National Australia Bank Ltd v Nyasa Nominees Pty Ltd - [2019] WASC 107

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   NATIONAL AUSTRALIA BANK LTD -v- NYASA NOMINEES PTY LTD [2019] WASC 107
CORAM:   ALLANSON J
HEARD:   30 JANUARY 2019
DELIVERED          :   1 APRIL 2019
PUBLISHED           :   1 APRIL 2019
FILE NO/S:   CIV 2582 of 2015
BETWEEN:   NATIONAL AUSTRALIA BANK LTD
Plaintiff

AND

NYASA NOMINEES PTY LTD
First Defendant

PATRICK ALLEN NUGAWELA
Second Defendant

KAREN ANN NUGAWELA
Third Defendant

Catchwords:

Practice and procedure - Appeal deemed to have been abandoned - Whether court should formally dismiss appeal

Legislation:

Bankruptcy Act 1966 (Cth), s 58, s 60, s 178

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	K Britton
First Defendant	:	No appearance
Second Defendant	:	In person
Third Defendant	:	No appearance

Solicitors:

Plaintiff	:	Dentons Australia
First Defendant	:	No appearance
Second Defendant	:	In person
Third Defendant	:	No appearance

Case(s) referred to in decision(s):

Cole v Challenge Bank Limited [2002] FCAFC 200
Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124
Duckworth v Water Corporation [2012] WASC 30; 261 FLR 185
Nugawela v Commissioner of Taxation [2018] FCA 1458
Owens v Comlaw (No 62) Pty Ltd [2006] VSCA 151
Savage v Australian Unit Funds Management Ltd [2011] NSWCA 270

ALLANSON J:

In preparing these brief reasons I have been assisted by the outline of submissions filed by the plaintiff which, in my opinion, gave a fair and comprehensive summary of the factual and legal position. I have also had regard to the affidavits of Richard Lewin, sworn 10 April 2018 and 24 January 2019, and the affidavit of the second defendant, Dr Patrick Alan Nugawela, sworn 28 February 2019.
The plaintiff (which I shall refer to as the bank) commenced proceedings against the three defendants on 5 October 2015.
On 1 July 2016, the bank obtained summary judgment against Dr Nugawela for debt recovery and possession of a property in Subiaco. Dr Nugawela was and remains the sole registered proprietor of the property.
On 11 July 2016, Dr Nugawela filed a notice of appeal, and on 28 September he filed an amended notice.
On 21 February 2017, a sequestration order was made against Dr Nugawela's estate. He filed an application to review the sequestration order, which was dismissed on 9 August 2017. Dr Nugawela filed a notice of appeal from that decision.
On 25 September 2017, the solicitors for the bank wrote to Dr Nugawela's trustee in bankruptcy, inviting him to make an election under s 60 of the Bankruptcy Act 1966 (Cth) with respect to the notice of appeal dated 11 July 2016. On 20 December 2017, the solicitors for the bank sent a further letter to the trustee, inviting him to make an election under s 60 with respect to the amended notice of appeal.
The trustee did not make an election in respect of either the appeal or the amended appeal within 28 days after notice was served on him.
The bank submits that the appeals have now been abandoned by operation of s 60(3) of the Bankruptcy Act and should now be dismissed. It applies for orders dismissing the appeal and the amended appeal, with costs.
The application first came before me on 10 April 2018. At that time, Dr Nugawela's appeal in the bankruptcy proceedings had not yet been determined. I adjourned the application to await resolution of the appeal.
On 13 November 2018, the appeal was dismissed in the Federal Court of Australia. Dr Nugawela remains an undischarged bankrupt.
After the dismissal of the bankruptcy appeal, the bank renewed its application.

Consideration

Although his appeals in these proceedings are deemed to have been abandoned by operation of the Bankruptcy Act, the deemed abandonment does not operate to dismiss the appeals. [1] I am satisfied, following Cole v Challenge Bank Limited,[2] that this court may now make an order formally giving effect to the deemed abandonment.[3]
[1] Nugawela v Commissioner of Taxation [2018] FCA 1458 [11].
[2] Cole v Challenge Bank Limited[2002] FCAFC 200.
[3] See also Savage v Australian Unit Funds Management Ltd [2011] NSWCA 270.
At the hearing of the bank's renewed application on 30 January 2019, Dr Nugawela raised a separate issue. He has commenced proceedings in the Federal Court under s 178 of the Bankruptcy Act to review the conduct of the trustee. Should the bank's application be adjourned until those proceedings have been completed?
Dr Nugawela relies on a decision of Colvin J in the Federal Court on 26 September 2018.[4] The proceedings before his Honour were an appeal by Dr Nugawela against a decision of the Administrative Appeals Tribunal to dismiss six applications to review decisions of the Commissioner of Taxation. The Tribunal found the applications had been abandoned by the trustee and that they should be dismissed. The Tribunal further found that Dr Nugawela had no standing to prosecute the applications.
[4] Nugawela v Commissioner of Taxation [2018] FCA 1458.
Colvin J understood one of the grounds of appeal to raise a claim that the Tribunal ought to have declined to dismiss the applications before it, because Dr Nugawela had a pending application to the Federal Court to review the trustee's decision to not take any action in respect of those applications. His Honour held that it was reasonably arguable that Dr Nugawela's interest in preserving the subject matter of his objection to the trustee's decision provided sufficient standing for him to seek an adjournment of the proceedings before the Tribunal.[5]
[5] Nugawela v Commissioner of Taxation [2018] FCA 1458 [32].
Dr Nugawela sought an adjournment of the bank's application in the proceedings before me until his application to review the conduct of the trustee has been determined. Despite the clear differences between the matter before me and that considered by Colvin J, I considered that Dr Nugawela should have the opportunity to argue the point if there was a factual basis for it. It was not, however, apparent on the material before the court that his application in the Federal Court included any act, omission or decision of the trustee that resulted in these appeals being deemed to be abandoned. Such an application was required to be made not later than 60 days after the day on which Dr Nugawela became aware of the trustee's act, omission or decision. I adjourned the application to enable Dr Nugawela to put evidence before me that his application under s 178 of the Bankruptcy Act included a review of the conduct or decision of the trustee relating to this matter.
In an affidavit filed 28 February 2019, Dr Nugawela declined to put the evidence before the court. He advanced several arguments but did not address whether there is a current application to review the relevant act, omission or decision of the trustee.
In the circumstances, I am not satisfied that Dr Nugawela has advanced any sufficient reason to adjourn the application.
I am also satisfied that none of Dr Nugawela's arguments put forward sufficient reason to either adjourn or dismiss the application.
First, he referred to an unspecified 'parallel action', and said that the trustee 'had been made aware and failed to notify the bank that an appeal is not property vested in the trustee … and gave the impression of abandonment of prosecution of the appeal …'[6] With respect, that argument does not address the question raised by s 60 of the Act. Under s 60(2) and (3):
(2)An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.
(3)If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.
[6] Affidavit of Patrick Nugawela sworn 28 February 2019 [8].
The question is whether the appeal is an action commenced by Dr Nugawela before he became a bankrupt. The definition of 'action' in s 60(5) is broad enough to cover an appeal in civil proceedings.[7] The application of s 60(2) does not depend on the right of appeal being property which vests in the trustee under s 58(1).[8] The rationale of s 60(2) also includes the protection of those sued by a bankrupt who, should they succeed in the action, could not obtain an effectively enforceable order for the costs of the proceedings because of the bankruptcy.[9]
[7] Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124, 130; Cole v Challenge Bank Limited [2002] FCAFC 200 [11].
[8] Owens v Comlaw (No 62) Pty Ltd [2006] VSCA 151 [42].
[9] See Duckworth v Water Corporation [2012] WASC 30; 261 FLR 185 [43] - [44].
Second, Dr Nugawela alleged that the bank had refused to discover material pertaining to its exchanges with the trustee, and the court had declined an application to subpoena documents. Neither of those matters is relevant to whether the appeal has been abandoned by operation of s 60. And, if the appeal has been abandoned, there is no action in which discovery or a subpoena will lie.
Third, Dr Nugawela said that the review under s 178 of the Bankruptcy Act is within the exclusive jurisdiction of the Federal Court. This court is not purporting to exercise the jurisdiction under s 178, but is concerned only to know whether the relevant conduct or decision of the trustee is the subject of a review.
Fourth, Dr Nugawela said that an application for special leave has been filed in the bankruptcy proceedings. Dr Nugawela did not say that he has been granted a stay of the operation of the sequestration order. This court should act on the basis that the decision of the Federal Court continues to operate and Dr Nugawela remains an undischarged bankrupt.
Fifth, Dr Nugawela asserted that the production of the review application would put the bank in an unequal and unfair position to contest it. I do not see how that is the case.
Sixth, Dr Nugawela said that the property is occupied, well maintained, and not incurring ongoing expense to the bank. Accepting that is so, it is not a reason to dismiss or adjourn the bank's application.
Seventh, Dr Nugawela asserted that the court may have a conflict of interest 'because its own actions are under examination in the parallel action now being determined in a higher court'.[10] There is, on the material before the court, no basis to apprehend a conflict of interest in proceeding to determine a regularly brought application in this matter.
[10] Affidavit of Patrick Nugawela sworn 28 February 2019, 5 [6].
Finally, Dr Nugawela referred to the position of other defendants who can exercise a separate right of review. It does not appear, from what Dr Nugawela said in his affidavit, that either of the other two defendants has sought to exercise any right of review.
None of the matters raised, individually or together, is sufficient reason to adjourn this application.
The appeal, having been abandoned, should formally be dismissed. I will make orders to that effect.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson
1 APRIL 2019