Federal Court of Australia

Dimitriou v Piscopo [2021] FCA 1201

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to file a notice of discontinuance of the proceeding.

2.    The applicant file a notice of discontinuance of the proceeding within three days of these orders.

3.    If the applicant fails to file a notice of discontinuance of the proceeding as required by Order 2, the proceeding be dismissed.

4.    The applicant pay the first respondent’s costs of the proceeding on an indemnity basis.

5.    The applicant pay the second, third and fourth respondents’ costs of the proceeding on a party and party basis.

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

REASONS FOR JUDGMENT

(Delivered ex tempore)

STEWART J:

1    Mr Dimitriou’s estate was sequestrated by orders of Wigney J on 30 August 2019 for the reasons published as Pineview Property Holdings Pty Ltd v Dimitriou (No 2) [2019] FCA 1416.

2    Mr Dimitriou appealed against those orders. The appeal was dismissed on 8 December 2020 for the reasons published as Dimitriou v Pineview Property Holdings Pty Ltd [2020] FCAFC 218 (Markovic, Anastassiou and Stewart JJ).

3    On 26 April 2021, Mr Dimitriou commenced the present proceeding in which he has at all times been self-represented. The originating application cited only one respondent, namely Samuel Piscopo personally and as trustee of Mr Dimitriou. For convenience I shall refer to Mr Piscopo as the trustee. The relief sought is the annulment of the sequestration order under s 153B(1) of the Bankruptcy Act 1966 (Cth), punitive costs including against certain third-parties not cited as respondents, unspecified damages and the following orders:

4.     An order that the Respondent, Samuel Piscopo in his own right and as Trustee of the Bankrupt Estate of George Dimitriou is permanently unable to perform the functions and duties of a trustee because of mental incapacity. The trustee is not a fit and proper person.

5.     An order requiring the Respondent, Samuel Piscopo in his own right and as Trustee of the Bankrupt Estate of George Dimitriou to answer an inquiry made to him in relation to the bankruptcy which the trustee is, or has been, engaged.

6.     Pursuant to regulation Part 8 Division 3 of the Bankruptcy Regulations 2021 an order that Samuel Piscopo cease to be trustee.

4    The proceeding was initially managed by Markovic J in the Bankruptcy List. On 10 June 2021, Markovic J ordered that Mr Dimitriou serve the application on the named third parties and that he give notice of the application to each person known to him to be a creditor of his estate.

5    Mr Dimitriou apparently failed to do what he was required to do because on 1 July 2021 Markovic J extended time for both those steps and ordered that he amend his originating application either to remove reference to the third parties or to join the third parties.

6    On 19 July 2021, Mr Dimitriou filed an amended originating application which cites the third parties, namely the second, third and fourth respondents. The relief was also slightly amended to make it clear what relief is sought against the first respondent, the trustee.

7    On 10 August 2021, the trustee filed an interlocutory application which seeks the striking out of Mr Dimitriou’s application “insofar as orders sought against the first respondent” pursuant to r 16.21 of the Federal Court Rules 2011 (Cth) and, alternatively, security for costs of the proceeding in the sum of $133,195. Markovic J made orders on that day programming the interlocutory application for hearing and referring the matter to be allocated to a docket judge. The programming orders required Mr Dimitriou to file and serve submissions on the interlocutory application on or before 7 September 2021. The final set of submissions, being those by the second, third and fourth respondents, was to be filed by 28 September 2021.

8    On the matter being allocated to my docket, I listed the interlocutory application for hearing today, i.e., 5 October 2021.

9    Mr Dimitriou did not file submissions on the interlocutory application.

10    The day before the hearing of the interlocutory application, which was a public holiday in New South Wales, Mr Dimitriou sought to file a document purporting to be a notice of discontinuance of the whole of the proceeding. The notice was in the following terms:

1.    Pursuant to Subrule 13.01(2)(b) Federal Circuit Court Rules 2001, Leave be granted by a registrar, dispensing of the proceedings.

2.    The First Respondent’s Interlocutory Application set down for hearing at 10:15am on 5 October 2021 vacated. [sic]

11    The deficiencies in and inappropriateness of those provisions of the notice are self-evident.

12    When the matter was called for hearing, Mr Dimitriou confirmed that he seeks leave to file a notice of discontinuance of the whole of the proceeding. He however submitted that he should not have to pay the costs of the proceeding because of the “actions of the trustee” which he said that he “didn’t wish to elaborate today”. He also referred to certain events related to a public examination conducted by the trustee, but no evidence of those events was adduced, or sought to be adduced, before me. If there is some irregularity or prejudice in that proceeding, then that proceeding is the proper place for it to be dealt with.

13    Ms Drayton who appeared for the trustee submitted that I should not grant leave to Mr Dimitriou to discontinue the proceeding but should rather decide the trustee’s interlocutory application. When I questioned the utility of that course, Ms Drayton submitted that the trustee is entitled to the benefit of a res judicata. However, when I pointed out that all that the interlocutory application sought was the striking out of certain relief in the originating application and not the summary dismissal of that relief, Ms Drayton rightly accepted that no res judicata would arise from a decision on the interlocutory application. On that basis, Ms Drayton accepted that leave should be granted for the filing of a notice of discontinuance.

14    In relation to the discontinuance, Ms Drayton submitted that the trustee should have his costs on an indemnity basis and not merely on the ordinary basis. In that regard she read and relied on an affidavit sworn by her on 5 August 2021. Mr Dimitriou did not object to the reading of that affidavit provided that he could read and rely on paragraphs 14 to 21 of an affidavit of Francisco Rubino affirmed on 10 June 2021. Ms Drayton did not object to those paragraphs being read. Ms Drayton also tendered three emails between her and Mr Dimitriou on 21 December 2021 (exhibit “A”).

15    Mr Fielder, who appeared for the other respondents, submitted that they should also have their costs on an indemnity basis and referred to and relied on the submissions of Ms Drayton in that respect.

16    I am satisfied that since Mr Dimitriou wishes to discontinue the proceeding and that there would be no possible utility in maintaining the proceeding in those circumstances, he should have leave to discontinue it. He accepted that a period of three days to file such a notice of discontinuance would be more than adequate.

17    It would obviously be prejudicial to the other parties, and indeed to the efficient management of the proceeding, if having obtained leave to file a notice of discontinuance Mr Dimitriou failed to file such a notice within the stipulated time. Given that he has stated his unequivocal intention to discontinue the proceeding, I will direct him to file the requisite notice within three days and order that if he fails to do so then on account of that default the proceeding be dismissed. That is a power specifically given to the Court by rr 5.21(a) and 5.23(1) of the Rules. Mr Dimitriou accepted the appropriateness of such an order.

18    I am not satisfied that there is any reason to depart from the usual rule (as expressed in r 26.12(7) of the Rules) that the party filing the notice of discontinuance should be liable to pay the costs of each other party to the proceeding. By seeking to discontinue the proceeding, Mr Dimitriou seeks to remove from consideration by the Court his allegations of misconduct against the trustee. In those circumstances, he cannot rely on those allegations to justify not paying the trustee’s costs. In any event, those allegations, even if established, are no justification for not paying the costs of the other respondents.

19    Insofar as indemnity costs are concerned, there are a number of matters that are relevant.

20    First, the evidence sought to be relied on by Mr Dimitriou, namely the Rubino affidavit, goes essentially to Mr Dimitriou’s complaints about the trustee. That is to say, they are the same complaints which Mr Dimitriou no longer wishes to be heard or determined in this proceeding. They are not matters that I can make any findings on in relation to the costs question.

21    Secondly, Mr Dimitriou has conducted the proceeding in an appallingly unprofessional, discourteous and inflammatory fashion. I accept that he is self-represented and can on that basis expect some leeway in the sense that he will not be held to the same standard of conduct to which a lawyer as an officer of the court will be held. However, as a litigant before the Court he is under an obligation to conduct the proceeding in a way that is consistent with the overarching purpose, namely to facilitate the just resolution of the dispute according to law as quickly, inexpensively and efficiently as possible: Federal Court of Australia Act 1976 (Cth), ss 37M and 37N. That includes an obligation that parties cooperate with one another to assist in achieving the overarching purpose: Central Practice Note: National Court Framework and Case Management (CPN-1), [7.2]. The Court expects litigants to behave reasonably and to not engage in intemperate, abusive, harassing and inflammatory correspondence. If parties find it necessary to make serious allegations, then they must be in a position to justify them.

22    In that regard, within the context of this proceeding Mr Dimitriou has written correspondence to Ms Drayton which is intemperate and harassing and has included inflammatory and unsupported allegations, including (with errors retained):

(1)    “Either you are on another planet or Samuel Piscopo is totally mentally unstable.”

(2)    There is a “Piscopo purgery and scheme”.

(3)    “You are obviously becoming as dillusional as your client Piscopo and simply have nothing better to do on the weekend including late Sunday evening whereas you are attempting to justify yours and your clients incompetence once again.”

(4)    “You ought to concern yourself with your clients mental state of mind and as a consequence his demise as a registered trustee and accountant that he chose to that path.”

(5)    “You are also part of the ‘Piscopo scheme‘, you and that crazy man Piscopo that continues to make baseless assertions and creditor claims that are nonsense and baseless.”

(6)    “I will not be subjecting myself to this mentally unstable idiots game no longer and proceeds to have removed as trustee.”

23    Mr Dimitriou’s correspondence to the trustee is similar, including the following statements:

(1)    “… you appear to me to simply be an extremely frustrated and twisted individual that is holding a vendetta against me without any reason.”

(2)    “Unfortunately, it will come after your bankrupted because of paying my legal fees and those of your own defending my application.”

24    It is also to be observed that despite Mr Dimitriou having filed affidavits in support of his originating application, he filed no evidence in support of the allegation that the trustee is unable to perform his functions and duties “because of mental incapacity”.

25    Thirdly, Mr Dimitriou initially failed to cite the necessary parties. When he was given the opportunity to do so, he failed to do so within the requisite timeframe. He also failed to give notice to creditors. He was then given the opportunity to do so, but entered into a dispute as to whether creditors who were identified by the trustee as having lodged proofs of debt were in fact creditors, refusing to accept that they were required to be served because of their interest in the annulment relief that he sought whether or not their debts were ultimately admitted. As a consequence, he prolonged the proceeding and caused costs to be wasted.

26    Mr Dimitriou also failed to file submissions, and then at the last minute sought to discontinue the proceeding. That caused the Court and the respondents to unnecessarily prepare for the hearing of the trustee’s interlocutory application. That conduct was not only discourteous, but also wasteful.

27    In my assessment, those factors, taken together, are sufficient to justify an indemnity costs order against Mr Dimitriou. He brought the proceeding which makes serious allegations with apparently little evidence to support them, delayed and defaulted in the conduct of the proceeding and engaged in intemperate and inflammatory correspondence, and then ultimately sought to discontinue the proceeding on the eve of the hearing of the interlocutory application. That form of harassing conduct is to be deprecated and should be discouraged. A punitive costs order may serve that end.

28    However, I am not satisfied that the costs of the second, third and fourth respondents should be paid on an indemnity basis. They have been brought to the proceeding only recently and had no direct interest in the trustee’s interlocutory application that was listed for hearing today. No serious allegations have been made against them, and as far as I am aware they have not been subjected to abusive and harassing correspondence. They should have their costs on the ordinary basis.

29    A question arises as to the point of a costs order in favour of the trustee against a bankrupt in litigation concerning the administration of a bankrupt estate. That is because the trustee is in any event entitled to a full indemnity out of the trust estate against all costs, charges and expenses properly incurred: Adsett v Berlouis [1992] FCA 549; 37 FCR 201 at 209-210 (Northrop, Wilcox and Cooper JJ); Lathwell v Lathwell [2008] WASCA 256 (S) at [4] (Pullin and Buss JJA and Le Miere AJA). However, it may be that the bankrupt has funds acquired after sequestration against which the costs order can operate in which event the trustee can, pursuant to his obligation to protect the interest of creditors of the estate, recover his costs from such property. The costs debt is not a provable claim in the estate because the liability to pay the debt arises only after sequestration, and as such the bankrupt would not be free of the liability upon discharge and the trustee would be free to pursue it: Bankrutpcy Act, s 82; Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; 234 CLR 52 at [9]-[10] (Gleeson CJ, Gummow, Hayne and Crennan JJ).

30    In the result, I make the following orders:

1.    The applicant have leave to file a notice of discontinuance of the proceeding.

2.    The applicant file a notice of discontinuance of the proceeding within three days of these orders.

3.    If the applicant fails to file a notice of discontinuance of the proceeding as required by Order 2, the proceeding be dismissed.

4.    The applicant pay the first respondent’s costs of the proceeding on an indemnity basis.

5.    The applicant pay the second, third and fourth respondents’ costs of the proceeding on a party and party basis.

Associate:

Dated:    5 October 2021

SCHEDULE OF PARTIES