Papoutsakis v Prime Capital Securities Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Papoutsakis v Prime Capital Securities Pty Ltd [2023] FCA 205

File number(s): NSD 456 of 2022
Judgment of: HALLEY J
Date of judgment: 14 March 2023
Catchwords: BANKRUPTCY – application for extension of time to file a notice of appeal – where no adequate explanation for delay – where unsecured creditors likely to be prejudiced – where proposed appeal has no merit and no reasonable prospects of success – application dismissed
Legislation:

Bankruptcy Act 1996 (Cth) ss 58, 153B, 154

Evidence Act 1995 (Cth) s 140

Federal Court Rules 2011 (Cth) rr 36.03, 36.05

Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) r 7.06

Limitation Act 1974 (Tas) s 4
Cases cited:

BQQ15 v Minister for Home Affairs [2019] FCAFC 218

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

GOK18 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCAFC 169

House v The King (1936) 55 CLR 499; [1936] HCA 40

Prime Capital Securities Pty Ltd v Papoutsakis [2021] FCCA 1594

Robson v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 286 FCR 494; [2021] FCAFC 143

Tuakeu v Minister for Immigration and Border Protection [2016] FCA 362
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 69
Date of hearing: 8 December 2022
Counsel for the Applicant: The Applicant appeared in person
Solicitor for the Interested Person: Mr C Groves of Dobson Mitchell Allport

ORDERS

NSD 456 of 2022
BETWEEN:

ANTONIOS PAPOUTSAKIS

Applicant
AND:

PRIME CAPITAL SECURITIES PTY LTD

Respondent

MR ROBERT TENBENSEL IN HIS CAPACITY OF THE BANKRUPT ESTATE OF ANTONIOS PAPOUTSAKIS

Interested Person

ORDER MADE BY:

HALLEY J

DATE OF ORDER:

14 MARCH 2023

THE COURT ORDERS THAT:

1.The application for an extension of time, filed on 17 June 2022, to file a notice of appeal is dismissed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

HALLEY J:

  1. This is an application under r 36.05 of the Federal Court Rules 2011 (Cth) (Rules) for an extension of time (Application) in which to appeal from orders dismissing an application made by the applicant, Mr Antonios Papoutsakis, to annul his bankruptcy: see Prime Capital Securities Pty Ltd v Papoutsakis [2021] FCCA 1594 (J).

  2. The respondent, Prime Capital Securities Pty Ltd (PCS), is deregistered and has not participated in these proceedings. The trustee of Mr Papoutsakis’ estate, Mr Robert Tenbensel (Trustee), has participated in these proceedings as an interested person.

  3. On 14 July 2021, the primary judge delivered written reasons and made an order that Mr Papoutsakis’ application for annulment of his bankruptcy be dismissed. Mr Papoutsakis was required to file any notice of appeal within 28 days after the date of the decision of the primary judge was delivered: r 36.03(a) of the Rules. Mr Papoutsakis did not file a complying notice…

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Details
Case
[2023] FCA 205
Decision Date

CaseChat Overview and Summary

The case of Papoutsakis v Prime Capital Securities Pty Ltd involved Mr Papoutsakis' application for an extension of time to file a notice of appeal against an order dismissing his application for the annulment of his bankruptcy. The primary judge had dismissed Mr Papoutsakis’ application for annulment on 14 July 2021, with the requirement to file a notice of appeal within 28 days. Mr Papoutsakis did not file the notice within the stipulated timeframe, and subsequently applied for an extension of time to file the notice of appeal. The court was required to decide whether it was in the interests of justice to grant the extension of time and whether the proposed appeal had reasonable prospects of success.

The court considered the reasons for the delay in filing the notice of appeal, noting that Mr Papoutsakis did not provide an adequate explanation for the delay. The court also evaluated the proposed grounds of appeal, which were either not cogent or assumed incorrect legal propositions. The court found that even if there had been an adequate explanation for the delay, the proposed appeal grounds did not have reasonable prospects of success. Moreover, the unsecured creditors were likely to be prejudiced by the granting of an extension of time.

Consequently, the court dismissed the application for an extension of time to file a notice of appeal. The proposed appeal had no merit and no reasonable prospects of success, and it was not in the interests of justice to grant the extension of time. The court concluded that the application should be dismissed.

The court's final order was that the application for an extension of time, filed on 17 June 2022, to file a notice of appeal was dismissed. This order was in accordance with Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The application for an extension of time, filed on 17 June 2022, to file a notice of appeal is dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

On 14 July 2021, the primary judge delivered written reasons and made an order that Mr Papoutsakis’ application for annulment of his bankruptcy be dismissed. Mr Papoutsakis was required to file any notice of appeal within 28 days after the date of the decision of the primary judge was delivered: r 36.03(a) of the Rules. Mr Papoutsakis did not file a complying notice of appeal within the time frame prescribed by r 36.03(a) of the Rules. BACKGROUND On 1 August 2016, Mr Papoutsakis and his former wife, Ms Marietta Papoutsakis, signed a Prime Capital loan approval document (Loan Approval) as guarantors for a $500,000 loan to Papou Pty Ltd (Papou). Both Mr and Ms Papoutsakis were directors of Papou. Mr Papoutsakis also signed the Loan Approval on behalf of Papou. The signatures of Mr Papoutsakis on the Loan Approval were witnessed by the broker, Mr Steven Tsiakis of MBA Finance, who had arranged the loan for Papou. The loan to Papou did not proceed, however, and the principal amount was never advanced. The Loan Approval included clauses providing that on the acceptance of the offer from Prime Capital a legally binding contract was created on the terms set out in the Loan Approval. Clause 18 of the Loan Approval also provided that if there was any withdrawal or the loan was not drawn within 30 days then the borrower and any guarantors were immediately required to pay all fees, costs and outlays payable pursuant to the Loan Approval and liquidated damages equivalent to one month’s interest at the “Lower Rate”. On page 3 of the Loan Approval in the section entitled “Section 2.0 – Security”, the following four properties were stated to be required to secure the $500,000 proposed loan to Papou (Loan):(a)28 Shepherd Street, Sandy Bay – jointly owned by Mr and Ms Papoutsakis until the joint tenancy was severed on the date that Mr Papoutsakis was made bankrupt;(b)621-623 Sandy Bay Road, Sandy Bay – owned by Papou Properties Pty Ltd as trustee of the Papoutsakis Family Trust;(c)644 Sandy Bay Road, Sandy Bay – was owned by Mr Papoutsakis; and (d)1 Beach Road, Sandy Bay – was owned by Papou Properties Pty Ltd as trustee of the Papoutsakis Family Trust. In the hearing before the primary judge Mr Papoutsakis and the Trustee relied on competing versions of the Loan Approval. The only material difference in the two versions of the Loan Approval is that in the version attached to an affidavit of Mr Papoutsakis sworn on 26 April 2022, three of the four properties to be provided by way of security are crossed out and some names or signatures have been inserted above the list of properties. On 30 March 2017, Prime Capital issued an invoice to Papou in net amount of $26,606.63 (after deducting a payment received of $2,200 and providing for a discounted amount of $21,106.63 if it was paid by the due date of 6 April 2017) for application fees and expenses incurred in the course of arranging the loan and liquidated damages (Invoice). The Invoice was not paid.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The remaining grounds of appeal were not the subject of any substantive submissions by Mr Papoutsakis. They appeared on their face not to contain cogent grounds of appeal nor identify error on issues that the primary judge was required to determine. In addition, some appeared to assume incorrect or incomprehensible legal propositions, such as that the Trustee did not allow Mr Papoutsakis any money to engage a solicitor which is alleged to be a “gross denial of natural justice” (proposed appeal ground 30), the primary judge failed to exercise “his discretion on all the facts in making [an/the] order annulling the bankruptcy” (proposed appeal grounds 34 and 47) and the primary judge “erred on all the facts to consider the assets available to the appellant as they fell due” (proposed appeal ground 46).CONCLUSION I am satisfied for the foregoing reasons that it is not in the interests of justice to grant an extension of time in which to appeal from the orders made by the primary judge. In my view, Mr Papoutsakis has not provided an adequate explanation for his delay in filing the application for leave to appeal but even if he had, the proposed grounds of appeal do not have reasonable prospects of success. The Application is to be dismissed.

Ratio Decidendi

Legal Principle Established

On 21 May 2018, a sequestration order was made against Mr Papoutsakis’ estate (Sequestration Order). Mr Papoutsakis is also a party to proceedings HBC 133 of 2018 which were commenced by Ms Papoutsakis in the Family Court of Australia (Family Court proceedings). In October 2022, Justice McClelland reserved judgment in the matter. THE PRIMARY JUDGE’S REASONSFactual findings Mr Papoutsakis commenced proceedings SYG 534 of 2018 in the Federal Circuit Court of Australia (FCCA proceedings), as it then was, as a late application to review the Sequestration Order. PCS did not participate in the FCCA proceedings. The Trustee participated as an interested person and provided a report pursuant to r 7.06 of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth): at J [2]. The hearing occurred on 16 to 17 June 2021. At the hearing, Mr Papoutsakis “changed tack” and sought an annulment of his bankruptcy pursuant to s 153B(1) of the Bankruptcy Act 1996 (Cth) (Bankruptcy Act): at J [1]. The primary judge made the following observations and findings that provide important context to the circumstances surrounding the bankruptcy of Mr Papoutsakis and the exercise of any discretion to now annul his bankruptcy:9Mr Papoutsakis deposed that following the sequestration order his then-solicitors acted negligently and not in accordance with his instructions by responding to the Bankruptcy Notice outside the required time period. In his affidavit sworn 6 May 2021 Mr Papoutsakis deposed that the sequestration order dated 21 May 2018 was made in his absence and was made because his solicitor failed to attend court. However, in cross examination Mr Papoutsakis’s evidence was to the effect that he had only instructed his solicitors to assist him to obtain an adjournment of the creditor’s petition at its first return date and that he had been successful in obtaining that adjournment to 21 May 2018 with a related order that he file and serve any notice of ground of opposition and affidavit in support by 16 May 2018. His oral evidence was to the effect that once he had obtained the adjournment, he left the issue in the hands of the finance broker who had negotiated the PCS loan but that that person let him down. He agreed that he had been aware of the terms of the Court’s orders made at the first return date, that documents of the sort referred to in those orders were not filed and that he did not appear and was not represented on 21 May 2018, when the sequestration order was made.10Mr Papoutsakis said that in the first week of June 2018, with his solicitor, he met the Trustee and told him that he intended to have the bankruptcy annulled. On 23 October 2018 he incorrectly told the Trustee that an application to annul the bankruptcy had been filed. On 28 July 2020 he wrote to the Trustee saying that he intended to apply for an annulment.11 In his affidavit of 6 May 2021, Mr Papoutsakis deposed that he met with his barrister on 10 October 2018 to sign a bankruptcy annulment application to be submitted to the Court. Two weeks later, the Trustee telephoned Mr Papoutsakis’s counsel, in his presence, to confirm that the application had been submitted but refused to provide Mr Papoutsakis with the details of their discussion. On about 10 January 2019 Mr Papoutsakis telephoned the Court and was informed that the application had not been received. Mr Papoutsakis deposed that he telephoned his counsel who said that he had forwarded the application to the Court for review prior to filing.12In his affidavit sworn 5 November 2020, Mr Papoutsakis deposed that he filed in the Local Court an application [to set aside the default judgment], but was advised by that court that the motion could not proceed because Capital Securities XVI Pty Ltd [sic] was in liquidation. In his oral evidence, Mr Papoutsakis identified his Local Court notice of motion to set aside the default judgment which bore a court stamp of 8 May 2019. In his affidavit sworn 5 November 2020, Mr Papoutsakis deposed that 30 days after having advised him that [the creditor plaintiff] was in liquidation, the Local Court notified him that it would not consider the matter without the Trustee’s consent. He also said that for a period a firm of solicitors in Sydney had acted for him in relation to that stage of the Local Court proceedings. Exhibit T14 is a copy of those solicitors’ tax invoice which recorded that they attended the motion’s return date on 30 May 2019 and a further hearing listing on 27 June 2019 but ceased to act in July 2019.