FEDERAL COURT OF AUSTRALIA Official Trustee in Bankruptcy v Lendlease Primelife Pty Ltd [2011] FCA 145 Citation: Official Trustee in Bankruptcy v Lendlease Primelife Pty Ltd [2011] FCA 145 Parties: THE OFFICIAL TRUSTEE IN BANKRUPTCY v LENDLEASE PRIMELIFE PTY LTD, EDUARD CHRISTIAAN SENT, ANTONIO BUFALO, GIOVANNI BUFALO and GUISEPPE BUFALO File number(s): VID 1066 of 2010 Judge: MARSHALL J Date of judgment: 23 February 2011 Corrigendum: 14 April 2011 Legislation: Bankruptcy Act 1966 (Cth) ss 129AA, 134(4) Cases cited: Bufalo v The Official Trustee in Bankruptcy [2007] FMCA 1411 Primelife Corporation Limited v Bufalo [2008] FCA 1742 Date of hearing: 23 February 2011 Place: Melbourne Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 21 Counsel for the Applicant: Mr M Galvin Solicitor for the Applicant: Aitken Partners Counsel for the First and Second Respondents: Mr P Marzella Solicitor for the First and Second Respondents: Russell Kennedy Counsel for the Third, Fourth and Fifth Respondents: The Third, Fourth, and Fifth Respondents did not appear FEDERAL COURT OF AUSTRALIA Official Trustee in Bankruptcy v Lendlease Primelife Pty Ltd [2011] FCA 145 CORRIGENDUM 1 In paragraph 17 of the Reasons for Judgment, in the first sentence, the words "chosen action" should read "chose-in-action". I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Marshall. Associate: Dated: 14 April 2011 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1066 of 2010 BETWEEN: THE OFFICIAL TRUSTEE IN BANKRUPTCY Applicant AND: LENDLEASE PRIMELIFE PTY LTD First Respondent EDUARD CHRISTIAAN SENT Second Respondent ANTONIO BUFALO Third Respondent GIOVANNI BUFALO Fourth Respondent GUISEPPE BUFALO Fifth Respondent JUDGE: MARSHALL J DATE OF ORDER: 23 FEBRUARY 2011 WHERE MADE: MELBOURNE THE COURT DIRECTS THAT: 1. The applicant is justified in accepting the offer to assign the Assets as defined in the deed dated 29 September 2010 (other than the BC shares) contained in Exhibit GMA5 to the affidavit of Gina May Anderson sworn on 7 December 2010 and filed in this proceeding. 2. The third, fourth and fifth respondents pay the costs of the first and second respondents of the proceeding including reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1066 of 2010 BETWEEN: THE OFFICIAL TRUSTEE IN BANKRUPTCY Applicant AND: LENDLEASE PRIMELIFE PTY LTD First Respondent EDUARD CHRISTIAAN SENT Second Respondent ANTONIO BUFALO Third Respondent GIOVANNI BUFALO Fourth Respondent GUISEPPE BUFALO Fifth Respondent JUDGE: MARSHALL J DATE: 23 FEBRUARY 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The applicant, the Official Trustee in Bankruptcy seeks a declaration pursuant to s 134(4) of the Bankruptcy Act 1966 (Cth) ("the Act") that is justified in accepting an offer from the first respondent, Lendlease Primelife Pty Ltd ("Lendlease") to assign certain assets of the third, fourth and fifth respondents in accordance with a deed entered into between the applicant and Lendlease as 29 September 2010. 2 The applicant relies upon affidavits of Ms Gina Anderson, a senior case manager employed by Insolvency and Trustee Service Australia and authorised by the applicant to make those affidavits on its behalf. Ms Anderson is familiar with the bankrupt estate of the third, fourth and fifth respondents ("the Bufalos"). 3 The following table is based on material contained in Ms Anderson's affidavits that was not contradicted: Respondent Date of Bankruptcy Date of Discharge Antonio Bufalo, 3rd 22 November 2001 5 January 2005 Giovanni Bufalo, 4th 19 March 2002 20 July 2005 Guiseppe Bufalo, 5th 12 February 2002 6 August 2007 4 There were no funds available for distribution among the creditors of the Bufalos. As at the dates of bankruptcy of the Bufalos, each of them was an applicant in a proceeding brought against Lendlease and others in the Supreme Court of Victoria on 26 October 1999 by Bufalo Corporation Pty Ltd and others ("the Supreme Court action"). 5 On 14 February 2007, the fourth respondent (Giovanni Bufalo) applied to the Federal Magistrates Court for an order that the present applicant (the Official Trustee in Bankruptcy) assign to him, "the chose-in-action constituted by reference to rights arising in respect of or in connection with [the Supreme Court action] and the subject matter of that proceeding as set out in the third amended statement of claim …" 6 On 14 December 2007, the Federal Magistrates Court dismissed the fourth respondent's application; see Bufalo v The Official Trustee in Bankruptcy [2007] FMCA 1411, per O'Dwyer FM, at [27], his honour observed that: Even though the period of bankruptcy has concluded, the trustee remains vested in any choses-in-action arising from … [the Supreme Court] proceeding. 7 Federal Magistrate O'Dwyer granted leave to the current third and fifth respondents (Antonio and Guiseppe Bufalo) to be joined to the proceeding before him given their interest in its outcome. His honour accepted that the current applicant (the Official Trustee in Bankruptcy) was justified in refusing to accept the proposal of Giovanni Bufalo for an assignment to him of the relevant choses-in-action. 8 At [41] his honour observed that it was not contested before him that: … choses-in-action as constituted in legal proceedings with causes of action on foot at the time of bankruptcy are assets capable of being assigned to the former bankrupt or to third parties. The same applies in the instant proceeding. 9 It is unnecessary to delve into the reasons why the applicant in this proceeding was considered to be justified in refusing the proposal of the current fourth respondent. It is also unnecessary to examine the reasons for judgment of this Court which dealt with an appeal by Lendlease against a costs order made by O'Dwyer FM; see Primelife Corporation Limited v Bufalo [2008] FCA 1742, per Jessup J. 10 On 29 September 2010, the applicant entered into a deed with Lendlease, in which it agreed to assign the choses-in-action arising in the Supreme Court proceeding to Lendlease, and other assets, subject to the approval of this Court. The deed, amongst other matters, has the following effect: Lendlease pays the applicant the lesser of the following two sums: (1) $332,000; or (2) An amount sufficient to pay, in relation to the three relevant bankrupt estates, all the statutory charges which the applicant is liable to pay, all costs of the applicant (other than legal costs) and an amount sufficient to pay unsecured creditors an estimated 75 cents in the dollar. The withdrawal of each proof of debt lodged by Lendlease in the bankrupt estates. 11 The applicant notified the Bufalos on 25 October 2010 of the agreement reached with Lendlease concerning the assignment of the relevant chose-in-action arising from the Supreme Court proceeding and of its intention to apply to this Court for an approval of the deed pursuant to s 134(4) of the Act. That subsection provides: The trustee may at any time apply to the Court for directions in respect of a matter arising in connexion with the administration of the estate. 12 Lendlease and Mr Sent (the first and second respondents) support the current application. The Bufalos oppose it. It is apparent from an affidavit filed in support of the Bufalo's opposition to the application that Antonio Bufalo (the third respondent) claims the Supreme Court action, sought to be assigned to Primelife has re-vested in the Bufalos, under s 129AA of the Act, and is not capable of being assigned by the applicant to Lendlease. 13 I refer to the affidavit to state the nature of the opposition but not to treat it as evidence given the non attendance of the third, fourth and fifth respondents, although even if one treated it as evidence, its contents, for the reasons explained below, would not have made good the opposition of the Bufalos. 14 On the commencement of bankruptcy of the Bufalos, the assets of each of them were vested in the applicant as the trustee of each bankrupt estate, with some irrelevant exceptions. Notwithstanding that each Bufalo has been discharged from bankruptcy, the assets constituted by the choses-in-action are vested in the applicant until 5 January 2014. 15 Under s 129AA of the Act, if a trustee has not dealt with assets of a bankrupt within six years of the discharge from bankruptcy those assets re-vest in the bankrupt. As at 5 January 2011, 20 July 2011 and 6 August 2013 respectively the interest of the third, fourth and fifth respondents in respect of the relevant choses-in action would re-vest in them, save for the giving of an extension notice by the applicant under s 129AA(4) of the Act. 16 Section 129AA(4) provides: If the trustee, before the current revesting time, gives the bankrupt a written notice (an extension notice) stating that a later revesting time applies to particular property, then that later time becomes the revesting time for that property. 17 By letter dated 25 November 2010, the applicant gave notice to Antonio Bufalo (the third respondent) that the revesting time for the chosen action was 5 January 2014. That is consistent with s 129AA(6), which provides that the specified time in an extension notice must not be more than 3 years after revesting time. Revesting time for Antonio Bufalo was 5 January 2011. The other Bufalo respondents are yet to reach their revesting times. Accordingly the main basis of the opposition of the Bufalos to the approval of the deed is misconceived. The assets vest in the applicant and they are available to be assigned accordingly. 18 The other points raised against the approval of the deed relate to concerns of the Bufalos of a lack of knowledge by them of the course of negotiations between the applicants and Lendlease. One can understand the concerns of the Bufalos about losing a potential asset or assets. However, the approval of the relevant portions of the deed has the advantage of returning to creditors most of the funds owed to them by the Bufalos. This result is in the public interest. It promotes public confidence in the ability of the legal system to assist creditors recover debts from their debtors. Accordingly, I consider it is appropriate to make an order in the terms of the further amended application. 19 The applicant did not seek costs. There is no reason why the first and second respondents should not have costs awarded from the proceeding in their favour. 20 The court will make the following orders: THE COURT DIRECTS THAT: 1. The applicant is justified in accepting the offer to assign the Assets as defined in the deed dated 29 September 2010 (other than the BC shares) contained in Exhibit GMA5 to the affidavit of Gina May Anderson sworn on 7 December 2010 and filed in this proceeding. 2. The third, fourth and fifth respondents pay the costs of the first and second respondents of the proceeding including reserved costs. POSTSCRIPT 21 After delivering this ex tempore judgment this morning and making the orders referred to in that judgment, on returning to chambers, I discovered a fax letter from a Mr Jerome Borazio. That person is not on the record as a solicitor or representative for the third, fourth or fifth respondent. He purported to advise my associate in the faxed letter that Antonio Bufalo (third respondent) was ill and unable to attend court and required a 3-4 week adjournment. Also, in the fax machine, I discovered, on my return to chambers, a medical certificate from the Elsternwick Medical Centre certifying that Mr Bufalo presented at 8am that morning with "a hacking suffocating cough malaise and weakness and he has been diagnosed with a chest infection and possible left basal pneumonia". The certificate also says that, in the opinion of the treating doctor, Antonio Bufalo is unfit to attend Court. It is inappropriate to merely send a fax to Court in a busy chambers environment, which did not come to my attention until I had dealt with the proceeding. The appropriate course, at the very least, would have been to telephone chambers, or have someone appear, such as Mr Borazio (even on a McKenzie friend basis) to make the adjournment application. Nothing in the letter from Mr Borazio or the certificate from the medical centre moves me to reconsider the judgment I delivered this morning and the orders I made. On the material in the fax machine alone, I would not have granted an adjournment had that material been available to me at or before 10 am. Further, there is nothing in the material contained in the faxes which explains why the fourth and fifth respondents could not have asked the Court for an adjournment and explained why such an adjournment was necessary. It appears that the third respondent, acting with the knowledge of the fourth and fifth respondents, assumed that the sending of the material contained in the fax would automatically lead to an adjournment of the proceeding. That assumption if made, was unjustified. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate: Dated: 24 February 2011