Clients granted leave nunc pro tunc to pursue bankrupt ‘adviser’

A bankrupt Western Australian ‘financial adviser' and her partner can expect to face action in relation to a $58,000 loan borrowed from clients.

The Federal Court of Australia backed an application by clients of Deborah O'Halloran, to grant leave nunc pro tunc to take fresh steps in a proceeding in the Magistrates Court of Western Australia and to commence and take fresh steps in an appeal to the District Court of Western Australia from an order dismissing a claim in the Magistrates Court proceeding.

Court documents revealed that on 13 February 2012, Bradley Mader and his partner, Loren Amanda Beckwith, commenced proceedings against O'Halloran, claiming she had failed to repay a loan of $58,000 plus interest made to her.

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On 2 October 2013 the applicants commenced a claim against O'Halloran's partner, Joyce Bee Hong Lim, on the grounds that in making the loan, O'Halloran had acted for Lim as an undisclosed principal.

The applicants claimed that O'Halloran and Lim had used the money to pay a deposit to purchase a unit in Brisbane. However, the contract fell through and neither O'Halloran nor Lim repaid the loan.

The matter was set down for trial on 26 May 2014, however, on 16 May 2014, O'Halloran became bankrupt upon her own debtor's petition, and on 28 November the Magistrates Court gave judgement against O'Halloran in the sum of $75,000 (comprising the $58,000 loan, plus interest), but dismissed the claim against Lim.

Less than two months later the applicants lodged an appeal in the District Court in respect of the dismissal claim against Lim, however, the presiding judge adjourned the appeal to permit the applicants to take steps to obtain leave from the Federal Court nunc pro tunc in relation to taking fresh action.

"The following factors weigh in favour of granting leave retrospectively in respect of the Magistrates Court proceeding, notwithstanding that judgment has been entered," the Federal Court ruling said.

"First, the Magistrates Court proceeding involves claims against one party who subsequently became bankrupt, and another party who was, and is, solvent, and the controversy between the parties is still extant in the sense that an appeal has been brought in respect of the claim against the solvent party.

"Secondly, because the judgment obtained against the bankrupt is not be to be enforced, there is no special circumstance arising from the fact that judgment against the bankrupt has been entered, which, if leave was given, would be inimical to the policy underlying s 58(3) of the Bankruptcy Act.

"Thirdly, the grant of the nunc pro tunc leave would not undermine the underlying policies of the Bankruptcy Act by preferring one creditor over another. This is because the applicants have advised the Official Trustee that they do not intend to enforce the judgment which they obtained against Ms O'Halloran.

"Fourthly, the Official Trustee does not object to the granting of the leave."

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