Legge v Mackinlays Solicitors [2008] FCA 345

FEDERAL COURT OF AUSTRALIA

Legge v Mackinlays Solicitors [2008] FCA 345

GEOFFREY SPENCER LEGGE v MACKINLAYS SOLICITORS WAD 60 OF 2007

SIOPIS J

10 MARCH 2008

PERTH IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 60 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: GEOFFREY SPENCER LEGGE

Appellant

AND: MACKINLAYS SOLICITORS

Respondent

JUDGE: SIOPIS J

DATE OF ORDER: 10 MARCH 2008

WHERE MADE: PERTH

BY CONSENT THE COURT ORDERS THAT:

1. The appeal is allowed. 2. The Orders of Lucev FM made on 2 March 2007 be set aside. 3. The bankruptcy of the appellant be annulled. 4. The costs of the Official Trustee, including the costs of the proceeding before Lucev FM and this appeal, be taxed and paid out of the bankrupt's estate in the priority fixed by s 109(1)(a) of the Bankruptcy Act. 5. Otherwise there be no order as to the costs of the appeal. 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 WAD 60 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: GEOFFREY SPENCER LEGGE

Appellant

AND: MACKINLAYS SOLICITORS

Respondent

JUDGE: SIOPIS J

DATE: 10 MARCH 2008

PLACE: PERTH

REASONS FOR JUDGMENT 1 This is an appeal by Mr Legge in respect of a judgment of a Federal Magistrate which dismissed his application for the annulment of his bankruptcy. 2 There are a number of unusual features in this case. 3 First, it now appears, from new evidence which Mr Legge seeks to introduce, that the judgment in favour of the respondent, Mackinlays, a firm of solicitors, upon which the bankruptcy notice was issued and the sequestration order was made, was a default judgment that has now been set aside. Secondly, from the evidence of the Official Trustee in Bankruptcy, it appears that the creditors who have filed proofs of debt, amount to something just exceeding $40,000. The third feature is that Mr Legge is half‑owner of a residential property which on the valuation which was in evidence before the Federal Magistrates Court was $500,000. There was, however, no evidence before the Federal Magistrates Court as to the value of Mr Legge's interest in the property at the time of the sequestration order being made. 4 Because of these unusual features, and particularly because Mr Legge had an application before the Court to introduce new evidence to show that the judgment that was obtained by Mackinlays, had been set aside; and the fact that this was not a case where Mr Legge was hopelessly insolvent, if measured by reason only of debts against assets, I suggested, at the commencement of the hearing, that this might be a case where Mr Legge might benefit from the Court making a nomination under O 80 of the Federal Court Rules, so that he could be represented in these proceedings. 5 I also mentioned that on the face of the documentation, there was no evidence of Mackinlays ever having contracted with Mr Legge. In particular, there was no evidence that any costs agreement under the Legal Practitioners Act 1893 (WA) had ever been entered into between Mackinlays and Mr Legge. 6 After I made these comments, counsel representing the Official Trustee in Bankruptcy suggested that perhaps the parties might be able to resolve matters by way of discussion, and requested an adjournment. 7 After an adjournment, the parties returned to advise me that they had agreed certain consent orders. Those orders, after revision, were that the appeal should be allowed, that the orders of the Federal Magistrate be set aside, that the bankruptcy be annulled and that the Official Trustee's costs be taxed and paid out of the bankrupt's estate. 8 In my view, the Court is justified in making the consent orders in light of the authority of Re Raymond, ex parte Raymond (1992) 36 FCR 424, which accepted that a bankruptcy could be annulled where the judgment on which the sequestration order was founded, is set aside. In that case, Spender J followed the case of Re Deriu (1970) 16 FLR 420. 9 The evidence that the default judgment has been set aside, was not before the Federal Magistrate. That fact, together with the fact that there was no evidence of a contract between Mr Legge and Mackinlays and, in particular, no evidence of a costs agreement under the Legal Practitioners Act, are, in my view, considerations which would justify the Court in approving the proposed consent orders. 10 In those circumstances, I approve the consent orders. 11 I should not, however, leave this matter without recording that when I was considering with the parties the appropriateness of the consent orders, Mr Legge raised with me the fact that the Official Trustee's costs may be supplemented by a statutory charge and asked me to waive that charge. I advised him that if he was not content with the orders that were proposed to be made by consent in respect of the Official Trustee's costs, that he could have an adjournment to think about whether he wished to consent to the orders, or whether he wished to proceed with the appeal. 12 Mr Legge advised that he did not need the adjournment and he withdrew his submissions in relation to any waiver in respect of the Official Trustee's costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.