Hughes Trueman Pty Ltd v Young (No.2)

[2017] FCCA 601

FEDERAL CIRCUIT COURT OF AUSTRALIA

HUGHES TRUEMAN PTY LTD & ANOR v YOUNG (No.2) [2017] FCCA 601

Catchwords:
BANKRUPTCY – Bankruptcy Act 1966 (Cth) – sequestration order made – immediate oral application for a stay of proceedings under the sequestration order – no grounds for a stay – application for a stay dismissed with costs.

Legislation:

Bankruptcy Act 1966 (Cth), s.52
Federal Circuit Court Rules 2001 (Cth)

First Applicant: HUGHES TRUEMAN PTY LTD

Second Applicant: MR STEPHEN JOHN PERRENS

Supporting Creditor: MR IAN HEMMINGS SC

Respondent: MS MARGO YOUNG

File Number: SYG 1345 of 2016

Judgment of: Judge Dowdy

Hearing date: 23 March 2017

Delivered at: Sydney

Delivered on: 23 March 2017

REPRESENTATION

Counsel for the Applicants: Mr S Gray of Counsel

Solicitors for the Applicants: Kennedys

Solicitors for the Supporting Creditor: Moray & Agnew

Counsel for the Respondent: Mr R Newell (solicitor)

Solicitors for the Respondent: L C Muritini & Associates

THE ORDERS OF THE COURT ARE AS FOLLOWS:-

1. The oral application made for a stay of all proceedings under the sequestration order made today is refused.

2. The debtor is to pay the creditor’s costs of the application for a stay as if such application had been made by way of an Application in a Case filed today.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1345 of 2016

HUGHES TRUEMAN PTY LTD

First Applicant

STEPHEN JOHN PERRENS

Second Applicant

MR IAN HEMMINGS SC

Supporting Creditor

And

MARGO YOUNG

Respondent

REASONS FOR JUDGMENT

EX TEMPORE

(REVISED FROM TRANSCRIPT)

1. In this matter, I have just made a sequestration order against the Estate of Margo Young and I have delivered reasons for making that order. 

2. Mr Newell, who appears for Ms Young in the proceeding immediately asked for a stay, and I then afforded a short opportunity to Mr Gray of Counsel, who appears for the creditors and Mr Newell to read my reasons for judgment. 

3. The application for a stay is grounded on s.52(3) of the Bankruptcy Act, augmented by r.29.12 of the Federal Circuit Court Rules.  The parties seem to agree, and I am sure that it is the case, that if a stay were to be granted, it would be in terms of a stay of proceedings under the sequestration order rather than a stay of the sequestration order itself. 

4. Mr Newell seeks a stay for two purposes.  He first seeks a stay for a period of time to enable him to formulate and draft full grounds of appeal, and then he seeks a stay for a longer period, so that that appeal can be heard and determined.  On an application for a stay of a sequestration order, the authorities indicate a number of factors can or ought to be taken into consideration.  One of those factors is the nature of the appeal and whether there is a bona fide appeal available or an arguable point on the proposed ground of appeal or a rational prospect of success for any such ground. 

5. Mr Newell, who has only had limited time, it is true, to formulate any grounds of appeal, raises for my consideration in support of his application for a stay three grounds.

6. He first goes to paragraph 31 of my reasons for judgment and he says that the proposed and foreshadowed applications for special leave to appeal to the High Court referred to in paragraph 31 are indeed genuine and arguable and that I am wrong in castigating them as the opposite of that in that I had said they had no reasonable prospects for success. 

7. He then points to paragraph 32 of my reasons, where in effect I reject any possible criticism of the judgment of Bromwich J in the Federal Court in the case that is referred to in paragraph 32.  Mr Newell says that the apprehension of bias principle applies to the judgment of Bromwich J and that his judgment is riddled with forensic errors and fails to deal with the evidence before his Honour.

8. And finally he says that he has a bona fide ground of appeal with respect to paragraph 60 of my reasons for judgment, which relate to rejecting the last ground in the notice of opposition relied upon by Ms Young in asserting that the Creditors Petition had been brought and maintained for improper purposes, and where in paragraph 60 I found that the Creditors Petition had not been brought for any illegitimate, collateral or improper purpose. 

9. I should note that Mr Newell submitted on the stay application with reference to the Debtor’s claim that the Creditors Petition had been brought for an improper purpose, that the creditors had refused the offer of the amount of $128,838.63 subject to the Creditors Petition since the last hearing on 3 March  2017. I then pointed out to him that whilst at the conclusion of the hearing on 3 March 2017 I had asked to be kept abreast of whether or not an unequivocal legal tender had been made by Ms Young to the creditors and I had received a stream of email correspondence relating to payment or possible payment by Ms Young of a sum of money to the creditors, no party had sought to relist the matter and Ms Young in particular had not sought to amend her notice of opposition to rely on a legal tender of the amount owing to the creditors.

10. In those circumstances by email of 14 March 2017 my Associate had advised the parties that in my view none of the incoming correspondence since 3 March 2017 meant that I should be deflected from delivering judgment, to which email I had never received any contrary email from the parties.

11. There is then the issue that is relevant to this type of application, namely the balance of convenience.  In relation to that I am of the view that a refusal of a stay will not preclude Ms Young from bringing an appeal from my sequestration order.  And so that is not a balance of convenience issue in her favour.  A refusal of a stay will not render her right of appeal nugatory.

12. I have come to the view that there should not be any stay of proceedings under the sequestration order and I reject Mr Newell’s application on behalf of his client for such a stay. 

13. I maintain my view that the foreshadowed applications for special leave spoken of by me in paragraph 31 of my reasons are completely hopeless and misconceived.  I do not think that there is any bona fide ground of appeal with respect to those foreshadowed applications.  I hold the same view with respect to any attack on the judgment of Bromwich J which is referred to in paragraph 32 of my reasons, and I hold equally firmly to the view that the creditors in this case, in this application, that is, the application for a sequestration order, brought the application for a sequestration order in good faith for a proper purpose; that is, to the intent that Ms Young’s Estate be sequestrated to be rateably distributed in accordance with law to her creditors. 

14. And so to sum up I do not consider that Mr Newell has shown that his client has any bona fide points or grounds of appeal with respect to my judgment.  There is a further ground that I take into account in rejecting the stay application, and that is this:  that I am very firmly of the view that it is in the interests of justice and the proper administration of the Bankruptcy Act that the sequestered assets of Ms Young’s Estate be put at the earliest opportunity into the hands of an independent party; that is, a trustee in bankruptcy. 

15. I consider that it is in the interests of justice that proceedings under the sequestration order not be stayed and that the balance of convenience militates against any stay and in favour of the sequestration order that I have made today being immediately able to be acted upon.  For the reasons I have given, I reject the application for a stay with costs.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Dowdy

Date: 28 March 2017