Zegarac v Rambaldi

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.