of her bankrupt estate due to "misconduct by [Mr Vince] and engaging in unnecessary litigation". 4 Ms Sopikiotis filed a further affidavit sworn on 28 May 2013. In that affidavit, Ms Sopikiotis stated that Mr Vince had engaged in misconduct by way of concealment of material facts and that the actions and lack of assistance from Mr Vince had been, and are continuing to be, detrimental to her. It will be necessary to return to consider the content of this affidavit later in these reasons for judgment.

Background 5 On 21 April 2010, the Victorian Civil and Administrative Tribunal (VCAT) ordered Ms Sopikiotis to pay Owners Corporation RP 017740 the sum of $28,326.97 (the VCAT Order). That debt was not paid. On 26 May 2010, the Magistrates' Court at Melbourne registered the VCAT Order. On 1 June 2011, Mr Vince signed a consent to act as trustee. On 5 July 2011, in the Federal Magistrates Court (as it then was), a Registrar made a sequestration order against the estate of Ms Sopikiotis (the Registrar's Decision). Ms Sopikiotis contended that the VCAT Order was obtained by default in relation to an alleged debt (that dates back to 1 May 1996) that she does not acknowledge or accept she is liable for and which is statute barred. 6 On 20 July 2011, after the sequestration order was made, Ms Sopikiotis wrote to Mr Vince "outlining the circumstances that led to [her] bankruptcy". In that letter, Ms Sopikiotis stated: 1. Dispute with Owners Corporation # 17740 since the 90's. 2. Refusal of previous Owners Corporation Secretary … to provide accounts/receipts/invoices for monies being charged. 3. Non performance of duties by previous Owners Corporation Secretary … 4. The property I believe should be excluded from Owners Corporation and not be on a Strata Title. 5. … Lawyers providing services not required regarding the matter and increasing costs for financial gain. 6. Unsuccessful attempt to secure Deed of Settlement. 7. High costs of defending matter in the correct manner. (Limited Income and will not place financial strain on myself.) 7 On 7 May 2012, Bromberg J ordered Ms Sopikiotis no later than 21 May 2012 to make out, and file, a statement of affairs which provided, at least, certain identified information: Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis [2012] FCA 573. 8 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 to make her review application. On 22 February 2013, a Federal Magistrate (as he then was), refused to grant the extension of time: Sopikiotis v Owners Corporation RP017740 [2013] FMCA 122 (Federal Magistrate's Decision). 9 On 21 November 2012, Bromberg J ordered Ms Sopikiotis to deliver up to Mr Vince the duplicate certificate of title for the Property and for Ms Sopikiotis to vacate the Property within 60 days: Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis [2012] FCA 1298. In the event that Ms Sopikiotis failed to deliver vacant possession, Bromberg J ordered that a warrant of possession issue forthwith. On 10 December 2012, Ms Sopikiotis filed a notice of appeal and applied for an order staying the operation of Bromberg J's orders pending the hearing and determination of the appeal. On 20 December 2012, Tracey J granted the stay and made an order for an expedited appeal. That appeal was heard on 27 February 2013. The appeal was dismissed: Sopikiotis, in the matter of Sopikiotis (Bankrupt) v Vince (Trustee) [2013] FCAFC 24 (Full Court Judgment). 10 On 4 March 2013, Ms Sopikiotis filed an application for leave to appeal against the Federal Magistrate's Decision. On 18 April 2013, Kenny J refused her application for leave to appeal: Sopikiotis v Owners Corporation RP017740 [2013] FCA 353. 11 On 7 March 2013, Ms Sopikiotis applied for a stay of the Full Court Judgment. That application was heard on 22 March 2013 and dismissed by Kenny J on 18 April 2013: Sopikiotis, in the matter of Sopikiotis (Bankrupt) v Vince (Trustee) [2013] FCA 354.

Ms Sopikiotis' current application 12 What then are the facts relied upon by Ms Sopikiotis in support of her allegations? The matter was explained by Ms Sopikiotis in her second affidavit in the following terms: 5. On the 20th July 2011 [Ms Sopikiotis] responded to [Mr Vince] in writing outlining the circumstances that led to the bankruptcy. … 6. On the 20th and 26th July [Ms Sopikiotis] attended the offices in Dandenong of Vince & Associates and met with Christine Cantwell and stated that the alleged debt is statute barred and reaffirmed my position on the matter. 7. Pursuant to s 170(2) "The Trustee shall at the request of the bankrupt, furnish to the bankrupt information reasonably required by the bankrupt concerning his or her property or affairs." [Ms Sopikiotis] sent letters to Vince & Associates on the 3rd and 16th November 2011. [Ms Sopikiotis] was seeking a Section 73 proposal under the Bankruptcy Act. [Mr Vince] knew of my intention to pursue further litigation in this matter. … 8. [Mr Vince] lodged a Caveat No: AJ067838N on the 13th July 2011. … 9. From mid November 2011 to Mid March 2012 there was no contact with [Mr Vince] and bona fide creditors being Harrick lawyers and Boroondarra Council continued receiving fortnightly payments (prior arrangements made) and all normal household expenses are completely up-to-date. (I was working Full-Time prior and after 5th July 2011). 10. [Mr Vince] commenced litigation in the Federal Court on 21st February with a hearing date of 21st March 2012 (VID 154/2012). 11. In Mid April 2012 [Ms Sopikiotis] telephoned Christine Cantwell of Vince & Associates re Proof of Debit (sic) and ceased all verbal communications with Vince & Associates after this contact. 12. On the 16th May 2012 [Ms Sopikiotis] sent a letter to Ned Mahoney of Maddocks. … 13. Throughout the course of litigation in relation to VID154/2012 it was discovered that: (A) VCAT had on file an incorrect address for [Ms Sopikiotis]; (B) The Bankruptcy Notice had never been received by [Ms Sopikiotis] and at the time of the alleged service the bankruptcy notice had expired and is [sic] a nullity. The "Act of Bankruptcy" did not occur. … 15. [Mr Vince] has full knowledge of the impropriety and irregularity from affidavits that [Ms Sopikiotis] filed in court proceedings. 16. [Ms Sopikiotis] advised Justice Bromberg at the hearing of 2nd October 2012 that transcripts were in the process of being transcribed of the VCAT hearing dated 21st April 2010 and an Application for Review of the Sequestration order had been filed. [Ms Sopikiotis] sought an adjournment for the hearing but it was denied. 17. On the 13th November 2012 [Ms Sopikiotis] received from [Mr Vince] the Proof of Debit [sic] that was requested in November 2011. The accounts from LMS Lawyers are fraudulent. These documents were received by [Mr Vince] with a letter dated 21st September 2011 … - 5 pages only. 69 Pages in total to be produced in Court. 18. The relationship between [Ms Sopikiotis] (the bankrupt) and [Mr Vince] is one of complete conflict of interest and has irretrievable (sic) broken down. 19. The Owners Corporations have never in any legal proceedings from 2010 to 2013 produced any bona fide accounts, receipts or invoices for the amounts they claim. They are in breach of a minimum of 6 sections of the Owners Corporation Act. Spreadsheets with figures need to be supported by bona fide documents. [Mr Vince] has a duty to act diligently and prudently in regard of the estate, for these reasons [Ms Sopikiotis] seeks an inquiry into the conduct of [Mr Vince] pursuant to s 179 and to allow a stay on the order of bankruptcy to resolve the issues that arose from the VCAT Order which has no jurisdiction in Bankruptcy. … 13 By the date of the hearing (3 June 2013), Ms Sopikiotis had not complied with the orders of Bromberg J (see [9] above) and a warrant for possession of the Property had been issued by the Court.

Relevant legislative provisions 14 The relevant provisions of the Act are as follows: 178 Appeal to Court against trustee's decision etc. (1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable. (2) The application must be made not later than 60 days after the day on which the person became aware of the trustee's act, omission or decision. 179 Control of trustees by the Court (1) The Court may, on the application of the Inspector‑General, a creditor or the bankrupt, inquire into the conduct of a trustee in relation to a bankruptcy and may do one or both of the following: (a) remove the trustee from office; and (b) make such order as it thinks proper. … 15 The principles to be applied are well established. In relation to s 179, the principles were relevantly summarised by Besanko J in Moore v Macks [2007] FCA 10 at [29]-[30] as follows: 1. section 179 is governed by similar, but not identical, considerations to those relevant to s 178; 2. unlike s 178, which relates to the review of specific acts, omissions or decisions of a trustee in bankruptcy in the administration of a bankrupt's estate, s 179 reflects the Court's more general supervisory role and allows it to carry out an inquiry into the 'conduct' of a trustee in relation to a bankrupt's estate or affairs: s 179(1); 3. as with s 178, s 179 is to be understood in the context of the role of the trustee in bankruptcy as an officer of the Court. The section is typically employed where an allegation of misconduct or error by a trustee in bankruptcy arises: Macchia v Nilant (2001) 110 FCR 101 at [48]; 4. section 179 requires the Court to engage in a process which may involve two stages. First, the Court must consider whether there is a basis to inquire into the conduct of a trustee in bankruptcy and, secondly, if an inquiry is undertaken, the Court must consider what, if any, order should be made as a result of the inquiry; 5. the question of whether to order an inquiry is in the broad discretion of the Court, and the Court should be reluctant to do so unless there are "substantial grounds for believing that the trustee erred in his administration" (Re Gault; Gault v Law (1981) 57 FLR 165 at 173 cited in Macchia at [49]), "sufficient grounds" (Re Gault at 173), and "reasonable cause to believe that a trustee may have failed to act in relation to a bankruptcy in the manner required by the Act or the general law": Wilson v Commonwealth of Australia [1999] FCA 219 at [44]; and 6. the onus is on the applicant to establish the grounds or case for an inquiry. However, as with s 178, the exercise of the Court's discretion to order an inquiry is subject to the principle that the Court will not unduly interfere with the day-to-day administration of a bankrupt's estate by a trustee in bankruptcy: Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182 at 186 and Macchia at [50].

Analysis 16 Ms Sopikiotis' application faces a number of insurmountable hurdles. 17 First, in making an application under s 179 of the Act, Ms Sopikiotis must identify precisely the conduct about which she complains and the reasons why that conduct was improper. Generalised or unsupported assertions do not provide any basis, let alone a sufficient basis, for such an application. Neither of the affidavits filed by Ms Sopikiotis disclosed the conduct about which she complained and then went on to set out the reason or reasons why that conduct was improper. The application fails at the first hurdle. The fact that Ms Sopikiotis cannot do so is not surprising. In all of the judgments given to date (in the Federal Court, the Full Court of the Federal Court, the Federal Magistrates' Court (as it was then known) and the Supreme Court of Victoria) there has been no suggestion, let alone a finding, that Mr Vince has acted improperly in administering the bankrupt estate of Ms Sopikiotis. 18 At the hearing, Counsel for Mr Vince produced a table which listed the allegations in the affidavits sworn by Ms Sopikiotis in support of this application. In the right hand column of the table, Counsel for Mr Vince then identified the reason or reasons why each allegation should be dismissed. At the hearing, Ms Sopikiotis placed considerable reliance upon the matters listed in the table numbered 3 (Mr Vince engaged in misconduct by concealment of material facts), 7 and 8 (the VCAT order had no jurisdiction in bankruptcy and was based on debts which were statute barred), 10 and 16 (the efficacy of the bankruptcy notice) and 21 (the relationship between Ms Sopikiotis and Mr Vince is one of complete conflict of interest and has irretrievably broken down). I have considered each allegation and the response provided by Mr Vince. Ms Sopikiotis' application must fail. Ms Sopikiotis has not identified the particular conduct about which she complains and then identified the reason or reasons why that conduct was improper: Items 1 to 4, 17, 18 and 21. On other occasions, Ms Sopikiotis seeks to re-agitate issues already subject to judicial determination: Items 3, 7, 8, 10, 11, 12, 14, 16, 18, 20 and 22. In some instances, the allegation suffers from both problems: eg, Items 3 and 18. Finally, in some instances, the substance of the affidavit refers to a fact which does not on its face give rise to any allegation: Items 5, 6, 9, 13, 15 and 19. 19 Second, Ms Sopikiotis has already sought a stay of the orders made by Bromberg J on 21 November 2012 (namely the orders that Ms Sopikiotis deliver up to Mr Vince the duplicate certificate of title for the Property and for Ms Sopikiotis to vacate the Property within 60 days): see [9] above. That application was granted pending the hearing of her appeal to the Full Court: see [9] above. The Full Court dismissed the appeal and extended the stay for 30 days from the date of its order (27 February 2013). Nothing has occurred since then to permit a reconsideration of that application. 20 Third, s 179 of the Act does not confer power on the Court for it to order the removal of a caveat lodged by a trustee in bankruptcy. The procedure for the removal of a caveat is set out in s 89A of the Transfer of Land Act 1958 (Vic): cf Labocus Precious Metals Pty Ltd v Thomas [2007] FCA 1154 and Re Peter Anthony Coyne; Ex Parte Binningup (South) Pty Ltd [1992] FCA 540. 21 Fourth, even if Ms Sopikiotis' application for removal of Mr Vince was successful, the replacement of Mr Vince would not assist her. Her application on 26 September 2012 to review the sequestration order was dismissed on 22 February 2013: see [8] above. An application by Ms Sopikiotis for leave to appeal that decision was dismissed: see [10] above. A trustee of a bankrupt's estate has duties which include taking appropriate steps to recover property for the benefit of the estate: s 19 of the Act. Mr Vince (or any trustee) would be required to discharge those duties. If a new trustee was appointed, the discharge of those duties would in fact be to the further detriment of Ms Sopikiotis - increased cost because of the need for the new trustee to repeat work already undertaken. 22 The position Ms Sopikiotis finds herself in is unfortunate but it is a position that will only get worse if she does not comply with orders of the Court. She must, without delay, deliver up the certificate of title to the Property and sit down and complete a statement of affairs in a form acceptable to the Official Trustee.

VID 430 of 2013 23 In VID 430 of 2013, pursuant to s 178 of the Act, Ms Sopikiotis seeks relief from a decision alleged to have been made by Mr Vince in a letter dated 16 May 2013 to "issue a warrant of arrest". The proceeding had been filed in the Federal Magistrates Court (as it was then known). It was transferred to this Court on 30 May 2013. The application was supported by an affidavit sworn by Ms Sopikiotis on 20 May 2013. The basis of the application was said to be "significant irregularity, impropriety and misconduct by the parties involved in this complex matter". 24 The applicable principles are well established. In relation to s 178, Besanko J in Moore v Macks at [28] summarised the principles relevant to the current application: 1. the fundamental purpose of s 178 of the Act is to give the Court the power in a supervisory role, to review acts, omissions or decisions of a trustee in bankruptcy made in the course of the administration of a bankrupt's estate on the application of any person with appropriate standing; 2. on an application by the bankrupt it is incumbent on the bankrupt to demonstrate the elements necessary for a judicial review; including identification of the "act, omission or decision": Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 at 170; 3. the Court has the "widest possible discretion as to the appropriate order which should be made in the particular case": Re Tyndall at 186. These principles are in addition to those set out at [15] above which refer to s 178. 25 This application also fails. It fails because Ms Sopikiotis misread the letter sent by Mr Vince's solicitors to her dated 16 May 2013. That letter relevantly stated: We refer to our letter to you dated 30 April 2013 and note that - despite that letter, the orders of Justice Bromberg made on 21 November 2012 and our client's previous requests - you have failed to deliver up the certificate of title regarding the [Property]. In the event that you fail to deliver up that certificate of title by 4pm on Wednesday, 22 May 2013 our client will apply for a warrant of arrest without further notice to you. 26 As that extract reveals, there was no act, omission or decision by Mr Vince to which an application under s 178 could attach. As at the date of the hearing, no application for a warrant of arrest had been made by Mr Vince and, of course, any decision to issue a warrant of arrest is a decision of the Court, not of Mr Vince: s 78 of the Act. Accordingly, the application filed by Ms Sopikiotis in VID 430 of 2013 is dismissed.

CONCLUSIONS AND ORDERS 27 The applications in VID 430 of 2013 and VID 432 of 2013 are dismissed. Mr Vince's costs of both applications are to be paid out of the bankrupt estate of Ms Sopikiotis. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.