Perovich v Whitton

Case [2016] FCAFC 126

FEDERAL COURT OF AUSTRALIA

Perovich v Whitton [2016] FCAFC 126

Appeal from: Whitton v Perovich [2016] FCA 595
File number: QUD 456 of 2016
Judges: SIOPIS, GLEESON AND EDELMAN JJ
Date of judgment: 13 September 2016
Catchwords: PRACTICE AND PROCEDURE – joinder of party to an appeal – power to join person who was not a party to the decision being appealed – requirements of procedural fairness
Legislation:

Acts Interpretation Act 1901 (Cth) ss 13(1), 15AB(2)(a)

Bankruptcy Act 1966 (Cth) ss 73, 222D

Legislation Act 2003 (Cth) s 13(1)(a)

Federal Court Rules 1979 (Cth) O 52 r 14(2)

Federal Court Rules 2011 (Cth) rr 36.31, 36.31(1)

Explanatory Memorandum, Acts Interpretation Amendment Bill (Cth) 2011
Cases cited:

Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52

State of Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291

Suncorp-Metway Ltd (ACN 010 831 722) v Sapuppo [2001] FCA 708

Whitton v Perovich [2016] FCA 595
Date of hearing: Determined on the papers
Date of last submissions: 8 September 2016 (Applicant)
Registry: Queensland
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 12
Counsel for the Applicant: DA Kelly QC and DM Turner
Solicitor for the Applicant: Carter Newell Lawyers
Counsel for the First and Second Respondents: FM Douglas QC
Solicitor for the First and Second Respondents: Delta Law
Counsel for the Third Respondent: The Third Respondent did not appear

ORDERS

QUD 456 of 2016
BETWEEN:

SILVANA PEROVICH

First Appellant

RICHARD WILLIAM SPENCER

Second Appellant
AND:

ROBERT WILLIAM WHITTON

Respondent

IN THE INTERLOCUTORY APPLICATION:

BETWEEN:

MANGO BOULEVARD PTY LTD ACN 101 544 601
Applicant
AND:

SILVANA PEROVICH

First Respondent

RICHARD WILLIAM SPENCER

Second Respondent

ROBERT WILLIAM WHITTON

Third Respondent

JUDGES:

SIOPIS, GLEESON AND EDELMAN JJ

DATE OF ORDER:

13 SEPTEMBER 2016

THE COURT ORDERS THAT:

1.Mango Boulevard Pty Ltd ACN 101 544 601 be joined as second respondent to this appeal.

2.The respondent to this appeal, Robert William Whitton, be named first respondent to this appeal.

3.Costs reserved.

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


REASONS FOR JUDGMENT

THE COURT:

Introduction

  1. This interlocutory application is brought in the pending appeal between Mr Perovich and Mr Spencer (the appellant debtors), and Mr Whitton. Mr Whitton is the trustee of compositions between the appellant debtors and their creditors, pursuant to s 73 of the Bankruptcy Act 1966 (Cth). The primary judge held that the compositions terminated under s 222D of the Bankruptcy Act when the appellant debtors failed to pay amounts (respectively) of $1 million and $100,000.

  2. The applicant, Mango Boulevard, has applied for orders that it be joined as the second respondent to the appeal. The parties consented to this application being considered and determined on the papers.

  3. Before the primary judge, Mango Boulevard participated in what it described as an “informal capacity”. It did so pursuant to orders made by the primary judge requiring that any creditor…

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Perovich v Whitton [2016] FCAFC 126
Case
[2016] FCAFC 126
Decision Date

CaseChat Overview and Summary

In the case of Perovich v Whitton, the appellants, the debtors, sought to join Mango Boulevard as a party to the appeal. The primary dispute involved the enforceability of certain orders made by the primary judge in the Supreme Court of Queensland. Mango Boulevard, a company affected by these orders, had not been a party to the original decision but had a significant interest in the outcome of the appeal. The Federal Court was tasked with determining whether it had the authority to join Mango Boulevard as a party and whether such a joinder was warranted based on procedural fairness.

The central legal issue before the court was whether it possessed the discretionary power to join Mango Boulevard as a party to the appeal despite Mango Boulevard not being a party to the original decision being appealed. The court also had to consider whether procedural fairness mandated that Mango Boulevard be given an opportunity to be heard, given that the appeal's outcome would directly impact its rights. The court acknowledged that the rules governing the joinder of parties in an appeal did not preclude the exercise of its broader discretionary power to ensure procedural fairness, as illustrated in prior case law.

The court concluded that it had the power to join Mango Boulevard as a party to the appeal, as the rules governing joinder did not restrict the court's inherent discretion to ensure fairness. The court found that procedural fairness required Mango Boulevard to be heard because its interests were directly affected by the orders sought to be set aside. The court also noted that joining Mango Boulevard would not unduly interfere with the appeal's proceedings and would provide a contradictor to the appeal, given that the other respondent lacked the funds to oppose the appeal. Accordingly, the court granted the application to join Mango Boulevard as a party to the appeal.

The court ordered that Mango Boulevard Pty Ltd be joined as the second respondent to the appeal, with the existing respondent, Robert William Whitton, being named as the first respondent. Costs were reserved for further determination in accordance with Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. Mango Boulevard Pty Ltd ACN 101 544 601 be joined as second respondent to this appeal.

2. The respondent to this appeal, Robert William Whitton, be named first respondent to this appeal.

3. Costs reserved.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The appellant debtors do not submit that this Court lacks power to join Mango Boulevard, especially in circumstances in which Mango Boulevard could, in the absence of power to be joined as a party, be granted leave to intervene. We are content to proceed on the assumption that there is power to do so. Our assumption is not based upon the premise that the note to r 36.31 can take effect independently of the text of that rule. Rather, and in the absence of argument, we are content to assume that the provision of persons who must be joined as parties to an appeal in r 36.31 does not exhaust the long standing discretionary power of the Court to join other persons as parties, where interests of procedural fairness require it: State of Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291, 316-317 [76]-[78] (McHugh J); Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, 55-56 (Lord Diplock).Conclusions The appellant debtors submitted that Mango Boulevard should not be joined as a party because, subsequent to the decision of the primary judge, a stay of orders in the Supreme Court of Queensland was lifted (on 28 June 2016). The stay concerned a liability for Mango Boulevard to pay $643,019.96 due under a Share Sale Agreement between persons including the parties to this appeal. It was submitted that the effect of the lifting of this stay was that Mango Boulevard is not a creditor of the appellant debtors. Even putting to one side questions of timing, this submission is beside the point. The question whether Mango Boulevard should be joined to this appeal is not concerned with whether it is a creditor. The question is concerned with whether it has, or should be given, a right to be heard. As a matter of procedural fairness, Mango Boulevard has a right to be heard. Its rights are directly affected by the orders that were made and which the appellant debtors seek to set aside. Even independently of procedural fairness, as a matter of discretion we would allow the application. Mango Boulevard’s interests are affected by the orders sought on the appeal. As Mango Boulevard submits, its intervention will not unreasonably interfere with the ability of the parties to conduct the appeal; it seeks only to participate in the appeal in the same way as it participated at first instance, albeit with the recognised status as a party. Another discretionary consideration in favour of allowing the application is that it will provide the Court with a contradictor on the appeal. On the current evidence, Mr Whitton will not appear in opposition to the appeal because he is without funds.

Ratio Decidendi

Legal Principle Established

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