Re Morris, Con Ex Parte Morris, Dina v McDonald, Geoffrey David [1996] FCA 922

NOT FOR DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA) GENERAL DIVISION ) NB 2183 of 1996 BANKRUPTCY DISTRICT OF THE STATE ) OF NEW SOUTH WALES ) RE: CON MORRIS Debtor EX PARTE: DINA MORRIS Applicant GEOFFREY DAVID McDONALD Respondent

CORAM: SACKVILLE J PLACE: SYDNEY DATE: 10 SEPTEMBER 1996 REASONS FOR JUDGMENT The applicant is the wife of a bankrupt. She applies pursuant to s.35A of the Bankruptcy Act 1966 (Cth) (the "Act") for an order that the proceedings be transferred to the Family Court of Australia. The proceedings relate to an application to annul the bankruptcy of her husband, pursuant to s.153B of the Act. The sequestration order against the estate of the husband was made because he filed a debtor's petition on 30 July 1996. I have been told from the bar table, although of course I make no judgment about it, that the debtor's petition was filed in breach of an undertaking that had been given by the husband in the course of the Family Court proceedings.

Mr Freeman, who appears for the applicant, has provided me with some details of the proceedings in the Family Court. It is not necessary to deal with those at length. However, it does appear from what I have been told and from the affidavit evidence that there were complex financial issues at stake in the proceedings between the wife and the bankrupt. It also appears that other parties were joined to the Family Court proceedings. These include the parents of the bankrupt and a company in which they have a substantial interest, if not control. O'Ryan J determined the Family Court proceedings. It appears that his Honour made a number of findings relating to the property available for orders under s.79 of the Family Law Act 1975 (Cth). In the course of making those findings, his Honour apparently made judgments about the credit of the bankrupt and of the wife. His Honour found, so I have been told, that claims by some persons to be creditors of the bankrupt were not made bona fide. Those claims are recorded in the statement of affairs filed on behalf of the bankrupt in this court. The matter is not an entirely straightforward one. Section 35A(1) and (3) provides that: "(1)...where a proceeding is pending in the Federal Court, the Federal Court may, on the application of a party to the proceeding or of its own motion, transfer the proceeding to the Family Court. (3)...where a proceeding is transferred to the Family Court: (a) the Family Court has jurisdiction to hear and determine the proceeding; (b) the Family Court also has jurisdiction to hear and determine matters not otherwise within its jurisdiction (whether by virtue of paragraph 9a) or otherwise): (i) that are associated with matters arising in the proceeding."

Mr Freeman points out that the issues that will arise on the annulment application are closely related to those that have arisen in the Family Court. He also suggests that there is a connection between the issues arising on the annulment application and further matters that might need to be determined by the Family Court. In particular, an application is on foot in the Family Court for enforcement of the orders made by that Court. The application may give rise to issues related to those presented by the annulment application. Mr Freeman does not suggest, however, that there is any inconsistency in the orders that have been made in the Family Court and those that might be made on the annulment application presently before this Court. In that respect, compare the case of Re Sabri; ex parte Sabri v Brien (1995) 19 Fam LR 710 (FCA/Davies J). I do not regard the matter as entirely clear cut, principally because it is by no means clear that O'Ryan J will deal with the matters arising under the annulment application if the proceedings are transferred to the Family Court. This is so because, as I have already indicated, O'Ryan J has apparently made some findings of credit adverse to the bankrupt. I have been informed by Mr Walker, who appears on behalf of the trustee, that the trustee may oppose the annulment application. Mr Walker has also indicated that if that course of action is adopted by the trustee it may be that objection would be taken to O'Ryan J dealing further with the matter. However, Mr Walker does not actively oppose the transfer of the proceedings to the Family Court. In the circumstances outlined by Mr Walker, it is likely that some of the benefit of transferring the matter to the Family Court will be lost. However, on balance I think that the appropriate course is to exercise the power conferred on me by s.35A of the Act. The Family Court is seized of the matter; there are obvious connections between the issues that need to be dealt with on the annulment application and those that have arisen and may continue to arise in the Family Court proceedings. In addition, as Mr Freeman has indicated, there will be some costs advantages if the matters are before the one court. The parties will have the advantage of knowing that all matters will be dealt with by the Family Court and of being able to arrange legal representation accordingly. I therefore make an order pursuant to s.35A of the Act that the proceedings in this Court, being NB2183 of 1996, be transferred to the Family Court of Australia, Sydney Registry. I reserve costs, but subject to any order of the Family Court, with the intent that the Family Court should be in a position to make such order as it thinks fit in relation to the costs of this application. I certify that this and the preceding 4 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville. Associate: Dated: Heard: 10 September, 1996 Place: Sydney Decision: 10 September, 1996 Appearances: Mr C.D. Freeman, instructed by Slade Manwaring, Solicitors, appeared for the applicant. Mr John Walker, Solicitor, of the Argyle Partnership, Solicitors, appeared for the Trustee.