Pham and Ors. v Lincolns Lawyers - [2001] FMCA 85

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PHAM & ORS. v LINCOLNS LAWYERS [2001] FMCA 85

BANKRUPTCY – Bankruptcy notice – Application for extension of time for compliance with bankruptcy notice pending appeal to Court of Appeal – no stay of relevant order granted by Court of Appeal – whether desirable for Bankruptcy Court to allow extension of time and effectively allow stay of orders not granted by Court of Appeal.

Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 applied.

Bankruptcy Act 1966 s 41(6A).

Applicants

CHA VAN PHAM & OTHERS

Respondent:

LINCOLNS LAWYERS PTY LTD

File No:

MZ 582 of 2001

Delivered on:

17 September 2001

Delivered at:

Melbourne

Hearing Date:

17 September 2001

Judgment of:

McInnis FM

REPRESENTATION

The Applicant Cha Van Pham	In Person
Counsel for the Respondent:	Mr M Gronow

Solicitors for the Respondent:

Ebsworth & Ebsworth

ORDERS

The application is dismissed.
The applicants pay the respondent's costs to be taxed in default of agreement pursuant to order 62 of the Federal Court Rules.
The time for the compliance of the bankruptcy notice be extended to
1 October 2001.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MZ 582 of 2001

CHA VAN PHAM & OTHERS

Applicants

And

LINCOLNS LAWYERS PTY LTD

Respondent

REASONS FOR JUDGMENT

This is an application by four applicants in relation to a bankruptcy notice. The bankruptcy notice is one which has been served upon four debtors, namely BA THI HA, CHA VAN PHAM, THI TRANG TRAN, and HOANG KHAI PHAM. Each and every one of those debtors in the bankruptcy notice which is VN 11547 of 2000 were defendants in Victorian Supreme Court proceedings before her Honour Warren J which was the subject of a decision and orders made on 13 December 1999.
The order of the applicants in the application before me is taken from the bankruptcy notice rather than from the application itself which does not appear to provide a schedule. It would appear, however, that in looking at the bankruptcy notice and following that order the first debtor, Ba Thi Ha, was the fourth-named defendant in the proceedings before the Supreme Court. The second debtor, Cha Van Pham was the third defendant in those proceedings. The third debtor, Thi Trang Tran, appears to be the sixth defendant, and the fourth debtor, Hoang Khai Pham, is named in those proceedings as the fifth defendant. At the hearing before me today I have permitted Mr Hoang Kai Pham to appear and represent the other debtors and I have also permitted him to be assisted by a family member and interpreter, Mr Kiet Minh Pham.
Mr Kiet Pham has conveyed various submissions and I have also heard submissions made for and on behalf of the respondent. It should be noted that the respondent, Lincolns Lawyers, in the Supreme Court proceedings to which I have referred, was named as the seventh-named defendant. It had been so named after the other defendants filed and served third party notices, and upon the commencement of the proceedings before her Honour Warren J, application was granted to the plaintiff, Australia and New Zealand Banking Group, to in fact join Lincolns Lawyers Pty Ltd as a seventh-named defendant.
In the application before me today, the applicants seek "to adjourn bankruptcy notice pending Supreme Court appeal". It is agreed and accepted by the respondent to this application that in effect what is being sought is that the date for compliance with the bankruptcy notice to which I have referred be extended pending the outcome of the appeal to the Supreme Court, Court of Appeal.
In support of the application before me today the applicant with the assistance of Mr Kiet Pham relies upon an affidavit purportedly sworn 1 August 2001 and a further affidavit purportedly sworn 10 September 2001. Both Affidavits state that they are “joint declarations between the applicants”. The Affidavits are both in the name of “Khai Hoang Pham” who I take to be the fourthnamed debtor in the bankruptcy notice. It is important to note for the purposes of this application that the order made by her Honour Warren J on 13 December 1999 included order 7 by which her Honour ordered that:
“The third, fourth, fifth, and sixth defendants pay the costs of the seventh-named defendant of its defence of the proceeding.”
That, along with the other orders made by her Honour have been the subject of an appeal by the defendants to the Court of Appeal. The notice of appeal to the Court of Appeal in fact seeks to appeal from the decision of her Honour Warren J on a number of grounds. The matter appears to have been the subject of the need for an order by the Court of Appeal to ensure that the appeal remain current. To that end their Honours Charles and Chernov JJ made orders in the Court of Appeal on 5 May 2000 where, on that occasion, the applicants before this Court were the appellants before the Court of Appeal and were represented by Mr Heaton, one of Her Majesty's Counsel. It appears that various orders were made. Essentially undertakings were given by the appellants through their counsel in relation to certain payments to be made to the plaintiff, and indeed, to take all reasonable steps to expedite the hearing of the appeal.
I am told, and it is common ground, that the appeal before the Court of Appeal appears to be the subject of a callover which will occur in October of this year. It is not clear, however, when that appeal will be heard. What is clear is that the appeal is from a judgment delivered after a hearing that took a considerable number of days before her Honour Warren J. It is important to note, and I refer again to the order made by the Court of Appeal on 5 May 2000, that after receiving the undertakings the court made orders that execution of the judgment of her Honour Warren J given on 13 December be stayed, but in making that order the court specifically excluded from that order order 7 of her Honour's orders to which I have already referred and which is a crucial part of the material for the purpose of this application as it forms the basis upon which costs were taxed and which then formed the basis of the bankruptcy notice. Part of that bankruptcy notice, I am told, relies further upon the costs as taxed arising out of the Court of Appeal's order on 5 May 2000, and in particular it would appear that the court made its order in order 4 where it ordered the appellants pay the respondent's costs of the application to the court on that day including costs reserved by Gillard J on 28 April 2000.
Hence the combined costs orders of what was ordered by Warren J and by the Court of Appeal on 5 May 2000 form the basis of the bankruptcy notice and the applicants before me seek an order from this court to extend the time for compliance of that notice to a date beyond obviously the date when the Court of Appeal determines the appeal before it.
In this matter it is clear to me that the court needs to be extremely cautious about the extent to which it will effectively extend the time of compliance of the bankruptcy notice which then in turn would have the effect of imposing a stay of orders which were granted or made by her Honour Warren J and which were not stayed and which were not in any way interfered with by the orders of the Court of Appeal on

5 May 2000.
It is of concern to this court that essentially what is being argued is that there is some merit in the Court of Appeal application made by the applicants before me and accordingly I should grant the order, that is, allowing extension of time for compliance with the bankruptcy notice accordingly. Mr Gronow, who appears for the respondent, has submitted strongly that I should not in fact grant this application. He has taken me in some detail through the reasons for judgment of her Honour Warren J, and in particular has referred me to passages in that judgment where he indicates that her Honour had made findings of fact which were crucial findings of fact to enable her Honour to then properly assess the evidence and to properly draw a conclusion that the seventh-named defendant in those proceedings would not be liable and it's those findings which form the basis of her judgment in that regard.
Having read the judgment of her Honour it is clear to me that this was essentially a factual dispute and a matter which was the subject of issues raised as indicated by the applicant here today and fully agitated before her Honour. As to whether the Court of Appeal will have regard to that matter is obviously a matter for that court and not for this court but on the face of it, it appears to me on the limited material presently before me, that it would be inappropriate for this court to endeavour to interfere with the bankruptcy notice which would essentially involve this court either going behind the judgment of Warren J or indeed granting a stay which the Court of Appeal was not prepared to grant in the context of the proceedings presently before it, which as I have indicated which are in fact the appeal from the decision by Warren J.
Mr Gronow referred me to the case of Byron v Southern Star Group Pty Ltd which was a decision of his Honour Lehane J and is reported in 1997 73 FCR 264. I was referred particularly to the headnote which accurately reflects the judgment of his Honour in that case where it is stated:
“(1) The principles to be applied where the question is whether a petition should be adjourned or dismissed are not necessarily those which should guide the exercise of the discretion to set aside or extend time for compliance with a bankruptcy notice. The commission of an act of bankruptcy is of a different order of gravity from the change of status brought about by the making of a sequestration order.
(2) In determining whether to extend the time for compliance with the bankruptcy notice considerable weight should be given to the circumstances that no stay has been granted or even sought of the judgment supporting the bankruptcy notice”.

In the present case I accept for the purpose of this application that orders made by the Court of Appeal whereby execution of the judgment that had been obtained as a consequence of the order of Warren J was stayed, save for the orders to which I have referred, I accept that it does not appear on the material that a formal application to stay those exempted orders was made. However, it seems to me that the matter was certainly in the mind of the Court of Appeal because it made the orders that I have referred to which appear as order 1 of the orders made on 5 May 2000, it also it appears that on that occasion at least the applicants before me who are the appellants before the Court of Appeal were represented by counsel who could have made further application to stay the other orders (including order 7) made by her Honour Warren J.
The fact that no application was made or pursued is a factor which I can regard as relevant having regard to the authority to which I have referred, namely, Byron v Southern Star Group. I think it is also important in the present case for me to have regard to the fact that the Court of Appeal had made an order for costs against the applicants, and indeed, that order forms part of the basis upon which the bankruptcy notice has been issued. In all the circumstances exercising the discretion which I have, it is my view that this application should be refused. In saying that, I want to distinguish the process which has occurred in this application from the process which may occur upon the hearing of a creditors petition and an application for a sequestration order. That matter will be dealt with independently by another court if and when called upon to do so. What I am deciding is whether I should extend the time for compliance with the bankruptcy notice, and on the material before me for the reasons given I do not believe it is appropriate to do so. Accordingly, I make the following orders:
(1)The application is dismissed.
(2)The applicants pay the respondent's costs to be taxed in default of agreement pursuant to order 62 of the Federal Court Rules.
(3)The time for the compliance of the bankruptcy notice be extended to 1 October 2001.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 17 September 2001