The Official Trustee in Bankruptcy v Mahmoud [2006] NSWSC 1194 | Case summary

3 The plaintiff filed a Statement of Claim on 12 December 2005 for the purpose of obtaining possession and the defendant filed a document entitled 'Defence' on or about 18 April 2006. 4 As I have made clear on a number of earlier occasions, the Defence, as filed, raised issues confined to the merits of the order made by the Federal Magistrates' Court and the appropriateness or otherwise of the bankruptcy of the defendant. The Defence does not raise an issue which would disentitle the plaintiff to possession during the subsistence of that bankruptcy. 5 The Statement of Claim and the proceedings initiated thereby have been before the Court on a number of occasions. At least since 17 May 2006 the matter has been before a registrar or duty judge on approximately eight occasions, the last being 2 August 2006. On that occasion the Court was informed that application had been made by the defendant for the annulment of his bankruptcy and that the matter was listed before the Federal Magistrates' Court on 25 October 2006. 6 As a consequence of that application and the number of times the matter had been before the Court, the plaintiff sought orders in a slightly varied form to those which were sought in the Notice in Motion. The variation of the orders included a stay of the capacity of the plaintiff to issue a Writ for Possession until 1 November 2006. This date was chosen, expressly, for the purpose of allowing the defendant to conclude the proceedings before the Federal Magistrates' Court before the annulment of his bankruptcy. 7 The Court, and the plaintiff, were concerned, on 2 August 2006, that the assets available to the creditors were being dissipated by court costs brought about by the defendant's delays. The plaintiff sought the stay so that it would not be faced with further costs in relation to the issues. 8 The document filed as a Defence by the defendant discloses no or no substantial defence, is in inappropriate form, and ought to be struck out. On 29 June 2006 when the matter was before me I ordered that the plaintiff's Notice of Motion stand over to 10:00am on 26 July 2006 and directed the defendant file and serve by the close of business on 20 July 2006 any and all documents, including affidavits, upon which he seeks to rely at the hearing. It was made clear to the defendant that even at that late stage a Defence in proper form or a Defence which disclosed an arguable defence would be received and, subject to any submission that might be made by the plaintiff, would probably be sufficient to overcome the Notice of Motion. Such leave was also granted at the hearing on 19 June 2006. The defendant did not utilise the leave or take the opportunity to file, or seek to file, any Amended Defence. 9 When the matter came before the Court on 26 July 2006, the Court was dealing with a number of matters relating to bail and the matter was adjourned to a date convenient to the defendant, namely, 2 August 2006. 10 As earlier stated on that day the Court reserved judgment and gave liberty to the parties to file any document relating to the status of the defendant in relation to his bankruptcy. 11 At various times the defendant has sought an adjournment of the proceedings and of the plaintiff's Notice of Motion seeking summary judgment. Each of those applications for adjournment have been based, at least in part, on the existence of the annulment proceedings before the Federal Magistrates' Court. Those adjournment applications were the subject of ex tempore judgments on the 19 June 2006 and again, in relation to a subsequent application, on 2 August 2006. 12 In relation to the application for adjournment and/or stay made on 2 August 2006, a further matter that was raised was the defendant's stated desire to appeal the refusal of the adjournment application on 19 June 2006. The adjournment sought on 2 August 2006 was until the hearing and determination of the appeal, not at that stage commenced, against the refusal to adjourn the proceedings on 19 June 2006. The application for adjournment on 2 August 2006 was also based upon the proceedings before the Federal Magistrates' Court for the annulment of the bankruptcy. 13 I deliberately delayed until after 25 October 2006 the issuing of these reasons and judgment. The reason for that delay is that I am mindful of the need to reduce the costs of the parties, particularly the Official Trustee in Bankruptcy, and thereby maximise funds available to the creditors. As earlier stated, 25 October was the day upon which the proceedings for annulment were to be heard by the Federal Magistrates' Court and 1 November 2006 was the date proposed by the plaintiff as appropriate to be the first date upon which a writ for possession could issue. Having granted the leave to put before the Court any issue relating to the status of the defendant and giving the parties liberty to apply on two days' notice, I considered that I should give some time after 25 October 2006 in order for an approach to be made to the Court. That further time has now expired. 14 Part of the basis of the Notice of Motion of the plaintiff is that the Defence as filed discloses no defence and/or is an abuse of process and/or ought to be struck out. This power is exercised by the Court only in the plainest and most obvious cases and the principles adopted by the Court are well known and trite. The principles on the striking out of a pleading are the same whether that which is struck out is a Statement of Claim or a Defence. They were embodied in the judgment of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, in which his Honour said: "It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the Court is invited, as he did in this case, to exercise its power of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed: 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would to involve useless expense'." ( General Steel Industries at 129) 15 These epithets cited by Barwick CJ, with the necessary changes being made for the fact that this is a Defence that is sought to be struck out and not a Statement of Claim, apply to the document entitled Defence filed by the defendant in these proceedings. I am of the view that the Defence should be struck out and I will make that order. 16 The Defence having been struck out, there is no Defence and the plaintiff is entailed to default judgment. The plaintiff has displayed a commendable forbearance to the legally indefensible view of the defendant that the plaintiff ought not to proceed to possess the property in question in order to meet the defendant's debts. Likewise, the Court has granted a number of indulgences to the defendant as to the time within which the defendant was able to regularise his status and/or the proceedings. The defendant has not taken advantage of any of that forbearance or indulgence. 17 Fairness and procedural fairness are required to be shown to the defendant. But procedural fairness does not include a requirement that goes beyond giving an opportunity to the defendant to put his house in order and meet the case that is made against him. Whether it is a refusal of an adjournment or a refusal of liberty to file documents, it may, in some circumstances, constitute a denial of natural justice or procedural fairness. The comments of Deane J in relation to the grant of an adjournment are apposite: "The failure of a tribunal which is under a duty to act judicially to adjourn a matter may, conceivably, constitute a failure to allow a party the opportunity of properly presenting his case even though the party in question has not expressly sought an adjournment (see Priddle v Fisher & Sons [1968] 1 WLR 1478; [1968] 3 All ER 506). In this regard, however, it is important to remember that the relevant duty of the Tribunal is to ensure that a party is given a reasonable opportunity to present his case. Neither the Act nor the common law imposes upon the Tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled."(Full Court of the Federal Court of Australia in Sullivan v Department of Transport (1978) 20 ALR 323 at 343 per Deane J). 18 In this case the defendant has been given every opportunity and, at least on one view, greater opportunity than may have been warranted. There is evidence of the facts on which the Statement of Claim is based and, largely because the Statement of Claim is based upon the status of the defendant as an undischarged bankrupt and the position of the plaintiff as the Trustee in Bankruptcy, those facts are conceded by the defendant. Likewise, there is evidence by a responsible person that, in the belief of the person giving the evidence, the defendant has no Defence; the Court determines that the preconditions to the granting of summary judgment have been made out. 19 Section 116(1)(b) of the Bankruptcy Act 1966 (Cth) grants to the Trustee in Bankruptcy the right to take proceedings for the exercise of all powers in or over or in respect of property and the Bankruptcy Act grants to the Trustees in Bankruptcy the power to dispose of property or interests in property for the benefit of the owner, which property is divisible amongst the bankrupt's creditors. There can be no doubt that the plaintiff has the right to the property and to dispose of it. 20 For those reasons I grant the Notice of Motion and make the following orders: 1. Judgment for the plaintiff for possession of the whole of the land contained in Certificate of Title Folio Identifier 16/SP811 being the land known as Unit 16, 417 Liverpool Road, Ashfield, in the State of New South Wales and all improvements on the land. 2. Leave is granted to the plaintiff to have a Writ issued in regard to the land described in order 1, above. 3. The defendant pay the plaintiffs cost of and incidental to these proceedings as agreed or assessed. **********

The Official Trustee in Bankruptcy v Mahmoud

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