FEDERAL COURT OF AUSTRALIA

Wakeling v Wade (No 2) [2011] FCA 1452

THE COURT DECLARES THAT:

1.    The causes of action the subject of Supreme Court Proceedings No 2008/00289287 brought by the first respondent against the applicant vested in the second respondent in his capacity as the first respondent’s trustee in bankruptcy upon his appointment on 3 January 2003 and, if not yet extinguished by operation of law, continue to vest in him notwithstanding the first respondent’s discharge from bankruptcy on 4 January 2006.

2.    To the extent that the causes of action the subject of Supreme Court Proceedings No 2008/00289195 brought by the first respondent against the applicant ever vested in the first respondent or the second respondent at all, they vested in the second respondent in his capacity as the first respondent’s trustee in bankruptcy upon his appointment on 3 January 2003 or (if they had not already accrued by that date) at some time thereafter but in any event during the period of the first respondent’s bankruptcy and, if not yet extinguished by operation of law, continue to vest in him notwithstanding the first respondent’s discharge from bankruptcy on 4 January 2006.

THE COURT ORDERS THAT:

3.    The application otherwise be dismissed.

4.    The notice of motion filed by the first respondent on 10 January 2011 seeking declarations and orders against the second respondent be dismissed.

5.    The amended notice of motion filed by the first respondent on 28 March 2011 seeking (inter alia) an order that this proceeding be dismissed be dismissed.

6.    The notice of motion filed by the first respondent on 16 April 2010 seeking leave to file a cross claim in this proceeding be dismissed.

7.    The first respondent pay the applicant’s costs of the application including his costs of the notices of motion referred to in orders 5 and 6 hereof.

8.    The first respondent pay the second respondent’s costs of the notice of motion referred to in order 4 hereof.

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

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    The applicants pay the first and second respondents’ costs.

3.    There be no order as to the third respondent’s costs.

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

REASONS FOR JUDGMENT

1    In these matters I delivered reasons for judgment on 15 November 2011 and made directions for the filing of written submissions in relation to orders: Wakeling v Wade [2011] FCA 1292. In these reasons I shall use the same abbreviations to describe the various proceedings and corporate entities that I used in my previous reasons for judgment.

2    Submissions have been received from Mr Wakeling. Submissions have also been received from Mr Leroy.

3    No submissions have been received from Ms Wade, Ms Clarke or Mr Trnka. When the matter was called yesterday there was no appearance for Ms Wade, Ms Clarke or Mr Trnka.

4    I was told by counsel for Mr Leroy that Ms Wade was made bankrupt upon her own petition on 9 December 2011. An extract from the National Personal Insolvency Index dated 15 December 2011 which is in evidence confirms what I was told. The same document shows that Ms Wade’s trustee in bankruptcy is the Official Trustee.

5    I am satisfied that it is appropriate to make a number of declarations in Proceeding 212 which give effect to my principal conclusions, namely:

(a)    the causes of action the subject of the family law proceeding vested in Mr Leroy upon his appointment as Ms Wade’s original trustee in bankruptcy and, assuming they have not yet been extinguished (see s 63 of the Limitation Act 1969 (NSW)), remain vested in him;

(b)    to the extent that any of the causes of action the subject of the Gloucester proceeding ever vested in either Ms Wade or Mr Leroy, these also vested in Mr Leroy upon his appointment as Ms Wade’s original trustee in bankruptcy and, assuming they have not yet been extinguished, they remain vested in him.

6    As to (b), the proposed order is qualified by the words “to the extent that” in recognition of my findings that at least some of the causes of action relied upon by Ms Wade in the Gloucester proceeding, which she claimed to have acquired by reason of assignments from GSR and AE, were never acquired by her at all.

7    In his written submissions Mr Wakeling also asked me to make declarations which reflected my specific findings concerning the assignments that were in issue. I do not think it is either necessary or desirable that I make such declarations. First, the reasons for dismissing Proceeding 212 are sufficiently apparent from my previous reasons for judgment. Second, shortly before the commencement of the hearing, Senior Counsel for Mr Wakeling informed me he was not pressing any claim for such relief even though it had been sought in the application.

8    Given that the proceeding brought by Mr Wakeling was only ever intended to resolve the question of the trustee’s title to the causes of action the subject of the Supreme Court proceedings, I think the declarations I propose to make are all that is required.

9    Costs would ordinarily follow the event and there is no reason why Ms Wade should not pay Mr Wakeling’s costs. However, Mr Wakeling has sought an order for indemnity costs against Ms Wade. In support of the application for indemnity costs, he relied upon a letter dated 27 August 2010 written “without prejudice save as to costs” which I was informed was sent to Ms Wade by his solicitors on that date. It states:

We refer to the following proceedings, and make the following offer of settlement in resolution of all:

1.    Wade v Muir & Wakeling (Supreme Court) 20026/08 proceedings

2.    Wade v Wakeling (Supreme Court) 20194/08 proceedings

3.    Wakeling v Wade & Leroy (Federal Court) NSD 212/10 proceedings

The above proceedings are inter-related and dependent upon each other and therefore make a global offer as follows.

1.    Judgment be entered in favour of Mr Wakeling, the second defendant in proceedings 20026/08 and the first defendant in 20194/08.

2.    Each party bear their own costs in relation to proceedings 20026/08 and 20194/08.

3.    Proceedings NSD 212/10 be discontinued.

4.    Each party bear their own costs in relation to proceedings NSD 212/10.

This offer is made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333. We reserve the right to produce this letter on the question of costs following a determination of any of the above-mentioned proceedings.

This offer is open for acceptance until 24 September 2010 at which time it is revoked and no longer capable of acceptance.

We note that following the entering of judgment in proceedings 20026/08 and 20194/08. [sic] Any declarations sought in relation to the assignment of causes of action by Ms Clarke and Mr Trnka in NSD 986/10 as far as they relate to Mr Wakeling would no longer be necessary.

10    What Ms Wade was asked to do in the letter of 27 August 2010 was to abandon both the family law proceeding and the Gloucester proceeding on terms that each party pay his or her own costs. There is no doubt that, with hindsight, she would have been much better off accepting the offer made to her. But it does not follow that it was unreasonable for Ms Wade not to accept it at the time it was made.

11    Mr Wakeling’s submissions on this issue, apart from referring to the fact that Ms Wade would have been better off if she had accepted his offer, did not explain why it followed that an order for indemnity costs should be made. The fact that Ms Wade would have been better off if she had accepted the offer is not in itself enough. In the circumstances, I am not persuaded that it is appropriate to make an order for indemnity costs on the basis of Ms Wade’s failure to accept the offer of 27 August 2010.

12    As to Ms Wade’s bankruptcy, it is not necessary for Mr Wakeling or Mr Leroy to seek leave to proceed under s 58(3) of the Bankruptcy Act 1966 (Cth) (the Act) for the purposes of obtaining a costs order against Ms Wade. This is because any such costs order, not having been made prior to the presentation of Ms Wade’s debtor’s petition on 9 December 2011, would not be a liability at the date of Ms Wade’s bankruptcy and could not constitute or give rise to a debt provable in such bankruptcy: see Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [65]-[68].

13    As to the declarations I propose to make, s 58(3) of the Act does not require the giving of any leave before they can be made. Neither of the proposed declarations is a “remedy against a person or property of the bankrupt in respect of a provable debt …”. Hence, it is not necessary for any order under s 58(3) to be made before making the declarations.

14    I shall also make orders disposing of the various notices of motion in accordance with my previous rulings. Here to, costs should follow the event.

15    Orders accordingly.

Associate:

Dated:    16 December 2011