Marmalade Australia Pty Ltd v Johns

[2023] FedCFamC2G 59

Federal Circuit and Family Court of Australia

(DIVISION 2)

Marmalade Australia Pty Ltd v Johns [2023] FedCFamC2G 59

File number(s):

SYG 1515 of 2022

Judgment of:

JUDGE LAING

Date of judgment:

3 February 2023

Catchwords:

PRACTICE AND PROCEDURE – application for stay of operation of Registrar’s orders – whether grounds established – stay application dismissed – jurisdictional challenge – whether proceedings should be transferred to the Brisbane registry when all parties are in Queensland – proceedings transferred to the Brisbane registry.

Legislation:

Bankruptcy Act 1966 (Cth)

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 8.01

Cases cited:

Endresz v Australian Securities and Investments Commission [2014] FCA 1139

Division:

Division 2 General Federal Law

Number of paragraphs:

16

Date of hearing:

3 February 2023

Place:

Sydney

Solicitor for the Applicant

Mr A Edmonds (Kerrs Law Pty Ltd) appeared in-person on behalf of the applicant

Solicitor for the Respondent

The Respondent appeared in-person

ORDERS

SYG 1515 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

MARMALADE AUSTRALIA PTY LTD

Applicant

AND:

GRANT DAVID JOHNS

Respondent

order made by:	JUDGE LAING
DATE OF ORDER:	3 FEBRUARY 2023

THE COURT ORDERS THAT:

1.The respondent in the proceedings be directed within 7 days to complete and lodge his statement of affairs with the Australian Financial Security Authority.

2.The application in a proceeding filed on 13 January 2023 be dismissed.

3.Pursuant to rule 8.01 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) the matter be transferred to the Brisbane registry.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

EX TEMPORE REASONS FOR JUDGMENT
(revised from transcript)

JUDGE LAING

INTRODUCTION

1. Before the Court is an application for review of orders made on 6 December 2022 by a Registrar of this Court by which, inter alia, the estate of Grant David Johns was sequestrated under the Bankruptcy Act 1966 (Cth) (Act).

2. The matter was listed today for directions, this being the first listing date after the application for review was filed. In advance of the directions hearing, Mr Johns, the respondent in these proceedings (Respondent), filed an application in a proceeding seeking that “the operation of the orders” made on 6 December 2022 be stayed until a decision was made on the application for review. 

3. The day before this listing, a number of affidavits were filed by the Respondent. One of those affidavits challenged the jurisdiction of this Court as a “New South Wales Court” to determine the matter. That jurisdictional objection was pressed by the Respondent during the hearing today.

   JURISDICTIONAL OBJECTION

4. The jurisdictional objection appears to involve some misunderstanding of the role of this Court in bankruptcy proceedings. This Court is not a “New South Wales Court”, as was suggested by the Respondent, although I accept that the hearing today is taking place at a location in New South Wales. However, this is a Court of federal jurisdiction. Its jurisdiction in bankruptcy proceedings is provided under the Act: see Part III, Division 2.

5. The Respondent referred to clause 14.1 in a document entitled “Supplier Agreement” that was expressed to be between Marmalade Australia Pty Ltd (Applicant) and Matrix Truss Co Pty Ltd. This document appears to have been signed by the Respondent, as the latter company’s “authorised representative”. The clause stated as follows:

   14.1The laws of Queensland govern this Agreement and each party irrevocably submits to the exclusive jurisdiction of the courts of Queensland and courts competent to hear appeals from those courts.

6. That clause appears to have the purpose of agreeing that disputes under the Agreement would be determined by a Queensland court. It is incapable of ousting the bankruptcy jurisdiction of this Court.

7. However, there remained a question as to whether this matter may more appropriately be heard in Brisbane, given that the parties both appear to be located in Queensland. This was sought by the Respondent in the event that his primary position was not accepted. No objection was taken by the Applicant. I therefore accept that it would be appropriate for an order to be made for this matter to be transferred to the Brisbane Registry. 

   STAY APPLICATION

8. In respect of the stay application, I have not been directed to any clear authority on point by either party. However, in the time available I have considered what was said by Beach J in Endresz v Australian Securities and Investments Commission [2014] FCA 1139 (Endresz), at [8]-[11]:

   8.It is apparent from the provisions and operation of the Bankruptcy Act 1966 (Cth) (the Act) that it is inapposite to talk of a stay of a sequestration order as such. When a sequestration order is made, it takes immediate and automatic effect by force of the Act. There is an immediate vesting of property in the trustee in bankruptcy. Moreover, after-acquired property of the bankrupt vests as soon as it is acquired. See, generally, Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757 at [3] per Yates J. It is conceptually incoherent to contemplate a judicial stay order as being available to countermand automatic legislative operation where no question of invalidity is involved.

   9.In concept, one can only consider whether there should be a stay of any proceedings or action under a sequestration order, rather than a stay of the order itself. So much is made plain by the language of s 52(3) of the Act which uses the language of “stay all proceedings under a sequestration order”. I interpolate at this point that s 52(3) also has a time limit of 21 days. Nevertheless, in the Court’s appellate jurisdiction under r 36.08, such a time bar does not limit the Court’s power thereunder. A separate source of jurisdiction can be invoked, rather than that applicable under s 52(3).

   10.Further, reference should also be made to s 37(2)(a) of the Act, which provides that the Court does not have power to suspend the operation of a sequestration order.

   11.In summary, the Court only has power to stay proceedings or action under the sequestration order. The present interlocutory applications do not identify what proceedings or action ought to be stayed and why. They fail in limine on this aspect alone.

9. The affidavits and submissions relied upon in support of the stay application were, respectfully, somewhat difficult to understand. As best I can understand it, the Respondent considers that some form of trust was created upon his birth that has been mismanaged over the course of his lifetime. I have limited material before me in relation to the trust, although the Respondent does refer to a “Copyright ‘PPSR’” reference in an affidavit filed in support of the stay application. In relation to the trust, the Respondent has also referred to his “Birth Certificate” being a “Receipt” as confirmation of the “Trust” occasioned on his birth.

10. In respect of this, the Respondent has referred in an affidavit to seeking compensation in the amount of $3 million. Again, the basis of this is not presently clear. The Respondent seeks, as part of his application for review, payments associated with a “Notice Schedule of Fees for Remedy”. That document appears to refer to various payments he says must be made by the government or others for various actions. 

11. The Respondent has also suggested, in an affidavit filed in support of the stay application, that this Court “discharge this matter and eliminate from the record, award the applicant remedy by payment of the default judgment order 0050032/22 including costs via cheque presented today from the Cestui Que Vie Trust”. By this, the Respondent appears to take issue with and seek for this Court to set aside a default judgment of the Magistrates Court of Queensland. I note that this submission preceded the Respondent’s subsequent submission that this Court lacked jurisdiction entirely. In any event, the jurisdictional ability of this Court to set aside the judgment of another Court has been left unexplained. 

12. In an affidavit filed yesterday, the Respondent suggested that he may seek for a “Queensland Court” to go behind the judgment on the basis of a document entitled “Notice of Assignment of Debt” dated 7 February 2022. This refers to what is said to have been an assignment of certain debts owed to Matrix Truss Co Pty Ltd over to the Applicant, Marmalade Australia Pty Ltd. The Respondent may well seek for the Court to go behind the judgment debt, and may seek to develop these arguments, at a subsequent hearing in this matter. However, at this stage I am not satisfied for present purposes that an arguable basis has been demonstrated in this regard or that the document relied upon justifies the making of the stay order sought.

13. Reference has additionally been made by the Respondent in an affidavit to a “Fine 1 Oz ‘0.9999’ ‘99.99% pure’ Silver Coin” that he possesses and says that he produced to the Registrar as evidence that he was not a “Pauper”.  However, no valuation of that coin has presently been provided, nor any explanation as to why its existence might be said arguably to justify the relief that has been sought. 

14. I am not satisfied that the matters identified by the Respondent provide a basis for staying the orders made by the Registrar on 6 December 2022. For the reasons given in Endresz, this Court cannot stay the sequestration order itself.

15. For the Trustee, Mr Edmonds informed the Court that the Trustee does not contemplate, in the immediate future, taking any particular steps towards realisation of assets. The Respondent has not identified any significant action that is reasonably anticipated to be taken by the Trustee in the near future likely to cause him irrevocable prejudice, or to incur significant costs. Nor has he persuaded me, at this early stage, that there is another basis for staying proceedings or action under the sequestration order.

    FURTHER ORDER SOUGHT

16. The Trustee sought an order requiring the Respondent to lodge a Statement of Affairs. Whilst I understand that the Respondent objects to this, he is obliged to do so under s 54 of the Act. I am therefore satisfied that it is appropriate to make such an order.

17          I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Laing.

Associate:

Dated:       3 February 2023