RYAN v HILL - [2020] SADC 58

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
RYAN v HILL
[2020] SADC 58
Judgment of His Honour Judge Dart
20 May 2020
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - HEARING OF APPEAL
Appeal from Master - order made for interim allocatur - plaintiff appeals against the order - appeal out of time - plaintiff is an undischarged bankrupt - plaintiff has no standing to appeal - extension of time not appropriate - Master exercised a discretion - no error in the exercise of the discretion.
Held:
1. Appeal dismissed.
2. Plaintiff to pay the defendant's costs of the appeal, certified fit for counsel.
Bankruptcy Act 1966 s 58, s 60(2), s 60(3), s 116(2)(g), referred to.
Cummings v Claremont Petroleum (1996) 185 CLR 124; Goldus Pty Ltd v Australian Mining Pty Ltd [2015] SASCFC 193; House v The King (1936) 55 CLR 499; Players Pty Ltd (in liq) & Ors v Clone Pty Ltd [2019] SASC 186, considered.

RYAN v HILL
[2020] SADC 58
JUDGE DART:

This is an appeal from an interlocutory order made by a Master on 15 April 2019. The appeal was not instituted until 24 January 2020 and is therefore substantially out of time. The appeal should be dismissed.
Background
On 26 November 2018 Master Blumberg allowed a summary judgment application brought by the defendant in relation to part of the plaintiff’s claim. The plaintiff’s claim is in defamation. The Master ordered that the plaintiff pay the defendant’s costs of the application on a solicitor/client basis and that the costs be payable forthwith.
The usual rule in relation to an interlocutory costs order is that no adjudication is conducted until the main proceedings have concluded. The Court, however, has a discretion in Rule 265 to order that costs be adjudicated and paid forthwith. It is that discretion which was exercised by Master Blumberg on 26 November 2018. The costs order is not the subject of this appeal, nor has it been the subject of any appeal.
Pursuant to the costs order, the defendant served a Form 49 setting out her claim for costs. The total amount claimed by the defendant was the sum of $15,044.51. After considering the amount claimed in the Form 49 on 15 April 2019 the Master ordered that an interim allocatur issue in the amount of $7500. It is the order to issue an interim allocatur that is the subject of the appeal. The plaintiff seeks to have the order set aside.
A final allocatur was ordered on 8 July 2019 in the amount of $9204.60. That amount, which included interest and costs, is in addition to the amount in the interim allocatur. There has been no appeal in relation to the final allocatur.
Since the order under appeal was made, the plaintiff has been made a bankrupt by the defendant. A sequestration order was made on 29 October 2019 in the Federal Circuit Court.
Consideration
The appeal raises three issues for determination. The issues are whether:
1The appellant has standing to institute and prosecute the appeal.
2The appellant should be granted an extension of time within which to institute the appeal.
3The Master made any House v The King[1] error in the exercise of his discretion to order that an interim allocatur issue.
[1] (1936) 55 CLR 499.
The first issue arises from the fact that the appellant is presently an undischarged bankrupt. Upon the making of a sequestration order all property of the bankrupt vests in his trustee.[2] Property of a bankrupt in the ordinary course includes a chose in action. The consequence is that, under s 60(2) of the Bankruptcy Act 1966, a matter is stayed until the trustee decides whether or not to continue with the action. A defendant can serve a notice on the trustee which requires him to make that decision within 28 days. If he does not do so, the matter is regarded as abandoned.[3]
[2] Bankruptcy Act 1966 (Cth) s 58.
[3] Bankruptcy Act 1966 (Cth) s 60(3).
Some actions, however, do not vest in the trustee. Defamation is one such form of action which does not vest.[4] That means the bankrupt is still able to prosecute the claim. It was stayed by the Master for other reasons.
[4] Bankruptcy Act 1966 (Cth) s 116(2)(g).
The subject matter of the appeal, however, is an allocatur. An allocatur is a judgment of the Court for a monetary amount. It solely has the character of a judgment debt. Relevantly, it was the judgment debt relied upon to make the appellant bankrupt.
A right of appeal is not property and does not vest in a trustee in bankruptcy. The allocatur amount is a provable debt in the plaintiff’s bankruptcy. In a bankruptcy, provable debts can only be satisfied out of the assets vested in the trustee. The debt is no longer enforceable against the plaintiff personally. It follows that the plaintiff has no interest in the subject matter of the debt.
The position was made clear by the High Court in Cummings v Claremont Petroleum.[5]In the joint judgment of Brennan CJ, Gaudron and McHugh JJ it was said:[6]
[5] (1996) 185 CLR 124.
[6]    Cummings v Claremont Petroleum (1996) 185 CLR 124 at 137-8.
In Heath v Tang,[7] Hoffmann LJ, delivering the judgment of the Court, recalled the observation of Farwell LJ in Boaler v Power and pointed out[8] that -
" In cases in which the bankrupt is defendant, there is of course usually no question of the cause of action having vested in the trustee. Unless the defence is set-off ... the bankrupt will not be asserting by way of defence any cause of action of his own. But in cases in which the plaintiff is claiming an interest in some property of the bankrupt, that property will have vested in the trustee. And in claims for debt or damages, the only assets out of which the claim can be satisfied will have likewise vested. it will therefore be equally true to say that the bankrupt has no interest in the proceedings. As we have seen, s 285(3)[9] deprives the plaintiff of any remedy against the bankrupt's person or property and confines him to his right to prove." (Emphasis added.)
After canvassing the authorities, his Lordship concluded that they demonstrated "that in principle a bankrupt cannot in his own name appeal from a judgment against him which is enforceable only against the estate vested in his trustee".[10] In a later unreported case,[11] Hoffmann LJ said:
"The essence of [the] decision [in Heath v Tang) is that a bankruptcy order divests the bankrupt of any further interest in what debts he owes because it provides that he shall no longer be under any personal liability. An appeal from the judgment against him or an application to set aside the judgment against him is therefore a matter for his trustee, but does not concern the bankrupt."
So far as a judgment entered in an action against a bankrupt creates or evidences a provable debt, we respectfully agree that the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts.[12]
[7] [1993] 1 WLR 1421; [1993] 4 All ER 694.
[8]    Heath v Tang [1993] 1 WLR 1421 at 1424; [1993] 4 All ER 694 at 698.
[9]    Insolvency Act 1986, the United Kingdom analogue of s 58(3) of the Act.
[10] Heath v Tang [1993] 1 WLR 1421 at 1425; [1993] 4 All ER 694 at 700.
[11] Royal Bank of Scotland v Farley; 17 March 1994.
[12] Heath v Tang [1993] 1 WLR 1421 at 1427; [1993] 4 All ER 694 at 701. It was not suggested in argument that, pursuant to s 153, the discharge of the appellants from bankruptcy would not release them from liability for the judgment debt, albeit there has been a finding of fraud. On that footing, the appellants have no financial interest in the judgment entered against them.
It is clear that the appellant no longer has any interest in the debt the subject of this appeal. It cannot be enforced against him. Therefore, he has no standing to prosecute this appeal. Payment of the debt is a matter between the defendant and the bankruptcy trustee.
It is not strictly necessary to consider the two other issues. I propose to do so, simply for the sake of completeness. The appeal was commenced approximately seven months out of time. The appellant is self-represented.
The position in relation to extensions of time was set out by the Full Court in a joint judgment in Goldus Pty Ltd v Australian Mining Pty Ltd.[13]The Court said:
[13] [2015] SASCFC 193.
The Court has an overriding discretion to grant an extension of the time within which a party has to appeal pursuant to rule 295(1).[14] When considering the exercise of its discretion, the court may have regard to the length of the delay, the reason for the delay, whether there is an arguable case on the substantive issue on the appeal and the extent of any prejudice on the part of the respondent.[15] In Spurway v Police, Blue J summarised the principles which apply to an application for an extension of time as follows:[16]
[14] See, e.g., Jackamarra v Krakouer (1998) 195 CLR 516; Police v Warren [2000] SASC 285.
[15] See Burke v Garsden (Unreported, Supreme Court of SA, Debelle J, 12 March 1993); McPherson v Groenveld (Unreported, Supreme Court of SA, Debelle J, 21 February 1997); Collins v South Australia [2000] SASC 62; Levi v Unisure Pty Ltd [1999] SASC 432.
[16] Spurway v Police [2011] SASC 177, [22].
The question whether or not an extension of time should be granted involves an exercise of discretion, which should not be circumscribed by fixed and binding rules.
An applicant for an extension must bring forward material to show why the appeal was not filed within time and why the application for an extension ought to be granted.
Prejudice suffered by the other party by reason of the delay is a factor tending against exercise of the discretion to extend time.
Where the delay is substantial, the applicant must give a detailed explanation for the delay.
Where the delay is substantial, the applicant must establish either:
(a) that the delay was caused through exceptional circumstances or some untoward vicissitude of life which prevented the applicant from applying his or her mind to the question of appeal; or
(b) otherwise, that on the merits the appeal would be likely to succeed.
The overriding question is whether, if an extension is not granted, there will be a miscarriage of justice.
[Footnotes omitted.]
The submissions of the appellant are to the effect that, because he is self-represented, he did not have a detailed understanding of procedure. He said he filed an affidavit objecting to matters raised in the adjudication. He also submitted that he thought the Court was still dealing with the matter at the time the interim allocatur was issued. That is correct, as the adjudication had not concluded.
The delay is substantial and the fact that a self-represented person may not understand practice and procedure of the Court is not of itself sufficient to justify an extension of time. I would not have granted an extension of time. The appeal itself has little merit. There is a complaint about an interim allocatur, but not about the final allocatur. The appeal appears to lack utility. Nothing put by the plaintiff suggests there is any risk of a miscarriage of justice.
The third issue is the decision to issue an interim allocatur. The Court has the discretion to make an interim allocatur. The rationale is that a party who has the benefit of a costs order, which is payable, should not be kept out of his or her money while the adjudication process takes place.
Recently in Players Pty Ltd (in liq) & Ors v Clone Pty Ltd Auxiliary Judge Norman considered the issue and said: [17]
The power to issue an interim allocatur is derived from rules 271(1) and 274(2)(b)(ii).
A decision to grant an interim allocatur involves the exercise of the discretion warranted in those cases where it can fairly be said that there is an amount on account of costs which appeared to be beyond any reasonable dispute: Russo v Buck & Ors (No 5) [2010] SASC 27 Judge Lunn at [14]. The authorities mandate that a conservative approach is to be taken when assessing an amount of costs which was beyond any reasonable dispute.
Judge Roder made similar observations in his decision on the interim allocatur.
Of its nature, an interim allocatur is a payment on account and it requires a consideration of the final result upon an adjudication and an assessment that something exceeding the interim allocatur would ultimately be recoverable after full argument was heard.
In Johnson Winter and Slattery v MP Investments Nominees Pty Ltd [2013] SASC 157 at [10], Judge Dart spoke of monies “undeniably owed” to the plaintiff.
[17] [2019] SASC 186 at [151]-[155].
The appeal on this issue is governed by the principles in House v The King.[18] It is not enough for the appeal court to believe that a different decision might have been made. The plaintiff was required to show that an error occurred in the exercise of the discretion. Nothing put by the plaintiff establishes any such error. The approach of the Master was orthodox and appropriate.
[18] (1936) 55 CLR 499.
The appeal is dismissed. The plaintiff is to pay the defendant’s costs of the appeal, certified fit for counsel.