LIMITED DISTRIBUTION CATCHWORDS i BANKRUPTCY - Application by bankrupt for order to set aside order giving leave to institute proceedings - Incorrect information previously provided to the Court - Power of the Court to correct a defect in its record - Proceedings against | both bankrupt personally and company controlled by him - | Inability of Federal Court to deal with claim against company ~ Considerations of convenience favouring resolution of all ; matters in District Court - Whether costs to be paid out of estate of bankrupt or by bankrupt personally. Bankruptcy Act 1966 s.58(3)(b) No. W.273 of 1984 Re: ANDREW RUSIN Wilcox J. Sydney 17 March 1986 Peeper iy I em to oe nape eg orcs See mira ert ee ee re yee ee me rar weep re Ce ns Awe me ene a cena mrt oT LIMITED DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF W.273 of 1984 \ NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY CORAM: WILCOX J DATE: 17 MARCH 1986 PLACE: SYDNEY mole a ens moe Tae Rr ANDREW RUSIN onyore ee eee ? Serer 2 ao MINUTE OF ORDERS THE COURT ORDERS THAT: ee nee Oe 1. The application be dismissed. 2. The costs of this application be paid by Andrew Rusin. Ite ee ce A EA NA EE ne earn of emNAN Sm, Ee ee rye = ee ee meme trie a ee te eee ee ope THE COURT DIRECTS THAT: . NOTE: Exhibit A be returned to Mr Bluett on behalf of the Official Trustee. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules: ; LIMITED DISTRIBUTION | IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF No. W.273 of 1984 wee eee NEW SOUTH WALES AND at opercice THE AUSTRALIAN CAPITAL TERRITORY ke RE: ANDREW RUSIN ahete aoa deenncatadr | CORAM: WILCOX J ; 1 it | DATE: 17 MARCH 1986 I PLACE: SYDNEY - yes cee eae EXTEMPORE REASONS FOR JUDGMENT x "y There is before the Court today an application made on behalf of the bankrupt, Andrew Rusin, seeking an order Tae ey ES setting aside an order made by me on 10 December 1984, pursuant to s.58(3)(b) of the Bankruptcy Act 1966, whereby I sora? granted to the then applicants, Huseyin Hasan and Osman and .4 Huyla Kasif, leave to proceed with'an action in the District Court of New South Wales against Mr Rusin, a company known as Rusin Pty Limited and a firm known as Centrepoint Smash Repairs. Ion SRe rp en ME Inn er rere ge reer i eA AT hak aN CAT IA Ca a aT i a eS tn ee et a Jos ee ee Se | The action there referred to was an action arising out of an alleged oral agreement made between the applicants and Mr Rusin, and concerning the sale of a business. There was apparently some question in the minds of the applicants as to whether the party on behalf of whom Mr Rusin was speaking was himself personally or the company, Rusin Pty Limited, which he apparently controlled. I gather that the business, the subject of the sale, was carried on under the name "Centrepoint Smash Repairs" and that it is accepted that this business was conducted either by the company or by Mr Rusin ! personally. When I dealt with the application on 10 December 1984 Mr Rusin was not represented. The solicitor who appeared for the applicants indicated to me that the District Court proceedings had actually been commenced before the sequestration order, which sequestration order had been made on 2 April 1984. It transpires that this answer was : incorrect, and that the proceedings in the District Court had been commenced by the filing of a Statement of Claim on 12 June 1984, the plaintiff's solicitors being apparently in was ignorance of the fact of the sequestration order. When this fact was drawn to their attention, application was made to BOD Pcie re et cian ore | this Court. i I ry \ Bas t FO RL TE ETE EEN ET SFE EE DF BES IIR TREE ENT Te Be OE NE BO eee Sorgen fo eee I NO nape on eee . baad A ORT ON Br Oe A a ole RE Following the grant of leave by me on 10 December 1984, an application was made for summary judgment in the District Court. This application was granted by Judge Foord on 5 December 1985. I am informed by counsel for Mr Rusin that, at that time, his client had dispensed with the services of his instructing solicitors and himself, that he had now come back into the matter and that he had instructions to take action in the District Court to set aside the summary judgment. It is clear, and indeed conceded, that the information given to me when I made my previous order was incorrect. It is submitted on behaif of Mr Rusin that it follows that the Court may set aside the previous order. Counsel has not referred to any particular provision of any statute or of any rule, but refers to the inherent power of the court to correct a defect in its record. Counsel for the present respondents, that is to say the plaintiffs in the District Court proceedings, challenges this view and says that, if the position is that the order was improperly obtained, the remedy is to appeal. He points out that a formal order has been taken out. In the view I take it is not necessary to choose between the submissions of counsel as to the power of the Court to interfere with the previous order. I am of the opinion that the application should, in any event, fail. Wen Foye tet soycp tae LG a So gr mts ees "= rn Siena anaane ' ! ] ) The position appears to be that a claim is made by the, plaintiffs in the District Court for damages in relation to the sale of a business. As I understand Mr Rusin's position, he denies that there is any liability by any person. He further says that, if there is any liability, it does not affect him personally; and presumably he says that, in that situation, the correct defendant is the company. If I were to "accede to the present application, the position would remain that there was a judgment in the District Court. The applicant apparently assumes that the effect of my revoking the previous order would be to facilitate an application on behalf of Mr Rusin to set aside the District Court judgment. I do not express any view as to whether or not that assumption is justified. If the assumption is justified, and the District Court judgment is set aside, it will leave outstanding the resolution of the dispute between the parties. Only the District Court can deal with any claim insofar as it affects the company. If I set aside the previous order under 8.58(3)(b), and unless there is some future order granting leave to proceed against Mr Rusin personally, the only way in Which the dispute between the District Court plaintiffs and Mr Rusin can be resolved would be pursuant to an appeal against a decision by the Official Trustee upon acceptance or rejection of a proof of debt. This would leave the situation that this Court has to go into the merits of the dispute between the parties insofar as it affects Mr Rusin, whilst the District TEI TTS Se ENS See ee i ee Fh terpenes ey unpemn, or eo rear eet nwt wy 74 vo: SB ET OE Ee EEE TY ' sm pageie re mens Court has to deal with the merits of the dispute insofar as it affects Rusin Pty Limited. It seems to'me that this situation is most undesirable, and that it is the precise situation which was in contemplation when provision was made in the Bankruptcy Act for this Court to grant leave to a plaintiff to proceed against a person notwithstanding the fact that he is a bankrupt. To my mind the convenient course is that all issues . between the parties relating to the existence of any liability and, if there be a liability, the person who is liable should be dealt with in the one proceeding; and that can only be in the District Court. At this stage I cannot recall the extent to which the incorrect statement as to the chronology affected my mind on 10 December 1984. However the matter was dealt with much more briefly on that occasion than it has been today and I have no° doubt that, on any fuller discussion on that day, I would have reached the same conclusion, even without that misinformation, as I have just expressed. It seems to me appropriate that, even if there is power to interfere with the previous order, it not be exercised. I think that the parties should be left to resolve the matter in the District Court. I might indicate that counsel for the plaintiffs in the District Court, has tendered proofs of debts which have been lodged by his clients, each claiming the sum of $22,816.24. These include not only the amounts sought in the bal i i { | District Court, but also costs which have been incurred since the proceedings commenced, that is since the date of the sequestration order, and indeed costs incurred in this Court. The proofs of debt were admitted into evidence subject to relevance. They provide some background to the matter, but I express no view as to whether or not the claimants are entitled to prove for the amount claimed or any part of it. In particular, there is a question which I have not sought to resolve in relation to the costs which have been incurred since the date of the sequestration order. The order that I make is that the application be refused. The application has failed, and I am of the opinion that there ought to be an order for costs. The question is whether that should be an order for payment out of the estate of the bankrupt or an order against the bankrupt personally. In relation to the original application I made an order for payment of the costs out of the estate of the bankrupt. I think that that course was appropriate, because it was essential in the proper administration of the estate that there be some resolution of the dilemna in which the plaintiffs in the District Court were then placed. However, today's application is in a separate category. I do not think that it arises out of the normal administration of the estate and I do not see why there should be an order which would have the effect of reducing any TOT tre en erin anne memmrme gina ELEM AB EET RINE eer grey eT ee Sle me ee ep ees eres ae, pee "8 wre rey TIT Sts eel lsletan naliaenttateemenmn aiatimme rascal t '1 ! I| dividend which may be available to other creditors. I think it is appropriate to regard the responsibility as being similar to a liability incurred by a bankrupt after the date of the sequestration order. It is true that the catalyst for the application was the error made by the solicitor for the present respondents on 10 December 1984; but notwithstanding that, the application has failed and I do not think that that error should deprive that solicitor's clients of their costs of resisting the application today. I therefore order that the costs of this application be paid by Andrew Rusin. I direct that exhibit A be returned to Mr Bluett on behalf of the Official Trustee. I certify that this and the six (6) preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Wilcox. associate: Yon ae A-HeCPFow Date: 17 April 1986 Counsel for the bankrupt: Mr T Elliott Solicitors for the bankrupt: Messrs B J Murphy & Co Counsel for the respondents: Mr Jd Maston Solicitors for the respondents: Messrs S E Cook & Son Appearance for Official Receiver on behalf of Official Trustee: Mr N Bluett Date of hearing: 17 March 1986 f Oe Le eo Ms qe ooo grote ant a Ea a ra mere - [lt tea iendlateland ; r i | Tr re tn TT te MARR EO ENTE GT TS RRR RT pS ATE A ER TT A ZEN EE IE