Federal Court of Australia

PC Whitehall & Sons Pty Ltd v Gollant as trustee of the bankrupt estate of Livanidis [2025] FCA 993

ORDERS

THE COURT NOTES THAT:

A.    On 29 July 2025, Judge Kirton of the County Court of Victoria made a freezing order in proceeding CI-24-01886 against the assets of the Respondent (the Second defendant in that proceeding), which order (as extended) expires at 4pm on 20 August 2025.

B.    On 6 August 2025, Judge Burchell of the County Court entered judgment in favour of the Applicant against the Respondent in a claim arising out of a building contract, for the sum of $702,586.86 and the costs of and incidental to those proceedings.

C.    On 18 August 2025, the Respondent was made bankrupt on a debtor’s petition, and a trustee in bankruptcy was appointed.

D.    On 20 August 2025, Judge Wise of the County Court adjourned the hearing of an application to further extend the freezing order, to allow the Applicant to obtain leave to proceed under s 58(3) of the Bankruptcy Act 1966 (Cth) from a Court of competent jurisdiction.

E.    Later on 20 August 2025, the Applicant brought this application for orders under s 58(3) of the Bankruptcy Act, relying on Antares Global Pty Ltd v Mansfield (Trustee), in the matter of Yang (Bankrupt) [2018] FCA 441.

F.    The trustee of the bankrupt estate of the Respondent has indicated that the trustee will abide by any orders made by this Court.

THE COURT ORDERS THAT:

1.    Pursuant to s 58(3)(b) of the Bankruptcy Act 1966 (Cth), the Applicant has leave to take the following fresh step in proceedings CI-24-01886 in the County Court of Victoria, between the Applicant as Plaintiff and the bankrupt, Terry Livanidis, as Second defendant, and JAS LDS Pty Ltd as First defendant:

•    to apply to the County Court by 4pm on 21 August 2025 for a continuation of the freezing order freezing the assets of the Second defendant made by that Court on 29 July 2025 (as extended) which expires at 4pm on 20 August 2025.

2.    Liberty to apply.

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

REASONS FOR JUDGMENT

HILL J

Introduction

1    On 20 August 2025, the Applicant applied for leave under s 58(3)(b) of the Bankruptcy Act 1966 (Cth) to take the fresh step of applying in the County Court of Victoria for an extension of a freezing order made by that Court against the assets of the Respondent, a bankrupt. The application was made urgently, as the freezing order was due to expire at 4pm on 20 August 2025, and was dealt with by me as the general duty judge. I made orders on that date granting the Applicant leave. These are my reasons for making those orders.

2    The application was supported by an affidavit of John Sinisgalli sworn on 20 August 2025, which set out a procedural history of the County Court proceedings, and annexed the relevant orders made by that Court. The Court held a short hearing in the afternoon of 20 August 2025. The trustee in bankruptcy advised by email that the trustee would not appear, and would abide by the orders of the Court.

Background

3    County Court proceedings: I was informed that the County Court proceedings concern a dispute over a building contract. The Applicant in this proceeding is the Plaintiff, while the Respondent is the Second defendant. I was informed that the First defendant in the County Court proceeding (JAS LDS Pty Ltd) has gone into liquidation.

4    Freezing order (Jul 2025): On 29 July 2025, Judge Kirton of the Country Court made orders pursuant to Order 37A of the County Court Civil Procedure Rules 2018 (Vic), freezing the assets of the Respondent (the Freezing Order). The Freezing Order was subsequently extended by further orders, and was due to expire at 4pm on 20 August 2025.

5    Judgment against Respondent (6 Aug 2025): On 6 August 2025, Judge Burchell of the County Court conducted a trial, and entered judgment in favour of the Applicant against the Respondent, for the sum of $702,586.86 and the costs of and incidental to those proceedings.

6    Respondent declared bankrupt (18 Aug 2025): The Respondent subsequently filed a debtor’s petition with the Australian Financial Security Authority and was declared bankrupt with effect from 18 August 2025.

7    Hearing for extension of freezing order (20 Aug 2025): On 20 August 2025, Judge Wise of the County Court held a hearing to determine whether to extend the Freezing Order. Judge Wise stated that, in view of the fact that the Respondent was now bankrupt, his Honour was not prepared to extend the Freezing Order unless and until the Applicant obtained leave from a court of competent jurisdiction under s 58(3) of the Bankruptcy Act.

8    Application for leave (20 Aug 2025): The Applicant then brought these proceedings to obtain that leave.

legislative framework

9    Leave to take fresh step in proceedings: Section 58(3)(b) of the Bankruptcy Act provides that, except as provided by that Act, after a debtor has become a bankrupt, it is not competent for a creditor (emphasis added):

except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.

10    Section 58(3)(b) only applies in relation to a “provable debt” (which is defined in s 82). Here, the judgment debt was ordered against the Respondent on 6 August 2025. This debt is therefore a liability to which the Respondent was subject at the date of his bankruptcy on 18 August 2025, and a provable debt within s 82(1).

11    Applying for an extension of an existing freezing order is properly seen as a “fresh step” in the County Court proceeding. In Antares Global Pty Ltd v Mansfield (Trustee), in the matter of Yang (Bankrupt) [2018] FCA 441, Wigney J granted leave under s 58(3)(b) to permit the Applicant to make an application to the New South Wales Supreme Court for a continuation of a freezing order made by that Court. That result is consistent with cases such as Parker, In the matter of Purcom No 34 Pty Limited (In Liq) (No 2) [2010] FCA 624 at [52](2), where Gordon J accepted a concession that a party providing further material in support of the relief sought, and making further submissions as to the appropriate form of declarations and orders and filing proposed orders, amounted to “fresh steps” within the meaning of s 58(3)(b) of the Bankruptcy Act.

12    Leave under s 58(3)(b): The principles that apply to the grant leave under s 58(3)(b) of the Bankruptcy Act were recently summarised as follows by O’Callaghan J in GO Markets Pty Ltd v Gupta [2025] FCA 554 at [16], quoting Hillig, in the matter of Battaglia [2019] FCA 2191 at [6]-[8] (Wigney J):

    The purpose of the requirement for leave is to ensure that a bankrupt is not subjected to a multiplicity of actions which would be both expensive and time consuming, and in some cases unnecessary.

    The requirement for leave focuses attention on the choice between litigation and the proof of debt procedure in a bankruptcy. It will generally be appropriate for leave to be granted in cases where the issues would be better and more comprehensively dealt with by a contested trial of the action in a court proceeding than would be the case if the creditor was required to lodge a proof of debt in the debtor’s bankruptcy.

    The relevant factors cannot be stated exhaustively, and will vary from case to case. However, the factors generally considered to be relevant include: the amount and seriousness of the claims; the degree and complexity of the legal and factual issues involved; the stage to which the proceedings have progressed; the risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt; whether the claim has arguable merit; whether proceedings are already in motion at the time of the bankruptcy; whether the proceedings will result in prejudice to creditors; whether the claim is in the nature of a test case for the interest or large class of potential claimants; whether the grant of leave will result in further litigation; whether the cost of the hearing will be disproportionate to the size of the bankrupt estate; the risk of delay; and whether pre-trial procedures such as discovery and interrogatories are likely to be required or beneficial.

13    In Parrella v Trustee of the Property of Marino (Bankrupt) [2022] FCA 1530 at [13], Katzmann J referred to a similar range of factors.

14    Application of factors to this case: A distinctive feature of this case is that judgment has already been entered against the Respondent (the Second defendant in the County Court), before he became bankrupt. The “fresh step” for which leave is required is to continue a freezing order over his assets, rather than (say) a substantive hearing as to liability. Many of the factors set out above have a more limited relevance in this situation; for example, the degree and complexity of the claims involved. However, the following factors favour the grant of leave:

    The County Court proceedings were already in motion at the time of bankruptcy (indeed, by that time judgment had been entered in favour of the current Applicant in those proceedings). Certainly there is no suggestion that this application for leave has been made to gain an advantage over other creditors (see Parrella at [13](5)).

    There is no opposition from the trustee in bankruptcy to leave being granted (see Parrella at [13](4)).

    Leave is being sought only to apply for the extension of a freezing order. The continuation of that order does not harm the interests of other creditors; if anything, it may advance their interests by preventing the dissipation of assets that might properly form part of the bankrupt estate of the Respondent: see Antares Global at [4].

15    As noted, Wigney J granted leave under s 58(3) of the Bankruptcy Act in Antares Global in very similar circumstances to the present. The Applicant in this case sought orders to the effect of Order 1(a) made in Antares Global. I was satisfied that those orders should be made, but considered that the grant of leave should cover only the present application to extend the operation of the freezing order. For that reason, the orders contained a requirement that the Applicant apply to the County Court by 4pm on 21 August 2025. If a further extension of the freezing order is required, and further leave required under s 58(3), the orders provide for a liberty to apply.

16    Costs? The Applicant sought an order for costs, and for those costs to be payable from the bankrupt’s estate, so as to engage the priority in s 109(1)(a) of the Bankruptcy Act. I was not prepared to make that latter order. It is far from clear that the current application is a step in the administration of the bankruptcy, as distinct from a step to protect the interests of the Applicant particularly (albeit that all creditors may obtain some benefit from the continuation of the Freezing Order). As to whether costs should be payable at all, in both Parrella and Antares Global, the Court made no order as to costs. (I note that the orders in Antares Global disposing of the proceedings were made on a later date.) A costs order was made in GO Markets; however, the respondents in that case included the wife of the bankrupt.

Associate:

Dated:    21 August 2025