Case Note: Kimber v Clark in his capacity as trustee of the property of Kimber (No 3) [2025] FCA 86
Alexander Clark and Andrew Aravanis, as the trustees of the bankrupt estate of Janelle Kimber (Ms Kimber) (a regulated debtor) (Trustees), represented by Kerrs, were successful in their application for summary dismissal, following Ms Kimber applying to have her bankruptcy annulled.
In reaching her determination, Justice Perry discusses the principles in any summary dismissal application – not only those brought in respect of an annulment of bankruptcy.
BACKGROUND
Although Ms Kimber was discharged from bankruptcy on 23 August 2022, her interests in a property she owned at the time of being made bankrupt remained vested in the Trustees. That property was sold, however the proceeds remain held in trust and have not been distributed for the benefit of Ms Kimber’s estate.
Following earlier applications filed by Ms Kimber across various proceedings, on 7 March 2023, Ms Kimber filed an application seeking to have her bankruptcy annulled pursuant to s 153B of the Bankruptcy Act 1966 (Cth) (Act). Included in that application were orders seeking interim relief in respect of the property – for a stay of a Writ of Possession; and a stay of a Notice to Vacate.
On 15 March 2023, the Trustees filed their own application, seeking that Ms Kimber’s application for annulment be struck out pursuant to r 16.21 of the Federal Court Rules 2011 (Cth) (FCR), and an order that Ms Kimber be prevented from filing any further applications without leave of the Court. At this point in time, the Trustees have not pressed for the latter order to be made.
Between Ms Kimber filing the application and the hearing on 13 December 2024:
1. Ms Kimber’s application for interim relief was heard and dismissed, and she sought leave to appeal that decision including for the leave application to be brought out of time. Ms Kimber ultimately withdrew her application for leave to appeal.
2. Ms Kimber filed an application seeking that Judge Perry recuse herself from the proceeding, alleging impartiality. Ms Kimber discontinued that application prior to it being heard.
3. The Trustees amended their application seeking to move for summary dismissal of Ms Kimber’s application for annulment pursuant to r 31A of the Federal Court of Australia Act 1976 (Cth) (FCA) and r 26.01 of the FCR, rather than a strike out application pursuant to r 16.21 of the FCR.
RELEVANT PRINCIPLES: SUMMARY DISMISSAL
Section 31A of the FCA and r 26.01(1)(a) of the FCR sets the relevant test for summary dismissal, being where there is “no reasonable prospect of successfully prosecuting the proceedings”: Shammas v Canberra Institute of Technology [2014] FCA 71.
Poor drafting otherwise does not necessarily warrant summary dismissal because any deficiencies relating to drafting can be cured by a granting of leave to amend. In coming to this conclusion, a summary of the relevant principles in Przybylowski v Australian Human Rights Commission (No 2) [2018] FCA 473 were set out, including that:
1. the respondent bore the onus of proving to the Court that the application had no reasonable prospects of succeeding;
2. the pleadings do not disclose any reasonable cause of action and such deficiency was incurable; and
3. the discretion rested with the court in circumstances where the complete facts were not known, and such discretion therefore ought to be exercised with caution.
Her Honour referred to the judgment of Reeves J in Australian Securities and Investments Commission v Cassimitis (2013) 220 FCR 256 where his Honour noted the requirement to “critically examine the available materials to determine whether there is a real question of law or fact that should be decided at trial”. She also noted that it is “an abuse of process to maintain an action which is doomed to fail”: Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 at 393.
RELEVANT PRINCIPLES: DISCRETION TO ANNUL A BANKRUPTCY
Section 153B(1) of the Act provides the court with the power to annul a bankruptcy – if the debtor’s petition ought not to have been presented; or if the petition ought not have been accepted. However, the court may exercise its discretion even if the bankrupt was insolvent at the time of presentation under s 153B(2).
Her Honour noted that the lack of solvency in this matter was a central issue as there were unpaid creditors in the estate. The relevant principles were set out in Symes v Holbrook [2003] FCA 96 as follows:
1. “ought not to have been presented” is understood to be where it is apparent the debtor was not insolvent at the time the petition was presented: Re Coyle (1993) 42 FCR 72;
2. “ought not to have been made” in respect of a sequestration order is understood to be where the true facts where unknown at the time of making the order and a similar threshold is required in respect of “ought not to have been received”: Re Almassy [1999] FCA 1004; and
3. the court is required to firstly look at whether ineligibility is established and then exercise its general discretion.
DECISION
Her Honour determined that this was a “clear case where the application should be summarily dismissed [as the] application for annulment is respectfully without any merit.” This is in circumstances where:
1. the application for annulment contained “scandalous, vexatious and frivolous material” which were “not supported by admissible or persuasive evidence and do not rise above bare assertion”;
2. there is no reasonable cause of action disclosed on the annulment application and therefore no reasonable prospects of the court exercising its discretion, including where:
– no compelling basis, such as a proposal for paying out creditors or the costs of administering the estate, was made;
– the evidence led by Ms Kimber does not establish solvency;
– Ms Kimber sought that the court go behind the original judgment debt which caused her to present her petition, despite Markovic J previously declining to do so with detailed reasons;
– an outcome where all that has occurred since Ms Kimber was made bankrupt would be for nought would be contrary to the public interest underlying bankruptcy;
– it would be unfair and unjust where Ms Kimber is partly responsible for the length and expense of the administration of her estate and to do so would deprive the Trustees of their remuneration;
– there has been considerable delay in Ms Kimber seeking an annulment; and
– there can be no restitution via a re-vesting of the property to Ms Kimber where it has already been sold; and
3. it is an abuse of process as, despite Ms Kimber being aware from at least 31 March 2023 that such an application would be doomed to fail, she proceeded to prosecute her annulment application.
Ms Kimber’s application was ultimately dismissed, with costs.
COMMENTARY
This decision provides valuable guidance for those seeking a dismissal of proceedings on a summary basis. Bankruptcy Trustees must otherwise remain vigilant in ensuring that the interests of the creditors of a bankrupt estate are preserved when the bankrupt (discharged or otherwise) makes an application to the court that is without merit.
Authors: Belinda Aoude, Associate & Rizza Andrada, Paralegal
The full text of the judgment can be downloaded here – https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2025/2025fca0086