Morien v Johnston
[2006] FMCA 1918
•18 December 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MORIEN v JOHNSTON | [2006] FMCA 1918 |
| BANKRUPTCY – Application to extend time for compliance with bankruptcy notice – appeal from and application for stay of decision on which bankruptcy notice based – appeal and application for stay not yet heard – relevant principles – application dismissed. PRACTICE AND PROCEDURE – Application to dismiss application for review of Registrar’s refusal to set aside bankruptcy principles – principles applicable to dismissal of application made out of time – application dismissed. |
| Bankruptcy Act 1966 (Cth), s.41(6A) and (6C) Federal Magistrates Court Rules 2001 (Cth), r.4.01 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.2.03 |
| Conway v Jackson (2001) 107 FCR 201 Perovich v Tesla Nominees [2006] FMCA 1342 Hacker v The Owners of Strata Plan Number 17572 [2005] FCA 1936 Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196 Gallo v Dawson (1990) 93 ALR 479 Re Edward Gem Pty Ltd (2005) 141 FCR 408; [2005] FCA 74 Re Insurance Australia Group Ltd (2003) 128 FCR 581; [2003] FCA 581 Pinnacle VRB Ltd v Reliable Power Inc (2001) 163 FLR 215; [2001] VSC 262 Adams v Lambert (2006) 3 ABC(NS) 835; (2006) HCA 10 La Pegna v Deputy Commissioner of Taxation [2006] FMCA 1643 Sheahan & Le Poidevin Industries Pty Ltd v Northern Australia Land and Agency Co. Ltd & Ors. (unreported, Supreme Court of South Australia, Perry J, 4 February 1993) |
Applicant: | NEIL EDOUARD MORIEN |
| Respondent: | DERRAN CHARMAINE JOHNSTON |
| File Number: | PEG286 of 2006 |
| Judgment of: | Lucev FM |
| Hearing date: | 14 December 2006 |
| Date of Last Submission: | 14 December 2006 |
| Delivered at: | Perth |
| Delivered on: | 18 December 2006 |
REPRESENTATION
| Applicant: | The Applicant appeared in person |
| Counsel for the Respondent: | Ms K. Vernon |
| Solicitors for the Respondent: | Arthur Metaxas & Co. |
ORDERS
That the Applicant’s application for interim orders extending time for compliance with the bankruptcy notice be dismissed.
That the Respondent’s application for dismissal of the application, on the basis that it was filed out of time, be dismissed
The costs of these applications be reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG286 of 2006
| NEIL EDOUARD MORIEN |
Applicant
And
| DERRAN CHARMAINE JOHNSTON |
Respondent
REASONS FOR JUDGMENT
(revised from transcript and further edited)
The substantive application
The substantive application in this matter is an application to review a decision of a Registrar of this Court not to set aside a bankruptcy notice.
The basis of the application to set aside appears to be:
“Whether or not the bankruptcy notice, as served, was valid.”[1]
[1] Morien’s Service Dispute Affidavit, para.8.
There are also grounds concerning the form of the bankruptcy notice; the naming of the debtor in the bankruptcy notice and the over-statement of the amount[2], as well as matters referred to and included at paragraphs 41, 48 and 59 of an affidavit, dated 6 October 2006.[3]
[2] Morien’s Second Support Affidavit, paras.34-58.
[3] In Volume 1 of the Annexures to Morien’s Second Support Affidavit.
The interim orders application
There is also an application for interim orders for extension of time in which to comply with the bankruptcy notice. It is that application, together with another application by the Respondent which will be referred to later, which is the subject of this judgment.[4]
[4] The Reasons for Judgement were delivered orally on transcript on 18 December 2006 and, as the Court said at that time, the Reasons have been revised and further edited before publication.
Affidavits
On 7 December 2006 the Court made orders in this matter including an order that the matter be heard at 4.30 pm on 14 December 2006, on the papers presently filed in the matter. Those papers are the papers to which the Court has had regard and not to any papers filed subsequently. That is in accordance with the Court’s order. There are various affidavits in support of the application, from Mr Morien, to which the Court has had regard. They include:
a)an affidavit of 26 October 2006 (“Service Dispute Affidavit”);
b)an affidavit of 3 November 2006 (“Adjournment Affidavit”), attached to which are a considerable volume of annexures not consecutively numbered; and
c)an affidavit of 3 November 2006 (“Second Support Affidavit”), in two volumes with over 150 pages of annexures.
The Court notes that there is no First Support Affidavit, but as the Court understands the papers the Service Dispute Affidavit is in fact the First Support Affidavit. Be that as it may, the Court has read all of Mr Morien's filed affidavits and the various annexures and the Court notes that in some of those annexures there are other affidavits contained. The Court has also, for the purposes of making this judgment, read the Respondent's one affidavit, that of Ms Julieanne Jeffrey, filed on 6 December 2006, which, in effect, disputes various contentions made about service and issues which go to the validity of the bankruptcy notice, as made by Mr Morien in his various affidavits.
Bankruptcy notice and judgment debt orders
The bankruptcy notice was served, albeit in a manner and form seemingly disputed, on the Applicant on 16 September 2006[5]. The orders being the basis for the judgment debt are orders of Principal Registrar Gething, in the District Court of Western Australia, in Johnston v Morien and Others, CIV2028 of 2005 and were made on
30 June 2006.[6][5] Morien’s Service Dispute Affidavit, para.8, annexure SVR 10001.
[6] Morien’s Service Dispute Affidavit, para.8, annexure SVR 10001.
Notice of opposition
There is a notice stating grounds of opposition to the interim application which relevantly, for present purposes, says:
“The Applicant has failed to apply for a stay of execution, or appeal against the judgment of the Principal Registrar, in District Court action CIV2028 of 2005, dated 30 June 2006, in the amount of $85,000 awarded to the Respondent.”[7]
[7] Respondent’s Notice of Opposition, filed 6 December 2006, ground 1.1.
However, as will appear below[8], there is an appeal and an application for a stay.
[8] See para.14 below.
Jurisdictional pre-requisite
The appeal is a proceeding to set aside the judgment and order of Principal Registrar Gething in the judgment debt proceedings. Therefore the jurisdictional prerequisite in section 41(6A) of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) has been met.[9]
[9] Conway v Jackson (2001) 107 FCR 201, at pp.207-210 per Moore, Matthews and Mansfield JJ (“Conway”).
Principles
Essentially this matter is to be resolved by an exercise of discretion as to whether there ought to be an extension of time for compliance with the bankruptcy notice. The discretion conferred is at large subject to section 41(6C) of the Bankruptcy Act.[10] However, grounds must be shown.[11] In McPhee v Glentham Pty Ltd[12], the Court set out the factors to be taken into account when determining whether to exercise the discretion, where proceedings to set aside a judgment debt and order have been instituted by way of an appeal. They include:
[10] Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 at pp.270-271 per Lehane J (“Byron”).
[11] Conway at pp.206-210 per Moore, Matthews and Mansfield JJ.
[12] [2006] FMCA 1508 at para.20 per Lucev FM.
a)whether there is an arguable case on appeal;
b)whether a stay of execution has been sought or obtained;
c)prejudice to the debtor;
d)prejudice to the creditor and other creditors;
e)the impact on the date of bankruptcy;
f)the impact on any related legal proceedings;
g)delay; and
h)whether or not undertakings have been given or conditions can be imposed in relation to, for example:
i)payment of moneys on trust by the debtor;
ii)non-disposal of assets by the debtor;
iii)notification of significant expenditure by the debtor; and
iv)further borrowings on real property owned by the debtor and the debtor's ability to fulfil or comply with those undertakings or conditions.[13]
[13] Re Horwarth; ex parte Mortgage Acceptance Nominees Ltd (1993) 43 FCR 587 at pp.592-593 per Einfield J; Valassis v Bernard [2001] FCA 477 per Beaumont J; O’Loughlin v Glenmont Investments Pty Ltd [2001] FCA 925 at paras.17 and 19 per Mansfield J.
The Court has also had regard to the cases that the Applicant has cited: namely, Lipov v Alexander Fraser & Son Limited and Another[14] and Van Reesema v Australian Growth Resources Corporation Pty Ltd[15]. Suffice to say that Lipov can be distinguished because there appeared to be, on the basis of the extract cited by Mr Morien[16], no real opposition to the application which was then before the court. In Van Reesema it appears that the court took the view that the notices should not have been issued in the form that they did. That was an appellate decision on the ultimate issue, not on an interim orders application.
[14] (1978) 24 ALR 616 (“Lipov”).
[15] (1987) 75 ALR 311 (“Van Reesema”).
[16] Lipov at p.620 per CA Sweeney J.
There are also more recent decisions of this Court, the Federal Court, the Full Federal Court and the High Court which are more relevant to the circumstances of this case.
Appeal and stay
It is necessary to next consider the issue of the appeal and application for stay of execution in relation to CIV2028 of 2005. Morien's Second Support Affidavit says that an appeal has been filed against the orders of Principal Registrar Gething, dated 30 June 2006 and a stay of execution sought on those orders.
There is a notice of appeal and it is in the following terms:
“Take notice that the District Court will be asked by way of appeal for orders, that:
(1) the orders made by Principal Registrar Gething, on 30 June 2006, in action CIV2028 of 2005, in the District Court of Western Australia, be set aside and orders be made that;
(2) the plaintiff's application by Chambers summons for judgment, dated 3 May 2006, be dismissed and/or in the alternative that;
(3) the plaintiff's application by Chambers summons for judgment, dated 3 May 2006, be adjourned sine die and that;
(4) execution on and all proceedings under the decision of his Honour Sleight J, of 31 March 2006, be stayed until hearing and determination of the appeal hearing, or until further order.
(5) Proceedings in the original action 2028 of 2005 in the District Court of Western Australia be stayed until hearing and determination by the Supreme Court of Western Australia, Court of Appeal, of CACV43 of 2006, or until further order.
(6) Orders (1) and (2) above shall apply to stay execution on and all proceedings to enforce payment of any judgment or order for costs that may be made in the proceedings. And further orders sought in the notice of appeal follow.”[17]
[17] Morien’s Second Support Affidavit, p.35 of Volume 2 of Annexures.
The Court notes that some of those orders relate to proceedings which are not relevant directly to the substantive or interim order applications, or the orders made by Principal Registrar Gething on 30 June 2006, but there is certainly a notice of appeal against, and an application for stay of the orders arising from those orders made by Principal Registrar Gething. The Court also notes that the appeal appears to be without grounds or particulars. The Court further notes that the appeal does not appear to have been served (on the basis of what is said by Mr Morien). From a complete reading of all of the affidavits and annexures it appears that there has been no further progress on the appeal since the filing of the notice of appeal and there is certainly no evidence of any further action taken by the Applicant to advance the appeal. That is consistent with the submission made by Mr Morien in response to the Court’s questions about the advancing of the appeal, or the existence of the appeal, in the hearing on 14 December 2006, when he indicated that there was an appeal, but could not point to the papers, which the Court has ultimately found, and could not tell the Court what further progress had been made. The reason for that now is evident: there has been no further progress. There is no evidence that the appeal might be heard, or heard any time soon. The position is similar with respect to the stay of execution, which is sought in the notice of appeal.
Having regard to the factors outlined above, it appears that in relation to the question of the appeal, that on the basis of the limited material before the Court that it is a bare appeal with no grounds, or particulars, of appeal, and that it is therefore difficult to form a view as to the arguability of the appeal. The Court cannot speculate as to what appeal grounds might be. The Court cannot positively conclude on the presently available material that there is an arguable case for the Applicant.
An arguable case is, however, but one factor in the overall assessment.[18]
[18] Byron at pp.270-271 per Lehane J; Elliott v Water Wheel Holdings Ltd [2004] FMCA 37 at para.49 per McInnis FM (“Water Wheel”).
The date of hearing of the appeal is also a factor to be weighed at this stage.[19] In this case there is nothing to indicate when, or if, a Judge of the District Court of Western Australia might hear the appeal.
[19] Sidhom v Euphoric Pty Ltd [2006] FMCA 827 at para.16 per Barnes FM (“Sidhom”).
Overall, the appeal itself is a factor, which at this stage does not assist the Applicant’s application for an extension of time in which to comply with the bankruptcy notice.
In relation to the stay of execution, where a stay has not been applied for that is a factor against extension of time and its consideration in favour of the Applicant.[20] In the absence of other relevant factors, it requires an exceptional case, or at least quite special circumstances for time to be extended when no stay has been obtained.[21] Where a stay has been applied for and granted that is a factor for extension of time.[22]
[20] Byron at p.270 per Lehane J.
[21] Sidhom at para.35 per Barnes FM.
[22] Jackson v Conway [2000] FCA 1530 at paras.24-26.
In this case a stay has been applied for, but not yet obtained. The stay application is a bare application for a stay with no grounds which might otherwise assist the Court in determining whether there is an arguable case on the stay application.
Additionally, there is no indication of when, or if, the stay application might be heard or determined. Again, the seeking or obtaining of a stay is but one factor in the determination of an application for extension of time for compliance.[23] However, in this case a stay has not been obtained and no material has been tendered, other than the bare appeal grounds, which might assist the Court in determining whether there is an arguable case for a stay. The hearing of the stay application might be at some indeterminate future time. All of the above precedes the question whether a stay is even granted. It may not be. In those circumstances the Court does not consider that the situation with respect to a stay is in the Applicant's favour in terms of an extension of time for compliance.
[23] Sidhom at paras.33 and 35 per Barnes FM.
Prejudice to the debtor
There is an absence of evidence of prejudice to the debtor. The debtor alluded, in his oral submissions (but only when asked) to the damage that might attend his business and commercial dealings, but without specificity. As the Court noted at the time in the course of the argument, there is nothing unusual in that. They are the usual and obvious difficulties attendant upon an act of bankruptcy having been committed. There is, in the Court’s view, no or no sufficient detailed evidence of prejudice to the debtor. An absence of evidence of irreparable damage to the debtor is a factor against extension of time.[24]
[24] Hovan v Goycolea-Silva (2003) FCA 234 at para.9 per Emmett J.
The gravity of the commission of an act of bankruptcy is of a different and lesser order than that which flows from the making of a sequestration order.[25] Federal Magistrate Barnes makes the point neatly in Sidhom where she said:
“However, as discussed there is a clear distinction between the exercise of the discretion to extend the time for compliance with the bankruptcy notice and the question of whether to proceed with the hearing of a creditor's petition. This is not the hearing of a creditor's petition. The debtor's status would remain unaffected by a refusal to extend the time for compliance, except that an act of bankruptcy would be committed at an earlier time than would be the case if the application for an extension of time were granted.”[26]
[25] Byron at p.270 per Lehane J; Warner v Frost [1999] FCA 830 at para.8 per Hely J (“Warner”); Sidhom at para.34 per Barnes FM.
[26] Sidhom at para.36 per Barnes FM.
Further, the issuance of a sequestration order is not guaranteed. There are various possibilities and scenarios envisaged in cases on this point.[27]
[27] Warner at para.9 per Hely J; Sidhom at paras.2 and 30-31 citing the approach adopted by Allsop J in Shepherd v Chiquita Brands (South Pacific) Ltd [2001] FCA 1394.
Beyond that which is usual with the issuance of a bankruptcy notice the Applicant has not demonstrated any sufficient prejudice to him as debtor to warrant an extension of time in which to comply with the bankruptcy notice.
Prejudice to creditors or other creditors
There is no evidence of prejudice to the Respondent as creditor of the Applicant beyond the non-payment of the judgment debt and the inference of prejudice to be drawn from that. There is no evidence as to other creditors of the Applicant (save for a reference to legal costs owing to the Applicant’s lawyers). However, to grant an extension of time would delay the time at which the act of bankruptcy occurs and it is in the interest of creditors generally if a sequestration order ultimately follows, that the act of bankruptcy be earlier not later[28], because there are potential adverse consequences if the act of bankruptcy is delayed.[29]
[28] Warner at para.8 per Hely J.
[29] Water Wheel at para.59 per McInnis FM.
In all the circumstances this is a factor which is probably neutral and therefore provides no sufficient reason to extend time.
Impact on date of bankruptcy
With respect to impact on the date of bankruptcy that issue is sufficiently dealt with above. It provides no reason to extend time.
Impact on related legal proceedings
With respect to impact on related legal proceedings, insofar as sequestration order proceedings might be considered related proceedings, that issue is dealt with above. In relation to the appeal and the stay, the extension or non-extension of time for compliance will have no impact. Those proceedings will continue to be dealt with in the normal way even if an act of bankruptcy is committed. There is no effect on the Applicant's conduct of those proceedings unless a sequestration order ultimately issues. Therefore, impact of related legal proceedings is no sufficient reason to extend time for compliance with the bankruptcy notice.
Delay
The appeal and application for a stay against the orders of Principal Registrar Gething were instituted within a reasonable time. However, they have not been progressed diligently, or at all, it seems. Even taking account of matters raised by the Applicant, such as his medical condition and other litigation in which he is involved, there is no particular reason advanced as to why the appeal and stay have not been advanced, seemingly one jot,[30] since instituted. That stands in stark contrast to the Applicant's conduct of other litigation, including this application, as evidenced in his various affidavits.
[30] The position here is different to that in the Sermon on the Mount:
“Till heaven and earth pass, one jot or one tittle shall in no wise pass from the law, till all be fulfilled”: Bible (King James Version), Matthew 5:18.
Here, some reasonable, or perhaps even some, progress on the appeal and the stay might, in all the circumstances, have been acceptable.
Whilst the Court can appreciate that the Applicant’s medical condition, for reasons referred to below, might have had some impact upon this issue, it does seem that the failure to progress the appeal and the stay at all does count against the Applicant, and, on balance, that the issue of delay tells against extending time for compliance with the bankruptcy notice.
Undertakings and conditions
With respect to undertakings and conditions, the Court notes the protestations of the Applicant that, these proceedings apart, he is solvent.[31] The Court further notes that in that regard, however, there is no detailed information put forward as to the Applicant’s financial position. Certainly, there is no evidence of relevant undertakings or conditions based upon that alleged solvency, and therefore no sufficient reason to extend time for compliance with the bankruptcy notice on this basis.
[31] Morien’s Adjournment Affidavit, para.48.
Conclusions on interim orders application
With respect to the interim application for extension of time to comply with the bankruptcy notice, the Court concludes that there is:
a)a bare appeal;
b)no arguable case disclosed on the materials available in respect of the appeal;
c)a bare application for a stay but no stay granted and no grounds advanced in the stay application to support an argument that there is an arguable case for a stay, and therefore no information disclosed as to an arguable case;
d)no evidence of particular prejudice to the Applicant debtor beyond that ordinarily associated with an act of bankruptcy;
e)no evidence of particular prejudice to the Respondent creditor beyond the judgment debt, or of particular prejudice to other creditors, apart from the usual interest of creditors in the act of bankruptcy being earlier not later;
f)no evidence of impact on any related legal proceedings;
g)evidence of delay in the progressing of the appeal and stay which tells against the Applicant; and
h)no relevant undertakings or conditions.
Having considered the evidence the Court, in the exercise of its discretion, concludes that there is insufficient evidence before it to warrant an extension of time for compliance with the bankruptcy notice.
Respondent’s application
A further application was made, for the first time, in the Respondent's submissions. That application was that the substantive application was filed out of time.[32] There was no "application" in the proper form required by the Federal Magistrates Court Rules 2001 (Cth) (“FMC Rules”).[33] Neither was there any objection by the Applicant to the form of the "application". So, notwithstanding the lack of a formal application, the Court heard the Respondent’s application.
[32] Respondent’s Outline of Submissions, filed 14 December 2006, paras.2-4.
[33] FMC Rules, r.4.01.
The Respondent relies on rule 2.03 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) as the basis for the application. Essentially that rule requires the filing of an application for review within 21 days of the Registrar's decision. Ultimately, following argument, it seems that there is no dispute that the application is one day out of time, having been filed on 6 November 2006, a Monday, rather than 3 November 2006, a Friday.
Principles – extension of time
The principles to be applied in determining whether to extend time (applicable here in the context of the application to dismiss for being out of time) can in the Court’s view be summarised as follows:
a)the length of the delay;
b)the reasons for delay and whether in the Court's view the reasons are satisfactory;
c)whether the delay was that of the Applicant or another person;
d)whether it be futile to extend time in that there is not an arguable case on the application for review;
e)the prejudice to be suffered by either party if the order extending time is made;
f)the conduct of the bankrupt in relation to the bankruptcy proceedings; and
g)the possible consequences for other parties who may be affected by the extension.[34]
[34] Perovich v Tesla Nominees [2006] FMCA 1342 at para.13 per Wilson FM; Hacker v The Owners of Strata Plan Number 17572 [2005] FCA 1936 per Emmett J at paras.7-8. See also Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196; Gallo v Dawson (1990) 93 ALR 479 at p.480 per McHugh J.
Length of delay
If the delay were any shorter the application would be within time! In those circumstances it is a weighty consideration that an Applicant for review of a refusal to set aside a bankruptcy notice, with all the adverse consequences that might ultimately flow from that, be disentitled by the most minimal of delays from pursuing the review.
Satisfactory reason for delay
The Applicant is a person not unfamiliar with litigation (on all the evidence presently available to the Court) and therefore ought to have known and seemingly did know of the time limit for filing. That said, the Court can take notice of the fact that delays are not uncommon in litigation. Were this unrepresented litigant a member of the legal profession he might well have been afforded a professional courtesy or indulgence with respect to this delay as a matter of course.
The Applicant justifies the delay by pointing to:
a)medical evidence concerning his disability, particularly his psychiatric disability; and
b)the demands of various litigation in which he is engaged.
The Applicant also submitted that this application together with the application by the Respondent in these proceedings in PEG 273 of 2006 for a sequestration order against the Applicant should be heard together. That seems to the Court to be justification, not a satisfactory reason, for delay.
Counsel for the Respondent, Ms Vernon, mounted a thorough attack on the Applicant's reasons for delay, and in particular on the medical evidence relied upon by the Applicant. Ms Vernon criticised the medical evidence in essence as being:
a)irrelevant to the extension of time application, not having been originally obtained for that purpose;
b)out of date, insofar as it had not been updated at the time which the time for filing of the substantive application expired;
c)being in an edited format; and
d)being contradicted by the actions of the Applicant in the litigation when contrasted with what was said to be his disability by a consultant psychiatrist.
The Court has disregarded the Applicant's own evidence of his medical condition. The medical evidence being referred to is a copy of a report from a consultant psychiatrist Dr Peter Hoffman.[35] Relevantly, Dr Hoffman's report says as follows:
[35] Morien’s Adjournment Affidavit, annexure MED1001 at pp.153-157 of 267 in the volume of Annexures (“Dr Hoffman’s Report”).
“I note your mention [Dr Hoffman is writing to Mr Morien’s general practitioner] of depressive symptoms, including irritability with agitation, insomnia and constant ruminations. Other stressors have included surgery for basal cell carcinomas on the face and hidradenitis suppurativa.[36]
…
In terms of history of presenting complaint he notes he has been depressed since 1998 with exacerbation of his depressed mood over the last 18 months. Stressors have included legal proceedings in the Supreme Court, the District Court and the Magistrates Court where he is the plaintiff in most matters, but the defendant in three matters. These have involved legal proceedings against six former clients/friends/employees. [37]
…
Depressive symptoms have included mood, currently 2/10, with sad and irritable mood and associated tearfulness; anhedonia; anergia; initial insomnia particularly but also early morning wakening; reduced concentration; psycho motor agitation; cognitions of uselessness – “I am a total failure and nothing over the last 10 years has been worthwhile” and suicidal ideation. [38]
…
Past medical history is underlined by yourself, includes basal cell carcinoma; acne; sleep apnoea; chronic airways disease; hypercholesterolaemia and depression. Current medications include Cartia 100 milligrams a day; Pramin 10 milligrams twice a day as required; Effexor 50 milligrams a day, and Lipitor 80 milligrams a day. He denies the use of alcohol but smokes 60 cigarettes a day. [39]
…
There are no apparent cognitive deficits and he appeared psychologically minded. My impression was of a 50-year-old man presenting in the context of major depression of moderate severity complicated by insomnia and sleep apnoea. Precipitants include ongoing legal proceedings in both the Supreme, District and Magistrates Court with secondary trust issues and a sense of betrayal from ex-friends and employees. This has significantly impacted upon his sense of identify and self-esteem with secondary cognitions of uselessness. [40]
[36] Dr Hoffman’s Report, p.153.
[37] Dr Hoffman’s Report, p.154.
[38] Dr Hoffman’s Report, p.154.
[39] Dr Hoffman’s Report, p.155.
[40] Dr Hoffman’s Report, p.156.
…
In that regard [a reference to the event of legal proceedings] I agree with you that it would not be in Mr Morien's current best interest to attend legal proceedings until his depression is significantly ameliorated. [41]
[41] Dr Hoffman’s Report, p.157.
Given the nature of the illness, the then cited duration of the illness, and the nature of the stressors indicated in Dr Hoffman’s Report, particularly the effects of litigation, the Court is not persuaded that the major depression of moderate severity is irrelevant to the issue of filing of the application for review out of time, nor that Dr Hoffman’s Report is so out of date as to render it otiose, but the Court says that only for present purposes. The medical evidence which has been filed therefore provides some satisfactory evidence for the delay.
The Court notes the contradiction between:
a)the state and nature of the litigation in which the Applicant is currently involved;
b)the relatively competent manner of both his written and oral presentation of documents and arguments in this litigation in particular (but other litigation also); and
c)the medical evidence.
Indeed, such was the contrast that the Court itself raised the issue with the Applicant at the hearing. However, the evidence is not of total incapacity. Indeed there are said to be no cognitive defects[42], and the evidence is more consistent with temporary or overwhelming stress induced by bouts of depression from time to time. Notwithstanding evident scepticism at hearing, the Court, having carefully considered the issue, has come to the view that the medical evidence is capable of supporting the explanation put by the Applicant for the delay, and is prepared to accept, but only for present purposes, that the medical evidence offers a satisfactory reason for the delay.
[42] See para.44 above.
The Court notes and shares the Respondent counsel's concern about the apparent and unexplained “editing” of Dr Hoffman's Report. At final hearing the Court expects an unexpurgated copy to be produced to the Court, and if there are confidentiality or correction applications to be made they can made at hearing.
Delay
The delay the Court is dealing with is the delay in this matter and not the overall delay with respect to the various proceedings between the parties. This Court only has jurisdiction to deal with the matters presently before it, and cannot, in relation to the Respondent’s application, take account of proceedings and delays in other courts in other actions.
Dealing with delay, the delay is that of the Applicant. However, as indicated above, the delay is the merest of delays. Firstly, if the Applicant were represented by a lawyer it might go unchallenged, but were it not to be, then a delay of less than one day, the fault of a party's lawyer or otherwise, might be otherwise excused, in the interests of justice or because of the prejudicial effect of not extending time for such a short delay.[43] Those considerations apply here.
[43] Re Edward Gem Pty Ltd (2005) 141 FCR 408, [2005] FCA 74; Re Insurance Australia Group Ltd (2003) 128 FCR 581, [2003] FCA 581; Pinnacle VRB Ltd v Reliable Power Inc. (2001) 163 FLR 215, [2001] VSC 262; Mauntill Pty Ltd v Cadoroll Pty Ltd (1994) 122 FLR 224.
Futility of extension
With respect to futility of an extension of time application for the review, it is not obvious to the Court that extending time would be futile, that is that there is no arguable case. Indeed, the arguments that the Applicant raises concerning form (in particular being served as he alleges with an unsigned, unsealed bankruptcy notice) and misstatement or overstatement of the debt are matters which might give rise to arguable issues, particularly in the context of recent decisions in bankruptcy law over what constitutes a formal defect or irregularity.[44]
[44] Adams v Lambert (2006) 3 ABC(NS) 835 at pp.843-846 per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ; [2006] HCA 10 at paras.26, 28 and 32-35 per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ; La Pegna v Deputy Commissioner of Taxation [2006] FMCA 1643 at paras.41-44 per Lucev FM.
Prejudice
Greater prejudice is suffered by the Applicant if he is excluded from pressing the review than is suffered by the Respondent if the application for dismissal is granted. The Court is cognisant of the delays that the Respondent has suffered, the debt that is said to be owed, and the difficulties of protracted litigation in courts other than this Court where the Applicant and Respondent continue to litigate. It is, however, fair to say, at least insofar as this application and the sequestration order application (PEG 273 of 2006) is concerned, that a further delay of around seven weeks will ensure that the interests of justice are served by having a hearing and fully and properly determining the bankruptcy issues before this court.
The conduct of the applicant in the proceedings
The Court notes again that, in the context of the Respondent’s application, it is restricted to a consideration of the Applicant’s conduct in the bankruptcy proceedings in this Court. In that context both parties are taking steps to pursue and protect what they perceive to be their legal rights. Some aspects of the Applicant's conduct might be cause for concern, such as, for example, the continued application for adjournment on medical grounds of the proceedings. In that respect the Court can appreciate that there might be some frustration on the part of the Respondent, as was evident in Ms Vernon's competent submissions. It was for that reason that earlier in these proceedings the Court made orders requiring any adjournment on medical grounds to be made:
a)on notice;
b)on affidavit; and
c)for the deponent of that affidavit to be made available for cross-examination.
That order still pertains and will pertain at the hearing of this matter in February 2007. However, the Applicant may on the evidence dealt with above, have some, albeit perhaps weak, foundation for the medical position that he puts, and the Court is not in a position at this stage to draw conclusions adverse to the Applicant on this issue.
The Court also notes the Applicant's continued assertions concerning the conduct of various of the Respondent’s counsel engaged in these proceedings. The Court notes that if that is going to be an issue at trial (assuming for present purposes it is a relevant issue) there are various cases dealing with the position of counsel and solicitors being potential witnesses.[45] At the hearing on 14 December 2006 the Court warned the Applicant about the seriousness of those issues and of raising them in the context of these hearings. If they are, however, relevant live issues to be determined at the hearing (and subsequently before the appropriate statutory or professional bodies) those issues will have to be dealt with.
[45] See, for example, Sheahan & Le Poidevin Industries Pty Ltd v Northern Australia Land and Agency Co. Ltd & Ors. (unreported, Supreme Court of South Australia, Perry J, 4 February 1993) at paras.3-18; Pittorino v Meynert & Ors. [2001] WASC 245 at paras.7-10; Ipp J, “Lawyers’ Duties to the Court” (1998) 114 LQR 63 at 92.
The Court draws no conclusions on those issues presently, beyond saying that they have not yet been elevated to a level where the Respondent’s counsels’ conduct in relation to them in these proceedings warrants further present consideration, or the present drawing of conclusions adverse to those counsel.
Possible consequences for other parties
The position of other parties, the Respondent included, is presently sufficiently protected by:
a)the decision not to extend time for compliance with the bankruptcy notice; and
b)the hearing of this application, together with the sequestration order application on 8 and 9 February 2007.
Conclusions – respondent’s application
The Court has, very carefully and not without considerable thought, considered all of the evidence in relation to the Respondent’s application. On balance, and it is a fine balance, the Court has come to the view that the application to dismiss the application for review of the Registrar's decision as being out of time will be dismissed. The ultimate effect of that is that both the application to review and sequestration order application in proceedings PEG273 of 2006 will be heard together in this Court on 8 and 9 February 2007.
Orders
In those circumstances the orders that the Court makes are as follows:
a)that the Applicant's application for interim orders extending time for compliance with the bankruptcy notice be dismissed;
b)that the Respondent's application for dismissal of the application on the basis that it was filed out of time, be dismissed; and
c)the costs of these applications be reserved.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date:
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