By Hayley Hitch, Solicitor and Stephen Mullette, Principal of Matthews Folbigg in our Insolvency, Restructuring and Debt Recovery Group.
It is the stuff of the classic cop show or court room thriller. The bad guy is about to get away with the crime, until there is an application to introduce “fresh evidence”.
But how fresh is fresh enough?
In the real world, if the application is found to be just an attempt to re-hear a matter without in fact bringing new evidence before the Court, the application will be dismissed and potentially a cost order may be made against the applicant.
In Baycorp Collections PDL (Australia) Pty Ltd v Reaper [2016] FCCA 2458, the bankrupt, Mr Reaper, sought a stay of orders made a year earlier, for the sale of the bankrupt’s property by his trustee in bankruptcy. He did so, (despite having previously failed “in separate appeals or applications made by Mr Reaper to Pagone J, Davies J, Tracey J, Middleton J and Mortimer J”) on the basis that he had obtained “fresh evidence” that his bankruptcy should be annulled. This would prove, according to the bankrupt; that the judgment debt, on which he had been bankrupted, was obtained irregularly.
The bankrupt contended that the ‘fresh evidence’ which he had obtained was based on ‘deemed admissions’ said to have arisen based on notices he had issued to the petitioning creditor to admit various facts and documents. The Creditor had disputed all of the facts and admitted only the authenticity of certain documents.
The Court disagreed that this was “fresh evidence” but found that it was instead ‘yet another attempt to re-litigate matters already determined’ (adopting the words of Justice Davies in one of the other failed applications of the bankrupt).
The bankrupt’s application was in the end dismissed as his alleged ‘admissions’ were not in fact “fresh evidence” and did not address findings made against Mr Reaper, that he had failed to establish the judgment debt was not owing and that the sequestration order against him, ought not to have been made.
Judge Wilson found that it was “readily apparent that Mr Reaper’s purpose in engaging in ongoing skirmishing with the trustee is to exhaust the trustee’s willingness to pursue the trustee’s rights against Mr Reaper, as well as the trustee’s available funds to do so”.
In this case, a costs order was not made at the time, however there is always that risk that a costs order will be made against an applicant for proceeding with an action that has little or no prospects of success. That risk increases where the application is a repeated one with the intention of engaging in “procedural tactics and skirmishing” as the judge described the actions of the bankrupt. Of course the threat of a costs order can be of little disincentive to an undischarged bankrupt, particularly one who has not been deterred by “a very serious rebuke” from a judge over a “litany of unsuccessful applications in the Federal Court”.
In the end, a costs order was in fact made against the bankrupt, upon the Federal Court dismissing an appeal from the decision of Wilson J: Reaper v Baycorp Collections PDL (Australia) Pty Limited [2016] FCA 1454. A saving grace for the creditor was that Justice Collier on appeal characterised the petitioning creditor’s costs having the same priority as the original costs of the sequestration order (payable in priority to other creditors, and to the trustee, in the bankruptcy).
It is important to seek legal advice when considering an appeal of a decision to ensure that you have met the requirements and have a valid argument in order to proceed with any such appeal.
Should you wish to discuss, please do not hesitate to contact Matthews Folbigg Lawyers on (02) 9635 7966 who may provide you with advice in this regard.
Read the judgment here and the appeal here.
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact Hayley Hitch at hayleyh@matthewsfolbigg.com.au, or a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
