Gounder v Superior Alignments Pty Ltd
[2019] FCA 2093
•6 December 2019
FEDERAL COURT OF AUSTRALIA
Gounder v Superior Alignments Pty Ltd [2019] FCA 2093
Appeal from: Superior Alignments Pty Ltd v Gounder [2019] FCCA 1607 File number: QUD 321 of 2019 Judge: DERRINGTON J Date of judgment: 6 December 2019 Catchwords: PRACTICE AND PROCEDURE – application for extension of time in which to appeal from Federal Circuit Court of Australia – leave required to rely on new grounds and new evidence – no prospects of success – application dismissed Legislation: Bankruptcy Act 1966 (Cth)
Evidence Act 1995 (Cth)
Bankruptcy Regulations 1996 (Cth)
Cases cited: Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
Jackamarra v Krakouer (1998) 195 CLR 516
Jess v Scott (1986) 12 FCR 187
Parker v R [2002] FCAFC 133
Superior Alignments Pty Ltd v Gounder [2019] FCCA 1607
Totev v Sfar (2008) 167 FCR 193
VUAX v Minister for Immigration, Multicultural and Indigenous Affairs (2004) 238 FCR 588
Date of hearing: 6 December 2019 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 57 Counsel for the Applicant: The applicant appeared in person Solicitor for the Respondent: Mr B Long of Celtic Legal ORDERS
QUD 321 of 2019 BETWEEN: SHOBNA KUMARI GOUNDER
Applicant
AND: SUPERIOR ALIGNMENTS PTY LTD
Respondent
JUDGE:
DERRINGTON J
DATE OF ORDER:
6 DECEMBER 2019
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The respondent’s costs be costs in the applicant’s bankruptcy.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
DERRINGTON J:
Introduction
The applicant is bankrupt.
On 11 October 2018, a Registrar of the Federal Circuit Court of Australia (FCC) sequestrated her estate pursuant to s 52 of the Bankruptcy Act 1966 (Cth). The applicant applied in the FCC for review of the Registrar’s decision.
On 12 April 2019, the FCC dismissed the application for review of the Registrar’s decision: Superior Alignments Pty Ltd v Gounder [2019] FCCA 1607.
On 17 May 2019, the applicant filed an application for an extension of time in which to appeal the decision of the primary judge. That application is necessary because no appeal was filed in the time prescribed by r 36.03 of the Federal Court Rules 2011 (Cth).
Background
So far as can be ascertained from the judgment below and the limited material filed in this Court, the relevant background is as follows.
The appellant’s underlying liability arose from invoices issued by the respondent (Superior Alignments) for repair work completed on a truck or trucks, in July and August 2017. The invoices went unpaid. Proceedings were brought in the Magistrates Courts of Queensland for the unpaid amounts. On 15 January 2018, judgment by default was given in those proceedings for $11,081.89. On 20 April 2018, further judgment was given for $383, in respect of the costs of an unsuccessful attempt to set the default judgment aside. Further costs orders have been made in the Magistrates Court in addition to those, although the amounts are not in evidence before this Court.
A bankruptcy notice was issued by the respondent and served by post. The notice is also not in evidence before this Court, nor is the affidavit of service filed below. The judge below found that the notice was taken to be served on 7 May 2018, pursuant to reg 16.01(2)(a) of the Bankruptcy Regulations 1996 (Cth) and s 160(1) of the Evidence Act 1995 (Cth).
The bankruptcy notice required compliance by 28 May 2018. It was not complied with.
Proceedings before the Registrar in the FCC
On 9 August 2018, Superior Alignments filed a creditor’s petition in the FCC. The petition is not in evidence before this Court.
On 18 September 2018, the applicant filed documents in the FCC opposing the petition. Those documents are not in evidence before this Court.
The grounds of opposition (as identified by the judge below at [9]) may be summarised as follows:
(a)that there was no debt;
(b)that the bankruptcy notice was not served;
(c)that the creditor’s petition was served in insufficient time prior to the hearing of the petition;
(d)that there was another application on foot to set aside the default judgment in the Magistrates Court which should be heard first;
(e)that a cross-claim was advanced against the petitioning creditor for loss of income; and
(f)that the bankruptcy notice was “stale”.
On 11 October 2018, the petition came on for hearing before the Registrar after having been adjourned. That matter had previously been called on before the Registrar on 21 September 2018. It did not proceed on that day, although the evidence is sparse as to what occurred. Today Ms Gounder has informed me that the adjournment was to allow her time to obtain information in relation to the issues surrounding whether a sequestration order should be made on the petition. It is to be noted that the creditor’s petition had been served on 18 September, being a very short time prior to the day for its hearing.
In any event, as I have said, the matter came back before the Registrar on 18 October. The sequestration order was then made on that day.
The judgment below
The applicant applied in the FCC for review of the Registrar’s decision. The hearing before that Court was a hearing de novo, where all of the issues pertaining to the creditor’s petition are examined and the parties were entitled to adduce whatever evidence they wished. The primary judge found that:
(a)there was a debt which remained owing;
(b)the bankruptcy notice was served in accordance with the Bankruptcy Regulations;
(c)the petition was served sufficiently, in light of the fact that the hearing before the Registrar was adjourned;
(d)the further application to set aside the default judgment in the Magistrates Court had been dismissed since it was raised in opposition to the petition (there then having been four unsuccessful applications to set aside that default judgment, with costs ordered in favour of the petitioning creditor on each occasion);
(e)the cross-claim advanced by the applicant that might reduce her indebtedness to the petitioning creditor was for a value of $7,500, however, even if that claim were successful, it would not reduce the indebtedness below the threshold prescribed in s 44(1)(a) of the Bankruptcy Act, and as such would not be sufficient to allow the court to exercise its discretion against the making of the sequestration order; and
(f)it followed that the material filed on the application did not show sufficient cause that a sequestration order not be made, and as such the order made by the Registrar ought to remain standing.
The proceedings in this Court
The applicant applies for an extension of time in which to appeal. The application attaches a draft notice of appeal, the grounds of which are set out below.
Procedural steps
On 19 August 2019 at 10.01 am, this Court’s Registry informed the parties by email that a first case management hearing would be held on 23 August 2019.
On 19 August 2019 at 10.32 am, the applicant emailed the Registry to indicate that, due to her husband’s illness and attending a significant number of required medical appointments that week, she would be unable to attend that hearing, and would not be able to attend any hearing until at least 4 October 2019.
On 20 August 2019 at 2.23 pm, the applicant again emailed the Registry to indicate that she was extremely unwell and requesting the hearing be adjourned, and that she was unable to engage in formal discussions or meetings. The applicant then also filed an affidavit annexing a letter issued that day under the hand of a Dr Sharareh Memary, suggesting that the applicant was “not mentally and physically capable of carrying out any formal engagements and attending formal discussions and meetings”. That affidavit asked that the case management hearing “be adjourned to a date after my doctors have given me a clearance may be [sic] on 10/09/2019”. That date was one month earlier than the early October 2019 date suggested in the previous day’s email as the earliest possible date for the applicant to be able to attend any hearing.
On 20 August 2019 at 4.29 pm, the parties were informed by the Registry that the first case management hearing would proceed as listed on 23 August 2019, however the applicant was given leave to appear by telephone at that hearing.
On 20 August 2019 at 5.01 pm, the applicant, having that day deposed to an affidavit, lodged within just over 29 hours of being informed of the first case management hearing, replied to the Registry indicating that her “illness is preventing [her] from talking and thinking write [sic]”, and objecting to the hearing proceeding.
On 23 August 2019, the first case management hearing was held. The applicant appeared in person, and capably dealt with all of the case management issues being determined. Based on her demeanour, submissions and apparent understanding of the case management process, there could be no suggestion that the applicant was incapable of appearing on that date to deal with the making of directions for the future conduct of the matter.
Directions were made at the first case management hearing, providing for a timetable for the filing of material and submissions as follows:
(a)the applicant’s affidavit material by 20 September 2019;
(b)the respondent’s affidavit material by 4 October 2019;
(c)the applicant’s affidavit material in reply by 18 October 2019;
(d)the applicant’s written submissions by 25 October 2019; and
(e)the respondent’s written submissions in response by 1 November 2019.
The hearing of the application to extend time was listed for 6 December 2019.
On 23 September 2019, the applicant emailed the Registry to notify that she had missed submitting information on the submission date of 20 September 2019 and explaining that her husband had been critically ill and admitted to hospital for some time. The email indicated that material would be provided to the Court as early as possible “but before this Friday 27/09/2019.” No material was filed before that date, although that is perhaps understandable in the unfortunate circumstances faced by the applicant.
On 1 October 2019, the respondent filed a short affidavit addressing the circumstances of the handing down of the decision of the judge below and annexing some brief email correspondence in relation to that.
On 18 October 2019, the applicant filed her affidavit material in support of the application, addressing a wide range of issues in the proceeding and annexing some documents.
On 1 November 2019, the applicant emailed the Registry as follows:
I couldn’t submit my submissions on 25/10/2019 as I had to travel overseas suddenly on 24/10/2019 to be with the critically ill person.
I have just arrived back into the country today, 01/11/2019. Submission will be lodged on Monday 4/11/2019.
The solicitors for the respondent replied to that email that day indicated that, in light of the delay in the applicant’s submissions until 4 November 2019, they proposed to file the respondent’s submissions by 8 November 2019.
On 4 November 2019, the applicant emailed the Registry to indicate that her husband had again been admitted to hospital, and that her submissions would be submitted as soon as possible.
On each of 5 and 7 November 2019, the applicant filed an affidavit, although the contents deposed to in each were in the nature of submissions and under the heading “Submissions”, and will be treated as such in this Court.
On 29 November 2019, the applicant emailed the Registry noting that the respondent had not yet provided submissions and that she had submitted hers but she had not been advised why the respondent had not submitted theirs.
On 4 December 2019, two days before the hearing, the respondent filed its submissions. Later that day, the applicant emailed the Registry noting her objection to the unexplained late filing of the respondent’s submissions. That was not an issue which she further agitated at today’s hearing.
Consideration of the application for extension of time in which to appeal
The respondent opposes the application for an extension of time.
Although not adverted to in any great detail by the parties, the relevant principles governing the grant of an extension of time in which to appeal to this Court are well established: see eg Jess v Scott (1986) 12 FCR 187; Parker v R [2002] FCAFC 133 at [6] referring to the cognate decision in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-349. For an authoritative discussion, and a helpful contrast with the principles in relation to other procedural steps, see further Jackamarra v Krakouer (1998) 195 CLR 516.
I will turn then to whether there is any explanation for the delay in filing the appeal.
Explanation for the delay
In her affidavit supporting the application for an extension of time, the applicant deposes in general terms about her delay in filing an appeal, including some period of time overseas (although there appears to be some confusion in the dates deposed to), and she also relied on the very serious illness of her husband. She further deposes to some delay in becoming aware of the judgment of the FCC, although the evidence filed by the respondent might suggest there is some confusion in that respect also.
There is no evidence filed as to any prejudice suffered by the respondent as a result of the delay in bringing the present application. That is not surprising, as the delay is a mere matter of weeks, not months.
The Court is mindful of the potential harm to the administration of justice — in the particular case, and in general — resulting from any undermining of the finality of litigation. However, given the length of the delay in the present case, it is clear (including from the matters dealt with by the parties in their written submissions) that the weightiest factor for consideration in the present case is the prospects of success of any appeal.
Merits of any appeal
The draft notice of appeal identifies the following grounds:
1. The real owners of the truck should be pursued but me, the lessee of the truck was someone else and lessor incorrectly registered the truck under my name, as per the lease contracts per the lessor at no stage I should be legally allowed to own the truck, this was an error. The actual lessee was supposed to be the owner and thus they are responsible for the repair costs.
2. Creditors Petition was served to me by [the other side’s solicitor] on 18/09/2019, only 2 days prior to the Creditor’s Petition hearing on 21/09/2019. This only happened as I had visited [their solicitors] to submit some documents is when I was served the Creditor’s Petition and notice of hearing on 21/09/2019. The rule states that if Creditors Petition was not served within less than 3 days of the hearing then the Creditors Petition must be dismissed, and a new Creditors Petition must be submitted.
3. The repair costs that the mechanic is claiming didn’t occur. The truck was taken for repairs of radiator only however the mechanic raised an invoice for approximately $5,900 claiming to have fixed the head gaskit and when asked for evidence of repair work that was completed, he struggled to provide sufficient information about the parts used and so on. I was to be the overall manager managing this business not the owner.
(errors in original)
At paragraph [4] of the respondent’s submissions, their central objections are outlined:
The ground of Appeal in the Application are deficient as:
a.Ground of Appeal 1 was not contained in the original material before His Honour and attempts to adduce new evidence without such an application being made;
b.Ground of Appeal 2 references a rule which is not specified and does not exist; and
c.Ground of Appeal 3 attempts to both raise new evidence without an application and also re-litigate the judgment upon which the bankruptcy proceedings are based.
The respondent notes in paragraph [5] that these issues were raised (at least to some extent) at the first case management hearing, but that no attempt has been made to “remedy” the grounds.
Ground 1
The first proposed ground of appeal does indeed attempt to rely upon new evidence without any application being made. Somewhat more seriously though, is that the applicant seeks to raise this issue for the first time on appeal.
The principles on which this Court exercises its discretion as to whether to grant leave to raise a new ground on an appeal were explained in VUAX v Minister for Immigration, Multicultural and Indigenous Affairs (2004) 238 FCR 588, as follows:
46In our view, the application for leave to rely upon the sole ground of appeal now raised should be refused. Leave to argue a ground of appeal not raised before the primary judge should only be granted if it is expedient in the interests of justice to do so: O’Brien v Komesaroff (1982) 150 CLR 310; H v Minister for Immigration & Multicultural Affairs; and Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [20]-[24] and [38].
47In Coulton v Holcombe (1986) 162 CLR 1, Gibbs CJ, Wilson, Brennan and Dawson JJ observed, in their joint judgment, at 7:
“It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish.”
48 The practice of raising arguments for the first time before the Full Court has been particularly prevalent in appeals relating to migration matters. The Court may grant leave if some point that was not taken below, but which clearly has merit, is advanced, and there is no real prejudice to the respondent in permitting it to be agitated. Where, however, there is no adequate explanation for the failure to take the point, and it seems to be of doubtful merit, leave should generally be refused. In our view, the proposed ground of appeal has no merit. There is no justification, therefore, for permitting it to be raised for the first time before this Court.
In general terms, leave to raise a new ground on appeal should only occur where it is expedient in the interests of justice. It is important that matters be determined first at the trial level. Nevertheless, the Court retains the discretion to grant leave, which will on occasion be exercised. Generally speaking, the issues that the court considers are: an explanation for the failure to take the point below; whether there is any prejudice, and whether there is any merit. Those principles, which are derived from VUAX, are most pertinently directed to applications to raise new grounds in migration matters, but they are suitably applicable in the circumstances of the present case. They are also relevantly applicable to the attempt to adduce on appeal evidence which was not adduced below, in that the attempt to adduce that new evidence is, in fact, an attempt to raise a new issue.
In the present case there was no explanation by the applicant as to why the issue in the first ground, or the evidence which is sought to support it, was not raised or adduced before the primary judge. The reasons of the primary judge show the issues dealt with by his Honour, and they did not include the issue in the first ground. I do note that it seems I do not have all of the evidence which was before the primary judge, but it suffices to say that it is apparent that his Honour dealt with the live issues before him and that which is now sought to be agitated did not appear to be advanced. In any event, even if it had been, the applicant needs leave to adduce the further evidence in support of what she says is the first ground.
The evidence itself is vague and difficult to understand, and to some extent it even weighs against the applicant’s case, as it adduces evidence of invoices which were directed to her and which she did not pay. The applicant complained that the invoices were not directed to her because there was a misspelling of her first name. That should be rejected. It is apparent that a typographical error has occurred and, in the circumstances, there is no doubt the applicant was aware the invoices were directed to her.
In all the circumstances, where there is no explanation as to the import of the evidence sought to be adduced or the effect it would be likely to have had on the decision of the primary judge, who did not appear to deal with the issue to which it was directed, insufficient reason has been shown as to why this ground should be agitated on appeal, or the evidence which the applicant seeks to adduce in support of it should be adduced.
I would also mention that were leave granted to raise this ground or to adduce the further evidence, the successful party before the primary judge will be required to spend time, effort and money in dealing with it at the appellate level. Whilst there is the possibility that the respondent may be compensated for by an order for costs, there is no evidence which suggests that those costs would be paid. In that respect, it can be accepted that the respondent may suffer some prejudice were the issue in the first ground be allowed to be agitated on appeal.
I would also add that due to the lack of information about the ground and the vague nature of the evidence produced, it is doubtful that the ground has any prospects of success. While some documents were produced and generalised statements made, they are of the vaguest nature and it is very difficult to ascertain their relevance to any matter before the Court.
It must also be observed that the evidence on which the applicant relies and the first ground of the draft notice of appeal attempt to go behind the judgment debt: that is, she now seeks to agitate the underlying liability as between herself and the petitioning creditor. That is significant. Although the judgment debt on which the bankruptcy notice and creditor’s petition was based was a default judgment, the applicant has made four attempts to set aside that default judgment and failed on every occasion. As Mr Long, for the respondent, submitted today, on each of those occasions the applicant had the opportunity to adduce evidence to show why the default judgment ought to have been set aside on the merits, and she has failed to do that on each occasion. It is also not irrelevant that on each occasion costs were ordered against her. These will have added to her indebtedness to the respondent.
Taking that further matter into account, it would not be expedient in the interests of justice to allow the first ground to be advanced on appeal.
Ground 2
The second ground of the proposed notice of appeal is that the applicant was served with the creditor’s petition on 18 September 2019, being only two days prior to the creditor’s petition hearing on 21 September 2019. As I have mentioned, any deficit in the time of service of the creditor’s petition was overcome by the Registrar adjourning the matter to 11 October 2019. That would have given the applicant more than sufficient time to prepare a response to the petition. Indeed, as she told the Court today, the purpose of the adjournment was to give her time to produce material in relation to the application.
The respondent submitted that the applicant sought review of the Registrar’s decision to make the sequestration order before the FCC. That review was a hearing de novo. That being so, any deficiency in the original service of the creditor’s petition was overcome as a result of the applicant’s ability to file any evidence which she wished in the FCC proceedings. The decision in Totev v Sfar (2008) 167 FCR 193 is good authority for the proposition that any deficiency in the proceedings before the Registrar can be overcome on the de novo hearing on review.
That issue of short service was considered by the primary judge, who identified that the applicant had been given sufficient time to respond to the creditor’s petition. There is no merit in the second ground of the proposed notice of appeal. The observations of the primary judge on this matter appear to be plainly correct.
Ground 3
The third ground of appeal on which the applicant wishes to rely is apparently a new ground as well. It is that the amount claimed by the petitioning creditor (the respondent in these proceedings) for the repair costs on the truck allegedly owned by the applicant were excessive. The ground of appeal appears to indicate that the purpose of having the truck repaired was for work to be done on its radiator only, but that the amount that was charged by the respondent included the cost of purportedly fixing the head gasket. I take that as an allegation of overcharging for work not done.
The comments which I have made in relation to the first ground apply with equal force in relation to this issue. It was not raised before the primary judge and it appears that the evidence on which Ms Gounder now seeks to rely may also not have been before the primary judge. That being so, Ms Gounder would require both leave to raise this new ground on appeal and, indeed, leave to adduce additional evidence. For the reasons which I gave in relation to the first ground, such leave ought not to be given, there being no basis for doing so and no merit in the third ground.
It might also be said that this ground also seeks to attack the foundation of the judgment debt from the Magistrates Court. Again, the failure of Ms Gounder to set aside that judgment on four occasions is indicative that the debt is valid, and in the absence of any substantive evidence to the contrary, this ground has no prospects of success either. In those circumstances, on the application for an extension of time in which to appeal, the applicant has been unable to show that any of her proposed grounds has any merit which would justify making an order in his favour. In those circumstances, her application for an extension of time must be dismissed.
I order that the costs incurred by the respondent be costs in the bankruptcy.
I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington . Associate:
Dated: 6 December 2019
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