Capital Finance Australia Limited v Vellar
[2012] FMCA 285
•4 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CAPITAL FINANCE AUSTRALIA LIMITED v VELLAR | [2012] FMCA 285 |
| BANKRUPTCY – Creditors petition – opposition challenging authority of Federal Magistrate – High Court summons filed on eve of hearing – adjournment applications refused – sequestration order made. |
CONSTITUTIONAL LAW – Creation of Federal Magistrates Court – appointment of Federal Magistrates – whether invalid under Chapter III of the Constitution by reason of exclusion from judges’ pensions.
| Bankruptcy Act 1966 (Cth), ss.37(2), 52, 60(2) Federal Magistrates Act 1999 (Cth), Sch.1 cl.8 High Court Rules 2004 (Cth), rr.20.01.1(a), Parts 25 & 26 Judges’ Pensions Act 1968 (Cth) Judiciary Act 1903 (Cth), ss.40, 78B Magistrates Act (NT) |
| Bank of Western Australia Ltd v Srinivasan [2012] FMCA 177 Bienstein v Bienstein (2003) 195 ALR 225, [2003] HCA 7 Cummings v Claremont Petroleum NL (1995) 185 CLR 124 Forge v Australian Securities & Investments Commission (2006) 228 CLR 45 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 North Australian Aboriginal Legal Aid Service Inc v Bradley & Anor (2004) 218 CLR 146 Srinivasan v Bank of Western Australia Ltd [2012] FCA 319 |
| Applicant: | CAPITAL FINANCE AUSTRALIA LIMITED ACN 069 663 136 |
| Respondent: | FRANKO VELLAR |
| Intervenor: | COMMONWEALTH ATTORNEY‑GENERAL |
| File Number: | SYG 2027 of 2011 |
| Judgment of: | Smith FM |
| Hearing date: | 4 April 2012 |
| Delivered at: | Sydney |
| Delivered on: | 4 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr A R Zahra |
| Solicitors for the Applicant: | Henry Davis York |
| Counsel for the Respondent: | Mr B Levet |
| Solicitors for the Respondent: | Lazarus Legal Group |
| Counsel for the Intervenor: | Mr T Howe QC with Ms N Sharp |
| Solicitors for the Intervenor: | Australian Government Solicitor |
| Solicitors for Michael Kevin Hayter, David Thomas Newey and Michael Joseph Gillis t/as Gillis Delaney Lawyers, First Supporting Creditor | Gillis Delaney Lawyers |
| Solicitors for PSAL Limited, Second Supporting Creditor | Galilee Lawyers |
ORDERS
A sequestration order be made against the estate of Franko Vellar.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 3 August 2011.
Note that a consent to act as trustee has been signed by Mark Robinson.
The applicant must give a copy of this order to the Official Receiver within 2 working days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2027 of 2011
| CAPITAL FINANCE AUSTRALIA LIMITED ACN: 069 663 136 |
Applicant
And
| FRANKO VELLAR |
Respondent
| COMMONWEALTH ATTORNEY‑GENERAL |
Intervenor
REASONS FOR JUDGMENT
(revised from transcript)
This revised judgment contains several judgments which I delivered on 4 April 2012 in the course of the hearing of a creditor’s petition brought by Capital Finance Australia Ltd (‘Capital Finance’) against Mr Vellar. They explained my reasons for refusing two adjournment applications by Mr Vellar, for making a sequestration order, and for refusing to stay its operation.
I note that Capital Finance did not move on an application for the transfer of the petition to the Federal Court, which was also set down for hearing on 4 April 2012, and that no other party moved for such an order.
In the course of Mr Vellar’s first adjournment application, his counsel, Mr Levet, made, and I rejected, an application that I should recuse myself on grounds of apprehended bias. I gave reasons for refusing that application which should appear in the transcript, and which I repeated in the present judgment as set out below.
For convenience, I shall separate the background which was included at the commencement of my reasons for refusing Mr Vellar’s first adjournment application. The later judgments were then given as addenda to that judgment, without repeating that background. A reader might also benefit by first reading my judgment in Bank of Western Australia Ltd v Srinivasan [2012] FMCA 177 (‘Srinivasan’)
The background to the matter
The creditor’s petition relies upon a judgment obtained against Mr Vellar on 3 June 2011, when a judge sitting in the commercial list of the Equity Division of the NSW Supreme Court ordered that Mr Vellar pay Capital Finance the sum of $26,411,099.34. The certificate of judgment indicates that the matter proceeded in the absence of Mr Vellar, and that the judge was satisfied by evidence as to Mr Vellar’s liability. Mr Vellar has not subsequently challenged the judgment, either in the Supreme Court or in the course of the bankruptcy proceedings, nor sought any stay on enforcement of the judgment. The evidence before me today shows that Mr Vellar is still indebted to Capital Finance under the judgment in the sum of $18,964,912.99. He did not dispute that liability at the hearing before me.
A bankruptcy notice relying on the judgment debt was served on Mr Vellar personally on 13 July 2011, and the evidence shows that he did not comply with it nor make any application to the court to set it aside. An act of bankruptcy therefore occurred on 3 August 2011. No challenge is now made to the validity of the bankruptcy notice, nor as to the act of bankruptcy.
The present creditor’s petition based on the same judgment debt was filed in this Court on 9 September 2011. It was served personally on Mr Vellar on 26 September 2011. Mr Vellar filed an appearance on 17 October 2011, by a solicitor who appeared at the first return date of the petition before a registrar on 17 October 2011. The matter was adjourned by consent on that day, and also at the next listing on 31 October 2011.
On 7 November 2011 a registrar allowed a further adjournment which was contested by Capital Finance. A further adjournment occurred on 28 November 2011, and the matter was again listed before a registrar on 5 December 2011. On that date, a contested adjournment was allowed by Registrar Hannigan. It appears to me that she did so because Mr Vellar filed a notice of grounds of opposition to the petition raising a constitutional point. No other ground of opposition was asserted.
The notice was in identical terms to the notice of grounds of opposition which I reproduced at [7] in Srinivasan, in which the debtor was also represented by Mr Levet. It contended that the Federal Magistrates Court “is not competent to grant the relief sought by the Petitioner” by implication of Chapter III of the Constitution, because Federal Magistrates have not been provided with “a lifelong guaranteed non-contributory pension which is not subject to market fluctuations and in respect of which the potential recipient is not at risk in order to prevent post-retirement financial insecurity becoming an actual or perceived threat to their judicial independence.”
As a result of Mr Vellar raising this contention, the registrar, as she was obliged to, adjourned the petition and gave directions for the service of notices under s.78B of the Judiciary Act 1903 (Cth). She also ordered Mr Vellar to file all the evidence in support of his notice of grounds of opposition on or before 23 December 2011. The matter was adjourned to 6 February 2012.
On that occasion, the petition was referred to me by the registrar for the fixing of a hearing. At the same time, the creditor’s petition against Dr Srinivasan was also referred to me. Since Srinivasan was first in the list, I fixed it for hearing on Friday 9 March 2012, and gave directions for its preparation. I adjourned the present creditor’s petition until the following Monday, 12 March 2012, for directions. It was suggested by counsel that the outcome in Srinivasan might govern the outcome in the present matter, although no commitment to this effect was given.
The hearing in Srinivasan proceeded on 9 March, and was concluded by the above reserved judgment which I delivered at the start of my bankruptcy list on Monday 12 March. The present matter was then called, and stood down to allow the parties to read my judgment. It was called later in the morning, and, after discussion between the parties – who were all represented by counsel - I issued written directions for a timetable leading to a hearing of the petition today, including directions for the filing of evidence by Mr Vellar in support of any interlocutory applications, including any application to amend his notice of grounds of opposition, to have the matter transferred to the Federal Court, for the adjournment of the petition, or otherwise. A transcript of what occurred on the 12th of March is on the file, and I think that it makes clear that I intended to address any such applications in the context of the hearing of the petition itself. My written directions included:
2.The respondent debtor must file and serve on all necessary persons any proposed amended notice of grounds of opposition and any amended notice under s.78B of the Judiciary Act 1903 (Cth), together with all additional affidavits relied upon in relation to any interim application and his opposition to the petition, no later than 4pm on 23 March 2012.
My directions were not observed by Mr Vellar. On 28 March 2012 an amended s.78B notice was filed, together with a proposed amended notice of grounds of opposition. No other documents were filed by him or by his counsel until late yesterday afternoon. An affidavit was then filed in support of an adjournment application. Mr Levet did not file any written submissions in accordance with my directions, but forwarded to my chambers at 12.04am today a submission addressing only an application for adjournment. Meanwhile, the other counsel had endeavoured to meet their obligations to file submissions, without knowing what applications Mr Vellar might be making today, or how he would address his grounds of opposition to the Court in the light of my reasoning in Srinivasan.
Mr Vellar’s reliance on the amended notice of grounds of opposition was not opposed. It is an eight page document which I shall not reproduce in full. In effect, most of it reproduces the pleading which I referred to in Srinivasan as the ‘Altobelli FASC’, being the further amended statement of claim in proceedings on foot in the Federal Court, in which sundry Federal Magistrates – not including myself – seek orders recognising a constitutional entitlement to a judge’s retirement pension. It refers to the legislation which established the Federal Magistrates Court in 1999 and provided for the remuneration of Federal Magistrates, which I set out in Srinivasan at [14]-[19]. It adopts verbatim the constitutional implications which are contended in the Altobelli FASC:
16.By implication, s72 and Chapter III of the Constitution also require that Chapter III Justices receive such remuneration, or other provision, as is reasonably necessary to prevent financial insecurity becoming an actual or perceived threat to judicial independence.
17.That constitutional requirement extends to requiring such remuneration and provision after retirement as is reasonably necessary to prevent post-retirement financial security becoming an actual or perceived threat to the judicial independence of Ch III justices during their continuance in office.
18.Further, by implication, Ch III requires that the Parliament provide Ch III justices with a life-long guaranteed pension in order to prevent post-retirement financial insecurity becoming an actual or perceived threat to their judicial independence.
The amended notice of grounds of opposition then refers to the 1999 amendment to the Judges’ Pensions Act 1968 (Cth) which excluded Federal Magistrates from benefits under that Act, and reproduces the argument of invalidity of that amendment found in [28]-[35] of the Altobelli FASC which I extracted in full in Srinivasan at [20]. It then refers to the current arrangements for Federal Magistrates by way of contributions to their superannuation funds pursuant to a determination by the Governor-General under Sch.1 cl.8 of the Federal Magistrates Act 1999 (Cth). The amended notice of grounds of opposition repeats contentions that these arrangements do not satisfy the constitutional implications. At paragraph 35, it then departs from the contentions and relief sought in the Altobelli FASC:
33.The Superannuation Arrangements do not redress the financial insecurity caused by the denial of a guaranteed pension to the Federal Magistrates:
33.1superannuation as provided by the Superannuation Arrangements is an investment of funds for which the individual is at risk, which is subject to market fluctuations, and which creates uncertainty as to the total value of the fund upon retirement; and
33.2the superannuation contribution provided for by the Superannuation Arrangements is insufficient to address the financial insecurity caused by the purported denial of a guaranteed pension to the Federal Magistrates.
34.In the premises, Schedule 18 of the Amending Act offends the separation of judicial power in Ch III of the Constitution by denying to justices purportedly appointed under s72 the minimum remuneration and provision after retirement necessary to ensure that financial insecurity is not an actual or perceived threat to the judicial independence of Chapter III courts.
35.In the premises, Federal Magistrates purportedly appointed to the Court under s9 and Schedule 1 of the FM Act in circumstances where they have been deprived of the benefit of the Judges’ Pensions Act 1968 (Cth) or otherwise provided with a lifetime non-contributory guaranteed pension have not been validly appointed under Chapter III of the Constitution.
36.Alternatively, if such Federal Magistrates have been validly appointed, they are not able to exercise the judicial power of the Commonwealth until such time as they have been provided with of the benefit of the Judges’ Pensions Act 1968 (Cth) or otherwise provided with a lifetime non-contributory guaranteed pension.
The amended notice of grounds of opposition also contains the statement:
BThe Respondent reserves his position as to any substantive defence he may have to the petition until the jurisdictional issue raised above has been determined.
However, it does not plead any ‘defence’ or other ground of opposition to the making of a sequestration order, and no such ground is pointed to elsewhere in any affidavit or submission filed by Mr Vellar.
Mr Vellar’s first adjournment application
The affidavit filed by Mr Vellar yesterday in support of an adjournment application was sworn by his solicitor, Mr Rod. It attaches a writ of summons filed in the High Court yesterday, which was then forwarded to the solicitors for Capital Finance Limited and the Commonwealth of Australia, which are named as the first and second defendants. I am identified as the third defendant by name and not by my office. I have not been personally served with the writ of summons, and am unaware whether or not it has been served on the Court’s registrar. However, as I have noted, a copy of it was attached to an affidavit received in my chambers at about 4.30pm yesterday afternoon.
The writ of summons is filed under Part 27 of the High Court Rules 2004 (Cth), and includes a statement of claim which reproduces and embellishes the Altobelli FASC in the same terms as appear in the amended notice of grounds of opposition which I have described above. It seeks the following relief from the High Court:
45.The plaintiff seeks relief as follows:
45.1A declaration that Schedule 18 of the Amending Act is invalid, void and inoperative;
45.2A declaration that the Pension Act fixed (within the meaning of section 72 of the Constitution) the remuneration of a Justice of a Federal Court in the nature of a guaranteed pension;
45.3A declaration that the entitlements of any justice of a federal court (including the Federal Magistrates Court) under the Pension Act if validly appointed form part of their remuneration (scilicet: fixed) by Parliament under section 72(iii)
Further and in the alternative
45.4A declaration that any Justices of a federal court appointed under section 72 of the Constitution, are constitutionally entitled to a life-long guaranteed pension;
45.5A declaration that, in the absence of such pension, the remuneration of, and post retirement provision for, Federal Magistrates, as justices of a federal court, appointed under section 72 of the Constitution, does not satisfy the minimum requirements imposed by Chapter III.
Further
45.6A declaration that, in the absence of such pension, Federal Magistrates are not properly appointed as justices of a federal court under section 72 of the Constitution, and in consequence are not able to validly exercise the judicial power of the Commonwealth.
45.7An order in the nature of prohibition against the Third Defendant restraining him from continuing to hear, transfer, make orders or directions in relation to, or otherwise be seized of matter no (P) SYG 2027 of 2011 or any matter involving the Plaintiff.
46.The plaintiff seeks costs.
There is no indication that any other documents have been filed in the High Court or foreshadowed. No reference is made in Mr Rod’s affidavit to any attempt to obtain a listing in the High Court, whether for directions or for an urgent stay or other interlocutory order. It is significant that the proceeding was not commenced as an application for an order to show cause under Part 25 of the High Court Rules with an appointment for hearing, nor as an application under Part 26 to remove the present proceedings to the High Court under s.40 of the Judiciary Act.
Mr Rod’s affidavit contains the following paragraphs which were read in support of Mr Vellar’s adjournment application:
4.On 12 March 2012 I am advised and verily believe that presiding Magistrate Smith a comment to the effect that he would attempt to decide the matter without deciding issues that have to be decided in the matter of Altobelli and Ors v The Commonwealth.
…
7.Having regard to the decision of Federal Magistrate Smith in the case of Bank of Western Australia Limited v Srinivasan I do not believe my client can succeed in his current action without having to hand affidavit material concerning the financial positions of the Plaintiff’s in the Altobelli case. Such material is not yet available.
8.On 28 March 2012 I caused to be sent to each Attorney General’s of the Commonwealth, States and Territories an amended notice under Section 78B of the Judiciary Act, copies of which are attached and marked “C”.
No other evidence was presented in support of either the adjournment application or the opposition to the creditors petition.
Mr Levet’s written submissions in support of the adjournment application, to the extent that they were pressed, were:
Concession as to the Present State of the Evidence
7.It is conceded that were a decision to be made on the evidence as it currently stands in this matter (ie in regard to the present lack of evidence of the financial affairs of the federal magistrates who are parties to the Altobelli matter, together with actuarial evidence based on such material) on the reasoning in Srinivasan the Respondent in this case must necessarily fail (see paragraph 7 of affidavit of David Leon Rod sworn and filed 3 April).
Argument
8.It is respectfully submitted that the adjournment application in this case significantly differs from the adjournment application in the earlier case of Srinivasan in a number of significant respects:-
(a)In the present case, the High Court is presently seized of an application for prohibition. True it is that at present no application for an interlocutory order is before the High Court, but the High Court is seized of the matter generally. Were this court to refuse the adjournment in such circumstances the application for a constitutional writ currently before the High Court would be rendered nugatory. A respondent in respect of whom a sequestration order had been made would not be in a position to continue such litigation.
(b)[not pressed]
(c)It is possible, in any event, that the respondent might be able to mount a properly arguable "reasonable apprehension of bias" case based on comments when the matter was last before the court (paragraphs 4-6 of the affidavit of David Leon Rod). The respondent is presently prevented from giving proper consideration to this possibility by the present unavailability of a transcript. This can only be cured by the granting of an adjournment.
(d)It is noted that an amended Section 78B Notice was forwarded by prepaid mail to the Attorneys General of the Commonwealth, States and Territories on 28 March 2012. Such Amended Notice was in terms significantly different from the original notice. It is submitted that a reasonable time for the Attorneys General to consider such Amended Notice has not elapsed. Section 78B is mandatory in its terms as to reasonable notice. This can only be cured by an adjournment.
(e)The Court (subject to certain exceptions) is under an obligation to do justice in respect of an issue between the parties. Given the concession made in paragraph 7 of the affidavit of David Leon Rod and repeated at paragraph 7 above, the issue between the three parties as to the ability of Federal Magistrates to exercise Chapter III jurisdiction cannot be ventilated without sufficient adjournment to enable the Respondent to adduce all relevant evidence.
(f)The proposed Amended Notice of Objection is in terms significantly different to that in Srinivasan and cannot be determined on its merits without deciding the same issues of law which are before Justice Buchanan in the Federal Court in Altobelli. Any decision to embark on a substantive hearing of the matter without giving the Respondent similar time to adduce the necessary evidence as is enjoyed by the present Plaintiffs in Altobelli would, with respect, be unreasonable in the Wednesbury sense.
At the start of today’s hearing, I decided that the efficient use of the time available would be best served by my first receiving the evidence in support of the petition filed by Capital Finance. None of the evidence was objected to by Mr Levet, and he did not contest that it raised a prima facie case for the making of a sequestration order under s.52 of the Bankruptcy Act 1966 (Cth).
I then gave leave for Mr Vellar to rely on the amended grounds of notice of opposition, and received Mr Rod’s affidavit in support of an adjournment. The adjournment application was opposed by Capital Finance and by counsel for the Commonwealth Attorney-General, intervening. I then indicated to Mr Levet that I would hear his submissions in relation to adjournment, and decide that application after hearing the submissions of Capital Finance and the Attorney-General on that issue. My ruling would indicate whether I would immediately proceed with the hearing of the creditors petition or not. The morning was then occupied with submissions from counsel and by my present judgment which refused to adjourn the petition.
As I understood Mr Levet’s oral submissions, he addressed the contentions which I have set out above from his written argument. However, I was not persuaded by any of them.
I do not accept, and it was not submitted by any counsel, that I was under any legal obligation to adjourn the proceedings merely by reason of the filing of the writ of summons in the High Court late yesterday.
Moreover, I do not accept the premise of the argument in paragraph 8(a): that if I refused an adjournment application and proceeded to make a sequestration order, the proceeding in the High Court would be “rendered nugatory”.
It is difficult to fully understand what is meant by that term. It is also very difficult to predict what might be the future course of the proceeding filed in the High Court, with or without the making of a sequestration order today.
If no sequestration order is made, and these proceedings are adjourned for an unspecified time to await the outcome of the High Court proceedings, then very extensive delays may well occur. Particularly, since Mr Levet foreshadowed that his client would be asking the High Court not itself to decide the constitutional issues, but to remit them to the Federal Court. Mr Levet also foreshadowed applications by his client in the Federal Court seeking, in some unknown fashion, to allow Mr Vellar to avail himself of evidence which is currently the subject of directions for its preparation in the Altobelli proceedings. Mr Levet suggested that Mr Vellar’s matter would then be decided at the same time as the Altobelli proceedings in the Federal Court. It would then be open to appeal to the High Court in the same way as the Altobelli proceedings.
The amount of time which would be occupied with all of these procedures is very difficult to anticipate, but I accept the submissions of counsel for Capital Finance: that it would almost certainly extend beyond the period of life of the present creditor’s petition, which is due to lapse in September of this year; and that it is likely that it would also extend beyond the maximum extension of the petition permitted under s.52(5) of the Bankruptcy Act. The true purpose of Mr Vellar’s filing of the matter in the High Court yesterday, and of the application for adjournment, therefore, emerges. This is that Mr Vellar is grasping at the straw of using the High Court summons as a means of escaping sequestration under this petition entirely, whether or not Federal Magistrates can constitutionally exercise the jurisdiction of a Bankruptcy Court under the Bankruptcy Act. I find that prospect most unattractive in this case, and as a precedent for other cases.
I have some difficulties with a prediction that, indeed, the High Court and the Federal Court would allow the matter to proceed in the leisurely fashion foreshadowed by Mr Levet. Indeed, it is possible that it might not survive for very long. It is possible that the High Court might strike the matter out for its non-compliance with the High Court Rules, which require applications for a writ of prohibition to proceed expeditiously by way of application for a show cause order containing an expedited appointment before a Justice (see rr. 20.01.1(a), and 25.01), and for other formal deficiencies. It is possible that it might be struck out as an abuse of process, in the circumstances of the pendency of the present matter, and the context in which it was commenced. On the other hand, it is possible that a High Court Justice would be persuaded that it has arguable merits, and should proceed before the High Court on an expedited basis. It is possible that the High Court might be moved to issue stay orders in relation to pending proceedings in this Court in this and other matters, although this appears unlikely taking into account the thousands of other cases currently pending in this Court in all its jurisdictions.
What is clear, and I accept the submission of counsel for the Attorney-General: that Mr Vellar has adopted a procedure in relation to his High Court matter which appears to avoid, rather than confront, the need for urgency in the proceedings. In particular, by not commencing the High Court proceedings much earlier in the life of the present petition, and by not seeking an early listing before a Justice of the High Court, whether for directions or stay, before today’s hearing.
I also accept the submission of counsel for the Attorney-General that the subject matter of the High Court proceedings would not be affected by a sequestration order, insofar as they put in issue the constitutional capacity of a person holding a commission issued under the Federal Magistrates Act to exercise jurisdiction under the Bankruptcy Act. That issue would remain, whether the present petition was pending or had given rise to the making of a sequestration order.
Counsel for Mr Vellar did not argue against that proposition, but submitted that “as a practical matter” his client would be unable to proceed. However, this also is not apparent to me on the current evidence.
If a sequestration order was made today, it appears to me – and it was not disputed by Mr Levet – that s.60(2) of the Bankruptcy Act would prevent the matter proceeding in the High Court until Mr Vellar’s trustee made an election whether to prosecute or discontinue the action. Mr Levet invited me to speculate that such an election would not be forthcoming. However, I am not prepared so to conclude. The principles upon which such elections are made have been referred to in a number of cases, in particular, in the judgment of Brennan CJ and Gaudron and McHugh JJ in Cummings v Claremont Petroleum NL (1995) 185 CLR 124 at 130 to 132 and 138 to 139. As their Honours noted, any decision by a trustee would be subject to review by a bankruptcy court with jurisdiction under the Bankruptcy Act. A whole range of considerations would face a trustee, including the interests of the creditors, whether the continuance of the proceedings might deplete the resources available for distribution, the merits of the matter, and possibly issues of public interest. It may well be that Mr Vellar could overcome all of these issues, and persuade his trustee to make an election.
Moreover, in all the circumstances, I cannot see that it would be contrary to any public interest, including the interests of justice, that a trustee in bankruptcy should be given that opportunity before Mr Vellar continues to embark on protracted and expensive litigation in the High Court. Indeed, considering his admitted indebtedness to Capital Finance, I think that the public interests protected by the Bankruptcy Act point towards allowing s.60(2) to take effect.
Mr Levet’s submissions in respect of the practical effects of a sequestration order on his pending High Court case also took him into the questions of the future relevance and availability of evidence to support the grounds of opposition and his High Court matter, which I shall address below under paragraph 8(e) of Mr Levet’s written submission.
In relation to paragraph 8(c) of Mr Levet’s written submission, Mr Levet took me to the transcript of the directions hearing held by me on 12 March 2012, and at this point of his submissions he applied for me to recuse myself on principles of apprehended bias. He did not seek to repeat his submissions on apprehended bias which I rejected in Srinivasan at [21]-[30], but submitted that a statement by me at this directions hearing might raise an apprehension that I had prejudged the outcome of his ground of opposition and his future amended ground of application. He pointed to no other matter in support of his recusal application.
At the end of the directions hearing on 12 March, and in the course of typing orders into my computer and fixing a date for Mr Levet’s client to file any interim applications, amended notice of grounds, and further affidavits, I said as follows:
HIS HONOUR: …However, I’m not going to give you implicit leave, Mr Levet [i.e. to file an amended notice of grounds of opposition]. This is what I think emerged from those exchanges.
MR LEVET: Yes, your Honour
HIS HONOUR: And I think we need to see it, and whatever evidence you have been – additional evidence you have been able to put on in support of it. And at that stage, you’ve got to examine the history of the matter as to whether you should be given – and the merits of the point, to see whether you should be given more time, if you want to persuade me to allow more time. Similarly, if the Commonwealth wants to persuade [scilicet: me] in response to whatever it is you have been able to put on in time – it wants time to put on something in response, we will address the Commonwealth’s – that issue, too, at the hearing, and not on a hypothetical basis today. But the considerations that are going to govern this petition appear to me at present to be the same considerations that I’ve, I hope, clearly indicated in my judgment delivered. Now, so, let’s just work backwards from 4 April; everyone agreed they were available. Yes. Well, nobody else is – we could give you until Friday week, Mr Levet, the 23rd, I think.
MR LEVITT: That’s in respect of evidence, is it, your Honour?
HIS HONOUR: Any affidavits you wish to rely on at the hearing, including in support of further adjournments or transfers or disqualifications or anything else that you envisage needing to make an interlocutory application for, as well as the opposition in its substance. And frankly, I am not treating this case as a part- or a rerun or something, whereby the Commonwealth can pre-empt what’s going to happen in the Altobelli case. If I can leave issues to be decided there, they will be left to be decided in that proceeding, so far as my approach to these issues goes, and that was a very substantial reason, as I’ve indicated in my judgment, why I didn’t address the issues under step 1. And are we going to get your written submission in accordance with the times I direct, Mr Levet, this time ‑ ‑ ‑
MR LEVITT: Yes, your Honour.
HIS HONOUR: ‑ ‑ ‑ or 15 minutes before the hearing?
This transcript is not perfect, partly because the transcriber was not aware of what was going on in the courtroom at the time, and partly because I was also engaged in formulating orders on a computer. As Mr Levet in his oral submissions pointed out, the observation which gives rise to his recusal application was directed as much at counsel for the Attorney-General as at Mr Levet. That observation was:
If I can leave issues to be decided there, they will be left to be decided in that proceeding, so as far as my approach to these issues goes, and that was a very substantial reason, as I’ve indicated in my judgment, why I didn’t address the issues under step one.
As I understand what I was saying – and I think a reasonably informed lay observer who was present at the directions hearing would have understood – I was merely pointing out to counsel for all the parties, including for the Attorney-General, that I would hope that they would read my judgment in Srinivasan and analyse how I addressed what I concluded were three essential steps in the grounds of opposition in that case, which at that time were identical to the grounds of opposition relied on by Mr Vellar. My reference to “step one” is a reference to the three essential steps which I analysed at paragraph 45 of my judgment, as being found in the grounds of opposition.
It had been notable that the Attorney-General’s submissions in Srinivasan had focused upon the first step, which was the legal issue whether an implication could be found in the Constitution, and which provided a common foundation for both the Altobelli proceedings and the objections to the creditors petitions, and that no submissions were made for the Attorney-General which addressed the third step. As I explained in Srinivasan, I concluded that it was unnecessary to decide the first step issue, since easier issues presented themselves to me in the second and third steps. Step two raised an issue of fact as to the sufficiency of the current superannuation arrangements for Federal Magistrates, which was also common to the Altobelli proceedings. As I noted, it was common ground that Dr Srinivasan had not presented evidence necessary to meet this issue. Step three raised a legal issue, which was clearly not shared with the Altobelli proceedings and was directly inconsistent with the Altobelli proceedings, concerning the legal effect of non-compliance with a constitutional implication, if it were found. In Srinivasan, the easiest issue was obviously the absence of any necessary evidence, and I decided the case on that basis. However, I also provided tentative opinions in relation to step three, which were adverse to Dr Srinivasan’s case.
In this context provided by my judgment which had been published just before the directions hearing, my statement, which was the focus of the recusal application, should be understood as inviting all the present parties to contemplate preparing submissions which addressed steps two and three as well as step one raised by Mr Vellar’s grounds of opposition. It invited their counsel to consider and to address the possibility that I might adopt the same path of reasoning. It made no suggestion that I might not be open to persuasion in relation to any such submissions, nor that I was not open to considering submissions why I should depart from Srinivasan. If, as I believe, an informed lay observer would understand this context, then I cannot accept that he or she might form a relevant apprehension under the principles of apprehended prejudgment which I identified in Srinivasan at [23]-[24].
The contention that my statement at the directions hearing on 12 March might give rise to a relevant apprehension has already been raised by Mr Levet in the Federal Court, in the course of a stay application brought by Dr Srinivasan in support of an appeal from my judgment. The stay application was addressed by Rares J on 19 March 2012, and he has revised and published his ex tempore reasons for refusing it (see Srinivasan v Bank of Western Australia Ltd [2012] FCA 319). It is apparent at [5] of his judgment, that Dr Srinivasan presented evidence of my statement on 12 March 2012 at the directions hearing in Mr Vellar’s matter. Presumably, Mr Levet submitted that my statement proved that I might have arrived at the judgment I had just delivered in Srinivasan with a prematurely closed mind. Rares J dealt with that submission as follows:
14. In my opinion, the remark made by his Honour during the directions hearing on 12 March 2012 was entirely appropriate. It would not suggest to a fair-minded lay observer that his Honour had entered into any prejudgment in relation to the present proceedings or any other proceedings. Judges do not have to decide questions that are not necessary to the resolution of proceedings. By saying that, to the extent that it was not necessary to decide a matter, he would not decide it, did not reveal any prejudgment by his Honour of the issues the subject of the complaint in this case or any other case.
With respect, in my opinion, I need to say no more as to my reasons why I did not accept the present recusal application made by Mr Vellar. In the light of that ruling, I do not consider that Mr Levet’s argument presented in paragraph 8(c) provides any reason for adjourning the petition today.
However, I note that in fact the transcript was readily available soon after the directions listing in accordance with Auscript’s normal procedures. The copy which is on the court file was, it appears, obtained by the Attorney-General and a complementary copy was forwarded to the Court last week. I do not accept that there is any reason to adjourn because of any delays by Mr Vellar or his legal advisers in obtaining the transcript.
Turning to the argument for adjournment presented in paragraph 8(d) of Mr Levet’s written submission, the short answer to it is that in my opinion the amended s.78B notice does not appear to me, when read in the light of the amended grounds of opposition, to raise any different “matter arising under the Constitution or involving its interpretation” requiring an amended s.78B notice. No counsel took me to any authorities on the meaning of that term, but my conclusion appears to follow fairly clearly from a comparison of the two s.78B notices and the effect of the two notices of grounds of opposition. Particularly, since Mr Vellar’s first formulation was identical to that which I addressed in Srinivasan on the basis that, in effect, it raised and relied upon the constitutional implications as pleaded in the Altobelli FASC. As I have noted, Mr Vellar’s amended notice of grounds of opposition and amended s.78B notice now expressly adopt the language of that pleading, but they appear to me to raise the same issues as would have been addressed under the previous formulation. I could not detect any material difference as to the constitutional issues raised by Mr Vellar, and I consider that Mr Levet was unable to identify any material difference.
I therefore do not need to consider and reflect upon the unattractiveness of this ground of adjournment, since it is based on an argument that Mr Vellar has, through his own delays in serving a s.78B notice and by his disregard of my directions, acquired a right of adjournment of the hearing of the petition.
The argument for adjournment presented in paragraph 8(e) of Mr Levet’s written submissions and oral arguments sought to build upon the statement made by his solicitor in his affidavit and the concession made in paragraph 7 of his submissions. What their concessions do not address is that, as I have explained above, the hearing of the petition will not be necessarily or solely focused upon the evidentiary issue which I identified in step two in Srinivasan. As I have explained above, it appeared to me in Srinivasan, and still appears to me in relation to Mr Vellar’s grounds of opposition, that there are also issues of law upon which the fate of the petition might be determined, including under steps one and three. At the hearing it will be open to all the parties to present whatever submissions they wish going to all issues of fact and law raised by the present amended notice of objection. It will be open to all the parties to address me on whether I should depart from my earlier judgment generally, or in relation to any particular aspect. I therefore do not accept that Mr Vellar is today necessarily facing a material detriment if, indeed, he has missed an opportunity to present necessary evidence relevant to his grounds of opposition.
I would also conclude that Mr Vellar would not have been denied a reasonable opportunity to present evidence necessary to establish his original grounds of opposition or his amended grounds of opposition, if I were to refuse the adjournment application and proceed with the petition today. In my opinion, he has been given that opportunity in the course of the petition before its listing for hearing today.
As I have narrated above, Mr Vellar raised his constitutional ground in early December last year. The petition has been before the Court since October last year. Mr Vellar’s two notices of grounds of opposition appear to me, plainly, to raise allegations of fact requiring evidence. A perceived need for evidence to support the Altobelli proceedings, was clearly identified in the transcript of a directions hearing held by Gummow J on 13 September 2011 (see [2011] HCA Trans 259). The submissions that were presented to me by Mr Levet in Dr Srinivasan’s case, and my reasoning in Srinivasan should, in my opinion, indicate how this should have been obvious to Mr Vellar’s legal advisors at all times, and at latest when they contemplated raising this constitutional point.
I cannot be more specific as to the nature of the evidence which might have been sufficient to support Mr Vellar’s grounds of opposition, nor as to the time needed to prepare it, since neither Mr Vellar’s solicitor, nor the submissions of his counsel, have attempted to identify the precise evidence which they would wish to prepare and present in the future, if the matter were adjourned. However, I do not accept that it would necessarily have involved the delays and complications which appear to have occurred in the Altobelli proceedings, since these appear to relate largely to issues of fact raised in that case by the Commonwealth’s defence, and it is not a party to the present matter.
For all the above reasons, I do not accept the argument for an adjournment of the hearing of the petition presented in paragraph 8(e) “to enable the respondent to adduce all relevant evidence”.
The argument for adjournment presented in paragraph 8(f) of Mr Levet’s written submissions was little developed. It appears to me that his reference to ‘unreasonable in the Wednesbury sense’ is misconceived, since it invites reference to administrative law principles rather than the considerations upon which a Court exercises a discretion to adjourn the hearing of proceedings such as the present. If it is an invitation for me to reflect on the usual principles of procedural fairness in allowing a party a reasonable opportunity to present their case, then I have already explained that I do not consider that Mr Vellar would have been denied such an opportunity if I refused to adjourn.
I can identify no other consideration relevant to the administration of justice, which requires that this petition should be adjourned to await the outcome of other litigation, whether involving the present parties, or other parties. Essentially, this submission appears to me repeat submissions for transfer or adjournment of an indistinguishable creditor’s petition which I rejected in Srinivasan at [31]-[43], and would reject in this case for the same reasons. In particular, a central concern, in my opinion, in the present case, is that which I identified at [38]:
Moreover, I was also swayed to refuse the application for transfer, by considering the interests of the administration of justice in the Federal courts broadly. There could be serious disruption to the current work of my Court, and that of the two courts superior to it, if this Court too readily avoided its responsibility to address challenges of the present type by transferring the matter to the superior court.
Rares J pointed to similar considerations, when declining to stay the sequestration order I made in that case:
7. If I were to grant a stay in this matter, the consequence would be to suggest that every decision and order made by the Federal Magistrates Court had no validity. Were the appellant’s argument accepted, it could make it impossible for any Federal Magistrate to hear and determine any matter filed in the Federal Magistrates Court. That is a serious step for any court to take. I am of opinion that the appellant’s argument must be rejected.
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15. In my opinion, the overwhelming public interest is that the appellant should have his estate sequestrated and controlled by an independent trustee in bankruptcy. I am unable to detect any prejudice to him in refusing a stay. Accordingly, I dismiss the interlocutory application for a stay and I order the appellant to pay the respondent’s costs of that application.
In my opinion, those considerations, in combination with all the other circumstances of the present matter, point overwhelmingly to my refusing the present adjournment application, and proceeding to hear the petition.
Mr Vellar’s second adjournment application
I completed giving the above judgment just before the lunch adjournment, and the matter was then adjourned to hear Mr Vellar’s submissions in support of his grounds of opposition to the creditor’s position. On resumption, Mr Levet made a further application to adjourn the petition for 24 hours, that is, to tomorrow afternoon.
Mr Levet said that his instructing solicitor had enquired with the High Court registry in Sydney during the lunch adjournment, and been informed that ‘a duty judge is available’ and would be available tomorrow morning to entertain an application for removal of the present creditor’s petition to the High Court pursuant to s.40 of the Judiciary Act. Mr Levet suggested that although the papers were not available now in support of such an application, they would prepared in the course of the afternoon and be available to a High Court duty judge tomorrow morning. The basis upon which removal would be sought is therefore speculative at this point in time.
The application for adjournment to tomorrow afternoon, or subsequently whenever the Court were available, was opposed by counsel for Capital Finance and for the Attorney-General. Counsel for the Attorney-General referred me to Bienstein v Bienstein (2003) 195 ALR 225, [2003] HCA 7, in which a Full Court struck out an appeal from the refusal of Hayne J to remove a matter pending in the Family Court. Their Honours said:
45. There is no basis on which this Court could remove the proceedings identified by Mrs Bienstein even if the Court thought that the issues she seeks to raise would in other circumstances justify an order for removal. Orders for removal interfere with the processes of the courts hearing the proceedings sought to be removed. Only where the issues are important and require this Court's urgent decision should the Court make an order for removal. Not only do orders removing proceedings interrupt the processes of the lower courts but they deny this Court the benefit of the reasons of the lower courts on the constitutional issues and allow parties to by-pass the special leave and leave requirements of the Judiciary Act. The s 40(1) power to remove is not intended to convert this Court into a court exercising a general supervisory jurisdiction over lower courts. As Hayne J observed in the removal proceedings:
"It may be readily accepted that this Court has, as one of its fundamental roles that, as final Court of Appeal for this country and in its original jurisdiction, particularly under section 75(v), of ensuring application of the rule of law, particularly in the judicial system of Australia. That is not to be done, however, as if the Court were a general judicial ombudsman. In particular, the powers under section 40(1) of the Judiciary Act are not to be exercised save for the evident purpose for which they are conferred of permitting removal into this Court of causes, or parts of causes, which raise constitutional issues ripe for decision."
Counsel for the Attorney-General suggested that in the light of these considerations, it was an unlikely possibility that an order under s.40 would be made in relation to the present petition.
I am inclined myself to identify the unlikelihood in stronger terms, given the circumstances in which the application will be made and the history of this petition as narrated in my above judgment. Particularly, where the High Court Justice would not tomorrow have the benefit of my judgment explaining why I had already decided to proceed with the hearing today.
As it happens, I am not available tomorrow to resume a hearing in this matter in the afternoon, since I have listed an adjourned creditor’s petition requiring a full hearing day. The availability of the Court and present counsel beyond tomorrow is highly uncertain.
Taking into account all the matters which I have addressed in my judgment delivered before lunch, and considering the public interests both in relation to the administration of justice and those reflected in the scheme of the Bankruptcy Act favouring an expeditious resolution of a creditor’s petition concerning an admitted insolvency of a high order, I refuse the present application. The hearing of the petition will therefore proceed.
The grounds of opposition
At the end of the hearing, following further submissions from all counsel, I gave the following reasons for making a sequestration order, and for rejecting the amended notice of grounds of opposition.
In the course of his submissions, Mr Levet was invited by me to canvas the path of reasoning which I explained in Srinivasan at [44] and subsequent. I explored with him the appropriateness to the present matter of the three step analysis of the grounds of opposition in that case which I performed at [45], so as to consider the different formulation of the amended grounds of opposition. However, I am not persuaded that the new framing of the constitutional implications requires any different analysis. In my opinion, in substance the combined effect of the contentions made in new paragraphs 16, 17 and 18 (set out above) is essentially the same as the rolled up contention which I identified as ‘step one’ in Srinivasan.
As in Srinivasan, counsel for the Attorney-General have sought to persuade me that these implications cannot be found in Chapter III of the Constitution, by reference to the authorities to which I referred in my previous judgment (with additional reference to the judgment of Gleeson CJ at [36]-[37] and [43] of Forge v Australian Securities & Investments Commission (2006) 228 CLR 45). As in Srinivasan, I remain conscious that this issue has still not been met with contradictory arguments at the same level of detail, and that I am called upon to reach judgment without time for a fuller consideration. I again would prefer, if possible, not to base my judgment upon a firm conclusion as to the legal issue raised by the first step in the grounds of opposition. I therefore shall approach consideration of the second and third steps by assuming that Chapter III does contain an implication as to a minimum level or type of post-retirement remuneration to be provided for Chapter III justices.
In Srinivasan, I characterised the second step as necessarily involving issues of fact requiring evidence as to the financial effects of the current superannuation arrangements for Federal Magistrates and comparing them with those given to other Chapter III justices. Today, I explored with Mr Levet the correctness of this analysis of these parts of the Altobelli FASC which were adopted in argument by Mr Levet in Srinivasan, and are now expressly adopted in Mr Vellar’s amended notice of grounds of opposition.
As I understood Mr Levet’s submissions (somewhat inconsistently with his concession in paragraph 7 of his written submission), he disputed whether evidence would be necessarily required, before it could be decided that the current arrangements did not meet constitutional implications for judicial post-retirement benefits. He submitted that the constitutional implications could only be satisfied by provision of a retirement benefits scheme identical to the Judges’ Pensions Act, if not under that Act itself, and that it could only be met by non-discriminatory treatment in relation to all current Chapter III justices. He submitted that a failure to do this would be apparent merely from the legislation which excluded Federal Magistrates from the Judges’ Pensions Act.
Counsel for the Attorney-General met this argument, by submitting that, at least, the authorities cited by him established that under Chapter III judicial independence and impartiality could permissibly be secured by “a combination of institutional arrangements and safeguards” and by a variety of legislative methods for fixing the remuneration of Chapter III justices or of judges elsewhere in the Australian judicature whose appointment is subject to implications drawn from Chapter III. I accept that submission. It is not inconsistent with an implied requirement to give Chapter III justices post-retirement benefits of a particular type or level, but allows that any particularly required component of remuneration could be ‘fixed’ by the Parliament using a variety of approaches, including the Judges’ Pensions Act or any other constitutionally permissible means to effect a similar outcome.
In my opinion, my acceptance of this effect of the High Court authorities cited by the Attorney-General, means that I do not accept that a failure to afford Federal Magistrates with a constitutionally required level or method of post-retirement judicial benefits can be discerned merely by legal analysis. I remain of the opinion that step two of Mr Vellar’s grounds of opposition requires the presentation of evidence allowing a practical understanding and comparison of the financial implications of the current scheme for retirement benefits for Federal Magistrates under the Governor-General’s determination made under Sch.1 cl.8 of the Federal Magistrates Act. I consider that Mr Vellar’s grounds of opposition cannot succeed without reliance upon the contention found in paragraph 33 of the further amended grounds of opposition, which asserts a conclusion of fact as to the “sufficiency” of the current superannuation arrangements for Federal Magistrates, either looked at in themselves or by comparison to the financial effects of the Judges’ Pensions Act.
It is conceded that no such evidence has been presented to the Court by Mr Vellar. I therefore, accept the contention of counsel for the Attorney-General, adopted by counsel for Capital Finance, that I can and should maintain the same path of reasoning found in Srinivasan at [51] and [52]. That is, that the amended grounds of opposition fails at the second step of its argument due to the absence of an evidentiary foundation which is essential for its success.
However, debate this afternoon was also able to enter into the third step of the argument, and I was able to arrive at a firmer conclusion in relation to that step than I achieved in Srinivasan. This step addresses the legal consequences of any failure to provide Federal Magistrates with a constitutionally required type or level of post-retirement benefits.
In Srinivasan at [55], I referred to what I understand to be the established test of severance of an invalid component of a legislative scheme. I concluded that, if the 1999 amendment of the Judges’ Pensions Act which excluded Federal Magistrates was invalid, and if it formed part of a legislative scheme which created the Federal Magistrates Court and provided for the appointment of Federal Magistrates, then it could not have been intended that the effectiveness of such appointments could be called into question by discovery of that invalidity. No submissions were presented to me by any counsel today suggesting that any other principle of severance should be considered, nor that my reasoning which applied it was erroneous. I therefore see no reason to depart from my opinion expressed at [55] of Srinivasan, and I now adopt it as my considered opinion.
I also said in Srinivasan:
56.Nor, in my opinion, if the contended constitutional implication is to be met by a duty on the Governor-General to provide for judicial pensions in a determination under Sch.1 cl.8 of the Federal Magistrates Act, would it be ‘required or justified’ to imply invalidity of appointments of Federal Magistrates in the absence of performance of that duty (cf. Gleeson CJ in Bradley’s Case (supra) at [9], and the judgment of the plurality at [65]).
No counsel appearing before me today attempted to identify any error in this reasoning. Counsel for Capital Finance invited me to follow it, and I shall do so, with some further explanation.
No counsel submitted that Sch.1 cl.8 of the Federal Magistrates Act could not allow the making of a determination which could satisfy all of the constitutional implications which are asserted in the amended notice of grounds of opposition, and I can see no reason why it would not. Particularly, in view of my above opinion that Chapter III allows Parliament to chose a legislative method by which it will ‘fix’ the remuneration of Chapter III justices conformably with the requirements of the Constitution, including by a delegation to the executive which is subject to disallowance by the Parliament. If so, then the fact that the current determination providing for post-retirement benefits for Federal Magistrates may or may not comply with implications of the Constitution does not appear to me to lead to the invalidity or ineffectiveness of my commission.
Moreover, I consider that I am bound so to conclude by judgments of the High Court. In particular, by the reasoning in North Australian Aboriginal Legal Aid Service Inc v Bradley & Anor (2004) 218 CLR 146. This case concerned a challenge to the appointment of the Chief Magistrate of the Northern Territory, upon contentions that the terms of his remuneration fixed by a determination of the Administrator made under s.6 of the Magistrates Act (NT) infringed the principle in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51, which is drawn from the Constitution and from Chapter III in particular. The High Court held that there was no infringement, and also held that it would not have affected the validity of his appointment. In this respect, Gleeson CJ said at [9]:
…The first comment to be made about that submission is that, even if the premise were correct, the conclusion would not follow. If it were correct to say that, at the time of the appointment of the first respondent, there was no valid determination of his remuneration, then all that would follow would be that he was entitled to have his remuneration validly determined; an entitlement that could be enforced, if necessary, by proceedings for mandamus against the Administrator. The Magistrates Act does not expressly make the existence of a valid determination under s 6 a condition precedent of the validity of an appointment under s 4. No implication to that effect is required or justified….
The plurality said at [65]:
It is true that, however unlikely that eventuality in practice, an officeholder under the system established by the Magistrates Act may be placed in the position of seeking the aid of the Supreme Court to compel observance of the obligations of the Administrator under s 6. But that circumstance does not render the magistracy of the Territory or the office of the Chief Magistrate inappropriately dependent on the legislature or executive of the Territory in a way incompatible with requirements of independence and impartiality. It does not compromise or jeopardise the integrity of the Territory magistracy or the judicial system. Nor is it apt to lead reasonable and informed members of the public to conclude that the magistracy of the Territory was not free from the influence of the other branches of government in exercising their judicial function. To the contrary, the legislative requirement of continued attention by the executive of the Territory to the preservation of adequate remuneration of the magistrates, including the Chief Magistrate, is apt to defend the interests of judicial independence and impartiality which inform the legislation.
In short, in my opinion, if Chapter III of the Constitution contains an implication as to a minimum required level or type of post-retirement benefits for Federal Magistrates which is not currently provided by either the Judges’ Pensions Act or a determination of the Governor-General under Sch.1 cl.8, then this deficiency can have no legal effect on the creation of my Court nor on the effectiveness of my commission as a Federal Magistrate.
I therefore conclude that Mr Vellar’s challenge to my jurisdiction under the Bankruptcy Act must fail both in point of law and evidence.
No submissions were made by Mr Levet in support of the mysterious reference in B of the amended notice of grounds of opposition to the existence of other ‘defences’. Mr Vellar has certainly presented no evidence that he “is able to pay his debts”, nor that there is any “other sufficient cause” for declining to make a sequestration order pursuant to s.52(2) of the Bankruptcy Act.
He has not pointed to any defect in the proceedings under that Act, and I am satisfied that all the requirements of the Act for the making of a sequestration order have been established. In my opinion, the public interests to which I referred in Srinivasan, and to which Rares J pointed in his judgment, point to the desirability that I should make that order without further delay. Mr Vellar has an admitted indebtedness in an amount of at least $18 million. There are other creditors who have filed supporting appearances. Mr Vellar has not presented to the Court any evidence as to his financial situation at all. In those circumstances, there is an obvious public interest, in my opinion, in immediately appointing a trustee over his estate, allowing it to be administered under the Bankruptcy Act.
The application for stay
After delivery of the above judgment, Mr Levet applied for an order under s.52(3) of the Bankruptcy Act, which provides:
The Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days.
It is clear, in my opinion, that by reason of s.37(2) of the Bankruptcy Act, and the absence of any stay powers given to this Court under legislation providing for appeals from its orders, the Court has no other power to stay the operation of a sequestration order.
In Srinivasan, I acceded to an application to exercise this power, to allow one week for the bankrupt to take advice on my published judgment and to approach the Federal Court for a stay pending an appeal. As the judgment of Rares J indicates, such an application was brought and was addressed by his Honour. The present matter appear to me indistinguishable from Srinivasan in relation to the merits of giving any stay in support of a right of appeal. In view of the strong reaction of Rares J against the grant of a stay, I consider that I should follow his Honour’s reasoning and refuse to grant one in the present case. I am not persuaded that I should adopt a different approach merely by reason of the filing yesterday of Mr Vellar’s High Court proceeding, nor by reason of the possibility that he might wish to apply to that Court for some species of urgent interlocutory relief. I consider that he has had ample opportunity to seek that relief before today.
I therefore propose to make a sequestration order without any conditions and in the usual form.
I certify that the preceding eighty-five (85) paragraphs are a true copy of the reasons for judgment of Smith FM.
Date: 12 April 2012
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