FEDERAL COURT OF AUSTRALIA

Sopikiotis, in the matter of Sopikiotis (Bankrupt) v Vince (Trustee) [2013] FCAFC 24

THE COURT ORDERS THAT:

1.     The appeal be dismissed with costs.

2.    The respondent’s costs of this appeal be paid out of the bankrupt estate of the appellant.

3.    The stay granted by Tracey J on 20 December 2012 be extended for 30 days from the date of this order.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

THE COURT:

1    On 5 July 2011 the appellant (“Ms Sopikiotis”) was declared to be a bankrupt following the making of a sequestration order against her estate. The respondent (“the trustee”) is the trustee of Ms Sopikiotis’s bankrupt estate.

2    Ms Sopikiotis is the sole registered proprietor of a property at 2A Trafalgar Road, Camberwell. No other person claims to have an interest in the property. The property vested in the trustee upon the sequestration order being made on 5 July 2011. Ms Sopikiotis has remained in residence in the property and has failed to co-operate with her trustee.

3    The trustee wishes to obtain vacant possession of the property with a view to selling it and applying the proceeds to the benefit of Ms Sopikiotis’s creditors.

4    The trustee applied to the Court for orders pursuant to s 30 of the Bankruptcy Act 1996 (Cth) (“the Bankruptcy Act”).

5    On 21 November 2012 Bromberg J made orders requiring Ms Sopikiotis to deliver up to the trustee the duplicate certificate of title to the property, that she vacate the property within 60 days and that if she failed to do so a warrant of possession issue forthwith: see Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298.

6    Ms Sopikiotis filed a notice of appeal on 10 December 2012. On the same day she applied for an order staying the operation of Bromberg J’s orders pending the hearing and determination of her appeal.

7    On 20 December 2012 Tracey J granted the stay and made an order for an expedited hearing.

8    The only ground of appeal appearing in Ms Sopikiotis’s notice of appeal was that:

“Documentation that provides evidence in support of the Appellant was not made available until after the Federal Court Hearing date of 2nd October 2012.”

No particulars were provided which identified the “evidence” to which this ground referred.

9    No application to amend the grounds of appeal has been made.

10    Ms Sopikiotis filed an outline of her submissions in support of the appeal. The outline failed to identify any material “evidence” which had come to light after the hearing of the trustee’s application before Bromberg J on 20 October 2012.

11    For the most part the submissions set out various provisions of the Bankruptcy Act and summaries of some curial decisions on the construction and application of the Bankruptcy Act. None of these dealt with the ground appearing in her appeal notice. Nor did these submissions identify any other error which Ms Sopikiotis sought to attribute to the trial judge. Indeed, many of the statutory provisions and case law had not been relied on or raised in argument at trial. They dealt with matters such as the trustee’s entitlement to remuneration, the unlawful receipt of money by a trustee, the requirement that a trustee administer an estate as efficiently as possible and the exercise of the Court’s supervisory jurisdiction.

12    One matter which was raised at trial (but which is not raised by the sole ground of appeal) was the alleged refusal, by the trustee, to allow Ms Sopikiotis to make a proposal for a composition in satisfaction of her debts. Section 73 of the Bankruptcy Act provides for the making of such a proposal. There exists, however, an antecedent requirement that a bankrupt file a statement of affairs: see ss 6A and 54(1). Unless the trustee and the creditors are aware of the bankrupt’s financial position they cannot be expected to be able to make an informed decision on any composition proposal. Bromberg J had ordered that Ms Sopikiotis file such a statement following an earlier hearing on 7 May 2012: see Vince (Trustee), In the Matter of Sopikiotis (Bankrupt) v Sopikiotis [2012] FCA 573. His Honour’s orders required that the statement be filed on or before 21 May 2012. In her written submissions Ms Sopikiotis asserted that she had filed such a statement on 21 May 2012. Ms Sopikiotis had, in fact, purported to file a statement on that day. The Insolvency and Trustee Service Australia refused to accept the document which she presented on the ground that it was incomplete. This matter was considered by Bromberg J in his reasons on 21 November 2012. His Honour found that the document which Ms Sopikiotis sought to file on 21 May 2012 failed to include a range of information which she was specifically required, pursuant to the orders made on 7 May 2012, to provide. His Honour regarded this as a substantial failure to comply with the orders. He set out, in Schedule 1 to his reasons, the extent of that non-compliance. We agree with his Honour’s characterisation. Ms Sopikiotis had failed to provide a large amount of relevant information. She has not since done so. More significantly, for present purposes, she has not demonstrated that the trial judge had erred in concluding that a statement of affairs of the kind contemplated by the Bankruptcy Act had not been filed. There was, accordingly, no scope for the operation of s 73 of the Bankruptcy Act.

13    In oral argument Ms Sopikiotis identified the documents which she contended constituted the unavailable “evidence” as being documents which she had received in November 2012 which related to proofs of her debts. They included a series of invoices which had been rendered by solicitors acting for one of her creditors. Ms Sopikiotis had subsequently placed these documents before the Federal Magistrates Court to support an application which she had made for an extension of time within which to review the making of the sequestration order. They were considered by Burchardt FM in the course of providing reasons for rejecting her application: see Sopikiotis v Owners Corporation RP017740 [2013] FMCA 122.

14    Ms Sopikiotis alleged that some of the documents which formed part of the proof of debt were fraudulent. She provided no cogent evidence to support this serious allegation.

15    In any event, the efficacy of the proofs of debt was not an issue which the trial judge was called upon to consider. Indeed he expressly held (at [13] and [14]) that this was not an issue which fell for his consideration. His Honour was undoubtedly correct in this conclusion. The orders that his Honour made concerned the trustee’s attempts to administer the bankrupt estate of Ms Sopikiotis, consequent upon the making of the sequestration order against her, by obtaining the control of an asset that vested in the trustee by virtue of s 58(1) of the Bankruptcy Act. His Honour’s functions did not include reviewing the correctness of the debts said to be owing, the legality of the steps preceding the making of the sequestration order, or the propriety of the trustee’s administration of the estate generally.

16    Similar attempts at collateral challenge were found by Burchardt FM to lack merit.

17    Having considered Ms Sopikiotis’s written and oral submissions and having carefully examined the trial judge’s reasons, we can detect no appellable error.

18    The appeal must be dismissed. Costs should follow the event. The appropriate order is that the trustee’s costs of the appeal be paid out of the bankrupt estate of the appellant.

19    We propose to extend the stay granted by Tracey J on 20 December 2012 for a further 30 days.

Associate:

Dated:    4 March 2013