FEDERAL COURT OF AUSTRALIA

Passmore v Underdown (Deceased) [2010] FCA 70

THE COURT ORDERS THAT:

1.                   The applicant be granted leave from the Court to present a Form 14 Creditor’s Petition for Administration of the Deceased Person’s Estate (Petition) to the Court under s 244(1)(a) of the Bankruptcy Act 1966 (Cth) (the Act), on such terms as the Court thinks fit, pursuant to s 244(13) of the Act.

2.                   A sealed copy of the Petition shall be served, pursuant to s 244(9) of the Act on Mr Arturo Fazio.

3.                   There be liberty to apply.

4.                   The costs of today be reserved.

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.

REASONS FOR JUDGMENT

1                     This is an application which is made under s 244(13) of the Bankruptcy Act 1966 (Cth) (the Act).  That section provides that:

Where proceedings have been commenced in a court for the administration of a deceased person’s estate under a law of a State or Territory, a petition for an order under the section in relation to the estate shall not be presented by a creditor except by leave of the Court and on such terms and conditions (if any) as the Court thinks fit.

2                     The applicant’s affidavit evidence discloses that this application arises in the following circumstances.

3                     Ms Underdown, the deceased, brought a claim against the applicant, Ms Passmore, in the Perth Magistrates Court for damages in relation to a property transaction.  On 15 January 2007, the Magistrate dismissed Ms Underdown’s claim.

4                     The Magistrate’s orders gave Ms Passmore liberty to apply for a costs order in the absence of agreement between the parties.

5                     On 17 January 2007, the solicitors for Ms Passmore wrote to Ms Underdown’s husband, Mr Fazio, who was acting as Ms Underdown’s representative, stating that the costs were approximately $51,000.  On 19 January 2007, Mr Fazio asked for an itemised account of the costs.

6                     By an instrument of transfer of an interest in property, executed by Ms Underdown and dated 10 January 2007, Ms Underdown gifted to Mr Fazio an interest in a property in Leeming, which up until that time Ms Underdown owned absolutely in her own name.  The transfer of the interest was expressed to be on the basis of love and affection.  The transfer document was lodged for stamping on 25 January 2007.  However, that transfer document was not actually lodged for registration until 17 October 2007.

7                     On 1 July 2007, Ms Underdown passed away.

8                     On 2 July 2007, Mr Fazio executed a survivorship application in favour of himself.  That application was not lodged for registration until 17 October 2007.

9                     In November 2007, the bill of costs in respect of Ms Underdown’s unsuccessful claim, was taxed.

10                  In September 2009, Ms Passmore learned that the Leeming property was listed for sale.  Ms Passmore commenced proceedings in the Supreme Court of Western Australia, for the appointment of administrators to the estate of Ms Underdown, in order to seek recovery of the amount which was payable pursuant to the costs order.  Ms Passmore also obtained freezing orders in the Supreme Court.

11                  Ms Passmore’s application has been adjourned by the Supreme Court, on the basis that the appropriate course for Ms Passmore to adopt, would be to apply to this Court for the appointment of administrators to administer the deceased estate.  This is because of the contention that the deceased estate of Ms Underdown is bankrupt.

12                  On the evidence currently before me, the conditions prescribed in s 244(1)(c) and s 244(6) of the Act appear to be satisfied in this case.

13                  When this matter first came before me in December 2009, Mr Fazio had been served personally with the substantive application but did not appear at that hearing.

14                  However, I made directions which included an opportunity for Mr Fazio to file an affidavit in opposition to Ms Passmore’s application.  I was of the view, that Mr Fazio had an interest in the application.  Ms Passmore contends that the transfer of Ms Underdown’s interest in the Leeming property to Mr Fazio is liable to be set aside as a voidable transaction.

15                  I ordered that Mr Fazio be served with the orders of the directions by registered post rather than personally.  This was based on the evidence of Ms Cheryl Harrison before me at the time, as to the difficulties of serving the substantive application on Mr Fazio personally.

16                  Mr Fazio did not appear today.  However, the Court has received an affidavit from Mr Fazio sworn on 11 January 2010.  The affidavit is primarily in the form of submissions.  I made a copy of the affidavit available to counsel for Ms Passmore at the commencement of this hearing.  Counsel has addressed me on the matters which have been raised in Mr Fazio’s affidavit.

17                  First, Mr Fazio raised the question of whether there was proper service of the originating application and whether there had been an affidavit of service to prove that he had been served.  There is, on the Court file, an affidavit of Ms Harrison which deposes to the fact that Mr Fazio was served personally.  The affidavit also deposes to the numerous attempts which were made to do so.

18                  Then, Mr Fazio takes objection to the fact that I ordered that he be served with the directions orders by registered post.  In my view, Ms Harrison’s evidence of the difficulty in serving Mr Fazio personally, justified the making of those orders.  In any event, Mr Fazio had already been served personally with the main application; and the orders which I permitted to be served on him by registered post, were simply orders which provided him with an opportunity to put on evidence, should he so wish.

19                  Mr Fazio then raised the question of whether this Court has the appropriate jurisdiction to hear this application, in light of the fact that an application for the appointment of administrators is also pending before the Supreme Court.  I will deal with that issue a little later in my reasons.

20                  Mr Fazio also deposed that Ms Underdown made a will dated 23 March 2004 and he is the executor of the will.  Counsel for Ms Passmore contended that that evidence is apparently contradictory to evidence in an affidavit which was sworn by Mr Fazio in the Supreme Court proceedings where he said that there was no will.  That matter does not require any further exploration today, because in light of Mr Fazio’s obvious interest in this whole matter, were I to make the orders sought by Ms Passmore, I would require that he be served with any petition, whether or not he was appointed an executor under the will.

21                  Then, Mr Fazio said that the Magistrates Court’s order for costs is to be “imminently vigorously” appealed.  However, the affidavit material discloses that such an appeal was brought, and has been dismissed.

22                  In the case of Feliciano Gonzales v Maria De Luz Marmentini, Executrix of the Estate of the Late Ida Garcia Raber [1998] FCA 911, Emmett J referred to s 244(13) of the Act and observed:

The purpose of section 244(13) is to ensure that there are not two Courts administering an insolvent estate or administering the estate generally.  It is not concerned with the grant of probate or letters of administration by a Court of Probate.

23                  Bearing in mind that the policy objective behind this section is to avoid two courts being charged with the administration of a deceased estate, the issue is what is to become of the court proceeding which is currently pending before the Supreme Court.

24                  Counsel for Ms Passmore has advised me that should the petition be successfully prosecuted, the Supreme Court proceeding will be discontinued.  Further, the Supreme Court has, itself, adjourned the application before it sine die and advised Ms Passmore to seek relief in this Court.  Therefore, I do not see that the policy objective of ensuring that only one court is supervising the administration of the deceased estate, will be defeated if this order is made.

25                  In those circumstances, I will grant the relief sought and hear from counsel as to the precise terms of the orders.

Associate:

Dated:              11 February 2010