Bride v Official Trustee in Bankruptcy (1999) FCA 1519

FEDERAL COURT OF AUSTRALIA

Bride v Official Trustee in Bankruptcy [1999] FCA 1519

BANKRUPTCY – application for stay of contributions by bankrupt pending the outcome of legal actions – whether Court has jurisdiction under s 178 in these circumstances. Bankruptcy Act 1966 (Cth), ss 139P, 139S, 139T, 139ZA, 139ZF, 139ZG, 178

Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 Poletti v Commissioner of Taxation (1994)52 FCR 154 McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547

WENDY MARGARET BRIDE v OFFICIAL TRUSTEE IN BANKRUPTCY W 7091 of 1999

BOON JR 3 NOVEMBER 1999 PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY W7091 OF 1999

BETWEEN: WENDY MARGARET BRIDE

Applicant

AND: OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

JUDGE: BOON JR

DATE OF ORDER: 3 NOVEMBER 1999

WHERE MADE: PERTH

THE COURT ORDERS THAT: 1. The application be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY W7091 OF 1999

BETWEEN: WENDY MARGARET BRIDE

Applicant

AND: OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

JUDGE: BOON JR

DATE: 3 NOVEMBER 1999

PLACE: PERTH

REASONS FOR JUDGMENT 1 The applicant, Mrs Bride, has applied pursuant to s 178 of the Bankruptcy Act 1966 as amended for orders as follows: "1. The monthly contributions of $187.00 payable to the Attorney General's Department, Common Investment Fund, WA Official Account, as ordered by Mr D Smithson, for the Official Receiver in Bankruptcy, "Be Stayed" until the outcome of the following actions:- (a) High Court Appeal, P20 of 1998, Bride vs KMG Hungerfords. (b) Supreme Court Action, CIV 1804 of 1989, Bride vs Peat Marwick Mitchell. (c) Supreme Court Action, CIV 1570 of 1989, Bride vs The Australian Bank Limited and Oths. (d) Supreme Court Action, CIV 2041 of 1990, Bride vs Stewart. (e) Supreme Court Action, CIV 1632 of 1996, Bride vs Anglo Foods, Freehills, Muirwil Nominees etc." 2 The respondent, the Official Trustee in Bankruptcy, opposes the application on the following grounds: "1. The Applicant is not entitled to bring, and this Honourable Court does not have jurisdiction to entertain, an application for a stay of monthly contributions to her bankrupt estate, whether under s 178 of the Bankruptcy Act 1966 or otherwise. 2. In the exercise of the Court's discretion, it should not grant the application because no realistic prospect of benefit to the applicant's unsecured creditors flowing from the litigation in which the Applicant and her husband are involved is demonstrated." 3 In an affidavit filed by the applicant in support of her application she states that she is a registered nurse and has worked night shift for the past fifteen years at the Katanning District Hospital. She states that her husband, Edward James Bride, is an experienced litigant, and acts on behalf of the applicant's family with the applicant's total support. 4 The applicant states that because of the extent of the litigation in which she and her husband are involved, she is the breadwinner of the family. She states that it is from her salary that she and her husband are funding their joint efforts to "rectify the wrong done" to their children and the unsecured creditors of the family business, and to pay out the unsecured creditors of their former bankrupt estate (No. 455 of 1984) "who are victims of fraud". 5 The applicant and her husband are both bankrupt and the Official Receiver has decided that the applicant make compulsory monthly contributions of $187.00. 6 In her affidavit the applicant states that the order of the Official Trustee in Bankruptcy that she pay this monthly contribution is oppressive in that all of her salary at present is used to fund the litigation in which she and her husband are involved. She also has to support their daughter who is studying at Murdoch University. 7 The applicant further states that the order is capable of causing and will cause extreme financial hardship to her and her family as they reside some three hundred kilometres from Perth and her husband is usually in Perth once a week on legal matters. 8 It is further stated by the applicant in her affidavit that the order would cause extreme financial hardship and possibly jeopardise their litigation as it is from her salary that she and her husband pay for stationery, telephone, fuel and other things connected with the litigation. 9 The applicant states that the main causes of action in which she and her husband are involved are due to commence trial on the 9th of November 1999 in the Supreme Court of Western Australia. She states that she and her husband have never been legally assisted and the actions in which they are engaged are funded from her salary. The applicant further states that despite numerous requests from herself and her husband to the Official Trustee in Bankruptcy for relief or for a stay in the contribution, such requests have been refused. 10 The applicant has annexed to her affidavit copies of correspondence between herself and her husband on the one part and the Insolvency and Trustee Service Australia on the other. In a letter dated 3 May 1999 the applicant wrote to the Official Receiver's office stating that she sought exemption from making contributions on the grounds of hardship. In that letter she cited the fact that she had to pay rates upon the family home of $800 per annum, maintenance on the house of $20 per week and current and outstanding water rates of $100 per month. The applicant also referred to the six legal actions in which she was involved and which were fully funded by her. The applicant stated that the average weekly cost of funding the actions amounted to about $250 per week, which included motor vehicle expenses, paper, telephone and away from home costs for her husband. In that letter the applicant stated that the funding of the legal actions by herself was an exceptional reason which warranted a stay of compulsory contributions that at this time caused financial hardship. The letter stated that the payment of contributions would impose an excessive burden on the applicant and her family and render her unable to carry on the legal applications they had in train to rectify past actions. In addition, the applicant stated that she had a daughter studying at Murdoch University and she herself had to pay all costs associated with her daughter's fees, accommodation, books, travel to and from home and living expenses. 11 In a letter dated 4 June 1999 the Deputy Official Receiver stated that the application was refused. The notice of decision indicated that the reasons for the decision were as follows: "The bankrupt relies on three grounds; 1. Rented Accommodation. The bankrupt has not provided evidence that she lives in rented accommodation. 2. Person unable to contribute to maintaining household. The bankrupt has not provided evidence that her spouse has become unable to contribute to the costs of maintaining their household because of unemployment, illness or injury. 3. Exceptional circumstances. The bankrupt has not convinced me that exceptional circumstances have occurred which impose an excessive financial burden on her." 12 It is apparent from the documents filed in this matter that although the applicant initially indicated to the Insolvency and Trustee Service Australia that she intended to "appeal"to the Administrative Appeals Tribunal, she did not in fact do so. 13 The Court also has before it an affidavit of Jeremy White, a Deputy Official Receiver. In his affidavit sworn 8 October 1999, Mr White states that in his capacity as Deputy Official Receiver he made a decision to reject the applicant's application to vary the contribution payable by the applicant to her bankrupt estate on grounds of hardship. In the course of his activities as Deputy Official Receiver, Mr White had been required to inform himself of the contents of the file held by the Official Trustee in Bankruptcy in relation to the applicant's affairs. In the course of so doing, Mr White became aware of the documents which form annexures to his affidavit. There are three deeds of assignment annexed to that affidavit. The first deed of assignment was made 19 August 1988 between Bernard Putnin (as trustee of the bankrupt estate of the applicant and her husband) on the one part, and the applicant and herhusband on the other part. By that deed Mr Putnin as the trustee of the bankrupt estate assigned to the applicant and her husband all of his right to carry on legal proceedings against the former solicitors of the applicant and her husband. A deed in similar terms between Mr Putnin and the applicant and her husband was made on 12 January 1995 in relation to legal action against Peat Marwick Mitchell and the Australian Bank Limited. A third deed of assignment was made on 6 February 1995 between the applicant and her husband on the one part, and the Pinwernying Family Trust on the other part. This deed states that the applicant and her husband are trustees of the trust, the beneficiaries being John Oliver Bride, Edward James Bride and Holly Zoe Bride. The deed refers to Supreme Court Action CIV 1570 of 1989 and Supreme Court Action CIV 1804 of 1989 and states that the applicant and her husband assign to the trust absolutely all their right to carry on the causes of action against the Australian Bank Limited and Peat Marwick Mitchell, including all rights to recover and receive from the legal actions all such sums of money and property as shall be awarded and are judged to the plaintiffs in any such action. 14 The respondent in this matter has also made available to the Court Reasons for Judgment by the Full Court of this Court in WAG 149 of 1997, which was an appeal from a sequestration order made against the estates of the applicant and her husband by a Judge of this Court on 26 November 1997. The reasons for judgment state that the estates of the applicant and her husband had been the subject of two earlier sequestration orders on 6 September 1984 and on 6 November 1990. The reasons for judgment set out in some detail some of the litigation in which the applicant and her husband had been involved. I do not propose to set out again the nature of the litigation. It appears that the applicant and her husband have been and continue to be involved in litigation arising out of the preparation of reports by a firm of accountants. The firm was engaged by the Australian Bank in 1983 to carry out a financial investigation in respect of the business conducted by the applicant and her husband. The report and the conduct of the receivership in 1984 and subsequently in 1990 have given rise to litigation including the litigation relied on by the applicant in support of the present application before this Court.