Derriman v National Australia Bank
[2005] FMCA 496
•14 April 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DERRIMAN v NATIONAL AUSTRALIA BANK | [2005] FMCA 496 |
| BANKRUPTCY – Application for stay of proceedings under a sequestration order – where applicant applying for special leave to appeal to High Court – whether the Federal Magistrates Court of Australia have jurisdiction to hear the application – whether discretion should be exercised. |
| Bankruptcy Act 1966, s.306 |
| Wallin v MJB Building Services Pty Ltd [2002] FCA 1355 Wallin & Ors v MJB Building Services & Ors [2002] FMCA 2007 Guss v Johnstone [2000] FCA 1593 |
| Applicant: | KYM DERRIMAN |
| Respondent: | NATIONAL AUSTRALIA BANK LTD |
| File Number: | SYG 2996 of 2004 |
| Judgment of: | Raphael FM |
| Hearing date: | 14 April 2005 |
| Date of Last Submission: | 14 April 2005 |
| Delivered at: | Sydney |
| Delivered on: | 14 April 2005 |
REPRESENTATION
| Counsel for the Respondent: | J M White |
ORDERS
Both notices of motion are dismissed.
In respect of both matters the applicant is to pay the respondent's costs to be taxed, if not agreed, in accordance with the Federal Court Act and Rules.
Costs are to be paid in priority out of the property of the bankrupt's estate.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2996 of 2004
| KYM DERRIMAN |
Applicant
And
| NATIONAL AUSTRALIA BANK LTD |
Respondent
REASONS FOR JUDGMENT
I have before me today an application by the bankrupt by way of notice of motion for a stay of the sequestration order made on 18 October 2004 by Federal Magistrate Smith. His Honour had made that sequestration order following immediately upon his hearing of a review of a decision of Registrar Hedge declining to set aside a Bankruptcy Notice. After the sequestration order was made, the applicant debtor appealed the decision of Federal Magistrate Smith, and the appeal was heard by Wilcox J in the Federal Court. His Honour's judgment was handed down on 15 February 2005; Derriman v National Australia Bank Limited [2005] FCA 75. His Honour held that the impugned Bankruptcy Notice was a valid notice, and that to the extent that there was a defect in the notice, it was one which could be remedied by the application of s.306 of the Bankruptcy Act.
The debtor then sought special leave to appeal to the High Court of Australia and filed an application in that court on 18 March 2005. Yesterday, 13 April 2005, the debtor sought from Wilcox J, a stay of the sequestration order. His Honour took the view that he was functus having dismissed an appeal and that the relevant order which Mr Derriman was seeking to stay was an order of the Federal Magistrates Court. He, therefore, transferred the matter back to this court for me to hear urgently.
Mr Derriman argues that the judgment of Wilcox J is incorrect, and that he hopes he will be given leave by the High Court to establish this fact. He mentions that he has a cross-claim against the creditor, although he accepts the validity of the debt, which is one due upon his MasterCard account. He tells me that the real purpose of the forthcoming meeting of creditors is for the trustee to secure his own remuneration and that it will be unfair if after winning the appeal that he the debtor, is obliged to pay the costs of the trustee. I am not entirely sure if Mr Derriman would have to pay the costs of the trustee in the event of his successful appeal to the High Court. If that court finds that the Bankruptcy Notice was invalid, then the sequestration order was also invalid, and part of the costs payable by the creditor would be the costs of the trustee. It is notorious that the National Australia Bank is either the first or second largest company in Australia and I have little doubt that it will be able to afford the costs, which are currently estimated in the sum of $10,000.
I am advised by Mr White, who appears on behalf of the bank, that there has not previously been an application for a stay of the sequestration order which has now been in existence for some seven months. I note from a letter prepared by the trustee to the creditors, and provided to me by the respondents, that on 4 April 2005, Mr Derriman failed to file a statement of affairs. He tells me that he has now done this. What he did provide the trustee with was a statement of means which indicated that he had creditors to the value of $81,000.
A number of creditors have been identified on the Bay Corp Advantage Search, which all trustees carry out. The existence of a number of creditors is always a matter that the court should take into account when considering the public interest.
Mr White tells me that when he appeared before Wilcox J, he assumed that his Honour had power to deal with the application for a stay. When his Honour suggested that he did not do so, Mr White was taken by surprise and, therefore, did not have the opportunity of carrying out the detailed research which he has since brought to my attention. He has referred me to two decisions in the same matter being a decision of Federal Magistrate Driver in Wallin & Ors v MJB Building Services and Ors [2002] FMCA 2007, and the appeal against that decision bearing the same title but having the reference [2002] FCA 1355, a decision of Moore J. At [4] of Federal Magistrate Driver's reasons, his Honour says:
“In the circumstances, I am of the view that there is no basis upon which it is either possible or appropriate for me to grant this stay sought...
It is inappropriate, in my view, for the present applicants to seek to return to this Court, having now reached the High Court, on the making of the sequestration order, to seek to obtain a stay of proceedings under the sequestration order. The time for seeking such a stay in this court has long since passed.”
At [2] of Moore J’s decision, which is binding upon me as a decision on appeal from the Federal Magistrate, his Honour says:
“The applications filed on 29 August 2002, in terms, sought orders to stay the bankruptcy proceedings. By the time the matter reached this Court, the particular matter of concern to the bankrupts was the impending sale by auction (scheduled for Saturday 2 November 2002) by the trustee of a property that had been owned by Mrs Paula Wallin. When the matter came before Federal Magistrate Driver, an issue arose about his power to make the orders sought. His Honour concluded that he had no power to make the orders, and dismissed the application. In my opinion, he was correct in so concluding.
Section 52(3) of the Bankruptcy Act 1966 (Cth) has no relevance as the hearing of the creditor’s petition had concluded over a year earlier: see: Re Wardle; ex parte Widin (1987) 70 ALR 633 at 635, and Coleman v Lazy Days Investment Pty Ltd (1995) 55 FCR 297 at 302. The stay sought was not in aid of any appeal from the Federal Magistrates court concerning the sequestration orders: see Grundy v Wattle Australia (2002) FCA 615 and the case cited therein. While there had been an appeal, it had been heard and determined months earlier by Gyles J in Wallin v MJB Building Services Pty Limited [2002] FCA 426.
It follows that this appeal must inevitably fail given that the orders sought were orders the Magistrate could not have made in the circumstances. Accordingly, I propose to order that the appeal be dismissed.”
Notwithstanding the views of Wilcox J, with which I would not, in ordinary circumstances, presume to cavil, I would appear to be bound by the views of Moore J that I do not have the jurisdiction which Wilcox J would wish me to have. If I am wrong about these matters and the decision of Moore J is, in fact, incorrect or distinguishable from the proceedings before me, I would say that I would not be inclined to exercise my discretion to grant a stay in any event. I note that in Guss v Johnstone [2000] FCA 1593, Sackville J heard a very similar application in respect of an appeal from the Full Bench of the Federal Court. At [25] his Honour said this:
“It must also be borne in mind that the appellant's act of bankruptcy was committed some three and a half years ago. The sequestration order was made against him nearly two years ago. The appellant's attempt to set aside the bankruptcy notice failed before Sunberg J. The Full Court and the High Court (both unanimously) rejected appeals. His opposition to the making of a sequestration order failed before Kenny J and the Full Court (unanimously).
The appellant was entitled to oppose the making or implementation of a sequestration order by any means lawfully open to him. Doubtless he will continue to do so. Nonetheless, it is relevant in assessing the balance of convenience to take into account the fact that despite the appellant's lack of success, there have already been lengthy delays in giving effect to the sequestration order made by the primary Judge. Additional delays are not likely to be countenanced. This is so regardless of whether or not the Society is the appellant's only creditor.”
His Honour declined to grant the stay.
In this particular case, there was no previous stay, the debtor owes quite a considerable amount of money to a variety of creditors, the debtor failed until very late in the day to provide his trustee with a statement of affairs, and finally, having given some consideration to his notice of appeal and the judgment of Wilcox J, I would have to say that I believe his prospects of success on the special leave application are very low indeed. The High Court has, on many occasions, declined to accept appeals from a single judge of the Federal Court acting as the appeal court to the Federal Magistrates Court. I have no reason to believe that it will adopt a different approach in this particular case, given the seniority of the judge who handled the appeal and the fullness of his decision.
I dismiss both notices of motion. Although I have spoken mostly of the notice of motion in matter SYG 2996 of 2004, there is a similar notice in respect of matter SYG 2409 of 2004, and for the purposes of that latter notice of motion, I adopt the same reasons. I order that in respect of both matters the applicant pay the respondent's costs to be taxed, if not agreed, in accordance with the Federal Court Act and Rules. I have been persuaded by Mr White that I should add an order similar to that provided by Moore J in the Wallin case, to which I previously referred, that those costs be paid in priority out of the property of the bankrupt's estate.
I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Rapahel FM
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