Commonwealth Bank v McKinnon - [2005] FMCA 640

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COMMONWEALTH BANK v McKINNON

[2005] FMCA 640

BANKRUPTCY – Application for stay of Sequestration Order pending purported appeal in Federal Court from a decision to dismiss an application to set aside a Bankruptcy Notice – appeal in Federal Court prima facie incompetent – application for stay of sequestration order refused.

Federal Magistrates Act 1999, s.104(3)

Applicant:

COMMONWEALTH BANK

Respondent:

JEANETTE BEVERLY DAWN MCKINNON

File Number:

MLG 304 of 2004

Judgment of:

McInnis FM

Hearing date:

13 May 2005

Delivered at:

Melbourne

Delivered on:

13 May 2005

REPRESENTATION

Counsel for the Applicant:

Mr T Ellis

Solicitors for the Applicant:

Alison Harewood

Respondent:

In person

Solicitor for the Official Trustee:

Mr H Redd

ORDERS

The Notice of Motion filed 12 May 2005 be dismissed.
The Applicant Creditor's costs of the Notice of Motion be paid out of the Bankrupt Estate of Jeanette Beverly Dawn McKinnon with priority under s.109 of the Bankruptcy Act 1966.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 304 of 2004

COMMONWEALTH BANK

Applicant

And

JEANETTE BEVERLY DAWN MCKINNON

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

Before the court is a notice of motion which was filed on 12 May 2005 purportedly by Jeanette Beverly Dawn McKinnon and Donald Neil McKinnon claiming to be applicants against the respondent Commonwealth Bank of Australia. The notice of motion seeks orders from the court as follows:
1)The order of Registrar Agnew, made 28 April 2005 be stayed until all Appeals from Applications to have a Bankruptcy Notice set aside are determined or further order.
2)Alternatively that the Order of Registrar Agnew, made 28 April 2005 be dismissed or set aside.
3)Further or other orders as the Court seems fit.
The application was scheduled for hearing as a matter of urgency this day and was supported by an affidavit sworn by Jeanette Beverly Dawn McKinnon on 12 May 2005. It is appropriate by way of background to indicate in brief terms that it would appear that two sequestration orders were made on 28 April 2005 against the two debtors to whom I have referred. Those sequestration orders were made upon a petition by the Commonwealth Bank of Australia. The sequestration order in relation to Jeanette Beverly Dawn McKinnon appears to be the subject of an application for review which I note is to be heard on 16 May 2005 at 9.45 am. There appears to be a degree of confusion as to whether or not the intention was to review the sequestration orders made in relation to both debtors. There is equally some degree of confusion as to whether or not this application at all before me by way of notice of motion, purportedly on behalf of Donald Neil McKinnon, can be entertained by this court.
For present purposes and solely for the purpose of this application,

I am prepared to accept that the application by way of notice of motion is on behalf of both Jeanette Beverly Dawn McKinnon and Donald Neil McKinnon and does relate to a request to stay sequestration orders made against both. I have some hesitation in making an allowance of that kind as indeed I have some hesitation in even permitting Jeanette Beverly Dawn McKinnon to appear for and on behalf of Donald Neil McKinnon, but for present purposes I am prepared to do so solely on the basis that I note that Jeanette Beverly Dawn McKinnon is unrepresented and is not legally trained. The sequestration order having been made on 28 April 2005 has appropriately been the subject within time of an application for review filed on 29 April 2005 and is returnable on 16 May 2005.
It would appear that the proceeding between these parties have had a long and chequered history and so much is evident from other proceedings wherein an attempt was made to set aside relevant bankruptcy notices. This notice of motion, referring as it does to a request for a stay until all appeals from applications to have a bankruptcy notice set aside are determined or further order, clearly refers to, I now understand, what is described as a notice of appeal which appears to be a notice of appeal from a decision of Gray J wherein his Honour made an order on 7 April 2005 dismissing an appeal from a decision of Federal Magistrate Phipps of the Federal Magistrates Court on 29 March 2004 where an application to set aside the bankruptcy notice was dismissed.
Somewhat unusually, the notice of appeal which has been relied upon by the debtors, appears to be an appeal to the Federal Court of Australia. On the face of it, that notice of appeal, in my view, is incompetent. Any appeal from a decision of the Federal Court of Australia, albeit constituted by a single justice of that court hearing and determining an appeal from the Federal Magistrates Court of Australia, in my view could only proceed by way of an application for special leave to the High Court of Australia. I cannot see any or any proper basis upon which it could be concluded that the notice of appeal which has been handed to the this day bearing number VID 386/2005 could be regarded as competent. Nevertheless, the final determination of the competency of that notice of appeal will of course be a matter entirely for the Federal Court to determine at the appropriate time.
For the purpose of this notice of motion, however, it is relevant and appropriate that this court make some assessment of the extent to which there are any appeals from applications to have a bankruptcy notice set aside which would provide any or any proper basis upon which the sequestration orders made by the registrar on 28 April 2005 be stayed. Having regard to my finding as to the competency of that appeal, in my view it follows that the notice of motion does not have any or any proper basis upon which this court could rely in writing a stay.
In the alternative, during the course of submissions, I had indicated to counsel for the petitioning creditor that it may possibly be the case that this court has an inherent jurisdiction having regard to a pending application for review of the registrar's decision to grant a stay of the kind sought in the notice of motion, though not necessarily based upon there being pending appeals but rather based upon affidavit material before the court by at least one of the debtors. That affidavit, as

I indicated, sworn 12 May 2005, refers to a need to make payments which have been repeated in this court before me today in order to ensure the payments on a farm property of the debtors are maintained this week, and that other funds are made available for their food and sustenance between now and at least Monday.
Without finally deciding the matter, it seems to me that in all likelihood this court does have power, inherent power or otherwise, to make a stay order pending the hearing and determination of an application for review. In my view, s.104(3) of the Federal Magistrates Act 1999 provides that power in the sense that once an application for review has been properly filed and served, then this court may, to quote the subsection "make any order or orders it thinks fit in relation to the matter in respect of which the power was exercised". Whilst I note that the power that was exercised by the registrar is a power to make a sequestration order, it is clear that the registrar also has power to make other orders in relation to the petition before a registrar. Those powers include deferring the proceedings and include other orders that may be made during the management of the creditors petition. I see no reason why in interpreting the power of this court I should restrict its power in a manner which would deprive the court necessarily of an opportunity to exercise a discretion, if I were minded to do so, to grant a stay. But that stay would be a stay in relation to the application for review rather than, as I have indicated, a stay made upon any basis revealed in the notice of motion.
In my view, whilst it may theoretically be possible for the court to consider the exercise of a stay in the context of a pending application for review, the material currently before the court does not persuade me that it would be proper to exercise a discretion to grant that stay. This matter has had a long, and as I indicated, chequered history. The registrar's order was made on 28 April 2005. The review from that decision is a review now scheduled for hearing on 16 May 2005. Whilst there may be some immediate financial difficulties that arise in relation to the debtors between now and the hearing of that application for review on 16 May 2005, it is my conclusion that in the exercise of the court's discretion, if indeed it has one, it would not be appropriate to grant a stay of any kind.
Specifically, however, for the present purposes, it is my conclusion that the grounds sought to be relied upon in the notice of motion are without foundation. I am satisfied there is no competent appeal pending. I should add, even if there were a competent appeal pending, then in my view any question of a stay would properly be a matter for the appellate court rather than this court.
In those circumstances it follows the notice of motion should be dismissed.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 13 May 2005