Trustees in the hole after bankrupt’s appeal

A successful appeal in the Federal Court has left two registered trustees facing a hefty costs order from an unenviable position deep in the hole on their fees.

The pair, who’ve been pursuing almost $550,000 they claimed the bankrupt had paid into his superannuation fund to defeat creditors, had opposed the appeal.

But the decision handed down this week by three appellant court judges must have made them weep. And that’s not all.

The appellant is the bankrupt, which stings of course, and the trustees’ lawyers, who sources say aren’t happy about the difficulties they supposedly had obtaining clear instructions, are rumoured to be buried beneath the abyssal plain in respect of their own fees.

The matter came to light on Monday this week when the judges delivered their decision in Do (Trustee), in the matter of Andrew Superannuation Fund v Sijabat [2023] FCAFC 6.

Vincents director Nick Combis and his former Vincents colleague Louisa Sijabat had opposed the appeal brought by the bankrupt, one Tien Dung Do.

The bankrupt had sought to overturn declarations and orders made in the Federal Circuit and Family Court in April last year which found that payments Do made totalling $437,767, $7,159 and $25,000 in the financial years ending 30 June 2013, 30 June 2014 and 30 June 2015 respectively into his self managed superannuation fund were void as against Sijabat in her capacity as joint and several trustee of Do’s bankrupt estate.

The trustees had also won orders pertaining to interest generated by the impugned payments but failing any appeal they may now choose to pursue, Monday’s decision represents a massive about face in fortunes for Combis and Sijabat, the latter of which has only recently left Vincents to found her own firm, Merchant Advisory.

Our mail is that the trustees’ lawyer declined a six figure settlement on the morning the appeal was scheduled to be heard.

iNO also understands that despite several requests the trustees or their lawyers never provided a written annulment calculation to Roser Lawyers, which acted for Do on the appeal.

Director Raymond Roser told iNO that informally, the other side told him annulment would require a payment by the bankrupt “in the vicinity of $2,000,000”.

While neither the trustees or their lawyers at Chamberlains would confirm or deny the numbers, iNO is informed that they have respectively clocked up $600,000 and $900,000 in remuneration and expenses on the case.

Given the petitioning creditors claim was for $50,000 and the ATO was in their for less than $1500 we’re not surprised a written annulment calculation was never provided.

Roser said he was doubtful that the trustees would seek leave to appeal.

“Our client was very pleased with the outcome, which was a testament to Steven Golledge SC and Josh Raftery of Counsel and also to the efforts of Roser Lawyers’ lawyer Dean Vosnakis and graduate Kerissa Naicker who assisted in the preparation of the appeal.

“It appears unlikely special leave would be granted for a further appeal to the High Court of Australia given the findings of the Full Court of the Federal Court,” Roser said.

The question now is who is going to pay Do’s costs of about $80,000?

Sijabat confirmed that both she and Combis remained jointly and severally appointed but couldn’t say how the job was going to be carved up between them now she has moved out from underneath the shrinking umbrella that was once Vincents’ national practice.

Combis and the Chamberlains solicitor on record Stipe Vuleta were contacted for comment but did not respond by deadline.