FEDERAL COURT OF AUSTRALIA
Bechara v Bates [2021] FCAFC 34
Appeal from: Bechara v Bates [2018] FCA 460 File numbers: NSD 2386 of 2018
NSD 658 of 2020Judgment of: ALLSOP CJ, MARKOVIC AND COLVIN JJ Date of judgment: 16 March 2021 Catchwords: BANKRUPTCY – sequestration orders – application for review to Federal Circuit Court judge of sequestration orders made by registrar – where Federal Circuit Court judge dismissed application for review for non-attendance and for want of prosecution – review is a hearing de novo – meaning of “hearing de novo” – necessary for fresh compliance with s 52(1) of the Bankruptcy Act 1966 (Cth) – inappropriateness of dismissal for non-attendance or want of prosecution by debtor – application for review to be remitted to Federal Circuit Court for hearing de novo – status of registrar’s order – whether creditor’s petition has lapsed – where sequestration order made within 12 months of presentation of creditor’s petition
PRACTICE AND PROCEDURE – registrars – review of registrar’s power to make sequestration order – review is a hearing de novo – meaning of “hearing de novo”
HIGH COURT AND FEDERAL COURT – appeal from orders made by single judge in appellate jurisdiction of Federal Court – appeal dismissed as incompetent – relief granted under s 39B of the Judiciary Act 1903 (Cth)
Legislation: Constitution ss 72, 75(v)
Bankruptcy Act 1966 (Cth) s 52
Federal Circuit Court of Australia Act 1999 (Cth) ss 103, 104
Federal Court of Australia Act 1976 (Cth) ss 20(1A), 24(1), 25(2), 31A, 33(4B), 35A
Judiciary Act 1903 (Cth) s 39B
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) rr 2.01(1), 2.02(3)
Federal Circuit Court Rules 2001 (Cth) rr 4.05, 4.08, 13.03B, 13.03C, 16.05
Cases cited: Body Corporate for Sanderling at Kings Beach v Samsakopoulos (No 2) [2020] FCCA 1909
Civil Aviation Safety Authority v Administrative Appeals Tribunal [2001] FCA 1319; 33 AAR 439
Commissioner of Taxation v Cancer and Bowel Research Association Inc [2013] FCAFC 140; 305 ALR 534
F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295
Flint v Richard Busuttil & Company Pty Ltd [2013] FCAFC 131; 216 FCR 375
Kimber v The Owners Strata Plan No 48216 [2017] FCAFC 226; 258 FCR 575
Kleinwort Benson Australia Limited v Crowl [1988] HCA 34; 165 CLR 71
Continue reading Bechara v Bates
Sign in free to access the full text
- AGLC
- Bechara v Bates [2021] FCAFC 34
- Case
- [2021] FCAFC 34
- Decision Date
CaseChat Overview and Summary
The legal issues in this case were whether the review of a sequestration order made by a registrar is a hearing de novo, and if the dismissal for non-attendance and for want of prosecution was appropriate. The Court held that a review is indeed a hearing de novo, which means that it requires a fresh compliance with section 52(1) of the Bankruptcy Act 1966 (Cth). The dismissal for non-attendance and for want of prosecution was deemed inappropriate, as the applicant had engaged the Court's jurisdiction through the wrong form. The Court found that the submissions and approach of Mr Bates and the Circuit Court judge showed a misunderstanding of Ms Bechara's entitlement to a de novo hearing. The Court also considered the argument that the creditor's petition had lapsed, but concluded that the sequestration order was made within 12 months of the presentation of the creditor’s petition, and therefore the petition had not lapsed.
The Court's reasoning was that Ms Bechara, as an applicant for review of a sequestration order, was entitled to a de novo hearing of the creditor’s petition, subject to all proper procedural orders. The Court found that the dismissal of the application for review was inappropriate and that the review should be remitted to the Federal Circuit Court for a de novo hearing. The Court also found that the creditor’s petition had not lapsed, as the sequestration order was made within 12 months of the presentation of the petition. The Court dismissed the appeal as incompetent and granted relief under section 39B of the Judiciary Act 1903 (Cth), quashing and setting aside the orders of the Federal Circuit Court and remitting the application for review to the Federal Circuit Court for a de novo hearing.
The final orders of the Court were to quash and set aside the orders of the Federal Circuit Court dismissing the application for review, and to remit the application for review to the Federal Circuit Court for a de novo hearing of the creditor’s petition. The Court also ordered that the costs of the application, and all other outstanding orders for costs as between the parties in litigation in the Federal Circuit Court of Australia, the Federal Court of Australia, and the High Court of Australia, not be enforced and no steps be taken to enforce such costs until after orders are made consequent upon the hearing of the creditor’s petition in the application for review.
Orders
Orders of the court
1. The orders of the Federal Circuit Court of Australia made on 8 December 2016 dismissing the Interim Application filed on 25 July 2016 and ordering costs; on 3 March 2017 dismissing the Application in a Case filed on 5 January 2017 and ordering costs; and on 17 May 2017 dismissing the Application in a Case filed on 2 May 2017 and ordering costs be quashed and set aside.
2. The application for review, in the form of the Interim Application filed on 25 July 2016, of the order of Registrar Tesoriero made on 5 July 2016 that the estate of Maria Bechara be sequestrated under the Bankruptcy Act 1966 (Cth) and of the order concerning costs be remitted to the Federal Circuit Court of Australia for hearing according to law as a de novo hearing of the creditor’s petition filed on 7 April 2016, to be heard as soon as reasonably possible.
3. The first respondent pay the applicant’s costs of the application, such costs, and all other outstanding orders for costs as between the parties in litigation in the Federal Circuit Court of Australia, the Federal Court of Australia and the High Court of Australia, not be enforced and no steps be taken to enforce such costs until after orders are made consequent upon the hearing of the creditor’s petition in the application for review.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Whilst one can understand the degree of frustration in Mr Bates and in the Circuit Court judge reflected in some of the transcript, the reality is, however, that Ms Bechara had engaged, albeit by the wrong form, the Court’s jurisdiction (subject to all proper procedural controls) to hear a review of a sequestration order made by a registrar. Over 20 years of jurisprudence illuminated the features of this kind of application. The submissions and approach of Mr Bates, his failure to bring forward evidence to satisfy s 52(1) of the Bankruptcy Act, and the approach and reasons of the Circuit Court judge disclose with clarity that each viewed Ms Bechara as the substantive applicant in her substantive application. This was wrong. As an applicant for review of a sequestration order she was entitled (as a Constitutional imperative), subject to all proper procedural orders, to a hearing de novo of the creditor’s petition. It did not occur. The submissions of Mr Bates in this Court and consideration of the Circuit Court hearings The submissions of Mr Bates in support of his Second Further Amended Notice of Contention and in support of his submissions on the appeal and the s 39B application contended that the Circuit Court judge had before him a “bare” interim application without an affidavit in support which did not engage an entitlement to a review. The argument of Ms Bechara based on the loss of the review (by way of Constitutional imperative) was said to be new and precluded by Coulton v Holcombe [1986] HCA 33; 162 CLR 1. He submitted that the facts engaged what was said to be the so-called “clean kill” principle in the summary disposal of matters, relying on Kimber v The Owners Strata Plan No 48216 [2017] FCAFC 226; 258 FCR 575 in the application of summary judgment procedure. The “bare application” argument There appear to be two limbs to the “bare application” argument. The first is that the interim application was not accompanied by an affidavit “stating the facts relied on”: rules 4.05(1) and 4.08(2) of the Circuit Court Rules. But the only two facts necessary to establish was the making of a sequestration order by a registrar and a request for a de novo rehearing. No error in the making of the order need be shown. The wrong form was used, but its content stated clearly that it was in substance an application for review of a sequestration order made by a registrar. Counsel, and a judge exercising jurisdiction in bankruptcy, ought to have understood the nature of such an application. Not to do so is to misapprehend the nature of the jurisdiction being exercised. The second limb of the “bare application” argument relies on something said by Gaudron J in Harris v Caladine at 172 CLR 153–154 where her Honour said: It is necessary to tum to the nature of the review process required by s. 37A(9) of the Act. In so far as that sub-section provides for the “review” of the “exercise of [a] power” delegated to a registrar or deputy registrar in accordance with that section, it was clearly intended that there should be a process enabling complete consideration of the matter as dealt with and not merely a process, such as is involved in the appeal process under s. 94 of the Act, directed to remedying errors of law. Such a review entails a consideration of whether, quite apart from legal or other error, a different result should be arrived at. But, as is clear from the word “review” and from the expression “exercise of power”, it was also intended that a decision made in exercise of delegated power should have force and effect unless and until set aside in or in consequence of the review process. Thus, a decision is not one that is provisional or, as argued on behalf of the appellant, one that is set at nought by the filing of an application for review, with the consequence that in the present case the Family Court was automatically obliged to determine, as a contested matter, what order should be made under s. 79 of the Act. Rather, the review process is one in which the Family Court must first determine whether the order should be set aside. That issue may be decided on the basis that, even though there is no discernible error in the decision in question, circumstances, including intervening circumstances, require a different result. Although the Full Court treated the review process as being of a more limited nature than that indicated, it was correct in rejecting the only argument put to it on behalf of the appellant concerning the nature of that process, namely, that merely by the filing of an application for review it was obliged to treat the question arising under s. 79 as one to be determined as a contested matter.