Sanders v Karayannis

[2005] FMCA 1006

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SANDERS v KARAYANNIS [2005] FMCA 1006

BANKRUPTCY – Application for review of Registrar’s decision – whether extension of time should be granted – no arguable case – sequestration order – no basis for going behind judgment – application for review 13 months after order – extension of time refused.

Federal Magistrates Court Rules 2001, Rule 3.05, 29.04(2)

Wren v Mahony (1972) 126 CLR 212
Petrie v Redmond (1943) QSR 71

Applicant: ROSS GREGORY SANDERS (TRADING AS ROSSCO'S LANDSCAPES)

Respondent: WAYNE DALE KARAYANNIS

File Number: MLG 1376 of 2003

Judgment of: McInnis FM

Hearing date: 18 July 2005

Delivered at: Melbourne

Delivered on: 18 July 2005

REPRESENTATION

Counsel for the Applicant: Mr I Cull

Solicitors for the Applicant: Mendelsons

Respondent: In person

ORDERS

1. The application for extension of time within which to bring the application for review be refused.

2. The application for review filed 11 March 2005 be dismissed.

3. The Applicant Creditor’s costs be taxed in accordance with the Federal Court Rules and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 1376 of 2003

ROSS GREGORY SANDERS (TRADING AS ROSSCO'S LANDSCAPES)

Applicant

And

WAYNE DALE KARAYANNIS

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

(As corrected)

1. This is an application for review of an order made by a registrar who made a sequestration order against Wayne Dale Karayannis (the debtor).  The sequestration order was made on 17 February 2004.  On that day the debtor did not appear.  The order was made in the usual form and was based upon a petition, together with the relevant affidavits in support.  Although there appear on the face of the material some defects in the material, including incorrect reference to the date in the petition of the judgment debt relied upon, material was otherwise filed in support including a copy of the bankruptcy notice and an extract from the judgment relied upon.  It is noted for the purposes of the chronology that the judgment by default in the State Magistrates Court at Ringwood was entered on 20 July 1999.  It is sufficient to note for present purposes that no real dispute has been taken in relation to whether or not the debtor owes the petitioning creditor the amount of that default judgment.

2. The preliminary issue for the court to determine in this application is whether or not pursuant to Rule 3.05 of the Federal Magistrates Court Rules 2001 the Court should grant an extension of time to the debtor within which to bring this application for review of the registrar's orders. Application for review of a registrar's order or decision is an application which pursuant to Rule 29.04(2) must be made within 21 days of the date of the decision. In this case the sequestration order was made, as indicated earlier in this judgment, on 17 February 2004. The application which I have taken to be an application for review of that decision was filed 11 March 2005. I indicate that the application is taken to be an application for review seeking to set aside a sequestration order even though on the face of it that document does not refer to the rules relied upon or that review of the sequestration is sought.

3. I am prepared in this case, however, for reasons which will become apparent, to make due allowance to the applicant in this instance on a number of grounds and in relation to procedural steps.  The grounds

   
   

   I rely upon in making due allowance to the applicant are, first, that he is unrepresented; second, that there is no dispute that he is illiterate; and third, that there is little dispute that certainly since the date of an unlawful assault upon him on 21 February 2003 he has suffered from a medical condition which I accept for present purposes would have altered his capacity to be able to deal with issues of this kind and which may at least be accepted for present purposes as providing some basis upon which this court could be satisfied that there is a reasonable explanation for the delay, both in terms of filing the application for review and in terms of the lack of precision in those documents as to what the debtor actually seeks from the court.  I have further allowed in these proceedings the debtor to appear with the assistance of his partner, who I have regarded as a McKenzie friend for these proceedings.  In addition, I have received into evidence as “debtor exhibit 1” a report from Jill Higgins, a psychologist, dated 29 June 2005, together with a medical certificate provided to Centrelink and a further handwritten medical report from the debtor's treating general practitioner, Dr Jeff Lindenmayer, dated 10 February 2005.  That material clearly demonstrates to me that there are both medical reasons and indeed other reasons, including the fact that the debtor is illiterate, that would otherwise at least provide some basis upon which the court could accept that there is a reasonable explanation for the significant 13‑month delay between the date of the sequestration order and the date of the application for review and further explains the obvious deficiency in the material currently filed with the court.

4. I had considered whether it might be appropriate to permit a further adjournment of this application, which I note had been adjourned on previous occasions, in order to provide the debtor with an opportunity to file and serve affidavit material.  However, in the absence of objection from the petitioning creditor, I was prepared to hear the debtor's explanation for delay from the bar table and other matters relevant to the issue of whether or not there is indeed an arguable case.  In this case an argument to be advanced by the debtor is that this court should go behind the judgment which forms the basis of the bankruptcy notice and the petition.  To that extent, a significant concession has therefore been made to the debtor in permitting the matter to proceed without further affidavit evidence.  It is further noted that it is the desire of the debtor himself to have the matter heard and determined this day without further delay and adjournment which would have resulted with any order that I may make that an affidavit be filed and served.

5. From a practical point of view, it is my conclusion that it is in the interests of justice for all parties that I hear and determine the matter this day.  In considering the debtor's current circumstances, I am satisfied that he does lack the capacity to read material; that is, I find he is illiterate.  I also find that he is suffering from what has been diagnosed as post‑traumatic stress disorder following an unlawful assault upon him which occurred on 21 February 2003 and that that assault and the consequences of it are the subject of an application for Victims of Crime Assistance Tribunal.  For present purposes I accept the application has been filed and that the matter will be dealt with appropriately.

6. The petitioning creditor, however, has submitted that notwithstanding those circumstances and notwithstanding what the debtor has asserted from the bar table as to his parlous financial circumstances and somewhat difficult circumstances arising both from the assault and in terms of his social situation in the past few years, that the judgment debt which had been entered by default on 20 July 1999 is a judgment which should stand and that this court as a court in bankruptcy should not go behind that judgment.

7. The chronology of events is set out in the affidavit material, including the affidavit of Innis Cull sworn the 17th day of June 2005.  Further affidavit material in relation to the debt is set out in the affidavit of Ross Gregory Sanders sworn 9 June 2005.  The chronology of events in the affidavit of Innis Cull includes a reference to the default judgment being entered on 20 July 1999, and that judgment was entered, it is claimed, in relation to goods sold and delivered.  Since that judgment was entered I accept that on 31 March 2000 a warrant to seize property was issued and that on 31 May 2000 the sheriff attempted execution of the warrant, and a field report annexed as exhibit IAC1 indicates that the sheriff attended the debtor's premises, spoke with the debtor who claimed he did not have sufficient funds to satisfy the judgment.  So much is confirmed by the debtor himself in submissions made from the bar table to this court with the assistance of his friend.

8. I further accept, and it seems to be common ground, that at least from 8 October 2001 up to and including the date of the assault on 21 February 2003 contact was attempted between solicitors acting for and on behalf of the creditor and the debtor.  It would appear thereafter that some attempt was made to resolve issues between the parties.  It is perhaps significant that indeed by letter dated 21 January 2000, exhibit RGS3 of the affidavit of Ross Sanders to which I have referred, confirmation is recorded of arrangements to pay the judgment debt by way of instalments.

9. In the circumstances of this case the court clearly has a discretion in relation to whether or not it shall extend the time within which the application for review should be filed.  In favour of the applicant, I am prepared to conclude that as a result of his dire financial circumstances, his unfortunate social circumstances, both in terms of the relationships he has had and the pressures placed upon him arising out of those set out in the psychological report which I have referred to as debtor exhibit 1, together with his current condition diagnosed as post‑traumatic stress disorder arising from the incident of 21 February 2003 provides some basis upon which this court may consider granting an extension of time.  However, the significant issue in this case is even if the court were minded on those grounds to grant an extension of time, it must consider whether or not there is an arguable case.

10. The key issue in this application is whether or not the court would be prepared to go behind the judgment which was entered on 20 July 1999.  The chronology of events and the affidavit material relied upon by the creditor to which I referred, namely, the affidavits of Innis Cull and Ross Gregory Sanders, together with submissions made indeed by the debtor himself satisfy me that there is no real challenge now and indeed never has been to the judgment debt.  No application was made to set aside the default judgment, and indeed to the contrary negotiations occurred between the parties involving payment of that debt by instalments, and although there may appear to be an assertion by the debtor that the record-keeping of the petitioning creditor was less than adequate, that is not of itself a sufficient basis in the present circumstances for this court as a court in bankruptcy to go behind the judgment.

11. It is clear there must be special circumstances in existence before a Court will go behind a judgment and it will not occur as a matter of course (see Wren v Mahony (1972) 126 CLR 212 per Barwick CJ at 224 and Petrie v Redmond (1943) QSR 71).  Applying the authorities in matters of this kind, it is clear to me from the affidavit material and the material currently relied upon by the debtor that there is indeed no arguable case as there is no basis upon which this court can as a matter of law go behind the judgment which forms the basis of the sequestration order, which in turn was based upon the bankruptcy notice and petition.  There is no allegation raised in the present case that the judgment was obtained by fraud or that indeed there is any other basis upon which the Court should go behind the judgment.

12. For those reasons, in the exercise of my discretion the court dismisses the application for review filed on 11 March 2005 and finds that in the circumstances there is no arguable case, and even if the court was satisfied that the other material to which I have referred provided a reasonable basis upon which an extension should be granted, that is not sufficient in my view to justify granting the extension of time where there is clear evidence that in this instance to do so would be futile as the court could not conclude that there is an arguable case and particularly that there is no basis upon which the court can go behind the judgment debt.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate: 

Date:  19 July 2005