FEDERAL COURT OF AUSTRALIA
Remta v Baker (Executrix) [2022] FCA 1485
Appeal from: Baker, as Executrix of the Will of Glenn William Baker v Remta (Federal Circuit and Family Court of Australia (Division 2)), PEG 169 of 2021, orders dated 22 November 2022 File number: WAD 252 of 2022 Judgment of: BANKS-SMITH J Date of judgment: 9 December 2022 Catchwords: BANKRUPTCY AND INSOLVENCY - where appeal filed from order confirming sequestration order - interlocutory application in the appeal - application for stay of proceedings under sequestration order - where bankrupt a director of company and seeks stay so as to manage significant project being undertaken by company - whether bankruptcy disqualifies the bankrupt from managing companies under the Corporations Act 2001 (Cth) during any stay of proceedings - insufficient evidence from which to assess prospects of success of appeal - where no reasons published by primary judge on review - where open to bring application under s 206G of the Corporations Act - where balance of convenience does not support stay - stay application dismissed Legislation: Bankruptcy Act 1966 (Cth) ss 43, 52, 58
Corporations Act 2001 (Cth) ss 201B, 206B, 206G, 206GAB, Part 2D.6
Federal Court Rules 2011 (Cth) r 36.08
Cases cited: Endresz v Australian Securities and Investments Commission [2014] FCA 1139
Frigger, in the matter of an application by Frigger [2019] FCA 1730
Macalister, in the matter of an application by Macalister [2021] FCA 1455
Mehajer v Weston (Trustee), in the matter of Mehajer [2018] FCA 608
Ritson v Commissioner of Police (NSW) [2021] FCAFC 208
Watts, in the matter of Watts [2011] FCA 1185
Division: General Division Registry: Western Australia National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 30 Date of hearing: 9 December 2022 Counsel for the Appellant: The Appellant appeared in person Counsel for the Respondent: The Respondent did not appear ORDERS
WAD 252 of 2022 BETWEEN: PETER JOHN AUGUSTIN REMTA
Appellant
AND: TRACEY BAKER AS EXECUTRIX OF THE WILL OF GLENN WILLIAM BAKER
Respondent
ORDER MADE BY:
BANKS-SMITH J
DATE OF ORDER:
9 DECEMBER 2022
THE COURT ORDERS THAT:
1.Application for stay dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BANKS-SMITH J:
On 31 October 2022 a registrar of the Federal Circuit and Family Court of Australia (FCFCOA) made a sequestration order with respect to the estate of Peter Remta. It appears that the order was made following non-compliance with a bankruptcy notice, which in turn referred to a debt by way of a default judgment entered in favour of the petitioning creditor by the District Court of Western Australia.
The registrar, pursuant to s 52(3) of the Bankruptcy Act 1966 (Cth), stayed all proceedings under the sequestration order for a period of 21 days.
On 17 November 2022 Mr Remta filed an application in the FCFCOA for review of the registrar's decision. Mr Remta…
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- AGLC
- Remta v Baker (Executrix) [2022] FCA 1485
- Case
- [2022] FCA 1485
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CaseChat Overview and Summary
The primary legal issue before the court was whether the bankruptcy of Mr Remta disqualified him from managing the companies under the Corporations Act 2001 (Cth) during any stay of the proceedings. The court considered whether Mr Remta had provided sufficient evidence to assess the prospects of success of his appeal against the sequestration order and whether the balance of convenience favoured the grant of a stay. The court also considered whether it was open to Mr Remta to bring an application under s 206G of the Corporations Act.
The court found that Mr Remta had not provided sufficient evidence to assess the prospects of success of his appeal. The primary judge had not published reasons for his review, and it was not open to the court to grant a stay without such reasons. Furthermore, the balance of convenience did not support the grant of a stay, as the sequestration order had already taken effect, and the bankrupt's property had vested in the trustee in bankruptcy. The court dismissed the application for a stay.
No further orders were made by the court. The application for a stay of the sequestration proceedings was dismissed.
Orders
Orders of the court
1. Application for stay dismissed.
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
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Ratio Decidendi
Legal Principle Established
Before moving to consider Mr Remta's evidence, it is appropriate to summarise some principles.Principles as to stays and sequestration orders Mr Remta is self-represented before me. He has not pointed to the source of the power that he requests I exercise in order to grant the stay. The time period relevant to s 52(3) of the Bankruptcy Act has expired. I will assume that Mr Remta relies on r 36.08(2) of the Federal Court Rules 2011 (Cth). That rule provides:However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. An appellant who seeks a stay under r 36.08 of the Rules must satisfy the Court that a stay is required to preserve the subject matter of the litigation, or that the refusal of a stay would make it difficult for the Court, in the determination of the appeal, to grant the relief sought. In short, Mr Remta must establish that there is an arguable point on the proposed appeal or some rational prospect of success in relation to any of the grounds of appeal, and that the balance of convenience favours the grant of a stay: Endresz v Australian Securities and Investments Commission [2014] FCA 1139 at [16]. Mr Remta's application is to be considered in the context that a sequestration order takes effect as soon as it is made. As soon as a debtor becomes a bankrupt, their property immediately vests in the trustee in bankruptcy, under s 43(2) and s 58(1) of the Bankruptcy Act. They remain bankrupt until discharged or until the bankruptcy is annulled. The Court does not have the power to suspend the operation of the sequestration order, but only to stay proceedings under it. The position was neatly summarised by Stewart J in Du Bray v ACW [2020] FCA 1142:[8]Section 153B(1) of the Bankruptcy Act provides that if the court is satisfied that a sequestration order ought not to have been made, the court may make an order annulling the bankruptcy. Under s 37(2) the court does not have power to suspend the operation of a sequestration order. If an appeal against a sequestration order is successful, the sequestration order can be set aside (under s 28 of the Federal Court of Australia Act 1976 (Cth); Simon v Vincent J O'Gorman Pty Ltd (1979) 27 ALR 619 at 625 and 631; De Robillard v Carver [2007] FCAFC 73; 159 FCR 38 at [149]-[150] and [1]) or the bankruptcy may be annulled (under s 153B(1)). In either event the sequestration order has operation while it remains extant: Pattison v Hadjimouratis [2006] FCAFC 153; 155 FCR 226 at [58].[9]There are two points to take from the above. The first is that the power that the court has is not to stay the sequestration order, but only to stay proceedings under the order. The sequestration otherwise immediately takes effect until it is set aside or annulled. The other is that even if the appeal is successful and the sequestration order is set aside, it would have continued to operate in the interim … More recently the Full Court in Ritson v Commissioner of Police (NSW) [2021] FCAFC 208 confirmed the position at [57]‑[66] (Allsop CJ, Lee and Downes JJ).Regardless of any stay, a bankrupt director remains disqualified from acting