National Australia Bank Ltd v Nyasa Nominees Pty Ltd

[2017] WASC 150

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   NATIONAL AUSTRALIA BANK LTD -v- NYASA NOMINEES PTY LTD [2017] WASC 150

CORAM:   BANKS-SMITH J

HEARD:   ON THE PAPERS

DELIVERED          :   30 MAY 2017

FILE NO/S:   CIV 2582 of 2015

BETWEEN:   NATIONAL AUSTRALIA BANK LTD

Plaintiff

AND

NYASA NOMINEES PTY LTD
First Defendant

PATRICK ALLAN NUGAWELA
Second Defendant

KAREN ANN NUGAWELA
Third Defendant

Catchwords:

Bankruptcy - Where sequestration order made - Where order staying proceedings under the sequestration order - Where defendant seeks to pursue appeal - Whether open to pursue appeal

Legislation:

Bankruptcy Act 1966 (Cth), s 37, s 52, s 60

Result:

Appeal adjourned

Category:    B

Representation:

Counsel:

Plaintiff:     No appearance

First Defendant              :     Not applicable

Second Defendant         :     No appearance

Third Defendant            :     Not applicable

Solicitors:

Plaintiff:     Dentons

First Defendant              :     Not applicable

Second Defendant         :     In person

Third Defendant            :     Not applicable

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

Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297

Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8

Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124

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

Evans v Heather Thiedeke Group Pty Ltd [1990] FCA 551

Fletcher v Westpac [2012] WASCA 154

McCallum v Commissioner of Taxation [1997] FCA 533; (1997) 75 FCR 458

Nugawela v Deputy Commissioner of Taxation [2016] FCA 578

Nugawela v Deputy Commissioner of Taxation [2016] FCAFC 164

Re Wardle; Ex parte Widin v Australia and New Zealand Banking Group (1987) 70 ALR 633

1. BANKS-SMITH J:  On 1 July 2016, Registrar C Boyle ordered summary judgment in favour of the plaintiff against the second defendant, Dr Nugawela, for $594,755.97 and ordered that Dr Nugawela give possession of a secured property to the respondent under the terms of a registered mortgage.  The plaintiff has not sold the property.

2. On 11 July 2016, Dr Nugawela filed an appeal against the Registrar's orders.

3. On 21 September 2016, the appeal came before me for directions.  Dr Nugawela foreshadowed that he would seek to amend his grounds of appeal and would seek to file fresh evidence.

4. I subsequently granted leave and Dr Nugawela filed further evidence.  On 28 September 2016 he filed an amended notice of appeal.

5. In the meantime, it seems Dr Nugawela was resisting bankruptcy proceedings in the Federal Court.  He applied to set aside a bankruptcy notice and on 25 May 2016 his application was dismissed:  Nugawela v Deputy Commissioner of Taxation [2016] FCA 578. An application to appeal against the decision was dismissed on 7 December 2016: Nugawela v Deputy Commissioner of Taxation [2016] FCAFC 164.

6. On 21 February 2017, a sequestration order was made against the estate of Dr Nugawela and Mr Gregory Dudley was appointed his trustee in bankruptcy.

7. Dr Nugawela filed an application for a stay of the sequestration order.  On 14 March 2017, Judge Lucev of the Federal Circuit Court reserved judgment on that application and ordered that there be a stay of all proceedings under the sequestration order pending further order.

8. At a directions hearing on 17 May 2017, Dr Nugawela sought to programme his appeal for hearing.  Following oral submissions, the matter was adjourned to allow the parties to file written submissions as to whether or not it was open to Dr Nugawela to proceed.  Dr Nugawela did not file written submissions but during the hearing he had handed up a note of cases that he said were relevant to his position (see below).

9. Dr Nugawela's application to proceed gives rise to two questions:

   (1)what is the effect of the order made by Judge Lucev staying proceedings under the sequestration order; and

   (2)is Dr Nugawela able to progress the appeal.

Order to stay proceedings

1. Dr Nugawela contends that by Judge Lucev's order, he is free to proceed with his appeal against summary judgment as if no sequestration order had been made.  This ignores the particular wording of the order.  The operation of the sequestration order has not been stayed.  It is proceedings under the sequestration order that have been stayed.

2. Proceedings under a sequestration order may be stayed for a period not exceeding 21 days under s 52(3) of the Bankruptcy Act 1966 (Cth). However, the 21 day period may be extended pursuant to the Federal Court's appellate jurisdiction under r 36.08 of the Federal Court Rules 2011 (Cth). Section 37(2)(a) of the Act provides that such an order does not rescind, discharge or suspend the operation of the sequestration order. The court only has power to stay proceedings or an action under the sequestration order.

3. This position was confirmed by Justice Beach in Endresz v Australian Securities and Investments Commission [2014] FCA 1139 [11]. See also Re Wardle; Ex parte Widin v Australia and New Zealand Banking Group (1987) 70 ALR 633, 635; Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297, 300 ‑ 301, 303.

4. Dr Nugawela's appeal is not a proceeding or an action under the sequestration order.  If Dr Nugawela's trustee were seeking to take any particular course with respect to the appeal, then there may be scope for the trustee's actions to be affected because of the stay order.  However, that is not the position with which I am currently concerned.

5. I have taken into account the authorities relied upon by Dr Nugawela.  Neither McCallum v Commissioner of Taxation [1997] FCA 533; (1997) 75 FCR 458 nor Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8 assist Dr Nugawela. Evans v Heather Thiedeke Group Pty Ltd [1990] FCA 551 is consistent with the position outlined above: see [52] ‑ [53].

Appeal is stayed by operation of the Act

1. Pursuant to s 60(2) of the Act, an action commenced by a person who subsequently becomes bankrupt is stayed until the trustee in bankruptcy makes an election in writing to prosecute or discontinue the action. The stay operates automatically: Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124, 130. An action is defined as any civil proceeding whether at law or in equity and has been held to include an appeal: see Fletcher v Westpac [2012] WASCA 154 [10].

2. Accordingly, the appeal is stayed and Dr Nugawela cannot currently pursue it.

Determination

1. In the circumstances, it is not open to Dr Nugawela to pursue the appeal and I will order that it be adjourned indefinitely with liberty to apply.