Bates v Bechara

[2016] FCCA 3489

FEDERAL CIRCUIT COURT OF AUSTRALIA

BATES v BECHARA [2016] FCCA 3489

Catchwords:
BANKRUPTCY – Creditor’s petition – sequestration order made by the Registrar.

PRACTICE & PROCEDURE – Application in a Case to set aside orders made the Registrar – dismissal for non-appearance and lack of due diligence in the prosecution of the Application in a Case – consideration of factors – application dismissed.

Legislation:

Federal Circuit Court Rules 2001 (Cth) rr.4.05, 4.08, 13.03A, 13.03B, 13.03C

Applicant: PHILIP BATES

Respondent: MARIA BECHARA

File Number: SYG 821 of 2016

Judgment of: Judge Nicholls

Hearing date: 8 December 2016

Date of Last Submission: 8 December 2016

Delivered at: Sydney

Delivered on: 8 December 2016

REPRESENTATION

Counsel for the Applicant: Philip Bates

Solicitors for the Applicant: Bannister Law

Respondent: No appearance

ORDERS

1. The interim application made on 25 July 2016 is dismissed for

   
   

   non-appearance pursuant to Rule 13.03C(1)(c) of the Federal Circuit Court Rules 2001 (Cth).

2. The interim application made on 25 July 2016 is also dismissed pursuant to Rule 13.03B(1)(a) of the Federal Circuit Court Rules 2001 (Cth).

3. The applicant debtor (Ms Bechara, the respondent in the substantive proceedings) pay the respondent creditor’s (the applicant in the substantive proceedings) costs set in the amount of $3724.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 821 of 2016

PHILIP BATES

Applicant

And

MARIA BECHARA

Respondent

REASONS FOR JUDGMENT

(Ex Tempore; Revised from Transcript)

1. I have set down for hearing before me today an application made by Ms Maria Bechara on 25 July 2016. Ms Bechara asks that an order made by a Registrar of the Court on 5 July 2016 sequestering her estate, be set aside. Further, she asks that the creditor’s petition dated 7 April 2016 (as amended) filed in these proceedings and the process that gave rise to the Registrar’s order, also be dismissed.

2. Ms Bechara has not appeared in Court today and no one has appeared on her behalf. In this light, the petitioning creditor, Mr Philip Bates, requests that the matter should proceed in her absence as she has had reasonable notice of the Court event today, and she has not provided a satisfactory explanation for her non-appearance (see further below). Mr Bates also submits that the application made by Ms Bechara on 25 July 2016 should be dismissed due to her non-appearance in Court today, and on the basis that she has not conducted her application with due diligence.

3. The matters in dispute between Mr Bates and Ms Bechara have some history before this Court. The relevant background to this matter which gives rise to the orders I make today is as follows.

4. On 7 April 2016, Mr Bates filed a creditor’s petition ultimately seeking that a sequestration order be made against the estate of Ms Bechara.  This was supported by the affidavit of Anne Ruth Finnerty, solicitor, of 7 April 2016.  The creditor’s petition relied on judgment debts in the amount of $127,936.91 ordered against Ms Bechara in various New South Wales State Court proceedings, plus interest.

5. On 13 May 2016, a Registrar of the Court made orders, in effect, granting leave for the substituted service of the relevant documents on Ms Bechara, and listed the creditor’s petition for hearing on 8 June 2016.  On 8 June 2016, further orders were made adjourning the date for hearing of the creditor’s petition to 5 July 2016. On 5 July 2016, a Registrar of the Court made the relevant sequestration order and an order for costs. 

6. On 25 July 2016, Ms Bechara made the application which is before the Court today. That application was prepared by a solicitor with TressCox Lawyers. Since that time, I note that other creditors have filed “appearances” or notification as “supporting creditors”. 

7. On 17 August 2016, the matter came before the Court for directions and was adjourned until 27 September 2016 at the request of Ms Bechara’s solicitors, and to which Mr Bates’ solicitors agreed. On 27 September 2016, various orders were made, including for the filing of evidence (see orders 1, 3 and 4). Ms Bechara did not comply with those orders.

8. Again, the matter was adjourned on application by Ms Bechara’s solicitors.  At that time, the explanation for the adjournment request was that the solicitors, who appeared for Ms Bechara, needed more time to obtain instructions because they had difficulty in obtaining instructions from her.  In any event, as was made clear at that time, the matter was set down for hearing on 8 December 2016. 

9. On 29 November 2016, a letter from Ms Bechara’s then solicitors was sent by email to my Associate (“the solicitor’s letter”). Mr Bates’ solicitors were not copied into this email at that time. That is now in evidence before me as part of a bundle of correspondence (“AE1”).  The letter gave notice that the solicitors intended to withdraw from representing Ms Bechara. They subsequently did withdraw, and filed the relevant notice on 6 December 2016.

10. The solicitor’s letter also made reference to the making of an application seeking an adjournment of the hearing of Ms Bechara’s application, to a date sometime in February 2017. This was not a “formal” application, as was acknowledged in the letter.  In any event, the reasons for adjournment were essentially put by way of written submissions.  There was no evidence by way of affidavit before the Court such that the explanation could be properly tested.

11. Essentially, the explanation was that Ms Bechara has had to undertake the full-time care of her disabled mother. Also attached to the email was a letter, albeit brief, from a General [medical] Practitioner (“the doctor’s letter”, also part of “AE1”). I understand that my Associate sent an email to both parties, stating that the matter remained listed for hearing today.  I note that in the solicitor’s letter, they indicated that they would convey “the outcome of [Ms Bechara’s] adjournment application to [their] client.”

12. When the matter was called this morning, there was no appearance by, or on behalf of, Ms Bechara.  Turning first to the email from Ms Bechara’s former lawyers. As mentioned earlier, and as is stated in the solicitor’s letter, it is not a formal application for an adjournment of the hearing.

13. Nonetheless, I am satisfied on the evidence that Ms Bechara and her lawyers had reasonable notice of the hearing date scheduled for today. Further, and in particular, I am satisfied as to that because on the occasion when the matter was set down, the lawyers were still acting for Ms Bechara, and were present in Court. Mr Payne of TressCox lawyers attended Court on 27 September 2016. It is reasonable to assume that her former lawyers would have complied with their duty to keep their client informed of the relevant matters, including that the matter had been set down for hearing.

14. There are a number of reasons why the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”), provide for the making of interim or procedural orders, and for such orders to be made on application in an appropriate form, with supporting evidence by way of affidavit. The reasons include the right of the other party, in this case, Mr Bates, to know what is put in support of seeking such orders, and to be given the opportunity to respond in an appropriate fashion. Further, it assists in the administration of justice, and in particular, the efficient conduct of cases before this very busy Court.

15. It is of note that Ms Bechara is not a lay person.  It is unclear whether she is still practicing as a solicitor. But even if she is not currently practicing, she was a solicitor, and cannot be said to be ignorant of the relevant practice of law.  Beyond that, Ms Bechara has also had the benefit of independent legal advice in relation to her application to set aside the Registrar’s orders.  Why she elected to proceed now, in what I would describe as the unorthodox fashion of seeking an adjournment through her solicitors with informal correspondence with my Associate, which was not, at least, copied to Mr Bates or his representatives, ultimately remains a matter for her. 

16. I make no criticism of Ms Bechara’s former lawyers. I accept that they acted on her instructions.  However, Ms Bechara, and for that matter her former lawyers, would have known that there is an appropriate way of making interlocutory applications. Ms Bechara has elected not to proceed in that fashion.

17. In any event, even if the material provided recently by Ms Bechara’s now former lawyers (the solicitor’s letter and the doctor’s letter) was to be treated as some explanation for her non-appearance today, and, indeed, in explanation for her conduct in not prosecuting her application with due diligence, it does not provide a satisfactory, or adequate, explanation for her absence from Court today, or her lack of diligence in prosecution. 

18. This is not the first request for an adjournment made by Ms Bechara in these proceedings. Such requests, without adequate explanation, were made on 17 August 2016 and 27 September 2016. In spite of this, such adjournments were granted. I note that on 17 August 2016, Ms Bechara’s former solicitors said they understood that she intended to “payout” the debt “in good faith”. No details were provided. Nor has this occurred.

19. Further, the doctor’s letter does not, in my view, as Mr Bates correctly submits, comply with the Rules of this Court with what is expected of expert witness requirements. Mr Bates, at [11] of his written submissions filed on 5 December 2016 states:

    “The one page letter by Dr Grinius dated 14.11.16 is objected to, as does not comply with the expert witness requirements including the Code of Conduct: Federal Circuit Court Rules 2001, r 15.07 (adopting the Federal Court of Australia practice direction guidelines); Federal Court of Australia, Expert Witness Practice Note (GPN-EXPT) par 4.4 & Annexure “A” thereto (with effect on and after 25 October 2016). Nor is the content of Dr Grinius’ opinion relevant to whether the sequestration order was properly made on 5 July 2016.”

    In the circumstances, I can only agree with what is set out there by Mr Bates. 

20. The solicitor’s letter says nothing about Ms Bechara’s capacity to have given instructions to her former solicitors.  It says nothing about her capacity to have made a proper application for an adjournment with supporting evidence that could be the subject of some testing or

    
    

    cross-examination before the Court. Nor, importantly, does it say, beyond inference, why she was unable to attend today. 

21. The inference in the “submissions” from the solicitor’s and the doctor’s letter, is that Ms Bechara was required to attend to, and assist, her sick mother. As a solicitor, or even as a former solicitor, Ms Bechara, in my view, can be taken to know that appearances in this Court, and having regard to the relevant sections of this Court’s Act, can be arranged, for example, by telephone. This facility is often extended, in this Court, to persons who are unable to physically attend. 

22. Further, I note the doctor’s assertion that Ms Bechara has closed her legal practice. In light of the solicitor’s letter and doctor’s letter now before the Court, this can go no higher than being seen as hearsay. This really highlights the efficacy of the submission made by Mr Bates in relation to expert evidence being given in an appropriate way.

23. Further, and importantly, even when Ms Bechara did have legal representation, it is clear from what is on the Court’s file, and in evidence before the Court, that she did not prosecute her application with due diligence.  In effect, she has already been granted two adjournments of the hearing of her application. I refer here to 17 August 2016 and 27 September 2016. Ms Bechara has had a reasonable opportunity to progress her case in a practical and relevant way, and has had a reasonable amount of time to prosecute her case with diligence. She has not done so. Nor has Ms Bechara complied with Court orders made on 27 September 2016 to file evidence by way of affidavit or written submissions.  There has been nothing of that nature filed by her in these proceedings. 

24. In his written submissions to the Court (at [10]), Mr Bates refers to an affidavit of Matthew David Payne, said to have been sworn on 17 August 2016 and presented in Court on that day. [Subsequently there was an objection by Mr Bates to the affidavit being “read” at the hearing on 8 December 2016].

25. As was clarified today, at the Court event on 17 August 2016, Ms Bechara was represented by a solicitor.  Submissions were made by the solicitor in support of an adjournment request for six weeks.  The submissions were that Ms Bechara was solvent and that the creditor’s petition had not come to her “personal” notice at the relevant time.  Reference was made to an affidavit in support of that adjournment request, which was said to go to the matters which had been raised in submissions. I note that a copy was said to have been given to Mr Bates. I adjourned for a short period to allow Mr Bates to consider that document. On resumption, there was no opposition to the adjournment request.

26. In the balance of the relevant conduct of the respective parties, I can only see that Mr Bates’ conduct in that regard to have been reasonable. The adjournment was granted to 27 September 2016.  That document, that is, the affidavit document, was not filed in Court, nor was leave granted for that purpose, nor, importantly, was the document subsequently electronically filed, as required by current Federal Court and, relevantly, Federal Circuit Court practice.

27. It is also important to note that Ms Bechara made her application to set aside the sequestration order on 25 July 2016. She was legally represented at that time. The application was said to be an “interim” application, although it would appear that, more properly under the FCC Rules, it should have been an Application in a Case. In any event, in either case, an affidavit in support of either of these types of applications should have been filed. I refer here to rr.4.05 or and 4.08 of the FCC Rules in this regard. No supporting affidavit had been filed.

28. The concern here is that this is not simply a matter of a lack of form.  The failure to comply with the Rules in this regard by Ms Bechara, who was legally represented at the time, and the failure to comply with Court orders made on 27 September 2016, leaves Ms Bechara’s case before the Court unexplained. That is, her case to set aside the orders made by the Registrar.  Importantly, it is her conduct, and not that of Mr Bates, that has resulted in that state of affairs.

29. Therefore, in all, the following arises.  The Registrar of the Court made a sequestration order in relation to Ms Bechara’s estate on 5 July 2016.  Ms Bechara has applied, on 25 July 2016, for that order to be set aside and for the creditor’s petition to be dismissed. She has had a reasonable opportunity to prosecute her case.  Her application, after a number of Court events, was set down for hearing today. I find that she had reasonable notice of the Court event today. 

30. No formal application for an adjournment has been made. When the matter was called today, there was no appearance by, or on behalf of, Ms Bechara. I understood the communication from Ms Bechara’s former lawyers, sent on her instructions, to be an attempt to explain her non-appearance today. I find, nonetheless, that it is appropriate in all the circumstances set out above, that Ms Bechara’s application be dismissed because of her non-appearance pursuant to r.13.03C(1)(c) of FCC Rules.

31. A further basis on which to dismiss Ms Bechara’s application is that she has not complied with orders of the Court for the proper progress of the case. On what is set out above, I find that Ms Bechara has failed to comply with the Court’s orders (orders 1, 3 and 4 of 27 September 2016) (r.13.03A(1)(a) of the FCC Rules) and in particular, I find that, in the circumstances, she has failed to prosecute her application with due diligence (r.13.03A(1)(e) of the FCC Rules). The appropriate order therefore should be made pursuant to r.13.03B(1)(a) of the FCC Rules. That is, dismissed as to the whole of the relief claimed by Ms Bechara. I will make that order relying on both parts of the FCC Rules.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Nicholls

Date: 17 May 2017