Federal Court of Australia

Pekar v Jess (Trustee) [2022] FCA 1367

ORDERS

THE COURT ORDERS THAT:

1.    The Applicant’s interlocutory application for an extension of time dated 8 November 2021 be dismissed.

2.    The Applicant pay the Respondents’ costs of the proceeding to be taxed, if not agreed.

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

REASONS FOR JUDGMENT

HESPE J:

The application

1    This is an application by Mr Pekar seeking an extension of time in which to bring an application pursuant to s 104 of the Bankruptcy Act 1966 (Cth) (the Act) for review of the decision of his trustees in bankruptcy (the Respondents) to admit proofs of debt in whole or in part.

2    The extension of time is required because, subject to the Court extending time, an application under s 104 must be made within 21 days from the date on which the trustees’ decision was made: s 104(1), (3). Mr Pekar lodged his application over 90 days after the Respondents had admitted the proofs of debt.

3    Mr Pekar was self-represented. Notwithstanding the observations of Mortimer J in Pekar v Jess (Trustee) [2021] FCA 1519 at [11]–[12], no litigation guardian has been appointed for Mr Pekar and the Court is not aware of any application for guardianship orders having been made. Although pro bono representation was initially provided to Mr Pekar in relation to this application, Mr Pekar dismissed his Counsel.

4    The application for an extension of time was supported by affidavits sworn by Mr Pekar dated 28 October 2021, 19 January 2022, 4 April 2022, 12 April 2022, 14 April 2022 and 15 July 2022. Those affidavits were essentially in the form of submissions. The Respondents filed an affidavit in response sworn by Mr Kucianski dated 1 September 2022. Following the hearing of this matter on 30 September 2022, Mr Pekar filed a further affidavit dated 5 October 2022.

5    For the reasons set out below, I have determined that an extension of time should not be granted.

Background

6    As Mortimer J noted in Pekar [2021] FCA 1519, Mr Pekar has been contesting various proceedings about his bankruptcy for a considerable period of time. The history of the proceedings can be found in Pekar [2021] FCA 1519, Moshinsky J’s decision in Pekar v Jess (Trustee) [2020] FCA 1250 and Snaden J’s decision in Pekar v Holden [2021] FCA 141.

7    As at 8 September 2017, the date for lodgement of proofs of debt, the following proofs of debt had been lodged with Mr Pekar’s former trustee in bankruptcy (Former Trustee), totalling approximately $98,000:

(1)    on 11 February 2015, AIG Australia Limited (AIG) lodged a proof of debt for $60,254.79, relating to various costs orders dated 12 July 2010, 15 July 2010, 22 December 2011 and 17 August 2012 made in favour of Gough Partners;

(2)    on 31 August 2017, Karen Katz lodged a proof of debt for $5,318.18, relating to a costs order in her favour made on 18 June 2013 plus penalty interest; and

(3)    on 6 September 2017, Michael Rickards lodged a proof of debt for $32,202.29, relating to costs orders in his favour plus interest.

8    On 7 November 2017, Mr Pekar was discharged from bankruptcy.

9    As at 7 November 2018, the Former Trustee had not yet admitted any proofs of debt.

10    Following orders made by Justice Moshinsky on 18 November 2019 in Pekar v Holden (Trustee) (No 3) [2019] FCA 1928, the Official Trustee became the trustee of the bankrupt estate of Mr Pekar.

11    On 13 March 2020, the Respondents were appointed as joint trustees of the bankrupt estate of Mr Pekar.

12    As at 9 July 2020, the Respondents had not formally adjudicated the proofs of debt. The Respondents gave evidence in Pekar [2020] FCA 1250 that it is “usual practice for a trustee of a bankrupt estate to only formally adjudicate proofs of debt submitted by creditors where there are assets which can be readily realised and distributed to creditors, owing to the costs and expenses associated with and incurred by the adjudication process and any subsequent challenge to the admission or rejection of proofs of debt” (at [47]). As at 9 July 2020, the Respondents as trustees were without funds to conduct this process or to otherwise further the administration of the estate.

13    In July 2020, in addition to the debts referred to at para [6] above, the liabilities of Mr Pekar’s bankrupt estate potentially included:

(1)    legal expenses in proceedings before Judge Burchardt and Tracey J totalling about $135,000;

(2)    the Former Trustee’s unpaid remuneration and expenses totalling about $136,000;

(3)    the Official Trustee’s outstanding remuneration of $2,500;

(4)    the Respondents’ remuneration of about $21,500; and

(5)    further remuneration and costs to finalise the proceedings in Pekar [2020] FCA 1250 in and the administration.

14    By affidavit dated 21 July 2020, filed and read in Pekar [2020] FCA 1250, one of the trustees, Mr Kucianski, relevantly stated that:

(a)    while it was likely that AIG had a provable debt in the bankrupt estate, in the absence of certificates of taxation he did not intend to admit its claim;

(b)    Ms Katz’s claims in the bankrupt estate appeared to be admissible for $4,244.91; and

(c)    he was seeking further advice regarding aspects of Rickards Legal’s claim.

15    Justice Moshinsky in Pekar [2020] FCA 1250 expressed the following concern (at [51]):

I note that, in my view, the total amount incurred by way of trustee remuneration and expenses is very troubling. On the basis of the figures set out above, the total amount incurred by way of trustee remuneration and expenses is approximately $295,000 in respect of an estate that has only three creditors, whose claims (if accepted in full) total only approximately $98,000. The total of the trustee remuneration and expenses (even if reduced on account of the costs orders against Mrs Pekar) appears to be disproportionate to the complexity and quantum of the claims against the bankrupt estate. At the hearing before me, Mr Galvin QC, senior counsel for the Trustees, accepted that the amount was disproportionate (T13), but submitted that this was common in cases where the administration of the estate has involved litigation; he also submitted that the litigation in the present case was necessary because the Pekars did not accept that the transfer of Mr Pekar’s interest in the Property [to Mrs Pekar] was voidable. At the hearing before me, both sides accepted that it is open to Mr Pekar to seek review of the trustee remuneration and expenses.

16    His Honour further observed (at [57]):

I note for completeness that the Trustees submitted that, in the ordinary course, a bankruptcy trustee realises assets before adjudicating on proofs of debt. A similar point was made in [8] of Mr Kucianski’s affidavit dated 1 July 2020. However, it may be that, in the circumstances of this case, it would be more appropriate to adjudicate upon the proofs of debt before obtaining possession of and selling the Property; that is because the quantum admitted may be relevant (together with other relevant considerations) in determining whether it is necessary and appropriate to obtain possession of and sell the Property.

17    A warrant for possession of the home of Mr Pekar and his wife was issued on 25 March 2021 and notices to vacate the property were given to Mr and Mrs Pekar in July 2021. The warrant was executed in December 2021.

18    The Respondents adjudicated the proofs of debt on the following dates:

(a)    AIG on 30 July 2021;

(b)    Karen Katz on 3 August 2021; and

(c)    Rickards Legal on 3 August 2021.

19    Any application under s 104 was required to be made within 21 days from these dates.

20    By letter dated 3 August 2021, Mr Pekar was notified of the outcome of the adjudication of the claims.

21    Mr Pekar filed his application for review of the Respondents’ decision to admit the proofs of debt on 8 November 2021. Mr Pekar later filed a notice of discontinuance in the proceeding on 18 November 2021. He filed an interlocutory application seeking leave to reinstate his application on 25 January 2022.

22    The Respondents were served with Mr Pekar’s interlocutory application and served their notice of appearance on 4 April 2022.

23    As mentioned above, pro bono representation was appointed to assist Mr Pekar and the Respondents provided Mr Pekar with their files relating to the proofs of debt. Pro bono Counsel ceased to act following the withdrawal by Mr Pekar of his instructions to act on 14 July 2022.

Statutory Context

24    Section 104 of the Act provides:

Appeal against decision of trustee in respect of proof

(1)    A creditor, or the bankrupt, may apply to the Court for review of a decision of the trustee under subsection 102(1), (3) or (4) in respect of a proof of debt.

(2)    The Court may, upon the application, confirm, reverse or vary the decision of the trustee.

(3)    Subject to the power of the Court to extend the time, an application under this section to review a decision shall not be heard by the Court unless it was made within 21 days from the date on which the decision was made.

25    Section 102 relevantly provides:

Admission or rejection of proofs

(1)    The trustee shall examine each proof of debt and the grounds of the debt sought to be proved and, subject to the power of the Court to extend the time, shall, not later than 14 days after the expiration of the period specified in the notice of intention to declare a dividend as the period within which creditors may lodge their proofs of debt, either:

(a)    admit the proof of debt in whole;

(b)    admit it in part and reject it in part;

(c)    reject it in whole; or

(d)    require further evidence in support of it.

26    Section 82 relevantly provides:

Debts provable in bankruptcy

(1)    Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.

…

(2)    Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.

Extension of Time

27    Having filed his application for review after the end of the 21 day period provided for in s 104, in order to make his application, Mr Pekar requires the Court to exercise its power to extend time.

28    The power to extend time is to enable the Court to do justice between the parties. The power is “broad and flexible”, to be exercised where it is “just in all the circumstances”: Rocom International Pty Ltd v Prentice [2002] FCA 604 at [4] (Tamberlin J), citing Jackamarra v Krakouer (1998) 195 CLR 516 at 539–43 (Kirby J). In Rocom [2002] FCA 604, Tamberlin J referred (at [4]) to the judgment of Kirby J in Jackamarra 195 CLR at 539–43 and said that factors relevant to an application for an extension of time include:

•    whether it is just in all the circumstances to grant an extension;

•    whether the time limits are of a substantive or procedural nature;

•    whether the case is arguable;

•    respective prejudice to the parties;

•    length of delay;

•    responsibility and reasons for the delay;

•    whether the delay was intentional or the result of a bona fide mistake;

•    whether the delay was caused by the litigant or legal advisers.

29    This approach has been adopted in the context of an extension of time for an appeal against a liquidator’s decision relating to a proof of debt in the context of former s 1321 of the Corporations Act 2001 (Cth): Re Pan Pharmaceuticals Ltd (in liq); Brennan v McGrath [2011] NSWSC 561 at [5] (Ward J).

30    In Derwinto Pty Ltd (in liq) v Lewis (2002) 42 ACSR 645 at 655 [47]–[48]; [2002] NSWSC 731, Austin J (citing Tamberlin J in Rocom [2002] FCA 604) distilled the principal factors for consideration on an application for extension of time to appeal from a decision in relation to a proof of debt, as:

(a)    delay (including the length and nature of the delay, and the responsibility and reasons for it);

(b)    prejudice to the respective parties; and

(c)    whether the claim is arguable.

31    I consider such an approach to be appropriate here.

Delay

32    The time limit imposed by s 104(3) reflects the time at which the legislature has balanced the public policy considerations as to finality of creditor claims in the context of the process of bankruptcy. The delay in this case was considerable in the context of a statutory limit of 21 days. I am also conscious of the long litigious history of this bankruptcy. The proposed proceedings will further prolong its finalisation. Absent explanation, the length of the delay would be a factor weighing heavily against an extension.

33    Mr Pekar did not address the reasons for delay in his affidavits filed before the hearing. At the hearing he told the Court that the reason for his delay was that, in early August, he was dealing with the trauma of losing his family home and directing his attention and energies to addressing his and his wife’s impending eviction from that property. Following the hearing, he filed an affidavit to that effect.

34    There is no doubt that the loss of the family home was a serious and personal tragedy for Mr and Mrs Pekar: see Pekar [2021] FCA 1519 at [8] (Mortimer J). However, Mr Pekar has been aware of the claims of his creditors for many years and is not unfamiliar with the provisions of the Act. Although I am not prepared to accept the Respondents’ submission that leave should not be granted by reason of an unexplained delay, the nature and extent of the delay is to be weighed in the consideration of the entirety of the circumstances.

Prejudice to the parties

35    There has been significant delay in the administration of the estate, largely attributable to the litigious conduct of Mr Pekar. That litigious conduct has also resulted in the estate incurring significant costs. As Mortimer J observed in Pekar [2021] FCA 1519, Mr Pekar’s predicament, particularly in terms of the size of the liabilities, is largely of his own making (at [16]).

36    If an extension of time is granted, there will be further delay to the finalisation of the estate. Due to the size of the liabilities incurred as a result of the litigious conduct of Mr Pekar, the Respondents do not expect there to be any return to creditors. In these circumstances, the question of the validity or quantum of the debts appears to be of no practical consequence, other than to increase the costs incurred by the estate and to delay the finalisation of the bankruptcy.

Arguable Claim

37    The underlying application is one for review of the Respondents’ decision to admit the proofs of the debt. The onus is on the party seeking the review of the trustee’s decision to satisfy the Court that the proofs of debt should not be admitted, based on the material that is before the Court: Re Masters; Ex parte Gerovich at 3 (unreported, Toohey J, 30 July 1985); Daevys v Official Trustee in Bankruptcy [2011] FCA 398 at [13]–[14] (Flick J); Coshott v Burke [2012] FCA 517 at [56] (Rares J); Williamson v Michell (Trustee) [2019] FCA 481 at [21] (Moshinsky J); Shaw v Official Trustee in Bankruptcy (No 2) [2019] FCA 1574 at [30] (Snaden J).

38    Mr Pekar’s underlying claim that the Trustee ought not to have admitted the proofs of debt appeared to be based on three contentions:

(1)    The debts were not proven (for the purposes of s 104 of the Act) because neither the trustee nor the creditors had sought an order from the Court that the debts were provable. Mr Pekar had informed the Trustee in July 2020 and some of the creditors (Rickards Legal and Karen Katz) by correspondence in September 2015 that he disputed their proofs of debt.

(2)    The debts were not provable in bankruptcy pursuant to s 82 of the Act because the Trustee had not admitted the debts prior to the bankruptcy coming to an end but instead admitted the proofs of debt some four and a half years after Mr Pekar’s discharge from bankruptcy. The debts were not debts to which Mr Pekar was subject at the date of his bankruptcy.

(3)    The debts were not provable in bankruptcy pursuant to s 82 of the Act because they were in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust.

First Contention

39    Mr Pekar’s first contention appears to assume that a debt can be proven for the purposes of the Act only if proven by a creditor in proceedings instituted for that purpose by the creditor in a court of law. That assumption is wrong.

40    By virtue of s 83, a creditor is taken to have proved a debt when a proof of debt lodged by him or her in respect of the debt has been admitted. Section 84 sets out the form and content requirements for a proof of debt. A proof of debt must, amongst other things, be in accordance with the approved form: s 84(2)(b). Section 84(3) enables a trustee to require a creditor to verify the matters in a proof of debt by statutory declaration. Section 102 imposes a duty on a trustee in bankruptcy to examine each proof of debt and the grounds of the debt, and make a decision to admit or reject the proof of debt, in whole or in part, or to require further evidence in support of the proof of debt. There is no requirement under the Act for the creditor to prove their debt in a court of law before a trustee can admit the proof of debt.

Second Contention

41    Mr Pekar’s apparent assumption that he was not subject to the debts claimed by the creditors because those debts had not been “proven” prior to his discharge and the end of the administration of his estate is also misconceived.

42    Section 82 applies to obligations to which Mr Pekar was subject at the date of his bankruptcy or to which he might have become subject before his discharge by reason of an obligation incurred before the date of the bankruptcy. The section applies to debts subsisting at the date of bankruptcy.

43    As is evident from the structure of the Act, whether a bankrupt is subject to a debt (or has incurred an obligation) at the date of bankruptcy is a matter separate and distinct from whether a debt is proven in bankruptcy. The process of admission is for the trustee in bankruptcy to undertake in accordance with ss 84 and 102. There is no requirement under the Act for a debt to be proven in a court of law before the debt can be taken to be proven for the purposes of the Act.

44    Mr Pekar submitted that the Act clearly declares that the bankruptcy arising from personal insolvency is in force for three years and that no debts can be admitted after the bankruptcy is discharged and at the end of the administration of the estate. This submission is misconceived for the following reasons:

(1)    Nothing in the terms of s 82 prevents the trustee in bankruptcy from admitting, after the discharge of bankruptcy, a proof of a debt to which a bankrupt was subject at the date of bankruptcy.

(2)    The expression “end of an administration of an estate” is relevantly defined in s 5–5 of Schedule 2 (“the Insolvency Practice Schedule (Bankruptcy)”) in the following terms:

In this Schedule:

…

“end of an administration” of a regulated debtor’s estate means:

(a)    in the case of a bankruptcy—the day on which the bankrupt is discharged or the bankruptcy is annulled, whichever happens first…

The definition applies only for the purposes of Schedule 2. It is relevant to the requirements imposed by that Schedule on trustees to maintain records. Section 70-35 of Schedule 2 requires a trustee to retain all books relating to the administration of the estate for a period of “7 years from the end of the administration”. The definition has no application outside of Schedule 2.

(3)    As Moshinsky J held in Pekar [2019] FCA 442 at [70], property vested in a trustee in bankruptcy continues to be so vested after the discharge of the bankrupt and remains subject to creditors’ provable and proven debts. The discharge relates to the bankrupt personally and not to his estate: Daemar v Industrial Commission of New South Wales (No 2) (1990) 22 NSWLR 178 at 182 (Kirby P, Clarke and Meagher JJA).

(4)    Section 129AA provides for the revesting of property in the bankrupt on the sixth anniversary of the date on which the bankrupt is discharged, unless a valid extension notice is given pursuant to s 129AA(4). There is no suggestion that the six year anniversary has been reached.

45    Each of the debts, proof of which was admitted by the Respondents, arose as a result of costs orders made prior to the date of Mr Pekar’s bankruptcy. They were debts to which Mr Pekar was subject at the date of his bankruptcy. His discharge from bankruptcy did not alter that fact. The effect of discharge was to liberate Mr Pekar personally from the claims of creditors which related to debts and liabilities present or future, certain or contingent, to which he was subject at the date of his bankruptcy. The discharge of his bankruptcy did not liberate the assets which had vested in the trustee in bankruptcy or have the effect of making creditor claims not provable.

Third Contention

46    Pursuant to s 82(2), subject to certain exceptions, demands in the nature of unliquidated damages are not provable in bankruptcy. As Murphy J explained in Polis v Zombar (2019) 134 ACSR 486 at 496–7; [2019] FCA 69:

[32]    Section 82(1) of the [Act] provides a wide definition of debts provable in bankruptcy, subject to some carve-outs in following subsections. In Re Hide; Ex parte Llynvi Coal & Iron Co (1871) 7 LR Ch App 28 at 31, cited with approval in relation to s 82 in Coventry (as trustees of the Mike and Lyn Coventry Family Trust) v Charter Pacific Corporation Ltd (2005) 227 CLR 234; [[2005] HCA 67 at [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ)], James LJ said in relation to an equivalent provision:

Every possible demand, every possible claim, every possible liability, except for personal torts, is to be the subject of proof in bankruptcy, and to be ascertained either by the Court itself or with the aid of a jury. The broad purview of this Act is, that the bankrupt is to be … freed not only from debts, but from contracts, liabilities, engagements, and contingencies of every kind. On the other hand, all the persons from whose claims, and from liability to whom [the bankrupt] is so freed are to come in with the other creditors and share in the distribution of the assets.

[33]    The purpose of s 82 is to capture and have proved in the bankruptcy a broad range of debts and liabilities. It is aimed at ensuring that the assets of the bankrupt are distributed rateably among creditors, that one creditor does not obtain an undue advantage over other creditors, and at bringing about the discharge of the debtor from future liability for his or her existing debts, so that the debtor may start afresh without lingering disabilities and with the immunities achieved through bankruptcy remaining in place: [Re McMaster; Ex parte McMaster (1991) 33 FCR 70 at 72–3 (Hill J)]; Official Receiver in Bankruptcy v Todd (1986) 14 FCR 177 at 188 … (Spender J).

[34]    Section 82(2) provides a carve-out from the definition of provable debt. Understood in conjunction with s 82(1) it means that an unliquidated claim for damages that arises by reason of a contract, promise or breach of trust is a provable debt, and an unliquidated claim that is not by reason of a contract, promise or breach of trust is not provable. Liquidated claims for damages are provable unless such claim falls within one of the other carve-outs.

Whether the proposed claims are for unliquidated damages

[35]    The distinction between liquidated and unliquidated claims was classically described by Odgers in Pleading and Practice, 12th ed, 1939, p 47–8 in the following terms, approved in Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 at 142 … (Knox CJ and Starke J):

…whenever the amount to which the plaintiff is entitled (if he is entitled to anything) can be ascertained by calculation or fixed by any scale of charges, or other positive data, it is said to be liquidated or “made clear”. But an action in which the amount to be recovered depends upon all the circumstances of the case, and no one can say positively beforehand whether the plaintiff will recover a farthing, or 40 shillings, or £100, is an action for unliquidated damages.

47    Included in the material before the Court was an affidavit of Mr Kucianski, which comprehensively set out the background to the proofs of debt in this case.

48    Orders for costs are not in the nature of unliquidated damages. Although the amount may not have been calculated at the time of the order, the amount is capable of ascertainment.

49    The circumstances in which a debt arising from the making of a costs order is provable in bankruptcy were explained by Gleeson CJ, Gummow, Hayne and Crennan JJ of the High Court in Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; [2007] HCA 56 in the following terms (at [67]):

Had the costs order … been made and taxed before the appellant’s bankruptcy ensued, it would have been a provable debt. Even if the order had not been taxed before bankruptcy, it would nonetheless have been provable as a debt incurred “by reason of an obligation incurred before the date of the bankruptcy”; namely the antecedent making of the costs order.

50    AIG’s proof of debt is based on the costs orders made by the Supreme Court of Victoria, the Victorian Civil and Administrative Tribunal and the Magistrates’ Court of Victoria against Mr Pekar prior to his bankruptcy. Even though the amount of costs was subject to quantification at the time of the costs orders and at the date of Mr Pekar’s bankruptcy, the costs orders were not in the nature of claims for unliquidated damages. The debts arose upon the making of each costs order. Provided the costs order is made before bankruptcy, the order for costs gives rise to a debt provable in bankruptcy even if it is taxed after bankruptcy: Foots 234 CLR 52 at 76 [67] (Gleeson CJ, Gummow, Hayne and Crennan JJ).

51    Although the Respondents may have intended not to admit proof of the AIG claim absent certificates of taxation, rather than pursuing a formal taxation of costs, the Respondents obtained independent costs assessments for the costs underpinning AIG’s proof. The Respondents’ sworn evidence was that the independent costs assessments determined that, if the costs were to be taxed, the sum of $45,414.77 would likely be allowed. The Respondents admitted AIG’s claim in this amount and rejected the balance. Because there were no formal certificates of taxation, no claim for interest was admitted. There is nothing before the Court to suggest that the claim ought not to have been admitted on that basis.

52    Some of Mr Pekar’s submissions made at the hearing relating to the AIG debt were fanciful. He submitted that the AIG debt was the product of a conspiracy. He had never heard from AIG prior to his bankruptcy and had had nothing to do with them.

53    Mr Pekar has failed to understand the basis for AIG’s claim. As Snaden J explained in Pekar [2021] FCA 141 at [14], Mr Pekar’s proceedings appear to hark back to a property dispute that he (and possibly also his wife) had with Gough Partners Pty Ltd. That dispute appears to have spawned proceedings in 2008 in the Supreme Court of Victoria and at least eight other suits in the Magistrates’ Court and the Victorian Civil and Administrative Tribunal. Those proceedings (or some of them) resulted in a number of costs orders being made against Mr Pekar, some on an indemnity basis. AIG’s proof of debt related to costs orders against Mr Pekar granted in favour of Gough Partners Pty Ltd (which held a professional liability policy with AIG).

54    AIG’s claim against the estate of Mr Pekar arose by reason of AIG’s rights of subrogation because AIG had paid Gough Partners’ legal costs under the professional liability policy. As was explained by Mason J (as he then was) in the decision of the High Court in A.F.G. Insurances Ltd v City of Brighton (1972) 126 CLR 655 at 663, “[t]he doctrine [of subrogation] comes into operation when the insurer meets his liability under the policy by making payment to the insured in respect of his loss. The insurer is then subrogated to the relevant rights of the insured”.

55    It is not surprising that Mr Pekar had not had any dealings with AIG prior to the claim made by AIG, as that claim arose by reason of an insurance policy to which Mr Pekar was not a party. There is no basis on which an inference might be drawn that there is any conspiracy by AIG against Mr Pekar or his estate or that AIG’s claim lacked legitimacy.

56    Based on the material before the Court, there can be no suggestion that the Katz claim or the Rickards Legal claim are claims in the nature of unliquidated damages.

(1)    The Katz claim is based on a fixed sum costs order with interest calculated up to the date of bankruptcy. Her claim exceeds the quantum of her taxed costs because of the interest to which she is entitled. Contrary to the assertions of Mr Pekar, it is not to be inferred from the fact that Ms Katz lodged an amended proof of debt with the Respondents that she perpetuated or attempted to perpetuate any fraud on Mr Pekar’s estate.

(2)    The Rickards Legal proof of debt is based on a costs order for which certificates of taxation were obtained. Rickards Legal originally lodged proofs totalling over $51,000, in respect of nine costs orders granted in its favour against Mr Pekar. Each was supported by a certificate of taxation. Although some of the costs orders were made after the commencement of Mr Pekar’s bankruptcy, the orders provided for the costs to be payable out of the bankrupt estate. This latter category of costs are not provable debts. The costs orders that constituted provable debts totalled approximately $19,477 plus interest to the date of bankruptcy of approximately $805. Contrary to the assertions of Mr Pekar, it is not to be inferred from the fact that the Respondents received an amended proof of debt from Rickards Legal containing only the provable portion of the claim that Rickards Legal perpetuated or attempted to perpetuate any fraud on Mr Pekar’s estate.

57    There is nothing in the material before the Court to support a conclusion that Mr Pekar has any arguable claim for review under s 104 of the Act.

Conclusion

58    For the reasons set out above, an extension of time to file the application under s 104 is refused.

Costs

59    The Respondents have sought an order for costs against Mr Pekar. Following the decision of the High Court in Foots 234 CLR 52, the liability for costs does not arise until the costs order is made. An order for costs made against Mr Pekar now is not a debt provable in Mr Pekar’s bankruptcy and would not be taken to be discharged by reason of Mr Pekar’s bankruptcy. As Jackson J held in Frigger v Trenfield (No 11) [2022] FCA 326 at [27], the Court can make a costs order against an applicant after their discharge from bankruptcy.

60    The effect of a costs order against Mr Pekar personally results in the Respondents having recourse to his assets that do not form part of his bankrupt estate.

61    I am also mindful that Mr Pekar is self-represented, although I note that the circumstances by which Mr Pekar came to be self-represented are largely of his own making. As Hodgson CJ (in Equity) stated in Bhagat v Royal & Sun Alliance Life Assurance Australia Limited [2000] NSWSC 159 (at [13]):

I accept that a court does have to make allowances for the position of litigants in person, and to try to ensure that such a litigant does not lose out because of lack of expertise; although there is a limit to what the Court can do in that regard, while still remaining an impartial determinant of a dispute. The Court may in those circumstances refrain from making orders against litigants in person for conduct that might be considered as justifying orders for costs against represented litigants. By the same token, litigants in person can cause great hardship and expense to other parties, through making allegations and claims that lawyers would recognise as allegations and claims that could not reasonably or even properly be made, and through making proceedings much longer and much more expensive than they otherwise would be, by not focusing accurately on the real issues in the case. Conduct of that nature by legally represented parties would often lead to orders for indemnity costs. Litigants in person may escape the consequence of indemnity costs, but I do not think that the circumstance that a party is a litigant in person is a ground for displacing the ordinary result that costs follow the event.

62    I consider that that there is no ground for displacing the ordinary rule that costs follow the event. As a result of this order being made following Mr Pekar’s discharge from bankruptcy, costs will be ordered against him. I am conscious of the unfortunate consequence this has for Mr Pekar. Whilst Mr Pekar’s sense of grievance at his circumstances may on a human level be understandable, his overall predicament is largely the result of his constant and persistent attempts to agitate issues without reasonable legal basis.

Associate:    

Dated:        18 November 2022