Evans, J.D. v The Heather Thiedeke Group Pty Ltd

[1990] FCA 224

Re: JOHN D. EVANS
And: THE HEATHER THIEDEKE GROUP PTY LTD
No. QLD G56 of 1990
FED No. 224
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.(1)

CATCHWORDS

Practice and Procedure - application for the stay of proceedings under a sequestration order - principles relating to a stay considered where bona fide appeal challenging the existence of the debt - time limit under Bankruptcy Act 1966 insufficient to enable consideration of an appeal before stay expired - relationship considered between Bankruptcy Act and Federal Court Rules when appeal brought under Federal Court of Australia Act 1976, s.24.

Bankruptcy Act 1966, ss.38, 52(3)

Federal Court of Australia Act 1976, s.24

Federal Court Rules, O.52 r.17

HEARING

BRISBANE

#DATE 23:5:1990

The applicant appeared in person

Counsel for the respondent: Mr P.A. Freeburn

Solicitors for the respondent: Morris Fletcher and Cross

ORDER

1. The proceedings under the sequestration order made by Spender J. on 4 May 1990 be stayed until 4.15 p.m. on Friday, 27 July 1990;

2. The costs of and incidental to today's hearing be costs in the proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an application for a stay of proceedings under a sequestration order made against the applicant on 4 May 1990. The judge who made the order (Spender J.) also made an order staying proceedings under it until 4 p.m. on 18 May 1990. According to the material, that was done to enable consideration of an appeal; the stay was later extended to 25 May 1990.

1. Since the order of Spender J. was intended to permit consideration of an appeal and an appeal has now been filed, it would seem that, prima facie, a further stay should be granted. It appears that the initial stay was ordered on the assumption that the case is one on which an appeal would not be frivolous. The Full Court next sits in Brisbane on 23 July.

2. The decision of the Full Court in Ahern v. Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 suggests that an adjournment of the petition should fairly readily be granted where there is a genuine dispute as to the existence of the debt underlying the bankruptcy proceedings (148). There, the adjournment was granted to enable an appeal against the judgment on which the bankruptcy notice was based. Here, the question is not one of adjournment of the petition, nor is the appeal against the judgment on which the notice was issued; the Court is asked for a stay of the sequestration order on the basis of an appeal against that order. Nevertheless, the decision in Ahern's case perhaps tends to support the view that where there is a bona fide appeal challenging the existence of the debt, a stay of the sequestration order should fairly readily be granted.

3. There are two considerations which point the other way. One is that the basic question sought to be raised on the appeal has already, in a sense, been decided in proceedings which went to the High Court. I refused to set aside the bankruptcy notice on a ground which was reagitated before Spender J., namely that the notice is not founded on a genuine debt; my decision was upheld by the Full Court. The High Court, by a majority, refused special leave. The second consideration is that s.52(3) of the Bankruptcy Act 1966 empowers the Court to "stay all proceedings under a sequestration order for a period not exceeding 21 days". It is argued for the creditor that the 21 day limit cannot be, or at least should not be, exceeded. If that is so, then as a practical matter appeals from the making of sequestration orders must necessarily be brought and disposed of within the 21 day limit.

4. In my opinion, the general power to grant a stay (not limited to a stay pending appeal) given by s.52(3) does not nullify the Court's jurisdiction to order a stay under O.52 r.17 of the Rules, which relates to appeals. Under that rule, a single judge may stay proceedings under "the judgment appealed from" and there is, of course, no 21 day limit. The rules of the Court do not in general apply to proceedings under the Bankruptcy Act: O.1 r.11. However, this appeal is brought under s.24 of the Federal Court of Australia Act 1976 and not under any provision of the Bankruptcy Act; s.38 of the latter Act does not apply.

5. On the whole, and having regard to the content of the reasons for judgment of Spender J., it appears to me that a further stay should be granted, to allow the appeal to be prosecuted. If that is not done, then the appeal (if successful) may be partly nugatory. It will be ordered that proceedings under the sequestration order made by Spender J. on 4 May 1990 be stayed until 4.15 p.m. on Friday, 27 July 1990; the costs will be costs in the proceedings.