Gomez v State Bank of New South Wales Limited

[2004] FCA 775

FEDERAL COURT OF AUSTRALIA

Gomez v State Bank of New South Wales Limited [2004] FCA 775

JOSEPH WENCESLAUS GOMEZ v STATE BANK OF NEW SOUTH WALES LIMITED
N 801 of 2004

WHITLAM J
18 JUNE 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 801 of 2004

BETWEEN:	JOSEPH WENCESLAUS GOMEZ APPLICANT
AND:	STATE BANK OF NEW SOUTH WALES LIMITED RESPONDENT
JUDGE:	WHITLAM J
DATE OF ORDER:	18 JUNE 2004
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.        The application is dismissed with costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 801 of 2004

BETWEEN:	JOSEPH WENCESLAUS GOMEZ APPLICANT
AND:	STATE BANK OF NEW SOUTH WALES LIMITED RESPONDENT

JUDGE:	WHITLAM J
DATE:	18 JUNE 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an application for an extension of time within which to institute an appeal from a judgment of the Federal Magistrates Court given on 20 April 2004 in which a sequestration order was made under the Bankruptcy Act 1966 (‘the Act’) against the estate of the applicant on a creditor’s petition presented by the respondent.  The application was filed on 17 May.  It was not accompanied by an affidavit showing the matters required by O 52 r 15(6) of the Federal Court Rules.  Instead, the applicant annexed to the application a ‘notice of appeal’ and filed an affidavit, in which he stated that he was under the ‘impression and understanding that I had twenty eight days in which to appeal (i.e. last day being today)’.  On 15 June the applicant filed a second affidavit, in which he stated that ‘[at] the time the sequestration order was made I was unable to obtain any further legal advice’.

2. At the hearing the applicant tendered a mishmash of documents.  In opposition to the application, counsel for the respondent read an affidavit by his instructing solicitor, tendered a number of documents and cross-examined the applicant.  The applicant was unrepresented at the hearing.

3. The creditor’s petition was founded on an act of bankruptcy mentioned in s 40(1)(g) of the Act, judgment having been obtained by the respondent against the applicant in the Supreme Court of New South Wales and entered on 14 May 1998. The petition was fixed for hearing on 29 March 2004. The applicant appeared in person on that day and procured an adjournment from a Deputy District Registrar. It appears that he did so on the basis of advice provided to him by a solicitor, Michael Zwar, in a letter dated 25 March 2004, which stated:

   ‘1.The only possible argument in the context of seeking to set aside the judgment founding the bankruptcy notice is to directly impugn the judgment obtained in the Supreme Court on the 28^th of April 1998 as being obtained by fraud.  This point has not been run before.

   …

   8.The best technique for Monday given that the matter will be listed in front of a Registrar is for you to appear yourself aided by me in relation to briefing notes.

   9.It follows from this that the motion to stay the judgment should be in your name and the affidavit should be sworn by you but not make any reference to this firm acting for you.

   …

   12.You will need a period of 6 weeks in which to … make application to the Supreme Court and you seek to have the notice [sic] stayed for a period of 6 weeks pending the making of these applications and then reporting back to the Federal Magistrates Court.  As I mentioned to you, there will be no judicial sympathy from a magistrate for your position and it is important that an adjournment be obtained.

   13.The only way that will be done will be for you to appear in person saying that you intend to re-engage your lawyers in connection with the application for sequestration and you are currently in the process of organising that.  If this writer were to appear then the matter would be referred to a magistrate and I do not believe I would be able to salvage the situation.

   …

   15.You should file the affidavit tomorrow together with the notice of motion and serve it upon Garland Hawthorne Bray [sic] and be ready to attend on Monday.  I will provide you with a complete briefing basis for your attendance on Monday.

   …’

   (There is a two-page document headed ‘Outline of Applicant’s Submissions’ included amongst the pages comprising exhibit B tendered by the applicant on the present application which appears to be the briefing notes promised by Mr Zwar in paragraphs 8 and 15 of his letter.)  In any event, the petition was adjourned to 20 April 2004.

4. A transcript of the hearing before Raphael FM is in evidence together with copies of what appears to be the affidavits and other evidence used.  His Honour dealt discretely with the issue of going behind the judgment debt and concluded that it would be an ‘abuse of process’ to permit the applicant to oppose the petition on the ground that the judgment in the Supreme Court was obtained by misrepresentation and fraud.  In reaching that conclusion, his Honour took into account the history of earlier proceedings in that Court to set aside the relevant bankruptcy notice (which was issued on 27 May 2003).  Those proceedings were dismissed on 12 December 2003 after a judgment was given in the Supreme Court on 25 November 2003, in which Master Malpass noted that the applicant did not press a foreshadowed claim to have the judgment entered on 14 May 1998 set aside on the grounds of fraud.

5. The notice of appeal annexed to the present application is fairly opaque, but the applicant said in address that his essential complaint was that Raphael FM refused him ‘leave to introduce evidence in relation to acts of fraud by the Respondent’.  The applicant submitted that he was thus denied natural justice.  In my opinion, such an appeal could not possibly succeed.  A bankruptcy court will not go behind a judgment as a matter of course but only if appropriate circumstances are shown to exist: Wolff v Donovan (1991) 29 FCR 480 at 486; Makhoul v Barnes (1995) 60 FCR 572 at 581, 584. The nature of the discretion to go behind a judgment was explained by Barwick CJ in Wren v Mahony (1972) 126 CLR 212 at 224-225. The discretion will be exercised where a debtor can demonstrate that there is any substantial reason for questioning whether behind the judgment there was in truth and reality a debt due to the applicant creditor: Wiltshire-Smith v Mellor Olsson (1995) 57 FCR 572 at 582, 584. In the present case the facts were such that for the reasons given by Raphael FM there was clearly no reason to permit the applicant to adduce any further evidence of fraud.

6. On the eve of the hearing in the Federal Magistrates Court the applicant commenced on 19 April 2004 a fresh proceeding in the Supreme Court seeking to have the judgment founding the bankruptcy notice set aside. The originating process was given a return date of 5 May 2004. I am informed that on that day the applicant’s trustee in bankruptcy discontinued that proceeding and that his decision is now the subject of an ‘appeal’ under s 178 of the Act. In the meantime, however, the applicant engaged on the evening of 29 April in an acrimonious exchange of correspondence with Mr Zwar. The applicant was cross-examined about these letters. He also admitted that at the hearing before Raphael FM he was assisted by another solicitor, Mark Gallego, who is apparently to appear for him in the s 178 proceeding. The statement in his affidavit of 15 June 2004 was thus untrue. The applicant denied the suggestion put to him by counsel for the respondent that he has pursued a deliberate strategy of holding himself out as a litigant in person who was ignorant of proper procedures. I do not accept his denial. It is also obvious from the notes made by the Deputy District Registrar that the adjournment on 29 March was procured by deliberate deception on his part.

7. The nature of the discretion under O 52 r 15(2) has been considered in a number of cases, including Jess v Scott (1986) 12 FCR 187, in which a Full Court rejected a submission that r 15(2) required that the words ‘for special reasons’ be given a stringent interpretation, and held that the cases established that leave to appeal out of time is to be determined by the Court’s view of the demands of justice in accordance with a broad judicial discretion. McHugh J in Gallo v Dawson (1990) 64 ALJR 458 stated that the discretion to extend time ‘is given for the sole purpose of enabling the Court or Justice to do justice between the parties’ (at 459D). That statement was applied by Mason CJ in Halliday v Sacs Group Pty Ltd (1993) ALJR 678 at 679F. More recently, the issue was considered in Jackamarra v Krakouer (1998) 195 CLR 516.

8. The overriding principle in the exercise of the discretion is whether an extension of time is necessary to do justice between the parties.  The exercise of the discretion requires the consideration of factors such as the length of the delay, the reason for delay and the prospects of success of the proposed appeal.  In Halliday, Mason CJ stated that ‘[i]f the prospects of success are so slight that the appeal would be futile, it would be wrong to extend the time and subject the respondent to further pointless litigation, delay, inconvenience and expense’ (at 679G).

9. I have no doubt that the applicant genuinely thought that he had 28 days in which to appeal against the sequestration order.  However, the appeal would be bound to fail.  In those circumstances, it serves no purpose whatsoever to extend the time.  The applicant has not been able to show that an extension of time to file a notice of appeal is necessary to do justice between the parties.

10. The application is accordingly dismissed with costs.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam.

Associate:

Dated:             18 June 2004

The applicant appeared in person.

Counsel for the respondent:	R R I Harper
Solicitors for the respondent:	Garland Hawthorn Brahe
Date of hearing:	16 June 2004
Date of judgment:	18 June 2004