Culleton v Balwyn Nominees Pty Ltd

[2017] HCATrans 41

[2017] HCATrans 041

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P6 of 2017

B e t w e e n -

RODNEY CULLETON

Applicant

and

BALWYN NOMINEES PTY LTD

Respondent

GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 1 MARCH 2017, AT 9.44 AM

Copyright in the High Court of Australia

HIS HONOUR:   In this matter I publish orders and reasons and I direct that the reasons be incorporated in the transcript.

By summons filed on 9 February 2017, Mr Culleton applies for a stay of orders of the Full Court of the Federal Court of Australia dated 3 February 2017, until such time as his application for special leave to appeal from orders of the Full Court has been determined by this Court.  By those orders, Allsop CJ, Dowsett and Besanko  JJ dismissed an appeal from orders of Barker J made on 23 December 2016, by which orders Mr Culleton’s estate is to be sequestrated under the Bankruptcy Act 1966 (Cth).

Mr Culleton’s application for a stay was directed to be heard on the papers pursuant to r 13.03.1 of the High Court Rules 2004 (Cth). Further directions were made for the filing of written submissions by the parties. By its written submissions, Balwyn Nominees Pty Ltd, the respondent to the application for special leave to appeal upon whose creditor’s petition the sequestration order was made, opposes Mr Culleton’s application and seeks its costs of the summons.

I am of the opinion that Mr Culleton’s application for a stay of the Full Court’s orders should be refused.

This Court’s inherent jurisdiction to grant a stay pending the determination of an application for special leave to appeal, as Brennan J identified in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681 at 683, “depends on whether a stay is necessary to preserve the subject‑matter of the litigation”. The basis for the exercise of inherent jurisdiction is reflected in the High Court Rules 2004 (Cth) by r 8.07.1, which provides that “[t]he Court or a Justice of its own motion or on application may at any time make such order as is necessary to effectuate the grant of … appellate jurisdiction in the Court”.

Even when a stay is necessary to preserve the subject‑matter of a litigation pending an application for leave to appeal, the ordering of a stay is in the discretion of the Court, and in the exercise of that discretion a stay will not lightly be ordered.  Brennan J made that clear in Jennings at 684 when he said that “a stay to preserve the subject‑matter of litigation pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted.” His Honour stated at 685:

“In exercising the extraordinary jurisdiction to stay, the following factors are material to the exercise of this Court’s discretion.  In each case when the Court is satisfied a stay is required to preserve the subject‑matter of the litigation, it is relevant to consider:  first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies.”

The factors identified by Brennan J in Jennings as material to the exercise of the Court’s discretion to order a stay have been repeated and applied in numerous subsequent cases.  The third of those factors – whether the applicant for the stay has failed to take whatever steps are necessary to seek a stay from the court from the orders of special leave to appeal is sought – will ordinarily carry significant weight.  Against the background of the procedural history in Jennings, Brennan J explained that significance when he said at 684:

“When an application for special leave to appeal is made to this Court, a jurisdiction to stay may be exercised by the court below and it is to that court - the court in which the matter is pending and which is familiar with the matter - that an application to stay should first be made.  In this case the Court of Appeal, not wishing to pre‑empt the view that may be expressed in this Court, tailored its order accordingly.  In future, there should be no inhibition on the court in which the matter is pending framing a stay order, if a stay be appropriate, to avoid the necessity for application to this Court.”

The course that Brennan J identified in 1986 as the course to be followed in the future remains the course that should be followed now.  His Honour’s remarks in that respect were recently reiterated by Kiefel J in Mercanti v Mercanti [2017] HCA 1 at [9]. The factor is one that has increased rather than diminished in significance over the past 30 years.

What has recently occurred that may impact on the exercise of the discretion to grant a stay is a change to the procedures for the determination of applications for special leave to appeal to this Court, as a consequence of which such an application can ordinarily be expected to be determined much more quickly than in the past.  Kiefel J drew attention to the changed procedures in Mercanti at [10].

That an application for special leave to appeal can now ordinarily be expected to be determined quite quickly is a consideration which bears on the likely duration of any stay that might be ordered pending the determination of the application for special leave.  In consequence, it is a consideration which bears on the balance of convenience in ordering such a stay.  It is not a consideration which ought to bear on the appropriateness and desirability of the application for the stay being made to the court from the orders of which the application for special leave to appeal is brought.

Part of the procedural background to Mr Culleton’s present application is as follows.  On 23 December 2016, upon making the sequestration order, Barker J made further orders that there be a stay of all proceedings under the sequestration order for a period of 21 days.  On 12 January 2017, the day after Mr Culleton filed his notice of appeal to the Full Court of the Federal Court against the orders of Barker J, Dowsett J made orders extending the stay until 20 January 2017.  On 19 January 2017, that stay was extended by orders of Allsop CJ until the hearing of the appeal on 27 January 2017, at which time the stay was further extended to 24 hours after the making of orders disposing of the appeal.  Following delivery of judgment in the appeal on 3 February 2017, the stay was further extended by orders of the Full Court until 6 February 2017 and then 8 February 2017.  The stay of the sequestration order expired at 4.15pm on 8 February 2017.

Mr Culleton failed to seek from the Federal Court any further extension of the stay.  An affidavit sworn by Mr Culleton’s solicitor, Mr Maitland, annexes correspondence between the parties’ solicitors which sheds some light on how that failure has occurred.  In a letter to the solicitors for Balwyn Nominees dated 14 February 2017, Mr Maitland stated that “Mr Culleton had already applied for a further stay in the first instance to the Full Court (such application being granted), the process we now seek to follow, so far as we are aware, accords with Mercanti v Mercanti [2017] HCA 1 and the other cases referred to in our correspondence.” That position was restated in a letter to a Deputy Registrar of this Court on the same date, and no further explanation is provided in Mr Culleton’s written submissions.

The inference I draw is that Mr Culleton’s failure to seek any further extension of the stay granted by the Federal Court has resulted from a misapprehension on the part of the legal practitioners acting for him of the import of the decision in Mercanti.  The view I take is that Mr Culleton should not be disadvantaged by that misapprehension.  The result is that, in the peculiar circumstances of this case, the failure to take steps necessary to seek, from the court from the orders of which special leave is sought, the stay now sought from this Court is not a factor that I propose to treat as weighing against Mr Culleton in the exercise of my discretion.

Mr Culleton’s submissions assert that “the third and fourth issues in Mercanti are satisfied”. The submissions then go on to refer to “further factors” said to support the ordering of a stay, including:  “desirability of seamlessness with the orders for a stay of the Full Court and its continuation to the hearing in this Court”; that a stay would “inhibit the Applicant from exercising his civil rights”; that bankruptcy is a “serious matter” and that there are errors in the judgment of the Full Court; that Mr Culleton has a “right to maintain the status quo”; that the stay would protect Mr Culleton’s right to take steps to protect his appeal rights in proceedings in other Courts, and that the Senate is “yet to finalise its position” on answers to its questions provided by the Court of Disputed Returns in Re Culleton [No 2] [2017] HCA 4.

Balwyn Nominees’ submissions refer to the benefit to creditors of being able to take steps to gather information about Mr Culleton’s financial position without delay, including the identification of creditors and available assets.  They note that “it is most unlikely that any irreversible action will occur” before determination of the application for special leave to appeal.

Nothing in Mr Culleton’s submissions suggests that the balance of convenience favours him.  I accept the submissions of Balwyn Nominees that there is benefit to creditors in being able to take the usual steps where a sequestration order has been made, and I consider it appropriate that the respondent should have the benefit of the orders made in its favour.  Importantly, Mr Culleton does not submit, and I do not consider, that refusal of his application for a stay would render his application for special leave to appeal from the orders of the Full Court of the Federal Court futile.

In the result, I do not think it necessary for me to reach any firm view as to the prospects of Mr Culleton’s application for special leave to appeal, other than to state that I am not persuaded that the prospects of success in obtaining special leave to appeal to this Court are sufficient to outweigh the conclusions I have drawn in relation to the balance of convenience.

By his summons, Mr Culleton seeks further orders that the application for special leave to appeal and appeal be expedited, and that the application and appeal be heard concurrently.  I have already emphasised that the procedures referred to in Mercanti at [10] have ensured that applications for special leave to appeal are dealt with quickly. I am not persuaded that the administration of justice in this case warrants any departure from them. I therefore decline to make those additional orders.

The orders I make are as follows:

1.The applicant’s summons filed on 9 February 2017 is dismissed.

2.The costs of the summons are the respondent’s costs in the application for special leave to appeal.

The Court will now adjourn till 10.15 am.

AT 9.45 AM THE MATTER WAS CONCLUDED