Ashdown v Spargo [2007] FCA 1399

FEDERAL COURT OF AUSTRALIA

Ashdown v Spargo [2007] FCA 1399

BANKRUPTCY – leave to take fresh steps in proceedings in respect of a provable debt subsequent to bankruptcy of debtor. Held: application allowed

Bankruptcy Act 1966 (Cth) ss 5, 58(3)(b), 82

Allanson v Midland Credit Ltd (1977) 16 ALR 43 applied Re McMaster; ex parte McMaster (1991) 33 FCR 70 referred to Re Veghelyi; Smith and Others v Official Trustee in Bankruptcy (1993) 45 FCR 413 followed Trustees Executors and Agency Company Ltd v Reilly [1941] ALR 105 referred to EDITH LILLAH MARIE ASHDOWN v LESLIE JOHN SPARGO AND ANDREW ARAVANIS NSD1780 OF 2007

COWDROY J

5 SEPTEMBER 2007

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD1780 OF 2007

BETWEEN: EDITH LILLAH MARIE ASHDOWN

Applicant

AND: LESLIE JOHN SPARGO

First Respondent

ANDREW ARAVANIS

Second Respondent

JUDGE: COWDROY J DATE OF ORDER: 5 SEPTEMBER 2007

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to s 58(3)(b) of the Bankruptcy Act 1966 (Cth), leave be granted to the applicant to take fresh steps in, and continue with, Supreme Court of New South Wales Equity Division matter no. 3897 of 2006. 2. For the purposes of order 1, leave to continue the said proceedings be deemed to have been granted on 29 August 2007. 3. Each party pay its own 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 NSD1780 OF 2007

BETWEEN: EDITH LILLAH MARIE ASHDOWN

Applicant

AND: LESLIE JOHN SPARGO

First Respondent

ANDREW ARAVANIS

Second Respondent

JUDGE: COWDROY J

DATE: 5 SEPTEMBER 2007

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 By application filed on 3 September 2007 the applicant, Ms Marie Ashdown, seeks leave pursuant to s 58(3)(b) of the Bankruptcy Act 1996 (Cth) ('the Act') to take fresh steps in and to continue with Supreme Court of New South Wales Equity Division proceedings no. 3897 of 2006 ('the Supreme Court proceedings'). Ms Marie Ashdown also seeks an order that such leave be deemed to have been granted from 29 August 2007. An order is also sought that each party pay its own costs. 2 Ms Marie Ashdown and her sister Ms Dulcie Ashdown ('the Ashdowns') were the registered proprietors of land known as 49 Goodlands Avenue, Thornleigh ('the Thornleigh property'). Such property was owned by the sisters as joint tenants. Ms Dulcie Ashdown died on 9 January 2005. 3 During 1997 the Ashdowns granted a power of attorney to the first respondent, Mr Spargo, who is the first defendant in the Supreme Court proceedings. Prior to 27 July 2001, the Thornleigh property was the subject of a series of mortgages to Wygoss Pty Limited, which is the second defendant in the Supreme Court proceedings. It appears that Mr Spargo exercised his power of attorney in executing at least one of the mortgages in the names of the sisters. 4 On 26 June 2002 by way of Financial Management Order in the New South Wales Guardianship Tribunal the estate of Ms Marie Ashdown was subject to management under the provisions of the Protected Estates Act 1983 (NSW) and such management was committed to the Protective Commissioner. On 25 July 2006, Ms Marie Ashdown by her tutor the Protector Commissioner, instituted the Supreme Court proceedings. On 31 July 2007, Mr Spargo was made bankrupt. Accordingly it is necessary for leave to be granted to enable Ms Marie Ashdown, through the Protective Commissioner, to continue with the Supreme Court proceedings. 5 The affidavit of Mr Christopher Matthew Zucker sworn 3 September 2007 attaches the existing Statement of the Claim in the Supreme Court proceedings, and the proposed Amended Statement of Claim. It is not necessary to consider in detail the claims made on behalf of Ms Marie Ashdown against each of the three defendants namely Mr Spargo, Wygoss Pty Limited and Mr Prior except to observe that there are allegations of undue influence in relation to the mortgages granted to Wygoss Pty Limited, unconscionable conduct, a claim for relief under the Contracts Review Act 1980 (NSW), and a claim for relief for breach of trust and breach of fiduciary duty. Alternatively there are claims in debt and other causes of action. In essence it is alleged that Mr Spargo received all of the funds that were secured by the mortgages and held them on trust for Ms Marie Ashdown. The assertion made by Mr Spargo that part of the funds were spent by him in support of the Ashdowns and in the maintenance and upkeep of the Thornleigh property is disputed. The second respondent, Mr Avavanis, is the trustee of the bankrupt estate of Mr Spargo. He is represented today in Court but takes no position either to accede to or oppose the orders sought. 6 The Supreme Court proceedings are fixed for hearing on 4 December 2007, but an interlocutory application for leave to amend the Statement of Claim in the Supreme Court proceedings is scheduled to be heard before Nicholas J on 12 September 2007. Accordingly the application for leave under s 58(3)(b) of the Act has been brought as a matter of urgency.