Zegarac v Rambaldi

REASONS FOR JUDGMENT 1 Ms Slavica Zegarac became bankrupt on 18 May 2006. A sequestration order was made by a Registrar on the petition of Mr Paul Dellios (trading as Dellios West & Co). That order was based on a judgment given by the Magistrate's Court of Victoria dated 26 April 2005. An appeal against the decision of the Magistrate was dismissed by the Supreme Court on 28 June 2005: see Zegarac v Dellios [2005] VSC 264. 2 Mr Gess Rambaldi and Mr Andrew Yeo were appointed joint and several trustees of the bankrupt estate of Ms Zegarac. They are members of the firm Pitcher Partners. 3 On 12 October 2005, Ms Zegarac applied to the Federal Magistrates Court for an order setting aside the bankruptcy notice on the ground that she had a counter claim, set-off or cross demand against Mr Dellios which exceeded the amount of the debt owed to him. On 16 December 2005, Federal Magistrate Phipps dismissed the application. He provided reasons for that decision on 19 January 2006: see Zegarac v Dellios [2006] FMCA 34. 4 On 13 December 2006, Marshall J refused an application for leave to appeal out of time against Phipps FM's decision. His Honour expressed the view that the Federal Magistrate's decision was "free from doubt such that it would be futile to extend the time within which to allow an appeal to be filed": see Dellios v Zegarac [2006] FCA 1733 at [19]. 5 On 15 December 2006, Marshall J also dealt with an application by Ms Zegarac to review the sequestration order made on 18 May 2006. Ms Zegarac sought to persuade his Honour that the Magistrate's judgment (on which the bankruptcy notice was founded) had been obtained by fraud. He dismissed the application to review the Registrar's decision: see Dellios v Zegarac (No 2) [2006] FCA 1831. 6 An attempt by Ms Zegarac to obtain special leave to appeal to the High Court from the first decision of Marshall J was refused on 6 September 2007: see Transcript of Proceedings, Zegarac v Paul Dellios t/as Dellios West & Co (High Court of Australia, Gummow J, 6 September 2007). 7 On 3 September 2007, a Full Court refused leave to appeal from Marshall J's second decision: see Zegarac v Dellios (No 2) [2007] FCAFC 141. 8 On 13 July 2009, Ms Zegarac filed an application in this Court seeking an order that her bankruptcy be annulled and various consequential orders including the payment to her of compensation. The application also contained certain serious allegations against Ms Zegarac's trustees. The most serious of these was an allegation that they "committed fraud". 9 By notice of motion filed on 21 August 2009, Pitcher Partners applied to the Court for orders that the application be dismissed as frivolous or vexatious or as an abuse of process. 10 On 4 September 2009, I ordered that the respondent file contentions of fact and law in support of its motions. They did so on 11 September 2009, and the contentions were served on Ms Zegarac. I also directed that Ms Zegarac file and serve any answering contentions on or before 9 October 2009. Ms Zegarac did not file any contentions by 9 October 2009; nor has she since done so. I fixed 4 December 2009 as the date on which the motions would be heard. 11 When the proceeding was called on on 4 December 2009, Ms Zegarac made an oral application for an adjournment. She said that she had "fresh evidence", being that "Pitcher Partners have opened a lot of accounts in the banks under my name, changed name, … and corporations' names". She submitted that "Pitcher Partners have done other fraudulent things including changing my name, getting grant of probate that I am dead when I am not dead, opening numerous accounts for me in the bank without any authority, issuing consents, numerous consents to the bank, to the court, to numerous government bodies and I need to obtain those documents". She said that she had become aware of these matters only "within the very last week". When asked how she became aware of the matters, she responded: "I do not want to tell you how. It doesn't matter how, what matters is what is there. If I tell you how, then you will do things to fix it so I can't do it again. So that is why I don't want to say how. Because if I explain to you how I've done it, because I have done that in the past, I said to people how I have done it, then they block me from doing it. So I am not going to say that anymore. What matters is the evidence…". 12 There was no evidence presented to support any of these allegations. In particular, there was no evidence to support Ms Zegarac's claim that she had obtained any evidence which might properly be regarded as "fresh evidence"; nor was there any evidence to support the allegations of fraudulent conduct on the part of the trustees. More importantly, for present purposes, all of these allegations were directed against the trustees who were not appointed until after the sequestration order had been made. Their impugned conduct occurred after their appointment. The various complaints about their conduct (even if there be evidence to support them) would not provide evidence which could be relied on to support the annulment of the sequestration order made on 18 May 2006. 13 For these reasons I refused Ms Zegarac's application for an adjournment. 14 I then invited Ms Zegarac to address any oral submissions which she wished to make in response to the submissions made by Pitcher Partners in support of their application to dismiss the proceeding. Despite repeated requests, Ms Zegarac advanced no contrary submissions. 15 Section 153B(1) of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") provides that the Court may make an order annulling a bankruptcy if it is "satisfied that a sequestration order ought not to have been made …". 16 Pitcher Partners submitted that the present application seeks to relitigate matters which were determined adversely to Ms Zegarac in the earlier proceedings to which I have referred. They submit further that, in any event, the Court should refuse the application as a matter of discretion because Ms Zegarac has not co-operated in the administration of her estate and because of the considerable and unexplained delay in bringing the application for annulment. 17 I put the latter submission to one side. The question of the exercise of the Court's discretion under s 153B would arise only in the event that the Court were persuaded, at trial, that the original bankruptcy order ought not to have been made. 18 The power to dismiss a proceeding on the ground that it is frivolous or vexatious or an abuse of process is not to be exercised lightly: see General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130. If, however, a proceeding is an abuse of process, it may be dismissed: see O 20 r 5 of the Federal Court Rules. A proceeding will constitute an abuse of process if it is "foredoomed to fail": see Walton v Gardiner (1993) 177 CLR 378 at 393. 19 This proceeding has been before the Court for almost five months. During that time Ms Zegarac has not put on any evidence to support a claim that the sequestration order which was made against her ought not to have been made. She has had ample opportunity to do so. At the last minute, she has claimed that she has discovered "fresh evidence" but has failed to support that claim with any evidence. Furthermore, she has given no indication of where the "fresh evidence" is to be found or the person or persons said to be in possession of it. Her description of the "fresh evidence" suggests that it would, in any event, not be relevant on the hearing of any application for annulment of her bankruptcy. 20 While I am conscious that Ms Zegarac has been unrepresented, the position is that she has failed for almost five months to adduce any evidence which would support the making of an order under s 153B(1) of the Bankruptcy Act. She has been on notice, since at least 21 August 2009, that the respondent was seeking to have her application struck out, inter alia, as an abuse of process. Although some of the things which she has said in argument suggest that she may wish to relitigate some of the issues which had been dealt with in the earlier proceedings, the paucity of evidence prevents me from making the necessary comparison. As a result, I am unable to conclude that, were this application to proceed further, the respondent would be able to rely on some form of issue estoppel. I am, however, satisfied that on the present state of the pleadings and evidence, the application is bound to fail. Despite having had the opportunity to do so, Ms Zegarac has advanced no submission to the contrary. 21 The application must be dismissed as an abuse of process. Ms Zegarac should pay the respondents' costs of the application. 22 The proper respondents are Mr Rambaldi and Mr Yeo. I will direct that they be substituted as the respondents to the proceeding. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.