Pitman v Johnson (Trustee)
[2017] FCA 1382
•14 November 2017
FEDERAL COURT OF AUSTRALIA
Pitman v Johnson (Trustee) [2017] FCA 1382
Appeal from: Application for an extension of time: Pitman v Johnson [2017] FCA 945 File number: SAD 245 of 2017 Judge: WHITE J Date of judgment: 14 November 2017 Catchwords: PRACTICE AND PROCEDURE – application for an extension of time within which to commence an appeal – Applicants sought to appeal decision of a Judge of the Federal Court of Australia – period of extension short – prejudice to the Respondents – Applicants have not shown a proper case for grant of an extension – application refused Legislation: Bankruptcy Act 1966 (Cth) s 130(2)
Evidence Act 1995 (Cth) s 9(3)(b)
Federal Court Rules 2011 (Cth) rr 1.39, 36.03, 36.05
Stamp Duties Act 1923 (SA) s 22
Date of hearing: 14 November 2017 Registry: South Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 28 Counsel for the Applicants: Mr NL Strawbridge Solicitor for the Applicants: Cleveland Chambers Counsel for the Respondent: Mr M Douglas with Mr K Ryder Solicitor for the Respondent: O’Loughlins Lawyers
Table of Corrections 29 November 2017 In the second sentence of paragraph 27, the word “not” is inserted between the words “do” and “permit”. ORDERS
SAD 245 of 2017 BETWEEN: PHILIP JOHN PITMAN
First Applicant
DEAN CLIFT
Second Applicant
DOROTHEA TOMAZOS
Third Applicant
AND: GREGG ROBERTSON JOHNSON AS TRUSTEE FOR THE BANKRUPT ESTATE OF SOTIRIOS PORTELLOS
Respondent
JUDGE:
WHITE J
DATE OF ORDER:
14 NOVEMBER 2017
THE COURT ORDERS THAT:
1.The application for an extension of time is refused.
2.The Applicants are to pay the Respondent’s costs of and incidental to the application for the extension of time.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
EX TEMPORE REASONS FOR JUDGMENT
WHITE J:
On 17 August 2017, a Judge of this Court dismissed the application of the Applicants for declaratory and other relief in respect of a large quantity of rough opalised sandstone (the Rough Opal). The Judge found that contrary to the Applicants’ claim, a trust of which they are the trustees (the Andamooka Opal Stone Unit Trust) was not the owner of the Rough Opal: Pitman v Johnson [2017] FCA 945.
The Applicants did not commence an appeal against the dismissal of their application within the 21 day period fixed by r 36.03 of the Federal Court Rules 2011 (Cth) (the FCR) for that purpose. The 21 day period expired on 7 September 2017.
However, by an application filed on 18 September 2017, the Applicants seek an extension of time in which to commence an appeal. The Respondent opposes the grant of the extension. The Court does have power to extend the time. The power is implicit in r 36.05 of the FCR and, in any event, is made express by r 1.39.
The discretion to extend time is to be exercised judicially. Prominent among the considerations to which the Court will have regard in the exercise of that discretion are the length of the extension required, the explanation for the matter being out of time, the prejudice to the respondent if the extension is allowed, the prejudice to an applicant if the extension is refused and the interests of justice more generally. Due regard must be had to the purpose of the 21 day limitation period and to its place in facilitating the proper administration of justice.
Factual setting
The background to the application can be stated reasonably shortly. Mr Sotirios Portellos was declared bankrupt on 22 May 2012. The Respondent was appointed as the registered trustee of his bankrupt estate. In that capacity, he took possession of the Rough Opal by the execution of two warrants for the seizure of property issued pursuant to s 130(2) of the Bankruptcy Act 1966 (Cth).
The Andamooka Opal Stone Unit Trust was established on 1 January 2011. The bankrupt Mr Portellos was initially the sole trustee of the Trust. The Rough Opal is said to have vested in the Trust at some time or times between 1 January 2011 and 14 August 2014. The three Applicants are the present trustees of the Trust.
The Applicants’ claim that the Rough Opal is the property of the Andamooka Opal Stone Unit Trust failed for a number of reasons. First, the Judge refused to admit into evidence several documents on which the Applicants had intended to rely. Her Honour concluded that the documents were “chargeable with duty” within the meaning of that expression in s 22 of the Stamp Duties Act 1923 (SA). That section precludes the admission into evidence of any instrument chargeable with duty executed in South Australia unless it has been stamped in accordance with that Act. Section 9(3)(b) of the Evidence Act 1995 (Cth) makes express that the Evidence Act does not affect the operation of the law of a State providing for the admissibility of a document to depend upon whether or not stamp duty has been paid.
The Respondent’s solicitors had put the Applicants’ solicitor on notice that the documents on which the Applicants intended to rely had not been stamped. They did so some 10 days before the hearing before the primary Judge. Despite this, the Applicants had not attended to the stamping of the documents and, when the issue was raised at trial, sought an adjournment in which to do so, or at least in which to obtain an opinion from the Commissioner of State Taxation for South Australia as to whether the documents were dutiable. The Judge refused that application holding, amongst other things, that the Applicants had already had a reasonable opportunity to attend to the stamping or to obtaining an opinion before trial and had “assumed the risk”.
The Judge then considered whether the documents were dutiable within the meaning of the Stamp Duties Act and found that most of them were. On that basis, the Judge refused to receive the documents into evidence.
Secondly, the Judge considered that the Applicants had not established the relevance of some of the documents and so declined for that independent reason to receive them.
Thirdly, the Judge considered that evidence of the Respondent which had not been contested by the Applicants supported the view that the Rough Opal was owned by Mr Portellos and not by the Andamooka Opal Stone Unit Trust.
The Judge referred in this respect to documents provided by the repository at which the Rough Opal is held, the statement of affairs provided by Mr Portellos in connection with his bankruptcy, a valuation of the Rough Opal commissioned by Mr Portellos in 2011 and to documents emanating from the firm of solicitors acting at that time for Mr Portellos. The Judge concluded at [112] of her reasons:
Even without reference to the respondent’s evidence, I regard the admissible evidence relied upon by the applicants to be insufficient to prove their pleaded allegations to the requisite standard in any event. The admission into evidence of the Transfer Bundle was, I consider, critical to their case. The consequence of my rulings that PP1 to PP7 were inadmissible had the consequence that the applicants had adduced insufficient evidence to establish the critical propositions in [20] above.
The present application
The evidence provided in support of the application for the extension of time is contained in affidavits made by the Applicants’ solicitor and by the First Applicant, Mr Pitman. It is convenient to refer to the solicitor’s affidavit first. I think it fair to say that that affidavit is made at a level of generality and lacks the particularity which is ordinarily to be expected in an affidavit of its kind. The affidavit does evince an awareness by the solicitor at relevant times of the 21 day limitation period.
The elements of the explanation for the omission to file the notice of appeal within the 21 day period seem to be these:
(a)on the same day that the primary Judge delivered judgment, the First Applicant, Mr Pitman, instructed the solicitor “to contact the other trustees and advise them of Mr Pitman’s view that [the Trust] ought to appeal the decision”. The solicitor does not depose to what he did, if anything, by way of compliance with that instruction;
(b)the solicitor prepared a notice of appeal (it is not clear when) and an application for a waiver of payment of the Court’s filing fee (again it is not clear when). The solicitor does not state the source of the particulars of financial hardship which he used to complete the application for waiver of the fee. That may be because, as I was told during the course of the hearing, that the waiver was sought only on the basis that funds which the Applicants intended to apply to payment of the filing fee were then in transit from overseas. It is not readily apparent that a mere delay in receiving one expected source of funds could provide a proper basis for the grant of a waiver of fees in any event. Subject to the matter to be mentioned next, there is no evidence of why the Applicants could not have provided the funds for the payment of the filing fees from other sources or of any inability on their part to have done so;
(c)at some time (again the affidavit does not indicate when) the solicitor contacted the Third Applicant, Ms Tomazos. She agreed to pay the funds for payment of the Court’s filing fee, but because of complications arising from Ms Tomazos’ place of residence (she is said to be in Greece) the funds were not received in Australia until 12 September 2017. The affidavit does not indicate when Ms Tomazos was first asked to provide the funds, nor when she first commenced attempting to provide the funds;
(d)the solicitor sought to file the notice of appeal and an application by the Andamooka Opal Stone Unit Trust for a waiver of fees on 7 September 2017. These documents were not accepted for filing by the Court’s Registry as applications for a waiver must, as the Rules and the prescribed form indicate, be made by individuals with a statement of their financial affairs indicating financial hardship. An alternative available to the Applicants was to pay the filing fee on 7 September 2017 and to seek later its recovery. That would have been a prudent course for the Applicants to have adopted, bearing in mind that 7 September 2017 was the last day of the 21 day period. No explanation has been provided for the Applicants not adopting that course;
(e)the Applicants did not, thereafter, pursue an application for a waiver and, as I have already noted, filed the application for the extension of time on 18 September 2017.
The solicitor’s affidavit does not provide any explanation for the lapse of the further six days after the receipt of the money from Ms Tomazos on 12 September 2017 until the lodgement of the application for the extension of time on 18 September 2017.
The affidavit of Mr Pitman does not add to the evidentiary picture as, in substance, he deposes to very same matters as does the solicitor.
Consideration
Against that background, I turn to the matters bearing upon the exercise of the discretion.
The period of extension sought is relatively short and, that being so, it would not be uncommon for the Court to grant an extension, providing that there is a proper explanation for the delay and it being satisfied either that a respondent will not be prejudiced or that steps can be taken to redress any prejudice. For the reasons I have already set out, I consider it difficult to regard the explanation provided by the Applicants for the delay as being complete or satisfactory. As I have sought to indicate, in several respects that explanation begs for further particulars and leaves unstated a number of matters which are material to an application of the present kind.
The Respondent does assert that he will be prejudiced if the extension of time is granted. First, he refers to the kind of prejudice associated with a delay in winding up the bankrupt estate if the extension is granted. By itself, that may not have been significant in the present case, given the shortness of the extension sought. However, the Respondent is presently paying costs of $966 per month for the storage of the Rough Opal. The longer the period before the administration of the bankrupt estate can be completed, the greater will be the depletion of the estate funds resulting from this expenditure. To my mind, this is a material consideration. Had the appeal been lodged within time on 7 September 2017, there is a good prospect that it would have been heard by the Full Court in the present month, November. However, as things stand now, if an extension of time was granted, the appeal is unlikely to be heard before February next year. That being so I accept that there is relevant prejudice to the Respondent. It is pertinent to take into account that the Applicants have not made any proposal concerning the payment of these additional costs which would be incurred by the Respondent as a result of their delay.
The solicitor for the Respondent has deposed that he did not become aware of the existence of the application for the extension of time until on or about 25 October 2017, despite the application having been filed in this Court on 18 September 2017. However, I do not understand the Respondent to be asserting any additional prejudice arising from that circumstance and so do not, for present purpose, attach significance to it.
The Respondent also refers to the depletion of funds in the bankrupt estate which is likely to result from the expenditure of funds for legal representation in defending the appeal. However, the Respondent has also filed an application for an order that the Applicants provide security for costs in the event that an extension of time is granted. That being so, it may well be that the Respondent will not suffer prejudice in connection with the incurring of legal costs and so I put that consideration to one side also.
The Applicants will suffer prejudice if the extension of time is refused in the sense that they will not be able to prosecute their appeal, but that will only be a real prejudice if they lose the opportunity to argue matters which are reasonably arguable. It is necessary for applicants for an extension of time in which to appeal to show that that is so. Generally this can be demonstrated by reference to the grounds stated in the draft notice of appeal. That is one reason why the provision of a draft notice of appeal is an important element of an application for an extension of time in which to appeal.
The Applicants’ draft notice of appeal contains three grounds:
1.The Stamp Duties Act (SA) did not require that any of the documents annexed to the affidavit of Philip John Pitman be presented for stamping by Revenue South Australia or to be stamped.
2.That the Andamooka Opal Stone Unit Trust (AOSUT) was at all material times the legal owner of the rough opal stored at [the repository].
3.That [the Respondent] had no authority whatsoever at any time to seize and/or remain possessed of the rough opal stores at [the repository].
The generality of these grounds is immediately apparent. In particular, Ground 2 does no more than assert the position for which the Applicants had contended at first instance without in any way identifying an asserted error in her Honour’s determination of that question. The same can be said of Ground 3.
Ground 1 could give rise to an arguable matter but suffers from the fact that it is not particularised. Instead, a bare assertion is made without identification of the error said to have been made by the Judge in concluding that the documents in question were dutiable. It is not sufficient for an applicant for an extension of time to assert, in effect, that a Judge was in error because the Judge reached a conclusion which was adverse to the applicant. The imputed error should be particularised. The deficiency in that respect is not made good in the Applicants’ outline of submissions filed in support of today’s application, nor could counsel make it good when the shortcoming was pointed out in the course of the oral submissions.
The reasons of the primary Judge indicate seeming close attention to the issues concerning the dutiability of the documents in question and a seemingly careful consideration of the matter. In circumstances of that kind, it is to be expected that the error imputed to the Judge could, and would, be identified with some particularity. It is not for the Court to speculate about these matters. Instead it is for it is for the Applicants to show that the grounds of appeal are reasonably arguable.
In my view, the grounds advanced in the draft Notice of Appeal do not meet that standard. In particular, they do not permit the Court to be satisfied that the Applicants have reasonably arguable grounds which they would be precluded from pursuing in the event that an extension of time is not granted.
Taking all these matters together, I do not consider that, despite the relative shortness of the extension required, the Applicants have shown that this is a proper case for the grant of an extension. Accordingly, the application for the extension of time in which to appeal is refused.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate:
Dated: 24 November 2017
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