FEDERAL COURT OF AUSTRALIA
Scott v NIMLAW Pty Ltd (No 2) [2023] FCA 1472
File number(s): SAD 104 of 2023 Judgment of: O'BRYAN J Date of judgment: 24 November 2023 Date of publication of reasons: 27 November 2023 Catchwords: PRACTICE AND PROCEDURE – application for a stay of orders dismissing an application to set aside a bankruptcy notice pending the determination of an application for leave to appeal against the orders – preliminary assessment that the prospects of success on the application for leave to appeal are poor – applicant will not suffer material prejudice if stay refused and is successful on the appeal – application refused Legislation: Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41(6A), 41(7), 43, 44, 52
Federal Court Rules 2011 (Cth), rr 36.08, 41.03, 41.11
Cases cited: Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685
Endresz v Australian Securities and Investments Commission [2014] FCA 1139
Nimlaw Pty Ltd v Scott [2023] SADC 42
Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65
Division: General Division Registry: South Australia National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 20 Date of hearing: 24 November 2023 Counsel for the Applicant: The Applicant was self-represented Counsel for the Respondent: J Stewart-Rattray Solicitor for the Respondent: Stewart-Rattray Lawyers
ORDERS
SAD 104 of 2023 BETWEEN: SUSAN JANE SCOTT
Applicant
AND: NIMLAW PTY LTD
Respondent
ORDER MADE BY:
O'BRYAN J
DATE OF ORDER:
24 NOVEMBER 2023
THE COURT ORDERS THAT:
1.The relief sought by paragraphs 1 and 2 of the Applicant’s interlocutory application dated 19 November 2023, seeking a stay of the execution or operation of any proceedings on the Bankruptcy Notice BN 260942 issued on 20 July 2023, be refused.
2.The Applicant pay the Respondent’s costs of the application for a stay.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
O’BRYAN J:
Introduction
By originating application filed on 8 August 2023, the applicant, Dr Susan Jane Scott, applied to set aside a bankruptcy notice, served upon her by the respondent, NIMLAW Pty Ltd, on 27 July 2023. The bankruptcy notice claimed an amount owing of $20,446.82 and required payment within 21 days of the date of service. The amount claimed to be owing was due under a judgment of the District Court of South Australia made on 5 June 2023: see Nimlaw Pty Ltd v Scott [2023] SADC 42 (Slattery J).
The originating application to set aside the bankruptcy notice stated a number of grounds, including that the applicant had a counter-claim, set-off or cross demand as is referred to in s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (Act). By s 41(7) of the Act, the time for compliance with the bankruptcy notice was deemed to have been extended until and including the day on which the Court determined the application.
On 15 November 2023, Charlesworth J…
Keep reading for free
Create a free CaseChat account to read Scott v NIMLAW Pty Ltd (No 2) and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2023] FCA 1472
- Decision Date
CaseChat Overview and Summary
The court examined the application for a stay in light of the applicant's prospects of success on the appeal. It noted that the applicant had not provided a sound basis for the grant of a stay. The court referred to the background facts and circumstances set out in the earlier judgment, which established that the debt originated from a retainer agreement between Dr Scott and a legal practice. The court also highlighted that the application to set aside the bankruptcy notice was dismissed, as the applicant did not have a counter-claim or set-off that could potentially equal or exceed the debt.
Given the preliminary assessment that the prospects of success on the appeal were poor, the court found that the applicant would not suffer material prejudice if the stay was refused and that the balance of convenience favoured the respondent. The court concluded that the applicant had not demonstrated an arguable point on appeal or a rational prospect of success, and therefore, the application for a stay was refused. The court also ordered that the applicant pay the respondent's costs of the stay application.
In summary, the court refused the relief sought by the applicant to stay the execution or operation of any proceedings on the bankruptcy notice. The applicant was also ordered to pay the respondent's costs of the stay application. This decision underscores the importance of establishing a rational prospect of success and the balance of convenience when considering an application for a stay of proceedings.
Orders
Orders of the court
1. The relief sought by paragraphs 1 and 2 of the Applicant’s interlocutory application dated 19 November 2023, seeking a stay of the execution or operation of any proceedings on the Bankruptcy Notice BN 260942 issued on 20 July 2023, be refused.
2. The Applicant pay the Respondent’s costs of the application for a stay.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The last consideration is protective of the position of a judgment creditor where it may be plain that an appeal has been lodged without any real prospect of success and simply in the hope of gaining a respite against immediate execution upon the judgment. Usually, in the case of an application for a stay of proceedings under a sequestration order, the appellant 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: see Endresz v Australian Securities and Investments Commission [2014] FCA 1139 at [16] per Beach J.Consideration The applicant has not advanced any sound basis for the grant of a stay of the orders made by Charlesworth J. The background facts and circumstances are set out in the judgment of Charlesworth J at [7]-[10] as follows:7 The bankruptcy notice states that Dr Scott owes to NIMLAW a debt in the amount of $20,446.82. The debt forming the subject matter of the bankruptcy notice has its history in a retainer between Dr Scott and a legal practice operated by a company, formerly named Minicozzi Lawyers. I will refer to that entity as the Firm. Dr Scott has made submissions about the proper identity of the debtor. 8 It appears to be undisputed that Dr Scott engaged the Firm to perform legal services in connection with disputes that she had with other entities and persons concerning the treatment of her now deceased mother and the management of her deceased estate. That is perhaps an overly simplistic description of the subject matter of the legal services provided because, on the basis of submissions made before this Court today, it appears that Dr Scott has for many years now been engaged in legal proceedings relating to the treatment of her mother and aspects of her financial affairs and her health. Nothing I am about to say should be understood as diminishing the importance of those matters to Dr Scott.9 The legal services performed by the Firm were the subject of invoices issued to Dr Scott. It appears to be undisputed that Dr Scott subsequently entered into deeds with the Firm, which recorded arrangements for the payment of the invoices.10 Ultimately, NIMLAW commenced proceedings in the Magistrates Court of South Australia, being an action in debt with respect to the fees alleged to be owing under the deeds or, at least, part of it. Those proceedings became the subject of a judgment of the District Court of South Australia on 27 April 2023: Nimlaw Pty Ltd v Scott [2023] SADC 42 (Slattery J). In the application before Charlesworth J to set aside the bankruptcy notice, the question that arose for determination was whether the applicant has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt, being a counter-claim, set-off or cross demand that the applicant could not have set up in the action or proceeding in which the judgment was obtained, within the meaning of s 40(1)(g) of the Act. Justice Charlesworth considered the evidence adduced and submissions advanced by the applicant and answered that question in the negative.