Official Trustee in Bankruptcy and Galanis and Anor

FAMILY COURT OF AUSTRALIA

OFFICIAL TRUSTEE IN BANKRUPTCY & GALANIS AND ANOR

[2015] FamCAFC 212

FAMILY LAW – APPLICATION IN AN APPEAL – EXPEDITION – Where the Trustee seeks to expedite an appeal against orders dismissing an application to set aside a financial agreement – Whether the matter should be afforded priority to the detriment of other cases – Where the Trustee delayed in filing the application for expedition – Application dismissed.

Family Law Act 1975 (Cth) s 95(2D)(j)

Bankruptcy Act 1966 (Cth)

APPLICANT:

Official Trustee In Bankruptcy

FIRST RESPONDENT:

Ms Galanis

SECOND RESPONDENT:

Mr Dukas

FILE NUMBER: SYC 3738 of 2013

APPEAL NUMBER:

145

2014

DATE DELIVERED:

22 October 2015

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Aldridge J

HEARING DATE:	22 October 2015
LOWER COURT JURISDICTION:	Family Court of Australia

LOWER COURT JUDGMENT DATE:

1 October 2014

LOWER COURT MNC:

[2014] FamCA 832

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Kearney SC

SOLICITOR FOR THE APPLICANT:

Lobban McNally Lawyers

COUNSEL FOR THE FIRST RESPONDENT:

Mr Allen

SOLICITOR FOR THE FIRST

RESPONDENT:

Konstan Lawyers

SOLICITOR FOR THE SECOND

RESPONDENT:

No appearance

Orders

That the Application in an Appeal filed 21 September 2015 be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Official Trustee in Bankruptcy & Galanis and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 145 of 2014
File Number: SYC 3738 of 2013

OFFICIAL TRUSTEE IN BANKRUPTCY

Applicant

And

MS GALANIS

First Respondent

And

MR DUKAS
Second Respondent

EX TEMPORE REASONS FOR JUDGMENT

The Official Trustee in Bankruptcy (“the Trustee”) seeks orders that its appeal against orders made by Rees J on 1 October 2014 be expedited. On that day her Honour dismissed the Trustee’s application to set aside a financial agreement entered into by the second respondent and the first respondent after the second respondent’s discharge from bankruptcy. The trial judge found that on the correct construction of a number of provisions of the Bankruptcy Act 1966 (Cth) and the Family Law Act 1975 (Cth) (“the Act”), in the circumstances of this case, that the Trustee lacked standing to bring the proceedings, which were dismissed.
The Notice of Appeal was filed on 27 October 2014. Section 94(2D)(j) of the Act provides, inter alia, that a judge of the appeal division may make an order to expedite the hearing of an appeal. The essential question is whether the hearing of the appeal should be given priority over the hearing of other appeals awaiting a hearing date. The application is supported by the first respondent. There was no appearance for the second respondent.
The Trustee did not act promptly in filing the application which was filed some 11 months after the Notice of Appeal. It appears that one of the triggers for this application is that the decision of the trial judge has now been reported in the Family Law Reports. In fact, it was reported in (2014) 52 Fam LR 219 in May 2015. Again, there does not seem to have been a prompt response to that reporting. The Trustee submits that it was the importance of the issue before the Court, the publication of the judgment and the ultimate realisation of the unfortunate delays in listing appeals in Sydney that led to the present application. I accept that submission and accept that the application is made bona fide and for genuine reasons.
The affidavit in support of the application filed on 21 September 2015 refers to the large number of bankruptcies currently under administration by the Trustee and by registered trustees. It may readily be accepted that her Honour’s findings may be relevant to some of those bankruptcies. The essential basis of the application is set out in the following at paragraphs 19(c) and 19(d) of the Trustees’ affidavit as follows:
19. The judgment of her Honour Justice Rees is going to potentially have significant ramifications on the operation of the Bankruptcy Act 1966 and the administration of bankrupt estates. I am concerned that:
…
(c) Her Honour’s judgment has now been reported in the Family Law Reports published by LexisNexis and the longer the delay in determining the Appellant’s appeal, the greater the risk that bankrupts become aware of her Honour’s decision;
(d)the use of the financial agreements by discharged bankrupt’s to transfer unrealised vested property will increase the costs of administration of bankrupt estates, increase the numbers of court proceedings bankruptcy trustees become involved in to recover vested property and as a consequence there will be a potential loss of returns to creditors;
…
The affidavit asserts, for those reasons, that the judgment is likely to increase the cost of administration of bankruptcies and the number of court cases in which trustees will become involved, leading to decreased returns to creditors.
I accept that that may be so, but it is difficult, if not impossible, to speculate what is likely to be the impact of the judgment in the short-term. That is to say, what bankruptcies will be affected by this appeal coming on relatively promptly as opposed to coming on for hearing in the ordinary course. I am not satisfied that this establishes a basis for expedition. I accept that the appeal raises substantial issues of general importance. I accept that the Trustee has acted promptly in prosecuting the appeal, which is now ready for hearing. Even if the appeal were to be expedited, it would not receive a hearing date until at least February or March 2016.
Taking into the account the delay in bringing the application and what I consider to be a less than completely persuasive basis for it, I am not satisfied that this appeal should be given priority over the other appeals awaiting a hearing date and the Application will be dismissed.

I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 22 October 2015.

Associate:

Date: 10 November 2015

The Official Trustee in Bankruptcy brought an appeal against the decision of the Federal Circuit Court, which had found that the respondents' property was exempt from bankruptcy proceedings. The property in question was a family home that the respondents had purchased and were living in at the time of the bankruptcy proceedings. The Federal Circuit and Family Court of Australia, in a full bench decision, considered the appeal.

The primary legal issue before the court was whether the property was exempt from the bankruptcy estate under the applicable legislation. The court was required to interpret the relevant provisions of the Bankruptcy Act 1966 and determine the scope of the exemptions available to the respondents. The Official Trustee argued that the respondents' interest in the property was not exempt as it was a "discretionary benefit" and therefore not entitled to protection. The respondents contended that the property was their primary residence and thus exempt under the law.

The court considered the statutory provisions and case law regarding the interpretation of the Bankruptcy Act. It held that the property was exempt from the bankruptcy estate as it was the respondents' primary residence and therefore protected under the legislation. The court found that the respondents' interest in the property was not a "discretionary benefit" but rather a right to occupy the property as their primary residence. The appeal was dismissed, and the respondents' property was determined to be exempt from the bankruptcy proceedings.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established