Benefit Strategies Group v Prider
[2005] FMCA 1117
•9 August 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BENEFIT STRATEGIES GROUP v PRIDER | [2005] FMCA 1117 |
| BANKRUPTCY – Notice opposing petition – application for transfer to Federal Court – application refused. |
| Foreign Judgments Act Federal MagistratesCourt Act 1999, ss.39(1), 39(2), 39(3), 39(3)(d), 39(3)(e), 104(4) Federal Magistrates Court Rules, r.8.02 Federal Court of Australia Act, s.25(1A) |
| Guss v Johnstone [2000] FCA 1593 Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 69 ALR 265 Deputy Commissioner of Taxation v Zizza [1999] FCA 1226 Commonwealth Bank of Australia v Healey [1999] FCA 833 Parras Holdings Pty ltd v Commonwealth Bank of Australia [1999] FCA 644 Finikotis v Sandhurst Trustee [2002] FCA 341 |
| Applicant: | BENEFIT STRATEGIES GROUP |
| Respondent: | TREVOR LAWRENCE PRIDER |
| File Number: | ADG 16 of 2005 |
| Judgment of: | Lindsay FM |
| Hearing date: | 29 July 2005 |
| Date of Last Submission: | 4 August 2005 |
| Delivered at: | Adelaide |
| Delivered on: | 9 August 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Wells QC |
| Solicitors for the Applicant: | Fisher Jeffries |
| Counsel for the Respondent: | Mr Ross-Smith |
| Solicitors for the Respondent: | Sykes Bidstrup |
ORDERS
That the application for transfer of the proceedings to the Federal Court is refused.
That all applications by the Debtor for costs, including the costs of this application and of earlier attendances before Registrar Christie, be reserved.
Liberty to either party to apply within 7 days as to consequential orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SOUTH AUSTRALIA |
ADG 16 of 2005
| BENEFIT STRATEGIES GROUP |
Applicant
And
| TREVOR LAWRENCE PRIDER |
Respondent
REASONS FOR JUDGMENT
On 29 July 2005 I made myself available at short notice to hear an application by the applicant for a transfer of these proceedings to the Federal Court. The application had been made to Registrar Christie. She considered it appropriate for me to determine the application.
The "proceedings" are constituted by a Further Notice of Intention to Oppose Petition filed on 18 July 2005.
The hearing of an earlier Notice of Intention to Oppose Petition became otiose when the appeal said to ground the opposition was heard and determined by the Full Court of the South Australian Supreme Court. It was determined adversely to the debtor.
The petitioning creditor obtained a judgment against the debtor in California. Parts of the judgment debt were the subject of enforcement proceedings in the South Australian Supreme Court. That court was exercising its general jurisdiction to enforce judgments, rather than any specific jurisdiction arising under the Foreign Judgments Act. On 15 November 2004, Gray J entered summary judgment against the debtor.
I heard an application to extend compliance with the bankruptcy notice, which was a consequence of the order of Gray J on 24 January 2005. That was in proceedings numbered ADG 256 of 2004. I refused the application.
The Full Court of the Supreme Court dismissed the debtor's appeal from Gray J's judgment. An application for special leave to appeal to the High Court has been filed. An application to set aside the Californian judgment has been adumbrated.
The debtor says that proper service of the Californian proceedings was never effected. He says the petitioning creditor has perpetrated a fraud in claiming that personal service has been effected.
The debtor in the alternative to the dismissal of the petition seeks an order adjourning further hearing of the petition to await the outcome of the special leave application to the High Court or the outcome of the Californian proceedings to set aside the judgment, or both.
The Registrar was about to embark upon the hearing of that application when this transfer application was made.
Section 39 subsections (1), (2) and (3) of the Federal Magistrates Act1999 provides:
“39(1)[Proceedings may be transferred] If a proceeding is pending in the Federal Magistrates court, the Federal Magistrates Court may, by order, transfer the proceeding from the Federal Magistrates Court to the Federal Court or the Family Court.
39(2)[Investigation of transfer] The Federal Magistrates Court may transfer a proceeding under this section:
(a) on the application of a party to the proceeding; or
(b) on its own initiative.
“39(3)[Matters to be considered for Federal Court] In deciding whether to transfer a proceeding to the Federal Court under subsection (1), the Federal Magistrates Court must have regard to:
(a)any Rules of Court made for the purposes of subsection 40(2); and
(b) whether proceedings in respect of an associated matter are pending in the Federal Court; and
(c)whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and
(d) the interests of the administration of justice”.
Rule 8.02 of the Federal Magistrates Court Rules provides:
“(1)The Court may, at the request of a party or of its own motion, transfer a proceeding to the Federal Court or the Family Court.
(2)Unless the Court otherwise orders, a request for transfer must be made on or before the first court date for the proceeding.
(3)Unless the Court otherwise orders, the request must be included in a response or made by application supported by an affidavit.
(4)In addition to the factors required to be considered by the Court under subsections 39(3) and (4) of the Act for transfer of proceedings to the Federal Court or the Family Court, the following factors are relevant:
(a) whether the proceedings is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court or the Family Court on one or more of the points in issue;
(b) whether, if the proceeding is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceedings is not transferred;
(c) whether the proceeding will be heard earlier in the Federal Magistrates Court;
(d) the availability of particular procedures appropriate for the class of proceeding;
(e) the wishes of the parties;
(f) for family law or child support proceedings, whether the hearing of the proceeding is likely to take longer than 2 days”.
The Registrar was exercising a delegated power of this Court when the transfer application was made.
Section 104(4) of the Federal Magistrates Act provides:
“If an application for the exercise of a power referred to in subsection 102(2) or under a delegation under subsection 103(1) is to be, or is being, heard by a Registrar, and;
(a)the Registrar considers that it is not appropriate for the application to be determined by a Registrar acting under section 102 or under a delegation under subsection 103(1); or
(b)an application is made to the Registrar to arrange for the first-mentioned application to be determined by a Federal Magistrate;
he or she must not hear, or continue to hear, the application and must make appropriate arrangements for the application to be heard by a Federal Magistrate”.
It is inevitable that the hearing of the proceedings will be transferred before a Federal Magistrate if a party to the proceedings requests the Registrar to do so.
That is important. That section effectively removes one layer of appellate hearing in these proceedings. There is no need for either party to be at risk, if risk it be, of a de novo review of the Registrar's decision. The proceedings can be removed to a Federal Magistrate for hearing upon such an application being made.
The proceedings really involve the determination of two issues. The first is a determination as to whether the court should go behind the judgment which gave rise to the debt which grounds the petition. The debtor says the judgment was improperly obtained. The petitioning creditor denies this, of course. This is a not uncommon application in proceedings involving opposition to a sequestration order. There is a substantial body of case law, including High Court authority, as to the way in which the court should respond to an invitation to go behind the judgment debt. Here, if the invitation is taken up by the Court, we can readily apprehend the possibility of the taking of evidence on the question of service of the Californian proceedings. There will doubtless be legal argument anterior to that exercise, which may well be determinative of the outcome of the proceedings, but it remains distinctly possible that the resolution of the proceedings will involve the taking of evidence.
The second issue is whether the hearing of the petition should be adjourned pending the outcome of the special leave application to the High Court. That is a matter of legal argument only. It is a discrete argument to that argument relating to the application to go behind the judgment.
It is contended that there are a number of decisions of single judges of the Federal Court which conflict with the decision of Sackville J in Guss v Johnstone [2000] FCA 1593.
In Guss v Johnstone (supra) a sequestration order had been made by the Federal Court. There was an appeal to the Full Court of the Federal Court. It was dismissed (there had been earlier proceedings on the bankruptcy notice. A differently constituted Full Court had ordered a stay of those proceedings whilst a special leave application was agitated. Ultimately the High Court dismissed that appeal). So, Sackville J was asked to stay proceedings under the sequestration order. He considered he had the power to do so, notwithstanding the provisions of s.37(2) and s.52(3) of the Bankruptcy Act. He regarded the latter power as facultative not restrictive. The former section he regarded as being directed to the suspension of the sequestration order which his Honour found to be a different exercise involved from staying proceedings under a sequestration order.
His Honour considered himself bound by the well‑known decision of Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 69 ALR 265 as to the circumstances in which a stay should be ordered pending the disposal of the special leave application. In that case, Brennan J propagated a fourfold test of what is described as the extraordinary jurisdiction to stay a judgment whilst the special leave application is agitated.
The decisions with which it is said that decision conflicts are Deputy Commissioner of Taxation v Zizza [1999] FCA 1226, Commonwealth Bank of Australia v Healey [1999] FCA 833, and Stone v Farrow Mortgage Services (in liquidation) (1999) NSWCA 435.
I have also been referred to the decision of Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1999] FCA 644 which was a Full Court decision, and which follows Burgundy Royale, in that it exercises the same criterion as were described in Burgundy Royale in staying orders made by the Full Court of the Federal Court.
The three decisions all relate to applications to adjourn the hearing of the petition pending a special leave application, not to stay proceedings under an order.
Finikiotis v Sandhurst Trustees [2002] FCA 341 is another judgment to which I have referred and which was an appeal from a Federal Magistrate's decision not to set aside a sequestration order made by a Registrar on review. North J said that the Federal Magistrate was correct in not setting aside the sequestration order. Once again this was a decision which involved an alleged error involved in the failure to adjourn a creditor's petition pending a special leave application.
It is not surprising in my view that in determining an application to adjourn the hearing of an application relating to a creditor's petition that different language is used than in the circumstances where the Court is being asked to stay the operation of a sequestration order. It is not surprising that the exercise involving determining an application for adjournment of a creditor's petition involves the use of language different to that which is used when the exercise is the stay of proceedings, whether under a sequestration order, as in the case of Guss v Johnstone, or whether in the case of an order of the Full Court of the Federal Court, as in Parras Holdings. The Court is dealing with applications directed to a different purpose and it must be thought that the language used will necessarily differ.
Presumably in this case, the petitioning creditor is contending that there should not be any difference in substance, as distinct from any
difference in language, involved in the exercise of the jurisdiction to adjourn. It is not clear to me whether in fact there is any difference in substance in the orders being sought. Certainly Lindgren J in Zizza treated the application for the adjournment in the same way as a stay was treated in Parras Holdings and in Burgundy Royale.
The inconsistencies which it is alleged these judgments demonstrate were not apparent to me, despite my best endeavours to apprehend them.
I turn now to the matters described by s.39 of the Federal Magistrates Act which are said to be relevant to the determination to transfer. Firstly, there is the question of the resources of the Federal Magistrates Court and whether they are sufficient to hear and determine the proceedings. The petitioning creditor contended that the proceedings would be resolved more quickly in the Federal Court, and this may be a matter which it is said relates to the relative resources of the court. That was not a position with which the debtor agreed. I have not had any matter brought to my notice that would suggest that I could make a determination one way or the other in relation to the question of resources.
Section 39 also speaks of the interests of the administration of justice as being a matter to which the court must have regard in the context of these applications, and this appeared to be the major point relied upon by the applicant in support of the application to transfer. It was said that the Federal Court determination of both issues in dispute was likely to be more authoritative and that therefore was more likely to lead to an acceptance of the determination by a litigant or the litigants, and hence more likely to bring the proceedings to a conclusion.
I readily accept this as a possibility. Apart from the obvious circumstance relating to the relative place in the court hierarchy of the two courts, there are other matters which would suggest that the determination of a Federal Court judge in the context of these proceedings would be more authoritative, and this would be so, notwithstanding that both the Federal Court judge and the Federal Court Magistrate determining the proceedings are Justices for the purposes of Ch III of the Australian Constitution. I do not think there is any difficulty associated in inferring that a decision of a Federal Court judge is capable of being inherently more authoritative in the sense promoted by the applicant. But my difficulty with the submission is that must be the case with each and every dispute that comes before the Federal Magistrates Court. The Federal Magistrates Court is given a jurisdiction in bankruptcy matters which is identical to that enjoyed by the Federal Court. The Federal Magistrates Court is constituted by Ch III Justices. Why would not matters relating to the relative authoritativeness of the determinations maintain in all applications which are made to the Federal Magistrates Court under the Bankruptcy Act or, for that matter, in other jurisdictions it exercises concurrently with the Federal Court?
Clearly there has to be something differentiating about these proceedings. What is it? I have already indicated that I do not see that the issue of the legal test to be applied in relation to the application to adjourn pending the special leave application is sufficiently controversial to warrant expedited authoritative determination by a Federal Court judge.
An appeal lies from a decision of a Federal Magistrate to the Federal Court and whether the appeal court is constituted by a single Judge or a Full Court of the Federal Court is a matter that is at the discretion of the Chief Judge of the Federal Court, pursuant to s.25(1A) of the Federal Court of Australia Act.
I am aware that evidence may need to be taken in these proceedings for the reasons I have indicated. Is it more appropriate that that be done in the Federal Court than done in the Federal Magistrates Court? It is difficult to identify any criteria which would enable me to answer that question.
I turn to the Rules of the Federal Magistrates Court which the legislation behoves me to take into account in determining this application. Firstly, r.8.02(4)(a), I am to consider whether or not questions of general importance are raised by these proceedings. This is essentially the same point as I have already discussed under s.39(3)(d) of the Act itself when dealing with the interests of the administration of justice. It may be a slightly different point in that it focuses upon the nature of the issue to be determined. But similarly, I am unable to identify, upon my reading of the decisions to which I was referred, any issue which can be described to be of general importance which is said to arise.
Under r.8.02(4)(b), I am to consider whether the proceedings can be agitated with less cost and more convenience in one court or another. Again this is a similar argument to that which arises under s.39(3)(c) of the Act in terms of the reference to the resources of the Court. True it is that the scale of party‑party costs in the Federal Magistrates Court is lesser than it is in the Federal Court, but it is difficult for me to see how that can bear upon the exercise of my discretion to transfer.
Under r.8.02(4)(c), this subrule directs me to consider whether a proceeding will be heard earlier in the Federal Magistrates Court, and again I indicate that nothing has been brought to my attention to suggest that an earlier hearing in one court or the other is indicated. Rule 8.02(4)(d) directs that the availability of particular procedures appropriate for the class of proceeding is a matter relevant to the exercise of the discretion, but it does not apply in the circumstances of this case. Rule 8.02(4)(e) asks me to take into account the wishes of the litigants. In this case, one is in favour of the transfer and one makes submissions to the contrary. Unless it is being put to me that the wishes of the party promoting the transfer are deemed to be more material than the wishes of those opposing it, it is difficult to see how I can take into account the wishes of the litigants where they differ. Perhaps latent in the application is a suggestion that I should transfer matters where there is not a unanimity between the parties. It is difficult to know. No specific argument was put to me on this topic, but it is difficult to see how it can assist me in the exercise of my discretion in this particular case.
Having regard to all of the matters that the legislation directs me to and all of the matters referred to in the rules, it seems to me that there are no matters indicating that the proceedings ought to be transferred. That is not to say that I begin upon the basis that there is a presumption in favour of the proceedings remaining within the court in which they were instituted, but I think there has to be some matter arising under the relevant legislative provision or under the relevant rules which can be said to warrant or to justify or to signify the requirement of a transfer. I am unable for the reasons I have indicated to identify any such factor and for that reason the application will be refused.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Lindsay FM
Associate: K. Clarke
Date:
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