BM2008 Pty Ltd (in Liquidation) v Iliopoulos (No.3) - [2011] FMCA 267

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BM2008 PTY LTD (IN LIQUIDATION) v ILIOPOULOS (No.3)

[2011] FMCA 267

BANKRUPTCY – Ruling on application for a stay pending appeal.

Bankruptcy Act 1966, s.52(3)
Federal Court of Australia Act 1976, s.29

Applicant:

BM2008 PTY LTD (IN LIQUIDATION)

Respondent:

STEVE ILIOPOULOS

File Number:

MLG 1731 of 2010

Judgment of:

Burchardt FM

Hearing date:

13 April 2011

Date of Last Submission:

13 April 2011

Delivered at:

Melbourne

Delivered on:

13 April 2011

REPRESENTATION

Counsel for the Applicant:

Mr G. Bigmore Q.C. with Mr D. Harrison

Solicitors for the Applicant:

Cooper Mills Lawyers

Counsel for the Respondent:

Mr L. Watts

Solicitors for the Respondent:

Belleli King & Associates

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 1731 of 2010

BM2008 PTY LTD (IN LIQUIDATION)

Applicant

And

STEVE ILIOPOULOS

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

Today I indicated that the result of the Creditor’s Petition was that a Sequestration Order should be made against the estate of Mr Iliopoulos. He seeks a stay pursuant to s.52(3) of the Bankruptcy Act 1966 (“the Act”). I assume that a stay is capable of operating in the fashion contended for, although I note that when one looks at s.52(3) there is some question, in my mind at least, as to whether that section gives rise to a stay of the Sequestration Order or merely of proceedings on the order.
Counsel for Mr Iliopoulos tells me that he is instructed to appeal. He has, of course, that appeal as a right. It does not vest in the trustee and, indeed, Mr Bigmore QC’s assertion to that effect has not been contradicted. It is common cause that the Federal Court might grant a stay pending an appeal pursuant to s.29 of the Federal Court of Australia Act 1976 (“the Federal Court Act”). In broad form, two matters were pressed in support of the application for a stay. The first I would describe as being the merits of the proposed appeal and also Mr Iliopoulos’ other actions. Mr Iliopoulos wishes a period of time to prepare notice of an appeal.
It is foreshadowed that, were this done, I would be addressed at some length about the merits of the appeal, and also I would be more fully informed of Mr Iliopoulos’ various other litigation. It is put that a court could not properly consider or entertain these matters without that being done. The second matter, broadly put, was the prospect of prejudice to Mr Iliopoulos in the event that a stay is not granted. Counsel for Mr Iliopoulos was properly guarded in his submissions, and I accept his rectitude in that regard. There is, of course, no formal evidence before me in regard to this aspect.
I was asked to infer that irreparable harm would possibly befall

Mr Iliopoulos, a company controlled by him and its employees, if a stay is not granted.
In response, once again perhaps putting the matter rather shortly, the creditor submitted first, that Mr Iliopoulos could in any event apply quickly to the Federal Court pursuant to s.29 of the Federal Court Act, for a stay. Second, and this matter was pressed strongly, it was submitted that there are no materials from Mr Iliopoulos, despite his having had from 25 March 2011 to prepare such materials, nor was it proposed that Mr Iliopoulos attend and give evidence. It was submitted that if I did grant a stay, it should be for no more than seven days and on condition that Mr Iliopoulos file a statement of affairs.
I do not think it is appropriate for me to hear at length about the appeal. That is quintessentially a matter for the Appeal Court. I am prepared to accept, in Mr Iliopoulos’ favour, that he has an arguable case and I note that Gray J appears to have made remarks to that effect already. The strength of the appeal will be determined by the appeal itself but I do note in passing that the application for leave to appeal to the Court of Appeal of the Supreme Court of Victoria, which was posited to take place on 1 April, was apparently unsuccessful. I note in passing that that is in marked contrast to the way in which the matter was presented to me. I also note that I was not told of this unsuccessful outcome despite its occurrence.
The next matter to deal with is Mr Iliopoulos’ other litigation. I think I understand these, in broad outline, sufficiently for present purposes. I note that Mr Iliopoulos’ record in litigation seems thus far to have been markedly unsuccessful. He has failed twice before Davies J in the Supreme Court of Victoria and, indeed, it appears now twice in the Court of Appeal. He was also unsuccessful before Finn J, and although I have not read all the judgments, it would appear from the ones that I have read that all were strongly against him. These are not, in any sense, determinative, but in my view, this series of outcomes is not irrelevant. The fact is Mr Iliopoulos’ other cases were matters I have already dealt with in my Judgment handed down this morning.
So far as the point of prejudice to Mr Iliopoulos is concerned, I think that the creditor’s point is a strong one. Mr Iliopoulos has had since

25 March 2011 to prepare. I appreciate, of course, that only short notice was given of the listing and indeed, that took place because of the march of events within chambers and my own availability but nonetheless, it was always clear that a decision was on its way one way or the other. Mr Iliopoulos is not here and there has been no application for him to be so. The fact is Mr Iliopoulos lost his arbitration. The Supreme Court registered the award. Mr Iliopoulos committed an act of bankruptcy. He failed to resist the petition. One of the grounds of resistance so strongly asserted has been rejected by the Court of Appeal.
Of course, if there is no stay, Mr Iliopoulos will be affected. Every bankrupt is affected by a Sequestration Order made against them. It is a matter of balancing the possibly harsh outcome to Mr Iliopoulos against the undesirability of a bankrupt continuing his affairs as though a sequestration has not been made. Each case turns necessarily on its own facts. Here, I do not think it is appropriate to exercise my discretion to order a stay. There is no formal evidence of irreparable consequences for Mr Iliopoulos, although I accept the possibility of such evidence is foreshadowed. Even assuming such evidence was put before the Court, I would not think a stay appropriate. Mr Iliopoulos is bankrupt. Bankruptcy has severe consequences.
I should say that I do not, myself, think that Mr Iliopoulos’ chances on appeal are strong. I have had much to do with Mr Iliopoulos’ affairs over a lengthy period of time and it is not necessary for me to see a notice of appeal to have an understanding of the matters likely to be raised. I have not heard and, of course in the circumstances, will not hear, all the no doubt skilful and extensive submissions as to why I am wrong in my opinion. In the circumstances, I do not think it is appropriate to do so. I should say that, over time, it has become clear that Mr Iliopoulos’ case has, at all times, been characterised by an all too obvious filibustering quality.
Some of the responses to the issues raised have shown an approach to litigation that I regard as extraordinary. By way of illustration, having counsel briefed in Court to agitate issues about service when clearly you know all about the proceeding is a course of conduct that speaks for itself, and I regret to say that, in my view, acknowledging the limitations to my insight, nonetheless in terms of what detail I have of it all, it is impossible for me to avoid the impression that

Mr Iliopoulos’ whole series of cases have about them something of a fantasy. Others will determine if my views are correct, but the totality of the materials to which, over time, I have been referred lead me to conclude that, while Mr Iliopoulos may well have an arguable case on appeal and may suffer irreparable harm if the stay is not granted, the interests of justice are properly met by exercising my discretion and not granting a stay.
He is bankrupt and has to face the consequences thereof. I note that it is, of course, open to Mr Iliopoulos to seek a different outcome before a Federal Court Judge who may take a different view.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Burchardt FM

Date: 13 April 2011