Stankovic v Van Der Velde

REASONS FOR JUDGMENT 1 On 14 December 2012, I made orders in this proceeding. Specifically, I made declarations concerning the extent to which property of Mr Stankovic was property available for distribution to creditors. I also made orders otherwise disposing of the proceeding and discharging an undertaking given by the Trustees to the Family Court of Australia on 1 December 2011. Finally, I ordered that the orders be stayed until 8 February 2013. That order was made by consent. 2 By interlocutory application, filed 7 February 2013, Mr Stankovic now seeks a further stay of the orders made on 14 December 2012, either up to the final hearing of proceeding NSD 1571 of 2012 or until 8 March 2013, when that proceeding is listed for directions and for hearing of an application for summary dismissal. The basis upon which the stay is sought appears to be two-fold, although that is not entirely clear. One basis is that there is an appeal on foot from the orders made on 14 December 2012. However, counsel for Mr Stankovic has made no serious attempt to develop any arguments in support of any contention that there was error in making those orders. The notice of appeal is singularly uninformative as to the basis of the appeal. 3 The first ground is that I failed to take into account relevant matters of law and fact. However, there is no indication as to what relevant matters of law or fact were not considered. The second ground is that I incorrectly accepted the arithmetic submissions of the Trustees, without due and proper consideration. Again, there is no suggestion that there was any error in the arithmetic submissions. The third ground is that I took into account irrelevant considerations. Once again, there is no indication as to what the irrelevant considerations were or how they in any way affected the reasoning that led to the orders that I made. 4 The alternative basis upon which the application for the stay is made, which appears to be the principal basis, is that, if there is no stay, the Trustees may distribute part of the property available for distribution and, if that occurs, that might prejudice Mr Stankovic's prospects of recovering damages in proceeding NSD 1571 of 2012. It is desirable, therefore, to say something about that proceeding. 5 By the originating application in proceeding NSD 1571 of 2012, Mr Stankovic seeks an order that his bankruptcy be annulled under s 153(b) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) and that there be an order for restoration to him of the property situated at President Road, Kellyville. He also claims damages as assessed by the Court. In the alternative, he claims damages in excess of $35,000,000. The respondents to that proceeding are The Hills Shire Council (the Council), which was the petitioning creditor that led to the sequestration order, Watson & Watson, a firm of solicitors who acted for the Council and, subsequently, for the Trustees, the Trustees themselves, Mr Charles Hockey, a solicitor who acted for Mr Stankovic, and Kent Lawyers, a firm who previously acted for Mr Stankovic in relation to the proposed development of the Kellyville property. 6 The causes of action against the respondents are not clearly articulated in the statement of claim. It seems to be common ground, as I have found in earlier reasons, in other proceedings involving similar parties, that it was alleged that Mr Stankovic committed an act of bankruptcy on 30 December 2007 by failing to comply with a bankruptcy notice, issued at the behest of the Council. On 12 May 2009, a sequestration order was made in respect to the estate of Mr Stankovic, on the petition of the Council. 7 On that day, in the course of the hearing before Raphael FM, there was an exchange between Mr Stankovic and his Honour, in which Mr Stankovic asserted that the Council wanted to bankrupt him and take his land off him. Raphael FM said: They are not taking your land off you. They want $20,000. That is all they want. Raphael FM made a sequestration order but stayed proceedings under the sequestration order for 21 days. He told Mr Stankovic that, unless he made an application within 21 days to annul the bankruptcy, the sequestration order would take effect. 8 It appears that, following the payment by Mr Stankovic of the sum of $22,000 owing to the Couuncil, an application for annulment was made on 20 May 2009. However, that application was dismissed by consent on 2 June 2009. Another application for annulment was made, which was also dismissed by consent on 13 October 2009. 9 The consent orders were signed on behalf of Mr Stankovic by Mr Charles Hockey, the fifth respondent in proceeding NSD 1571 of 2012. The statement of claim alleges that Mr Hockey acted against instructions given to him by Mr Stankovic in consenting to the dismissal orders on 2 June 2009 and 13 October 2009. There is an assertion in the statement of claim that, in doing so, Mr Hockey acted contrary to s 20 and s 21 of the Australian Consumer Law and the Competition and Consumer Act 2010 (Cth), which prohibit unconscionable conduct in trade or commerce. 10 I query whether those provisions were in force at the time when the conduct complained of occurred in June and October 2009. Be that as it may, whether or not there was a cause of action available to Mr Stankovic against Mr Hockey for acting contrary to his instructions or acting without instructions, that does not seem to me to impugn in any way the consent orders made by the Federal Magistrates Court. 11 The allegation against the firm Watson & Watson and the Trustees is that, notwithstanding the payment by Mr Stankovic of the debt owing to the Council within 21 days after the making of the sequestration order, those solicitors and the Trustees claimed control of his affairs and had the Trustees appointed as trustees in bankruptcy. Curiously, the allegation is that that was a failure to comply with the direction of Raphael FM, in breach of s 30(5)(b) of the Bankruptcy Act. Section 30(5)(b) relevantly provides that, where a trustee has failed to comply with an order, direction or requirement of a registrar, or with a requirement or request of the Inspector General under the Bankruptcy Act, the Court may, on the application of the registrar, Official Receiver, trustee or Inspector General, order the person who failed to comply with the order, direction, requirement or request to comply with it, or if it thinks fit, make an immediate order for the committal to prison of that person. That provision appears to have no bearing whatsoever on the conduct of the Trustees in acting in discharge of their duty as trustees, having been duly appointed by the Federal Magistrates Court. 12 The final cause of action alleged in the statement of claim is that Mr Stankovic engaged Kent Lawyers on a contingency fee basis to act for him in relation to the subdivision and development of the Kellyville property. The statement of claim alleges that, contrary to the fee agreement, which was on a contingency basis, being subject to successful development of the property, Kent Lawyers submitted a bill of costs for payment during the period of bankruptcy, notwithstanding that that was contrary to the fee agreement. It is alleged that Mr Stankovic was prevented by the Trustees from disputing or challenging the bill of costs. The facts that constituted the prevention are not in any way particularised. It is difficult to see how the mere presentation of a bill of costs could have caused damages as alleged. 13 On the basis of the statement of claim as it presently stands, I am not persuaded that any ground for staying the orders that I made on 14 December 2012 has been established. It seems to me that the application is misconceived. The application is supported by an affidavit by Mr Stankovic that he fears that the Trustees will disperse the majority of his estate, if they are allowed to, and that that dissipation would render nugatory any decision made in proceeding NSD 1571 of 2012. It is by no means self-evident that that is so. If it is said that there is a prospect that funds will be dissipated, thereby frustrating a judgment that may be entered in proceeding NSD 1571 of 2012, the appropriate course would have been to seek a freezing order in that proceeding. That is not the order that has been sought. 14 I am not persuaded that there is any reason why I should stay the orders I made on 14 December 2012. Whether Mr Stankovic will make an application for a freezing order in accordance with the Rules, in aid of proceeding NSD 1571 of 2012, is a matter for him. In all of the circumstances, I consider that his interlocutory application of 7 February 2013 should be dismissed with costs. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.