Judge resists “over-compartmentalisation”

A Federal Court judge who pulled out all the stops after hearing details about a highly distressed bankrupt may have put a rocket up the law reform process.

In the matter of Meagher and Cronan (Trustee), in the matter of Laguzza (Bankrupt) v Laguzza [2024] FCA 314 Justice John Logan declared that he would direct the court to send copies of his orders and judgment to the Federal Member for Bennelong, Mr Jerome Laxale MP; the Secretary, Department of Communities and Justice, New South Wales and the “Attorney-General for the Commonwealth for such law reform consideration, if any, as he may deem fit in relation to the subject of referrals, where evidence in a bankruptcy proceeding reveals that there may be a need for the same to ensure the health and welfare of a bankrupt or his or her family”.

“That, in turn, provokes the thought that the separation of powers for which our Constitution provides as between legislative, judicial and executive branches of government ought not extend to a compartmentalisation to the point where one branch of government operates to the complete exclusion of others, where evidence discloses that other branches of government may be able to assist a person. Justice John Logan.

The issue of welfare was brought before the court in proceedings commenced by Jason Cronan and Anne Meagher in their capacities as trustees of the bankrupt estate of Ms Linda Laguzza.

The SV Partners pair applied to the court for leave to distribute a dividend to creditors despite the bankrupt not having complied with the requirement to produce a statement of affairs (SOA).

“What the evidence discloses though, in my view, is that Ms Laguzza, in all probability, has found herself in a spiralling situation of debt,” the judge said.

“Indeed, I suspect that, from the evidence, she is in quite some despair. The evidence discloses that she is a single mother. It also discloses that, when she was served with papers concerning the present application, she became quite emotional, and understandably so, if my suspicion is correct, with the process server.”

As the enormity of the bankrupt’s distress became clear, the judge considered whether the evidence being put before him shouldn’t be utilised more broadly.

“That, in turn, provokes the thought that the separation of powers for which our Constitution provides as between legislative, judicial and executive branches of government ought not extend to a compartmentalisation to the point where one branch of government operates to the complete exclusion of others, where evidence discloses that other branches of government may be able to assist a person.

“In these circumstances, I consider that it is overwhelmingly in the interests of justice that the Court, by a direction to the registrar, bring to the attention of other branches of government Ms Laguzza’s circumstances as revealed by the evidence.

Ms Laguzza’s residence at Ryde falls within the Federal electorate of Bennelong. It may well be that there is a range of Federal welfare support which could be provided, or additionally provided, to Ms Laguzza as a sequel to a visit to her by a welfare officer.

“We also live in a federation, so it may well be that there are state welfare support services that could be provided to her via the New South Wales Department of Communities and Justice.

“I also propose to direct the registrar to send a copy of the reasons for judgment to the Attorney-General for the Commonwealth for such law reform consideration, if any, as he may deem fit in relation to the subject of referrals, where evidence in a bankruptcy proceeding reveals that there may be a need for the same to ensure the health and welfare of a bankrupt or his or her family.” Mr Dreyfus, you have the conn.