FEDERAL COURT OF AUSTRALIA
Kakavas v Paradise Enterprises Limited [2010] FCA 915
Citation: Kakavas v Paradise Enterprises Limited [2010] FCA 915 Appeal from: Application for leave to appeal: Kakavas v Paradise Enterprises Limited [2010] FMCA 574 Parties: HARRY KAKAVAS v PARADISE ENTERPRISES LIMITED File number(s): VID 610 of 2010 Judge: TRACEY J Date of judgment: 25 August 2010 Catchwords: BANKRUPTCY – application for leave to appeal from Federal Magistrate’s decision to refuse extension of time for compliance with bankruptcy notice pursuant to s 41(6A) of the Bankruptcy Act – application heard together with grounds of appeal - whether applicant’s insolvency may be a relevant consideration – whether specific prejudice would be suffered by applicant were application refused – whether complexity of applicant’s estate may be relevant consideration – in absence of demonstrable error by Federal Magistrate the discretion to extend time not is to be re-exercised by Federal Court – application for leave to appeal dismissed Legislation: Bankruptcy Act 1966 (Cth) ss 40, 41, 115, 116
Federal Court of Australia Act 1976 (Cth) s 25Cases cited: Bryant v Commonwealth Bank of Australia (1994) 217 ALR 251 considered, applied
Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 cited, applied
Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 applied
Guss v Johnstone (2000) 171 ALR 598 referred
House v The King (1936) 55 CLR 499 applied
Kakavas v Crown Melbourne Limited [2010] VSCA 102 cited
Kakavas v Paradise Enterprises Ltd [2010] FMCA 574 referred
Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 applied
Paradise Enterprises Inc v Kakavas [2010] VSC 25 referred
Re Nguyen; Ex parte Deputy Commissioner of Taxation (1995) 54 FCR 403 cited, applied
Re Taylor; Ex parte Deputy Commissioner of Taxation (1983) 74 FLR 377 applied
Warner v Frost [1999] FCA 830 referredDate of hearing: 28 July 2010 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 39 Counsel for the Applicant: Mr M Galvin, Mr J Kohn Solicitor for the Applicant: Madgwicks Lawyers Counsel for the Respondent: Mr S Horgan SC, Mr C Möller Solicitor for the Respondent: Kliger Partners
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 610 of 2010
BETWEEN: HARRY KAKAVAS
ApplicantAND: PARADISE ENTERPRISES LIMITED
Respondent
JUDGE:
TRACEY J
DATE OF ORDER:
25 AUGUST 2010
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The application for leave to appeal be dismissed.
2.The Applicant pay the Respondent’s costs of the application.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 610 of 2010
BETWEEN: HARRY KAKAVAS
ApplicantAND: PARADISE ENTERPRISES LIMITED
Respondent
JUDGE:
TRACEY J
DATE:
25 AUGUST 2010
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Mr Harry Kakavas is a gambler. In 2006 a casino in the Bahamas, which is operated by the Respondent, provided…
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Details
- Case
- [2010] FCA 915
- Decision Date
CaseChat Overview and Summary
The case of Kakavas v Paradise Enterprises Ltd concerns a bankruptcy notice issued to Mr. Kakavas, who appealed the Federal Magistrate's decision not to extend the compliance time for this notice until the appeal to the Court of Appeal was heard and determined. The Federal Magistrate had ruled that the discretion provided under s 41(6A) of the Bankruptcy Act 1966 (Cth) should be exercised based on the specific facts and circumstances of each case. In this instance, the Magistrate considered various factors including the bona fides of the appeal, the time required to hear the appeal, the potential impact on other proceedings, and the solvency of the parties. Mr. Kakavas argued that the Magistrate erred in exercising this discretion by not granting the extension.
The legal issue before the Court was whether the Federal Magistrate correctly exercised his discretion in denying the application to extend the compliance time. The key legal question was whether the Magistrate properly balanced the relevant factors in deciding not to extend the compliance time. The Court had to assess if the Magistrate's decision was reasonable and appropriate given the circumstances. The consideration of whether the appeal was bona fide, the explanation for not seeking a stay of the judgment at first instance, and the potential impact of the extension on other proceedings were all pivotal to the decision.
The Court held that the Federal Magistrate's exercise of discretion was not erroneous. The Magistrate had appropriately balanced the relevant factors, including the bona fides of the appeal, the time it might take to hear, and the potential impact on other proceedings. The Magistrate correctly considered the recent Court of Appeal decision that rejected a stay application in a similar case. The Court found that the Magistrate's decision was reasonable and did not warrant reconsideration by a Full Court. Therefore, the application for leave to appeal was dismissed.
The final orders of the Court were that Mr. Kakavas's application for leave to appeal was dismissed, and the decision of the Federal Magistrate was upheld.
The legal issue before the Court was whether the Federal Magistrate correctly exercised his discretion in denying the application to extend the compliance time. The key legal question was whether the Magistrate properly balanced the relevant factors in deciding not to extend the compliance time. The Court had to assess if the Magistrate's decision was reasonable and appropriate given the circumstances. The consideration of whether the appeal was bona fide, the explanation for not seeking a stay of the judgment at first instance, and the potential impact of the extension on other proceedings were all pivotal to the decision.
The Court held that the Federal Magistrate's exercise of discretion was not erroneous. The Magistrate had appropriately balanced the relevant factors, including the bona fides of the appeal, the time it might take to hear, and the potential impact on other proceedings. The Magistrate correctly considered the recent Court of Appeal decision that rejected a stay application in a similar case. The Court found that the Magistrate's decision was reasonable and did not warrant reconsideration by a Full Court. Therefore, the application for leave to appeal was dismissed.
The final orders of the Court were that Mr. Kakavas's application for leave to appeal was dismissed, and the decision of the Federal Magistrate was upheld.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Mr Kakavas has filed a draft notice of appeal. He does not seek to challenge the Federal Magistrate’s decision relating to the service of the bankruptcy notice. He does, however, contend that the Federal Magistrate erred, in the exercise of his discretion, in refusing the application for an order extending the time for compliance with the notice until the hearing and determination of the appeal to the Court of Appeal. THE FEDERAL MAGISTRATE’S DECISION The power to enlarge time for compliance with the requirements of bankruptcy notices is provided for in s 41(6A) of the Bankruptcy Act 1966 (Cth) (“the Act”). Relevantly, it provides:“(6A) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice:(a)proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or(b)…the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.”Subsection (6C) prevents the Court from extending time for compliance where the Court forms the opinion that appeal proceedings have not been instituted bona fide or are not being prosecuted with due diligence. The Federal Magistrate considered (at [16]) that s 41(6A) conferred what he described as “a general discretion” on the Court. That discretion was one which should not be fettered and should be “exercised based upon the facts and circumstances of the particular cases that come before the Court …”. His Honour was plainly correct in so directing himself: see Re Taylor; ex parte Deputy Commissioner of Taxation (1983) 74 FLR 377 at 379. He continued:“The relevant factors that are usually matters to be considered have been identified in various cases and include whether or not an appeal is being lodged and the time that an appeal may take to hear, whether stay applications have been made and granted, whether or not parties are solvent, the potential impact upon other proceedings and the potential impact upon the parties.” The Federal Magistrate accepted that Mr Kakavas was bona fide pursuing his appeal in the Court of Appeal. He accepted Mr Kakavas’s explanation as to why he had not sought a stay of the trial judge’s judgment at first instance pending the hearing and determination of the appeal. This was because the Court of Appeal recently had rejected a stay application in another case in which Mr Kakavas had been adjudged liable to another casino for gaming debts. The Federal Magistrate quoted at some length from the reasons given by Bongiorno JA (with whom Warren CJ agreed) for refusing the stay: see Kakavas v Crown Melbourne Limited [2010] VSCA 102 at [9]-[14].THE APPLICATION FOR LEAVE TO APPEAL The parties were agreed that the test I should apply in determining whether or not to grant leave to appeal was that articulated by the Full Court in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398: whether the decision is attended with sufficient doubt so as to warrant it being reconsidered by a Full Court; and whether substantial injustice would result if leave were refused, supposing the decision to be wrong.
Ratio Decidendi
Legal Principle Established
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