Hamilton-Smith v George (No 2)

[2006] FCA 1841

FEDERAL COURT OF AUSTRALIA

Hamilton-Smith v George (No 2) [2006] FCA 1841

TANYA HAMILTON-SMITH v HEIDI GEORGE
SAD 147 OF 2006

BESANKO J
29 NOVEMBER 2006
BRISBANE (HEARD IN ADELAIDE)

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 147 OF 2006

BETWEEN:	TANYA HAMILTON-SMITH Applicant
AND:	HEIDI GEORGE Respondent

JUDGE:	BESANKO J
DATE OF ORDER:	29 NOVEMBER 2006
WHERE MADE:	BRISBANE (HEARD IN ADELAIDE

THE COURT ORDERS THAT:

1.The following matters arising on the application for review of Registrar Christie’s orders made on 20 June 2006, on the creditor's petition presented on 26 September 2005 (‘the petition’) be remitted to Federal Magistrate Raphael for further hearing and determination as soon as practicable in accordance with the decision of this Court delivered 21 November 2006 (‘the decision’):

(a)the existence or otherwise of ‘other sufficient cause’ within s 52(2)(b) of the Bankruptcy Act 1966 (Cth) by reason of the alleged improper purpose of the petition as described in [70] to [86] of the decision, and if so,

(b)whether the petition should be dismissed by reason of the alleged improper purpose in the exercise of the Court’s discretion under s 52(2)(b) of the Bankruptcy Act 1966 (Cth).

2.There be no order as to the costs of the appeal.

3.The cost of the proceedings before Federal Magistrate Raphael be determined by him.

4.All proceedings under the sequestration order made by the Registrar on 20 June 2006 be stayed forthwith pending determination of the application for review by Federal Magistrate Raphael, on the appellant’s written undertaking, filed with the Court within 72 hours, that she will not dispose of any assets other than in the usual course of business as would otherwise be allowed under the Bankruptcy Act 1966 (Cth).

5.The order the Magistrate made as to costs (order number 2) on 19 July 2006 be set aside.

6.Liberty to apply.

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

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 147 OF 2006

BETWEEN:	TANYA HAMILTON-SMITH Applicant
AND:	HEIDI GEORGE Respondent

JUDGE:	BESANKO J
DATE:	29 NOVEMBER 2006
PLACE:	BRISBANE (HEARD IN ADELAIDE)

REASONS FOR JUDGMENT

1. On 21 November 2006 I delivered reasons in this appeal: Hamilton-Smith v George [2006] FCA 1551. I also made orders that the appeal be allowed and that the sequestration order against the estate of Ms Tanya Hamilton-Smith made by the Federal Magistrates Court on 19 July 2006 be set aside. I said that I would hear the parties as to other appropriate orders and I did so on 24 November 2006 and again this morning. There were major differences between the parties as to what were the appropriate orders other than those which I have already made.

2. The first issue is whether I should set aside the sequestration order made by the Registrar on 20 June 2006. The appellant submits that I should, and advanced two reasons in support of that contention. First, she submits that the Registrar’s order is infected with error because she too rejected the relevant paragraphs in the affidavit of Mr Gawronski. Secondly, she submits that because the Registrar’s order may ultimately be set aside on the review and because it has been in place for such a considerable period, I should in fairness to the appellant set aside the order now. As I understand it, the Registrar’s sequestration order remains valid and effective unless and until set aside on review. The effect of my decision is not that the Magistrate erred in not setting aside the Registrar’s order, but rather that he erred in ruling inadmissible certain paragraphs in Mr Gawronski’s affidavit which were relevant to the question of whether the creditor’s petition was being pursued for an improper purpose. In effect, the review now needs to be completed and it may or may not result in an order setting aside the Registrar’s sequestration order. In those circumstances, I do not think that I am bound to set aside the Registrar’s order, nor do I think that it is appropriate that I do so.

3. The second issue is the scope of the remitter to the Magistrate. The appellant submits that all issues referred to in my reasons should be remitted to the Magistrate even though she succeeded before me in relation to only one issue. The respondent submits in effect that only that issue should be remitted to the Magistrate. The appellant did not point to any provision of the Bankruptcy Act 1966 (Cth) or the Federal Court of Australia Act 1976 (Cth) which had the effect of constraining or qualifying my power to limit the remitter. In other words, the appellant did not submit that there is a statutory provision which means that I cannot limit the scope of the remitter in the normal way if it is appropriate to do so (see s 28(1)(c) of the Federal Court of Australia Act). I note in this context that the Full Court of this Court in Cottrell v Wilcox [2001] FCA 866 limited (albeit in a different way) the scope of the remitter in that case.

4. I see no reason why the appellant, who has succeeded in relation to one issue, should thereby be permitted to re-agitate issues which were correctly decided against her in the court below. I have considered whether the fact that some of the evidence in the relevant paragraphs of Mr Gawronski’s affidavit may be relevant to the existence of the debt, as well as the issue of improper purpose, means that it is inappropriate to limit the scope of the remitter. In the result, I have decided that that fact should not affect my approach to the scope of the remitter because, as the respondent rightly pointed out, the relevant paragraphs in Mr Gawronski’s affidavit were only ever put forward at the hearing before the Magistrate as being relevant to the issue of improper purpose. I think it is appropriate to limit the scope of the remitter to the improper purpose issue.

5. The third issue is whether the matter should be remitted to the Magistrate, or to a different Magistrate. I see no reason not to remit the matter to the Magistrate. He is familiar with the matter. He has made no findings of credit which mean that there will or may be apprehended bias in relation to the matter remitted to him. Nor has he determined an issue against the appellant which might suggest that he should not hear the matter.

6. The fourth issue is the question of costs. The appellant sought the costs of the hearing of the creditor’s petition before the Registrar, and of the review before the Magistrate and of the appeal before me. I would not disturb the order as to costs made by the Registrar. Whether the orders of the Registrar (including her order as to costs) should stand will be a matter for the Magistrate and no doubt he will have regard to the outcome of the review. Furthermore, the costs of the review before the Magistrate should be determined by the Magistrate after the outcome of the review is known.

7. The costs of the appeal are not so easily dealt with. The appellant has succeeded in that the appeal has been allowed and the matter remitted (albeit on a limited basis) to the Magistrate. On the other hand, as the respondent submits (in my view correctly):

   1.The notice of appeal is a lengthy and somewhat unhelpful document and it was not until shortly prior to the hearing that the grounds of appeal were formulated in a succinct fashion.

   2.The appellant failed on two of its three major arguments and the respondent succeeded on those two arguments.

   3.Ultimately, the appellant may not succeed because Mr Gawronski may not appear for cross-examination, or his evidence may not be accepted or, even if accepted, the Court may decide in its discretion that it is not appropriate to dismiss the petition.

8. This is not a case for separate costs orders on separate issues. Nor is it a case to simply look at the outcome and ignore both the way the matter was argued and the measure of success achieved by each of the respective parties. Weighing up all the relevant matters, I think that it is appropriate to make no order as to the costs of the appeal.

9. Two final matters need to be noted. First, the appellant’s application that I deal with certain reserved costs of 21 April 2006 was not pressed. That approach by the appellant was correct. Secondly, the respondent’s application that I make an order that Mr Gawronski be made available for cross-examination on the remittal hearing must be rejected. That is a matter for the Magistrate to make orders about, should that become necessary.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

Associate:

Dated:        17 January 2007

Counsel for the Applicant:	P Heinrich
Solicitor for the Applicant:	McNamara Business & Property Law
Counsel for the Respondent:	M Livesey QC
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	5 October 2006
Date of Judgment:	29 November 2006