FEDERAL COURT OF AUSTRALIA Reidy v Victorian Securities Corporation Limited, in the matter of Buggy (Bankrupt) [2011] FCA 591 Citation: Reidy v Victorian Securities Corporation Limited, in the matter of Buggy (Bankrupt) [2011] FCA 591 Parties: GEOFFREY PHILIP REIDY, THE TRUSTEE OF THE PROPERTY OF MICHAEL FRANCIS BUGGY, A BANKRUPT v VICTORIAN SECURITIES CORPORATION LIMITED ACN 004 496 208, FRANK REINISCH, ADAM REINISCH and CAROLYN BARBARA REINISCH File number(s): NSD 506 of 2011 Judge: EMMETT J Date of judgment: 27 May 2011 Legislation: Bankruptcy Act 1966 (Cth) s 60 Date of hearing: 27 May 2011 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 5 Solicitor for the applicant: D. Penkin of Polczynski Lawyers Counsel for the first respondent: T. M. Faulkner Solicitor for the first respondent: Middletons Counsel for the second to fourth respondents: The second to fourth respondents did not appear Solicitor for Balm International Limited: J. Choy of Jeffrey Choy Legal IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 506 of 2011 BETWEEN: GEOFFREY PHILIP REIDY, THE TRUSTEE OF THE PROPERTY OF MICHAEL FRANCIS BUGGY, A BANKRUPT Applicant AND: VICTORIAN SECURITIES CORPORATION LIMITED ACN 004 496 208 First Respondent FRANK REINISCH Second Respondent ADAM REINISCH Third Respondent CAROLYN BARBARA REINISCH Fourth Respondent JUDGE: EMMETT J DATE OF ORDER: 27 MAY 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Balm International Limited pay all reasonable costs reasonably incurred by the first respondent in relation to the hearings on 13 May 2011 and 20 May 2011. 2. The proceeding be otherwise dismissed. 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 NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 506 of 2011 BETWEEN: GEOFFREY PHILIP REIDY, THE TRUSTEE OF THE PROPERTY OF MICHAEL FRANCIS BUGGY, A BANKRUPT Applicant AND: VICTORIAN SECURITIES CORPORATION LIMITED ACN 004 496 208 First Respondent FRANK REINISCH Second Respondent ADAM REINISCH Third Respondent CAROLYN BARBARA REINISCH Fourth Respondent JUDGE: EMMETT J DATE: 27 MAY 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant in this proceeding is the trustee in bankruptcy (the Trustee) of Mr Michael Francis Buggy, against whom a sequestration order was made on 25 March 2011. At that time there were proceedings on foot to which Mr Buggy was a party, including a proceeding in the Supreme Court of the Australian Capital Territory. That proceeding remains part-heard. 2 Section 60 of the Bankruptcy Act 1966 (Cth) provides that an action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes an election, in writing, to prosecute or discontinue the action. Section 60 further provides that, if the trustee does not make an election within 28 days after notice of the action is served upon the trustee by a defendant or other party to the action, the trustee is to be deemed to have abandoned the action. 3 One of the parties to the proceeding in the ACT Supreme Court, Victorian Securities Corporation Limited (Victorian Securities), served notice under s 60 on the Trustee. The Trustee then applied for an extension of the time within which to make an election. The time has been successively extended up to and including today. On two occasions a putative creditor of Mr Buggy, Balm International Limited (Balm), which has appeared in this proceeding, sought a further extension of the time and an adjournment of the hearing of the final application, in order to give consideration to the possibility of funding the Trustee in the action in the ACT Supreme Court. 4 Balm claims to have had a call and put option in relation to a property in Shanghai, under an agreement with the bankrupt, and that it is a creditor as a result of that agreement. The Trustee has to date not accepted a substantive proof of debt on behalf of Balm. It is not clear why Balm and the Trustee have not reached some understanding concerning the admission of the proof and the funding of the litigation. Be that as it may, the fact remains that the proceeding has been delayed and costs have been incurred by reason of the successive applications made by the Trustee at the instance of Balm, and, most recently, an application for extension made by Balm. 5 In all of the circumstances, it is clear that the proceeding should now be dismissed. The only question is who should bear the costs of the last two adjournments. Victorian Securities has asked that Balm be ordered to pay its costs on an indemnity basis. In the absence of some further satisfactory explanation as to why Balm has not been able to make up its mind as to whether or not it would fund the Trustee, I consider that it is appropriate to order Balm to pay all reasonable costs of Victorian Securities reasonably incurred in relation to the hearings on 13 May 2011 and 20 May 2011. I order that the proceeding be otherwise dismissed. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 31 May 2011