Prider v Benefit Strategies Group Inc
[2005] FMCA 1108
•24 January 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PRIDER v BENEFIT STRATEGIES GROUP INC | [2005] FMCA 1108 |
BANKRUPTCY – Bankruptcy notice – extension of time – debtor not having made application to stay operation of order giving rise to debt, application refused.
| Bankruptcy Act, ss.41(6A); 41(7); (6C) Byron v Southern Star Group Pty Ltd |
| Applicant: | TREVOR LAURENCE PRIDER |
| Respondent: | BENEFIT STRATEGIES GROUP INC |
| File Number: | ADG 256 of 2004 |
| Judgment of: | Lindsay FM |
| Hearing date: | 24 January 2005 |
| Delivered at: | Adelaide |
| Delivered on: | 24 January 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr Sykes |
| Solicitors for the Applicant: | Sykes Bidstrup |
| Counsel for the Respondent: | Mr Wells, with Ms Thomas |
| Solicitors for the Respondent: | Fisher Jeffires |
ORDERS
The applicant do pay the respondent's costs of an incidental to this application. Such costs to be agreed within 14 days or as taxed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 256 of 2004
| TREVOR LAURENCE PRIDER |
Applicant
And
| BENEFIT STRATEGIES GROUP INC |
Respondent
REASONS FOR JUDGMENT
This is an application for an order pursuant to s.41(6A) of the Bankruptcy Act, for an order extending the time for compliance with a bankruptcy notice, to such time as will enable an appeal to be heard and determined in respect of the order which gave rise to the debt and on which the Bankruptcy Notice is based.
The application is filed before the expiry of the time to comply with the Bankruptcy Notice. I do not think there is any difficulty regarding the appeal filed by the applicant as being the kind of proceeding contemplated by the sub-section. The Appeal itself provides for the setting aside of the orders of the Supreme Court of 19 November 2004.
The applicant relies on two affidavits of his solicitor, filed on 7 December 2004 and 19 January 2005, and I heard argument in respect of the application on 19 January 2005. I have had the opportunity of reading the judgment of the Honourable Gray J of 15 November 2004. His Honour was determining a summons for immediate relief.
The plaintiff in the Supreme Court proceedings - the respondent here – relied upon and sought to enforce a judgment of the Superior Court of California. Ultimately, with two qualifications, his Honour did so. Firstly, the Californian judgment was a joint and several judgment in favour of two plaintiffs. That was amended and two separate judgments entered in the Supreme Court.
Secondly, the Californian judgment was partly constitutive of an award of punitive damages, exponentially larger than the award for general damages. No judgment was entered in the Supreme Court for the punitive damages aspect of the award. The Californian judgment was recognised and enforced in South Australia, pursuant to common law principles, the United States not being a country listed in the schedule to the Foreign Judgments Act.
His Honour had to be satisfied that the Californian judgment was capable of recognition. His Honour considered a number of authorities as establishing four requirements of the recognition of foreign judgments at common law. Those four requirements are set out at p 6, p 21 of his Honour's judgment. Ultimately, His Honour was so satisfied as to the existence of each of those four requirements.
The Supreme Court proceedings were for immediate relief; there was disagreement between the parties as to who had the onus of establishing that there was a serious question to be tried. His Honour appears to have found that the onus fell upon the applicant (see p 2, par 7, and p 24, par 104 of His Honour's judgment) and that the appellant had the onus as the basis of one of the grounds of appeal.
The Supreme Court hearing proceeded by way of affidavit, save that the applicant gave oral evidence and was cross-examined as to his assets. This was in case the court was to consider there was a triable issue but the terms should be imposed on the applicant. No oral evidence as to substantive issues was taken. His Honour formed a very poor view as to the creditworthiness of the applicant's evidence in that regard.
The Californian judgment was itself a default judgment. Both sets of proceedings – California and here – have resulted in judgment being entered therefore with no oral evidence on the substantive issues having been taken from the applicant. It was contended by the applicant that the triable issues were those of the alleged fraud of the plaintiffs, or either of them, in respect of the contentions made in the Californian proceedings as to, service of process on the applicant; and, secondly, the calculation of the damages award.
For the reasons set out in the judgment of Gray J His Honour found that the applicant had not demonstrated that there was any serious issue to be tried. The Supreme Court proceedings took place upon the basis that no appeal of the Californian judgment had been instituted and no stay application in respect of that judgment sought or made.
Similarly, the proceedings before me are heard on the basis that no stay application is lodged in respect of Gray J's judgment, although Mr Sykes has asked me to adjourn this application so he can get instructions as to whether one will be lodged.
As observed earlier, the application is properly made in the sense that the appeal has been instituted within time and involves an application to set aside the judgment, but I have a discretion as to whether or not to extend the time. I bear in mind I am not being asked to dismiss an application for a sequestration order; I am being asked to make an order which will have the effect of disentitling a creditor to rely on an act of bankruptcy. That is, the failure to satisfy the terms of the notice for a specific period of time. That time is currently extended to the date on which I am delivering judgment, pursuant to the provisions of s.41(7) of the Bankruptcy Act.
The discretion is unfettered; no reliance was placed by the respondent on s.41(6C). I have formed the view that the fact that no application to stay His Honour's order has been made, or made and obtained, is determinative of the application and I will say why. Firstly, the decision of Lehane J in Byron v Southern Star Group Pty Ltd, and a judgment referred to within that judgment; namely the matter of Re Geard; ex parte Reid and Geard is an unreported judgment of 11 February and referred to in Byron at the bottom of p 269, top of p 70.
Those judgments tell me that this circumstance – that is, the absence of the application for the stay – is significant. Firstly, turning to the passage from Geard that is cited in Byron's case, at the bottom of p 269 of the judgment in Byron, the passage of Sheppard J's judgment in Geard. What I want to refer to in this passage of the judgment is as follows - at the bottom of p 259:
“The debtor has not made any application for a stay of proceedings, pending the outcome of the appeal. Why he has not done so is not clear to me, but the judgment which has been recovered against him is a final judgment and execution upon it has not been stayed and it would seem to me to require quite special circumstances before a court exercising jurisdiction in bankruptcy would, in effect, do what has not been done in the court in which the judgment has been obtained, by extending the time for compliance with the bankruptcy notice when no application to stay the judgment has been made”.
Secondly, in the decision in Byron itself, at the bottom of p 270, Lehane J has this to say:
“I think therefore that considerable weight should be given to the circumstance that here, as in Geard, no stay has been granted or apparently sought of the judgment supporting the bankruptcy notice”.
I bear in mind that in Byron the Court was concerned with a circumstance where there had already been an unsuccessful appeal to the New South Wales Court of Appeal, and everything that is said by His Honour in that case is in the context of a special leave application to the High Court. That was not the position in Geard, which was a case where an appeal to the New South Wales Supreme Court was simply pending. In any event, Lehane J is quite clear that he is not limiting himself in respect of the observations he makes to special leave application circumstances. In the light of those two judgments, the law, it seems to me, is quite plain.
Turning to the facts of this case, I bear in mind the following matters. Firstly, there is no explanation as to why a stay has not been sought. Secondly, the appeal is from a judgment that no triable issue had been identified in the Supreme Court proceedings; that is, it is an appeal from a summary determination. In fact the applicant relies on this circumstance; that is, he has never had the chance to give or have his evidence evaluated as a factor militating in favour of the discretion being exercised his way.
If the process before His Honour was as flawed as the applicant says, or was as unusual as the applicant says, these matters would presumably feature in the consideration, by His Honour, of any application to stay the judgment. I do not consider that this application should be used as, in effect, it would be used if I were to grant the application to do what the Supreme Court has not been asked to do. That is, to stay the operation of the Supreme Court judgment.
Thirdly, the Californian judgment has never been appealed because the applicant says he was never served with that process. That circumstance in itself would surely be capable of grounding an appeal, or, concomitantly, a stay application to the Californian court. That, as I have indicated, is something that has not been done.
It is not for me to say whether or not the appeal will be successful, and I note the reference in Byron to the reluctance of courts, in the context of these applications, to weigh the merits associated with the appeal, but I can observe, I think, with propriety, that the issues to be determined on the appeal are relatively clear-cut: there is the triable onus issue; there is the issue relating to His Honour's finding that the contentions of the applicant as to service were not really in conflict with the evidence relied upon by the respondent as to service, both personal and by post. I do not propose to repeat the detail of those discussions in His Honour's judgment presently.
Policy issues are also said to arise on account of the joint and several nature of the Californian judgment, and the fact that there are other unidentified defendants. If any of these findings are, in truth, as controversial or as contentious as the applicant would say they are, then presumably again His Honour would have been asked to take that circumstance into account in determining whether to grant a stay, but I return to the circumstance that he has not been asked. Certainly, I think I can observe that the grounds of appeal cannot be said to be unusually strong grounds.
Byron was cited by Her Honour Branson J in Burns v AMP Finance Pty Ltd, and I set the reference to that judgment, with approval, out in these reasons. In fact Her Honour referred there, at par 18 of her judgment, to the case of Byron, and said:
“As Byron illustrates, the court is always reluctant to extend time for compliance with a bankruptcy notice where the notice requires payment of a judgment debt and no stay of the judgment has been obtained”.
So the question then arises as to whether I should adjourn the application so that instructions in relation to the stay can be pursued. The application is brought pursuant to Part 30 of the Federal Magistrates Court Rules. They provide, straightforwardly, for the applications to be supported by an affidavit referring to the relevant material upon which reliance is placed. I bear in mind that presumably the adjournment that was being sought for that purpose was a short adjournment only.
Even if I refuse the application, of course – that is, the application generally – the stay can be sought and these matters raised again at the time a petition is filed in reliance upon the specific act of bankruptcy, if indeed such a petition is filed. That was a circumstance that was referred to in that same paragraph of Her Honour's judgment in Burns v AMP Finance Pty Ltd.
The bankruptcy, if a sequestration order is made, will have occurred earlier than would otherwise have been the case if the application to extend time had been granted. Otherwise, the applicant preserves, it seems to me, his opportunity to avoid bankruptcy, whilst a stay of the Supreme Court judgment is sought if that is what he intends to do.
Both the cases of Byron and Geard talk interchangeably about whether a stay is: (a) sought, or (b) obtained. I think they should both be taken to refer to the circumstances of there being no stay, whether because it has been refused or because it has not been sought. If a stay had been sought by the applicant but not determined, generally speaking, it seems to me, there would have been an entitlement to the extension of time until the stay application had been determined, but that is not the position here. So for the foregoing reasons the application for extension to comply with the bankruptcy notice sought in the application of 29 November 2004 is refused.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Lindsay FM
Associate:
Date: 21 January 2005
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