//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2010] FCA 219
Federal Court of Australia
2010-03-16
Gray J
Original judgment source is linked above.
The application of the principles 33 There is no doubt that the judgment of the primary judge given on 11 December 2009 is an interlocutory judgment. It was given without a hearing on the merits and therefore does not dispose finally of the rights of the parties to the proceeding. Although the effect of the judgment is to dispose of the proceeding itself, a judgment that a proceeding amounts to an abuse of the process of the Court leaves open the possibility that the applicant could pursue any rights available to her legitimately in a properly constituted proceeding. The judgment of the primary judge would not be a bar to such a proceeding by way of res judicata estoppel or issue estoppel. For this reason, the judgment is not regarded as final. 34 In [18] of his reasons for judgment, the primary judge identified correctly the test of whether a proceeding amounts to an abuse of process. He focused on whether the applicant's proceeding was bound to fail. 35 In one respect, it might be arguable that his Honour was in error in the way that he characterised the nature of the applicant's proceeding. In [8], his Honour described the applicant's application as "seeking an order that her bankruptcy be annulled and various consequential orders including the payment to her of compensation". At [12], his Honour pointed out that the impugned conduct of the trustees in bankruptcy occurred after their appointment and that the complaints about them could not be relied on to support the annulment of the sequestration order. From those passages in his reasons for judgment, and from the fact that he referred only to s 153B(1) of the Bankruptcy Act, it appears that his Honour did not think of characterising the applicant's proceeding as having any possible basis in s 178 or s 179(1) of the Bankruptcy Act, particularly in the power of the Court to make such order as it thinks proper pursuant to s 179(1)(b) of that subsection. 36 An analysis of what the applicant sought in the first 14 paragraphs of her application, set out in [2] above, suggests that the relief she sought in some of those paragraphs might have been other than consequential upon annulment of the sequestration order. The first order sought was apparently the annulment itself. The orders sought in paras 3, 5, 6, 7, 8, 10 and 12 are capable of standing independently as applications either under s 178 or s 179 of the Bankruptcy Act. In ground 9, the applicant expressly invokes s 178. In part, ground 14 could be taken to invoke s 179(1). 37 This error on the part of the primary judge does not establish that his Honour's judgment is attended by sufficient doubt to warrant its reconsideration by a Full Court. Still less does the error establish the other criterion for the grant of leave to appeal, that substantial injustice will result from it. In order to give proper consideration to those two criteria, it is necessary to examine the applicant's claims in her application, together with the material in the affidavits she filed and the statements she made from the bar table, for the purpose of determining whether there is doubt as to the correctness of the order dismissing her application, or substantial injustice resulting from the applicant being unable to proceed with her application. 38 The applicant's application for annulment of her sequestration order was made after her discharge from bankruptcy upon the expiration of the three-year period specified in s 149(2) of the Bankruptcy Act, and in the absence of any objection to automatic discharge pursuant to s 149A. There must be considerable doubt whether there would be any utility in an annulment of a sequestration order after the discharge of the bankrupt, particularly as the provisions of s 154(1) of the Bankruptcy Act would apply. Effectively, s 154(1) prevents the undoing of whatever the trustee in bankruptcy has done during the period between the making and the annulment of a sequestration order. Whatever has been done during the whole of the period of the bankruptcy is validated. In any event, the material on which the applicant relied in support of her application for annulment, found in paras 1 to 24 of her affidavit filed on 27 July 2009, consists entirely of attempts to revisit issues already decided against her and confirmed on appeal in various proceedings she has commenced before. The applicant would not be permitted to revisit those issues. Any court would regard those issues as concluded, and the applicant as estopped from attempting to litigate them. The applicant's attempt to have her sequestration order annulled was bound to fail. 39 The application in para 2 of the applicant's application, seeking an order under s 154(1)(c) of the Bankruptcy Act was unnecessary. Section 154(1)(c) of the Bankruptcy Act has the consequence that remaining property of a former bankrupt still vested in the trustee reverts to the bankrupt, without the necessity for any court making any order. 40 Much of what the applicant seeks to accomplish in the remaining grounds in her application would be rendered impossible by the validating effect of s 154(1)(a) of the Bankruptcy Act, or by the express power conferred on the trustees in bankruptcy by s 154(1)(b). In particular, all acts done by the trustees in bankruptcy or any person acting under their authority before annulment are taken to have been validly made or done. It may be that the effect of this validation provision is to put a limit on the supervisory jurisdiction of the Court under ss 178 and 179 of the Bankruptcy Act. In any event, to invoke s 178(1), it is necessary for the bankrupt to point to a particular act, omission or decision of the trustee in respect of which he or she applies to the Court. Such an application must be made no later than 60 days after the bankrupt becoming aware of the act, omission or decision, by virtue of s 178(2). 41 Apart from para 25 of her affidavit of 27 July 2009, the applicant's grounds, and her affidavit material and her statements from the bar table, are silent about the dates on which acts about which she complains occurred and dates when she became aware of those acts. Paragraph 25 of that affidavit alleges that the trustees: took steps for administration of Bankruptcy. Any of these steps are WERE NOT KNOWN TO ME UNTIL YESTERDAY - 15 JULY 2009 at approximately 1.40 pm I was given a letter, dated 2nd of July 2009. The letter to which the applicant referred was not in evidence, either in the principal proceeding, or in this proceeding. There is no indication as to what constituted the "steps" referred to in para 25 of the applicant's affidavit of 27 July 2009. For instance, it is not clear whether they included any acts leading to the dismissal of the applicant's claim in negligence against the petitioning creditor, or to the institution of a proceeding in the name of the applicant without informing her about it, or to having a consent order made. The applicant's statement that she was in court when a grant of probate was made against her, while straining credulity, suggests that she had some participation in at least some of the acts of her trustees in bankruptcy, and was therefore aware of them. Without precise references to acts in respect of which she may be invoking the jurisdiction of the Court under s 178 of the Bankruptcy Act, with the dates on which those acts occurred and the dates on which the applicant became aware of them, it is impossible to determine whether there is anything in respect of which that jurisdiction has been invoked within the period of 60 days specified in s 178(2). It does not appear that the limitation period in s 178(2) of the Bankruptcy Act is capable of enlargement by the Court. 42 The power in s 179(1)(b) for the Court to make such order as it thinks proper is not expressed to be subject to any time limit. It is expressed to be cumulative upon the removal of a trustee from office, rather than an alternative to the removal of a trustee from office. A retrospective removal, after the automatic discharge of the bankrupt, would certainly lack utility, and may very well be beyond the power of the Court. Consequential orders as to damages and compensation, such as the applicant seeks, would therefore appear to be beyond the power of the Court as well. Certainly, if the validating provisions in s 154(1)(a) of the Bankruptcy Act are taken at face value, it would appear to be quite impossible for a bankrupt to make these claims after discharge. This interpretation is consistent with the view that s 179 of the Bankruptcy Act is intended to confer on the Court a supervisory jurisdiction with respect to a trustee in bankruptcy during the bankruptcy, and not a general jurisdiction to revisit at any time thereafter any aspect of the conduct of a trustee in bankruptcy. That policy is also expressed by the short limitation period in s 178(2), within which an application must be made to review an act, omission or decision of a trustee. 43 Even if the applicant were able to overcome these difficulties, she would find it necessary to convince the Court under s 179(1) that there were grounds for inquiring into the conduct of the trustees in bankruptcy. In this respect, because of the way in which her application has been put, the applicant would be in serious difficulty. Her allegations of fraud are not accompanied by any particulars. Her allegations generally lack specificity. They descend into suggestions that are so improbable they would have to be classed as fanciful. It is difficult to suppose that the petitioning creditor could actually have become the controlling trustee of the bankrupt estate, as the applicant alleged in her affidavit of 27 July 2009 and again from the bar table on the hearing of the application for leave to appeal. It is even more difficult to believe that the petitioning creditor changed the name of the applicant, married her and obtained a grant of probate in the Supreme Court of Victoria on the basis that she had died. Not only do the applicant's allegations lack specific information, or particulars, they suffer from a number of other defects. The applicant appears to lack an understanding of the extent of the trustees' powers in relation to her bankrupt estate, and any property that was part of it, and their obligations to administer the estate for the benefit of the creditors. When the factual allegations she makes are examined, it becomes impossible to distinguish fact from fantasy. In the circumstances, the Court would be bound to say that no sufficient ground existed for the Court to inquire into the conduct of the trustees in relation to the bankruptcy, pursuant to s 179(1) of the Bankruptcy Act. 44 For these reasons, even if the primary judge had looked at the allegations of the applicant on the basis that they were made pursuant to s 178(1) or s 179(1) of the Bankruptcy Act, his Honour would have been bound to reach the same conclusion that he did, namely that the applicant's proceeding was bound to fail. It follows that the orders that his Honour made are not open to sufficient doubt to warrant their reconsideration by a Full Court. More importantly, it also follows that there is no injustice done by refusing leave to appeal. If his Honour's judgment were to be overturned on appeal, it is clear that a further application could be brought pursuant to s 31A of the Federal Court Act, in which the Court would be bound to hold that the applicant's claims as they have been put have no reasonable prospect of success. There is therefore no injustice to the applicant in having them dismissed by the primary judge on 11 December 2009. There would be injustice to the trustees in forcing them to continue to face the applicant's claims in the form in which they appear in the documents filed in the principal proceeding.
Other issues 45 As I have said, the applicant had great difficulty focussing on submissions that were relevant to her motion for leave to appeal from the judgment of the primary judge of 11 December 2009. She seemed to think that her appearance before me was the occasion for her to pursue all her complaints, not only against the trustees in bankruptcy, but also against the petitioning creditor and the primary judge. This was not the case. Any grant of leave to appeal depended on the applicant addressing the reasons for judgment and indicating the arguments she had about errors in those reasons. Pursuing other issues was not capable of helping her. 46 It would have been entirely inappropriate for the applicant to go into the witness box in the course of the hearing of the motion for leave to appeal. The issue whether the primary judge was in error in some relevant way could not depend on evidence that was not before his Honour at the time the judgment was given. Nor was the applicant entitled to judgment in default of appearance on the motion. As I have said in [32], before the Court grants leave to appeal from an interlocutory judgment, it must be satisfied that the judgment is attended by sufficient doubt to warrant the granting of leave, and that if leave is not granted and the interlocutory judgment is wrong, substantial injustice will result. The requisite satisfaction of the Court is not achieved as a result of the mere absence of the respondents. In a case in which a properly-advised respondent consents to the grant of leave, the Court may be satisfied that leave is appropriate without investigating the question thoroughly, but this is not such a case. 47 It was not open to the applicant to argue the correctness of interlocutory judgments of the primary judge, given in the principal proceeding, prior to 11 December 2009. Section 24(1A) of the Federal Court Act requires leave to appeal before those judgments could be questioned. The applicant had made no application for leave to appeal from those judgments. The time fixed by O 52 r 10(2A)(b) for the making of any application for leave to appeal from those judgments had long since expired, and the applicant made no application for the extension of that time limit. Thus, the Court could not entertain the applicant's submissions that an order should have been made for trial of the proceeding by a jury, or that discovery of documents should have been ordered. Her complaint about the representation of the petitioning creditor at an interlocutory hearing in the principal proceeding (which no doubt occurred because the applicant was seeking discovery of documents against the petitioning creditor) was out of order on the hearing of the application for leave to appeal. 48 The fact that solicitors on behalf of the trustees in bankruptcy asserted that there were no funds left in the estate to pay legal costs for the trustees to appear on the application did not entitle the applicant to question the truth of that statement on the hearing of her application for leave. It is not the Court's function to allow the applicant to pursue any question that troubles her, and to have it resolved by the Court. Nor is it the Court's function to answer any question put to any judge by the applicant. The primary judge was not obliged to explain his reasons for judgment after he had delivered judgment, or engage in dialogue with the applicant about those reasons for judgment, and to answer her questions about them. Similarly, the applicant was not entitled to interrogate me about matters such as the use of the abbreviation "Anor" in the label on the Court file in this proceeding, or the significance of certificates of compliance on the file in the principal proceeding. Her suspicions about these matters were unfounded. The label is affixed to the file for the convenience of the Court in its administration. For the sake of that convenience, the practice is adopted of naming only one respondent. The abbreviation "Anor" is added to make it clear that there is another respondent, in this case, the second trustee in bankruptcy. Had there been more than two respondents, the abbreviation would have been "Ors". A certificate of compliance is required by O 14 r 5A of the Federal Court Rules when a legal practitioner acts for a party in a proceeding, in order to direct the attention of the practitioner to the need for any document filed in the Court to comply with the requirements as to form. 49 The applicant's complaint that the primary judge had not read his reasons for judgment aloud in court when he delivered judgment is unfounded. Order 35 r 2 of the Federal Court Rules expressly permits the Court to publish its reasons for judgment in written form by delivering them to an associate or other officer of the Court in open court. Reasons for judgment are published in this manner as a regular practice of the Court. The practice saves time and money. His Honour was certainly entitled to publish his reasons for judgment on 11 December 2009 by delivering them to his associate in open Court. He was not obliged to read them aloud.
Conclusion 50 For these reasons, the motion for leave to appeal from the judgment of the primary judge, given on 11 December 2009, must be dismissed. As the respondents to that motion, the trustees in bankruptcy, did not appear and contest the motion, there is no occasion to make any order for costs in their favour. There should be no order as to the costs of the motion. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.
Zegarac
Rambaldi
The nature and history of the proceeding 1 By notice of motion filed on 18 December 2009, the applicant applied for leave to appeal from the judgment of a single judge of the Court, in proceeding no VID 518 of 2009 ("the principal proceeding"). The learned primary judge ordered that the title of that proceeding be amended by substituting Mr Gess Rambaldi and Mr Andrew Yeo as respondents in place of the originally named respondent, Pitcher Partners. His Honour also ordered that the principal proceeding be dismissed and that the applicant (also the applicant in the present motion) pay the respondents' costs of the proceeding. See Zegarac v Rambaldi [2009] FCA 1463. 2 The principal proceeding was an application for the following orders: 1. That this Honourable Court makes an Order under s 153 of the Bankruptcy Act 1966, which states that: "if the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy. 2. Consequently, that this Honourable Court makes an Order under s 154 (1) (c) of the Bankruptcy Act 1966, for the property of the former bankrupt still vested in the trustee, to revert to the former bankrupt. 3. That this Honourable Court makes an Order that all costs in Bankruptcy and incidental costs ordered against me and my property be dismissed due to Fraud of the Trustee 4. That this Honourable Court makes an Order that the Bankruptcy of the Applicant be annulled and that the Bankruptcy of the property be annulled in full, due to Trustee's fraud and contradiction of various Court Orders (Court Orders in Federal Court and other Courts are contradicting). 5. That this Honourable Court makes an Order for Compensation for my pain and suffering and damages due to dismissal of my Negligence Claim against the Creditor (who made me bankrupt) and loss in other proceedings, consequential to Trustee's involvement and Consent Orders. 6. That this Honourable Court makes an Order for Compensation for my damages due to dismissal of my Negligence Claim against the Creditor (who made me bankrupt) and loss in other proceedings, consequential to Trustee's involvement. 7. That this Honourable Court makes an Order for damages consequential to Trustee's instituting other proceeding under my name, without informing me about it, and when I found out about it, Trustee and his Solicitor Schetzer Brott and Appel, who acted as my Solicitors, refused to give me any information about it or any documents to this day. Under the Law Trustee does not have right to institute the proceeding in my name during Bankruptcy period. 8. That this Honourable Court makes an Order for damages consequential to Trustee's Consent Order without informing me about it and without my Consent. Under the Law Trustee does not have the right to do that. 9. I am making this Application under the s 178 of the Bankruptcy Act 1966. 10. Trustee refused to give me any information (including the information of the balance owing up to date). Under the Law Trustee does not have the right to do that. 11. Leave of the Court to amend my Application, due to lack of information. Trustee and ITSA did not provide me any information to this day. As mentioned above, need "URGENT" Discovery of documents and file further Affidavits, due to lack of time (I found some of these information only last Thursday (9 July 2009), Friday (10 July 2009) and today (13 July 2009). 12. Trustee committed fraud. 13. I have complained numerous times to ITSA, but they have never done anything about it.
The principles to be applied 29 Section 153B(1) of the Bankruptcy Act provides relevantly that, if the Court is satisfied that a sequestration order ought not to have been made, the Court may make an order annulling the bankruptcy. Section 154 makes quite detailed provisions concerning the consequences of annulment of bankruptcy. In particular, by s 154(1)(a), all acts done by the trustee in bankruptcy or any person acting under the authority of the trustee in bankruptcy or the Court before the annulment are taken to have been validly made or done. By s 154(1)(b), the trustee in bankruptcy may apply the property of a former bankrupt still vested in the trustee in payment of the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee. By s 154(1)(c), any remaining property of the bankrupt, vested in the trustee during the bankruptcy, becomes vested in the former bankrupt again. By s 154(2), if the property of the former bankrupt is insufficient to meet the costs, charges and expenses, the amount of the deficiency is a debt due by the former bankrupt to the trustee and is recoverable by the trustee in Court. 30 Part VIII of the Bankruptcy Act makes detailed provisions concerning trustees in bankruptcy. Section 178(1) provides relevantly that, if a bankrupt 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 as it thinks just and equitable. By s 178(2), the application must be made not later than 60 days after the person became aware of the trustee's act, omission or decision. Section 179 gives the Court power, on the application of (among others) the bankrupt, to inquire into the conduct of a trustee in relation to a bankruptcy. The Court may remove the trustee from office and make such order as it thinks proper. In Trkulja v Morton [2005] FCA 659 at [4], I said with reference to the power in s 179: In its terms, this power is plainly concerned with "the conduct" of the trustee "in relation to a bankruptcy". As Macchia v Nilant [2001] FCA 7 (2001) 110 FCR 101 at [49]-[50] demonstrates, the Court must first consider whether it should inquire into the conduct of the trustee. If an inquiry is undertaken, the next question is whether the trustee should be removed from office and/or whether any other order should be made. The Court should be reluctant to undertake an inquiry, unless there are substantial grounds for believing that the trustee erred in the administration. If an inquiry is unlikely to reveal misconduct, it should not be undertaken. The Court should not unduly interfere with the day-to-day administration of a bankrupt's estate by the trustee. In order to remove a trustee in bankruptcy, it is necessary to find misconduct on the part of the trustee. 31 Order 20 r 5(1)(b) and (2) empower the Court to dismiss a proceeding that is an abuse of the process of the Court. In Walton v Gardiner (1993) 177 CLR 378 at 392-393, Mason CJ, Deane and Dawson JJ summarised the circumstances in which a power to stay proceedings on grounds of abuse of process can be exercised. They included circumstances in which a proceeding "can be clearly seen to be foredoomed to fail" and circumstances in which "it is sought to litigate anew a case which has already been disposed of by earlier proceedings". As well as its power to dismiss a case as an abuse of process, the Court now has power under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") to give judgment for a respondent against an applicant if satisfied that the applicant "has no reasonable prospect of successfully prosecuting the proceeding". By s 31A(3), it is not necessary that the proceeding be hopeless or bound to fail for it to have no reasonable prospect of success. 32 By s 24(1A) of the Federal Court Act, leave to appeal from an interlocutory judgment is required. The test for determining whether a judgment is interlocutory or final is whether it finally determines the rights, or the substantive rights, of the parties. See Cubillo v Commonwealth of Australia [2001] FCA 1213 (2001) 112 FCR 455 at [182] and the cases there cited. It seems clear that an order dismissing a proceeding as an abuse of the process of the Court is an interlocutory judgment, in respect of which s 24(1A) of the Federal Court Act requires leave to appeal. See Marketing Advisory Services (MAS) v Football Tasmania Ltd [2002] FCAFC 165 at [29] and the cases there cited. The principles governing the grant or refusal of leave to appeal from an interlocutory judgment are well-established. They are expressed in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399. The first question is whether, in all the circumstances, the interlocutory judgment is attended with sufficient doubt to warrant its being reconsidered on appeal. The second question is whether substantial injustice would result if leave were refused, supposing the interlocutory judgment to be wrong.
(2001) 112 FCR 455
(1991) 33 FCR 397
(1993) 177 CLR 378
(1964) 112 CLR 125
(2001) 110 FCR 101