Federal Court Denies Late Appeal in Bankruptcy Case

OUTCOME: Dismissed

FEDERAL COURT OF AUSTRALIA

[APPELLANT] v The Hills Shire Council (No 3) [2012] FCA 523 Citation: [APPELLANT] v The Hills Shire Council (No 3) [2012] FCA 523

Parties: [APPELLANT] v THE HILLS SHIRE COUNCIL, [APPELLANT] and [APPELLANT] number: NSD 690 of 2011

Judge: [NAME] J

Date of judgment: 4 May 2012

Legislation: Bankruptcy Act 1966 (Cth) s 52

Cases cited: Jess v Scott (1986) 12 FCR 187 [APPELLANT] v The Hills Shire Council [2012] FCA 521

Date of hearing: 4 May 2012

Place: [APPELLANT]: GENERAL DIVISION

Category: No catchwords

Number of paragraphs: 25

[NAME]: [APPELLANT] applicant appeared in person

Counsel for the [APPELLANT]: [[APPELLANT]]

Solicitor for the [APPELLANT]: [COUNSEL] of The Hills Shire Council

Counsel for the second and third respondents: [redacted]

Solicitor for the second and third respondents: [redacted]

Solicitor for [NAME]: [COUNSEL] of [NAME]

IN THE FEDERAL COURT OF AUSTRALIA [APPELLANT] 690 of 2011

BETWEEN: [APPELLANT]

Applicant

AND: THE [APPELLANT] OF ORDER: 4 MAY 2012 [APPELLANT]

THE COURT ORDERS THAT:

1. The applicant's application for leave to file and serve a notice of appeal out of time, filed on 19 May 2011, be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA [APPELLANT] 690 of 2011

[APPELLANT]

Applicant

AND: THE [APPELLANT] [APPELLANT] [APPELLANT]

JUDGE: [NAME] J DATE: 4 MAY 2012 PLACE: [APPELLANT] FOR

JUDGMENT 1 I have before me an application for leave to file and serve out of time a notice of appeal from orders made by the Federal Magistrates Court on 12 May 2009. On that day, [NAME] ordered that a sequestration order be made against the estate of the applicant, Mr [APPELLANT], who is also known as [APPELLANT]. His [NAME] ordered that all proceedings under that order be stayed for a period of 21 days, and ordered that the costs of the applicant, The Hills Shire Council, be taxed and paid from Mr [APPELLANT]'s estate. 2 The application for an extension of time was filed on 19 May 2011. The respondents to that application are The Hills Shire Council (the Council) and the [NAME] in bankruptcy appointed following the making of the sequestration order (the [NAME]). The application for an extension of time is opposed by the respondents. [NAME], a firm of solicitors who had acted for Mr [APPELLANT] in relation to various different sets of litigation ([NAME]), and who appeared on the hearing of the bankruptcy petition, also oppose the grant of an extension of time. 3 Mr [APPELLANT] appeared without legal representation today, although at various times lawyers have appeared for him in the proceeding. On 3 June 2011, Mr [COUNSEL], solicitor, filed a notice of appearance in court. On 14 September 2011, a notice of change of lawyer was filed, stating that Mr [APPELLANT] had appointed Ms [APPELLANT], of [NAME], to represent him in the proceeding in place of Mr [NAME]. Mr [NAME] filed a notice of ceasing to act on 16 September 2011. No notice of ceasing to act has been filed in relation to Ms [NAME]. However, as I indicated in reasons that I gave earlier today for refusing Mr [APPELLANT]'s application for an adjournment (see [APPELLANT] v The Hills Shire Council [2012] FCA 521) there was some evidence, proffered in connection with that application, that Ms [APPELLANT] was not free to represent Mr [APPELLANT] today. 4 The draft notice of appeal attached to the application for leave filed on 19 May 2011 specifies three grounds. They are as follows: 1. "Compensation monies received by the Applicant/Appellant were not considered when sequestering my estate" [sic] 2. "Pursuant to s116[2] Bankruptcy Act 1966 [Cth], protected monies are exempt the provisions of s116[1]" [sic] 3. "Compensation monies are protected monies" [sic] 5 Those grounds do not make a great deal of sense. The thrust of the complaint by Mr [APPELLANT] appears to be that, although he has substantial assets, those assets are derived from moneys paid to him as compensation for injuries received in the course of his employment. He says that those moneys, and the property that represents the moneys, do not form part of his estate for the purpose of distribution to creditors. While that question has been ventilated from time to time by Mr [APPELLANT] in the course of this proceeding, and in another related proceeding concerning the review of a decision of the [NAME], it is not a matter that was ventilated before the Federal Magistrates Court when the sequestration order was being sought by the Council. Further, it appears that, on 3 May 2012, Mr [APPELLANT] commenced a fresh proceeding in the Court seeking review of decisions of the [NAME] in relation to the treatment of property that Mr [APPELLANT] says was acquired with the proceeds of workers compensation payments. 6 Even if Mr [APPELLANT] now has some well-founded complaint about the conduct of the [NAME] in relation to exempt assets, that has nothing to do with the question of whether a sequestration order should have been made. The question of what property of Mr [APPELLANT]'s was divisible among his creditors was not raised before the Federal Magistrates Court. There was no error on the part of the Federal Magistrates Court in that regard. It is clear that an appeal based on the grounds specified in the draft notice of appeal could not possibly succeed, and would be doomed to failure. That is a basis for refusing the application for an extension of time. 7 However, in the course of oral submissions today, Mr [APPELLANT] also raised other grounds upon which he complained about the making of the sequestration order. First, he complained that the Federal Magistrates Court took account of contentions advanced on behalf of [NAME] as a supporting creditor. [NAME] recorded that [NAME] claimed a debt of $244,677, together with interest, in respect of bills of costs rendered to Mr [APPELLANT] between January and July 2008. Mr [APPELLANT] had not requested assessments of the bills under the Legal Profession Act 2004 (NSW), as he would have been entitled to do. His [NAME] observed that those bills represented debts for which [NAME] were entitled to prove in Mr [APPELLANT]'s bankruptcy, although they were not bills of costs that had yet been made the subject of a judgment of a court. They therefore could not have been the subject of a bankruptcy notice. Mr [APPELLANT]'s complaint about [NAME]'s reference to [NAME] is that he now asserts that there was some arrangement that the fees were to be paid only after a property had been sold. That is not a matter that appears to have been put before the Federal Magistrates Court. 8 The second matter complained of by Mr [APPELLANT] in the course of his submissions today concerns the reference made by [NAME] to evidence advanced by Mr [APPELLANT] that he had received an offer of a line of credit from the [COMPANY] of approximately $500,000. Mr [APPELLANT] submitted to me today that his [NAME] ought to have adjourned the hearing of the bankruptcy petition to enable those arrangements with the bank to be finalised. However, his [NAME] observed that the offer from the [COMPANY] was incomplete, and that there appeared to be another document that set out the conditions upon which it was proposed that the loan be given. His [NAME] considered that he had so little evidence of the loan that he did not believe that he could take it into account to the extent that he would decline to grant a sequestration order. 9 Mr [APPELLANT] apparently contended in the Federal Magistrates Court that the proceeding should be dismissed under s 52(2) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), on the basis that the Court was satisfied that he was able to pay his debts. The reasons of [NAME] [APPELLANT] indicate that one of the grounds upon which Mr [APPELLANT] opposed the making of a sequestration order was that he was solvent, by reason of his ownership, at least in part, of a parcel of [NAME] that he said was worth at least $5 million, a value that appears to have been conceded by the Council. 10 [NAME] [NAME] referred to the fact that the property identified by Mr [APPELLANT] as having a value of at least $5 million was held in joint names and was unlikely to be sold for some time. There is no evidence before me of the arrangements with the [COMPANY] that would suggest that there was any error on the part of [NAME] [NAME] in declining to take the arrangements into account. In fact, his [NAME] granted a stay of the sequestration order for the maximum period of 21 days. His [NAME]'s reason for doing so was that Mr [APPELLANT] said that all he needed to do to have the loan from the [COMPANY] materialise was to obtain his wife's signature on the documentation and present it to the [COMPANY]. Mr [APPELLANT] said that, if he received payment from the [COMPANY], he would pay the Council. [NAME] was not prepared to dismiss the application, but considered that the appropriate course was to make the sequestration order subject to the stay. If the debt had been paid, it would have been open to Mr [APPELLANT] to seek annulment of the bankruptcy. There does not appear to be any basis for concluding there was any error on the part of [NAME] in that regard. 11 A third matter raised by Mr [APPELLANT] as a ground for complaint concerns the debt that was owing to the Council, and which formed the basis for a bankruptcy notice upon which the Council's petition was founded. [NAME] referred to what, as his [NAME] understood it, was a long-running dispute between Mr [APPELLANT] and the Council over certain [NAME]. It appears that there was an appeal on foot against certain decisions of the New South Wales [NAME] & [ADDRESS]. However, his [NAME] observed that the costs order that was the basis of the petition did not relate to the proceedings that were the subject of the appeal. His [NAME] was unable to see how Mr [APPELLANT]'s complaints about the Council, including the existence of the appeal, constituted sufficient cause, for the purposes of s 52(2) of the Bankruptcy Act, for refusing to make a sequestration order. His [NAME] referred to assertions by Mr [APPELLANT] that the Council had brought the case for an improper motive. His [NAME] was not satisfied that that assertion had been made out, and was not satisfied that any successful appeal that was then current would alter the situation. 12 In the course of his submissions about the Council today, Mr [APPELLANT] went beyond what appears to have been put to [NAME] [NAME]. His submissions involved an assertion that the order for costs that was made by the [NAME] & [ADDRESS] was incompetent, because it was made in a proceeding that had been struck out or dismissed for want of appearance and had not been reinstated. The evidence as to that matter is not entirely clear. Mr [APPELLANT] has tendered an extract from the record of the [NAME] & [ADDRESS] in proceeding 41243 of 2004. Insofar as it is possible to understand that extract, the course of the proceeding that resulted in the costs order appears to be as follows. 13 The proceeding in the [NAME] & [ADDRESS] had been fixed for hearing on 19 January 2005. However, on that day [NAME] CJ ordered that the hearing date be vacated and that the proceeding be stood over to 16 February 2005 at 9.15am before a class 4 judge of that Court. On 16 February 2005, the matter was apparently called on before [NAME]. Mr [APPELLANT] appeared in person, but there was no appearance for the Council. It appears that [NAME] made an order that the proceeding be dismissed for want of prosecution. There is a further note on the file that, on 22 February 2005, a motion was filed to be listed for 4 March 2005. That appears to have been an ex parte application made to the [NAME] & [ADDRESS], and the note suggests that Mr [APPELLANT] was to be notified of that application. 14 On 4 March 2005, the [NAME] & [ADDRESS] apparently made an order, although the terms of the order are not clear. At that time, the Council was represented by counsel and Mr [APPELLANT] appeared in person. The parties were directed to approach the Registrar for a hearing date. A note on the file made later on the same day indicates that the hearing of 19 January had been adjourned and that the proceeding would be fixed for hearing on 14 March 2005 before a judge. 15 On 14 March 2005 the proceeding came before [NAME] for hearing. [NAME] gave reasons for making orders on that day, which included orders restraining Mr [APPELLANT] from carrying out or undertaking a use of pig keeping on his property. [NAME] also made a declaration that that property was being used as a junkyard, in breach of provisions of the [NAME] Act 1979 (NSW), and made an order restraining Mr [APPELLANT] from carrying out or undertaking the use of a junkyard on the property. The final order made by [NAME] was that Mr [APPELLANT] pay the costs of the proceedings. In due course, costs were assessed and judgment was entered for the Council in the [ADDRESS] for the amount of the costs taxed and assessed. That is the order that apparently founded the bankruptcy petition. 16 Mr [APPELLANT]'s complaint appears to be that there was no proper reinstatement of the proceeding that had been dismissed by [NAME] on 16 February 2005. It would be curious for [NAME] to have embarked on a hearing, made the orders that I have indicated, and given reasons for those orders, if [NAME] had not ordered the reinstatement of the proceeding. In any event, the [NAME] and [ADDRESS] is a superior court of record. The material before me does not support any contention that the order for costs made by the [NAME] & [ADDRESS] was incompetent. In any event, as I have said, that matter was not ventilated before [NAME]. 17 Even if the proposed notice of appeal raised the additional matters to which I have referred, I am not persuaded that there is any substance at all in those matters. I am not persuaded that there is any prospect that any such ground could succeed, in the event that an extension of time were granted. Any such grant would therefore be futile. 18 In any event, the respondents also oppose the grant of an extension of time by reason of the excessive delay on the part of Mr [APPELLANT] in making the application. No complaint is made about the conduct of the proceeding, once it was commenced on 19 May 2011. The matter was adjourned by consent to enable Mr [APPELLANT] to take steps to obtain access to funds, such access having been denied by orders made by the Family Court of Australia. The complaint is as to the delay between the making of the sequestration order on 12 May 2009 and the filing of the application for an extension of time on 19 May 2011, more than two years later. 19 Under the Federal Court Rules in force on 12 May 2009, any notice of appeal from the orders of the Federal Magistrates Court was required to be filed and served within 21 days after the date on which the judgment appealed from was pronounced. Order 52 rule 15.1(b) provided that a notice of appeal could be filed and served within such further time as was allowed by the Court or a judge, upon application filed within that period of 21 days. Clearly, that requirement was not satisfied. There was, however, a provision in Order 52 rule 15.2 to the effect that, notwithstanding anything in the preceding sub-rule, the Court or a judge, for special reasons, might at any time give leave to file and serve a notice of appeal. Thus there is power for the Court to extend the time for filing a notice of appeal, notwithstanding that the application is brought after the expiration of a period of 21 days. 20 The expression special reasons is intended to distinguish the case from the usual course, according to which the relevant period is 21 days. It may be so distinguished wherever the Court sees a ground that does justify departure from the general rule in the particular case. Such a ground would be a special reason because it would take the case out of the ordinary (see Jess v Scott (1986) 12 FCR 187 at 195). In considering whether an extension of time should be granted, several factors are ordinarily to be taken into account. Apart from the question of the merits of the substantial application – that is, the merits of the appeal assuming leave were granted – one such factor is whether or not there is an acceptable explanation for the delay, such that it would be fair and equitable in the circumstances to extend time. Another factor would be whether any prejudice to the respondents would be caused by the delay. 21 In his application, Mr [APPELLANT] has relied on three affidavits sworn by him on 19 May 2011, 31 January 2012 and 9 March 2012. There is very little material in those affidavits directed to explaining the delay between 12 May 2009 and 19 May 2011. In that regard, it is of some significance that, shortly after the making of the sequestration order, Mr [APPELLANT] paid the amount claimed by the Council. He then made two applications to the Federal Magistrates Court. The first was an application to extend the stay ordered by [NAME]. It appears that on 5 June 2009 [NAME] refused that application. [NAME] observed that, where there is no appeal, the Federal Magistrates Court has no power to grant a stay beyond the period of 21 days allowed for in s 52(3) of the Bankruptcy Act. [NAME] was not satisfied that she had power to extend the stay beyond the period of 21 days. The significance of that observation is that it might at least have drawn Mr [APPELLANT]'s attention to the fact that he may have had a right of appeal. 22 Rather than dismissing the application for an extension of the stay, [NAME] considered that the appropriate way to deal with the application was to adjourn the matter to the date for the return of a separate proceeding commenced by Mr [APPELLANT] on 20 May 2009, seeking annulment of the bankruptcy. I have no evidence relating to the application for an annulment, other than that an order was made by [NAME], on 13 October 2009, that the application for an annulment be dismissed by consent. Thus, it appears that Mr [APPELLANT] had some knowledge of a basis for seeking relief in respect of the sequestration order. There is no suggestion in his evidence that he sought legal advice and that his lawyers failed to take steps in time. In the course of his submissions, he said that, at the end of 2010, he consulted Mr [NAME]. There is nothing to suggest that he had made any attempt before then to seek advice as to the possibility of an appeal. The only material is the evidence that he sought an extension of the stay, and that he made an application for an annulment that was dismissed by consent. 23 One must, of course, have sympathy for an individual who appears for himself. Mr [APPELLANT]'s first language is not English and he has some hearing disabilities. Nevertheless, he is articulate. Although I have doubts about the merits of his submissions, I have had no difficulty in understanding those submissions. 24 The delay in this case is extraordinarily long. The length of the delay consolidates the strength of any vested right that the Council has in the judgment that it obtained from the Federal Magistrates Court. The only way in which the question of delay was addressed by Mr [APPELLANT] in his affidavit evidence was to say that he had difficulties in obtaining legal representation and has had financial difficulties over the past few years, during which he has been involved in legal proceedings. He also asserted that he was late because of the conduct and misconduct of the legal profession through all of the courts. He asserted that everything was misconceived by the legal professionals, and that the duty of care and obligation to the courts was ignored. He asserted that, because of that, it took him so long to ascertain that, as he alleges, the case before the [NAME] & [ADDRESS] had not been reinstated. He said that, following the orders of 12 May 2009, it was difficult for him to obtain representation, and that he had on various occasions asked the [NAME] for assistance but that the [NAME] refused to assist him. Those matters, of course, have no bearing on the question presently before me. 25 I am not persuaded that there is a satisfactory explanation for Mr [APPELLANT]'s delay in applying for an extension of time. Coupled with the complete lack of any merit in the proposed grounds, or any other grounds that have been suggested, I do not consider that it is appropriate to extend the time for filing a notice of appeal from the orders of the Federal Magistrates Court of 12 May 2009. The application for leave to file and serve out of time, filed on 19 May 2011, should be dismissed with costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the [NAME] [NAME].

Associate: Dated: 25 May 2012