FEDERAL COURT OF AUSTRALIA Campbell v Official Trustee in Bankruptcy [1999] FCA 1243 No question of principle Bankruptcy Act 1966 s 153B KEITH MALCOLM CAMPBELL v THE OFFICIAL TRUSTEE IN BANKRUPTCY N7730 OF 1999 LOIS AUDREY CAMPBELL v THE OFFICIAL TRUSTEE IN BANKRUPTCY N 7731 OF 1999 HELY J 27 JULY 1999 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7730 OF 1999 N 7731 OF 1999 BETWEEN: KEITH MALCOLM CAMPBELL First Applicant LOIS AUDREY CAMPBELL Second Applicant AND: THE OFFICIAL TRUSTEE IN BANKRUPTCY Respondent JUDGE: HELY J DATE OF ORDER: 27 JULY 1999 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applications be dismissed. 2. The applicants pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7730 OF 1999 N 7731 OF 1999 BETWEEN: KEITH MALCOLM CAMPBELL First Applicant LOIS AUDREY CAMPBELL Second Applicant AND: THE OFFICIAL TRUSTEE IN BANKRUPTCY Respondent JUDGE: HELY J DATE: 27 JULY 1999 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT 1 I have before me applications by Mr and Mrs Campbell, pursuant to s 153B of the Bankruptcy Act 1966 (Cth) seeking annulments of their respective bankruptcies. The ground on which the annulments are sought is that the sequestration orders ought not to have been made because the bankruptcy petitions were filed for an improper purpose, the improper purpose being a desire on the part of the petitioning creditor to frustrate the prosecution of appeals by Mr and Mrs Campbell in the New South Wales Court of Appeal. 2 The history of this matter is that in 1995, as a result of orders made by Barr AJ in the Supreme Court of New South Wales, Mr and Mrs Campbell were judged liable to Metway Leasing Limited in the sum of about $360,000 inclusive of costs. On 17 July 1995, Sheller JA, in the New South Wales Court of Appeal, refused to continue a stay of the proceedings in that Court pending the determination of the appeals. 3 On 6 June 1996, a sequestration order was made in relation to Mr Campbell's estate. On 4 April 1997, a sequestration order was made with respect to Mrs Campbell's estate. 4 On 1 September 1998, Wilcox J gave judgment on an application by Mr and Mrs Campbell for the annulment of their bankruptcies. The substantial basis of the application made to Wilcox J was the same as the basis on which the application was made to me, namely that the bankruptcy proceedings were instituted for an improper purpose. His Honour dismissed the application and did so upon the basis that there was no evidence before him of improper purpose. His Honour said at page 6: "The only basis of the claim of illegitimate purpose is that it is said, no doubt correctly, that the Court of Appeal Registrar was informed that Mr and Mrs Campbell were now bankrupt. Metway Leasing may have asserted this meant the appeal could not proceed, something that is conceded by Mr Wheelhouse, who appears for Metway before me, to be an incorrect understanding of the position. However, even if that statement was made, this falls far short of showing the possession of an improper purpose. In order to make good that claim, it would be necessary to show Metway Leasing was actuated by the improper purpose when it decided to commence, or to continue, the bankruptcy proceedings. There is no evidence along those lines and, therefore, no basis upon which the Court can reach the satisfaction which is a necessary precondition to an annulment under s 153B of the Bankruptcy Act. The applications for annulment must be dismissed." 5 On 19 April 1999, the Court of Appeal dismissed the appeal from the decision of Barr AJ. It did so upon the basis that that result was dictated by the application of the provisions of s 60 of the Bankruptcy Act. Mr and Mrs Campbell have lodged an application for special leave to appeal to the High Court from the decision of the Court of Appeal, and I was informed by Mr Campbell that it is his expectation that the special leave application should come on for hearing in about November of this year. 6 On 10 June 1999, Einfeld J rejected an application for an extension of time within which to appeal from the decision of Wilcox J. On about 23 July 1999, Mr Campbell was discharged from his bankruptcy by effluxion of time. Mrs Campbell has not yet achieved her discharge. In my opinion, the application which is made to me fails for precisely the same reason as the application made to Wilcox J. There is simply no evidence of an improper purpose in Metway Leasing pressing or continuing with the bankruptcy proceedings, even assuming the desire on its part to terminate the proceedings in the Court of Appeal was present and could constitute an improper purpose. 7 All that appears is that the Court of Appeal dismissed the appeal because, in its view, s 60 of the Bankruptcy Act so warranted. One cannot conclude from that circumstance that Metway Leasing had an improper purpose at the time of its prosecution of the bankruptcy proceedings. Accordingly, in my opinion, this application is no more than a repetition of the application made to Wilcox J and it should fail for the same reason. I therefore propose to dismiss each of the applications. 8 Mr Campbell opposes the making of an order for costs in favour of the respondent, the Official Trustee in Bankruptcy, upon the basis that he believed that this was an application which he was entitled to make. It seems to me that that belief affords an insufficient foundation for departing from the ordinary rule that an unsuccessful litigant should pay the costs of an application which fails. I therefore propose to order that the application be dismissed and that Mr Campbell, in the case of his application, and Mrs Campbell, in the case of her application, should pay the costs of the Official Trustee in Bankruptcy. 9 In each case the application names as the respondent the Official Trustee in Bankruptcy. Metway Leasing Limited is not named as a respondent, although copies of the documents constituting the application have, in some way, been served on them. Mr Campbell says that this happened in association with some proceedings which were pending in the Supreme Court. Whatever the rights and wrongs of the matter, it seems to me that Metway Leasing is not a respondent. 10 In the circumstances of this case, I would not be prepared to order that the applicant pay two sets of costs. I think it is appropriate that the costs order should be limited to the Official Trustee in Bankruptcy's costs and I am not prepared to make an additional order for costs in favour of Metway. It may be that the failure to join Metway Leasing is another reason why this application, as currently propounded, could not succeed, but in view of the conclusion which I have reached in relation to the application as it is presently constituted, I do not need to determine that question. 11 I will therefore make an order that each application be dismissed and that the applicant in each case should pay the costs of the respondent, the Official Trustee in Bankruptcy. I decline to make any order for costs either for or against Metway Leasing Limited, and I decline to do so because they have not been joined as a party to either application. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely. Associate: Dated: 27 July 1999 The first applicant represented himself and the second applicant. Solicitor for the Respondent: Freidman Reeves Date of Hearing: 27 July 1999 Date of Judgment: 27 July 1999