Slater, William Keith v Nye, Anthony Graham
[1998] FCA 1368
•27 OCTOBER 1998
FEDERAL COURT OF AUSTRALIA
BANKRUPTCY - Bankruptcy Notice - extension of time to comply with Notice - appeal against Judgment founding Notice - stay of Judgment refused - prospect of success of appeal - likely delay in hearing of appeal - conduct of debtor
Bankruptcy Act 1966 ss 41(6A), 41(6C)
Bryant v Commonwealth Bank (unreported) Hill J, 4 May 1994
Bryant v Commonwealth Bank (unreported) 9 November 1994 (Davies, Foster & O’Loughlin JJ)
Re Taylor; Ex parte Commissioner of Taxation 74 FLR 377
Vincent v State Bank of Victoria (1995) 60 FCR 296
McLeod v Falvey (unreported) 20 September 1995, Federal Court of Australia, Cooper J
WILLIAM KEITH SLATER v ANTHONY GRAHAM NYE
VG 7476 of 1998
BEFORE: RYAN JR
PLACE: MELBOURNE
DATE: 27 OCTOBER 1998
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 7476 of 1998
BETWEEN:
WILLIAM KEITH SLATER
APPLICANTAND:
ANTHONY GRAHAM NYE
RESPONDENTJUDICIAL REGISTRAR:
RYAN
DATE OF ORDER:
27 OCTOBER 1998
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
The application to extend time for compliance with Bankruptcy Notice No. VN952/98 dated 17 June 1998 is dismissed.
The applicant is to pay the costs of the respondent of and incidental to the application.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 7476 of 1998
BETWEEN:
WILLIAM KEITH SLATER
APPLICANTAND:
ANTHONY GRAHAM NYE
RESPONDENT
JUDICIAL REGISTRAR:
RYAN
DATE:
27 OCTOBER 1998
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
(DELIVERED EX TEMPORE)
THE APPLICATION
On 1 July the applicant made application for the following orders:
“1.That the Bankruptcy Notice dated 17th June 1998 issued against the above Debtor (as Applicant) on behalf of the above Creditor be set aside on the grounds that the Debtor holds a counterclaim, set-off or cress demand for an amount equal to or exceeding the sum specified in such Bankruptcy Notice and that the Debtor could not previously have set up that counterclaim, set-off or cross demand.
2.That, alternatively, the time for compliance with the said Bankruptcy Notice be extended until the expiration of 21 days from the date upon which the Court of Appeal of the State of Victoria delivers Judgment in an Appeal or until the expiration of 21 days from which such Appeal might become abandoned (whichever is earlier) as brought by the Debtor in Action No. 6010 of 1998 in which the Debtor is the Appellant and the Creditor is the Respondent, on the grounds that such Appeal (being from a Judgment of the County Court of Victoria in Action No. 11255 of 1996) involves the Judgment Debt upon which such Bankruptcy Notice has been issued.”
On 5 August the hearing of the application was adjourned to 14 September with orders as to filing of affidavits and time for compliance with the bankruptcy notice extended.
On 14 September and 12 October the hearing was further adjourned with time for compliance with the bankruptcy notice extended. On 5 August and 14 September costs were reserved. On 12 October the applicant was ordered to pay the respondent’s agreed costs at $400.
THE HEARING
Yesterday, 26 October, the matter came on for hearing, having been referred that day by Weinberg J for hearing before a Judicial Registrar.
The solicitor for the applicant, Mr Finkelstein, advised that the applicant no longer sought an order to set aside the bankruptcy notice but still sought an extension of time for compliance with the notice in terms of paragraph 2 of the application. At this stage I have assessed the proceeding as an application to extend time until, at the earliest, August 1999, and it could be early 2000 if the appeal referred to in paragraph 2 is pursued to judgment. My assessment is based on purported advice from the Registrar of the Court of Appeal that the appeal will not be heard until some time after 30 June 1999.
DISCRETION TO SET ASIDE
Discretion to set aside a bankruptcy notice under s 41(6A) of the Bankruptcy Act 1966 is at large and is not limited to cases falling under s 41(6C) where an application to set aside has not been instituted bona fide or prosecuted with due diligence: Bryant v Commonwealth Bank (unreported) Hill J, 4 May 1994. On appeal, Bryant v Commonwealth Bank (unreported) 9 November 1994 (Davies, Foster & O’Loughlin JJ) the Full Court held that the trial judge was obliged to form some view of the prospects of success of the appeal.
EXTENSION OF TIME
In Re Taylor; Ex parte Commissioner of Taxation 74 FLR 377, Sheppard J declined to extend time. In deciding against the debtor, his Honour took into account:
(a) the absence of any evidence of an opinion of counsel as to the prospects of the merits of the appeal
(b) the conduct of the debtor in the litigation and, in particular, delays on the part of the debtor and the failure to explain those delays.
In Vincent v State Bank of Victoria (1995) 60 FCR 296, Foster J, when considering his discretion to extend the time for compliance with bankruptcy notice took into account the following factors:
(a) the prospects of success of the appeal
(b) the fact that the appeal would not even be called over for approximately 32 months, with the actual hearing not to take place for some period of time after that
(c) the fact that there was no stay on the judgment
(d) the fact that the applicant had not sought an expedited hearing of the appeal
(e) the fact that the Court had “a strong suspicion based upon material that emerged during the cross examination of his solicitor that the debtor has been seeking to deal in a clandestine way with his assets which might arguable be available to satisfy in part the judgment against him.”.
PROSPECTS OF SUCCESS OF APPEAL
Having considered the affidavit material including, in particular, the Judgment and Reasons for Judgment of Ostrowski J in the County Court (6 May 1998) (Exhibit “WKS1” to the affidavit of William Keith Slater sworn 30 June 1998), and the Judgment of Ashley J in Supreme Court on 13 October 1998, (Exhibit “RGW14” to the affidavit of Ronald Gerard Willemsen sworn 23 October 1998), and the submissions made yesterday to me by legal representatives for both parties, I do not assess as high the likelihood of a successful appeal from the Judgment of Ostrowski J.
His Honour found that the applicant in this matter, a defendant before him, breached his fiduciary duty to the respondent in this matter, the plaintiff in County Court Writ No. 9611255. His Honour found that the applicant as a defendant failed to disclose to the respondent as plaintiff the actual state of a business as well as the actual state of its prospects.
Ashley J described it thus in paragraph 50 of his Judgment of 13 October 1998:
“His Honour decided that the plaintiff’s case founded on breach of fiduciary duties succeeded. There had been a misstatement of the true financial state of “the business” in which investment was to be made. Pertinent information had been withheld. “The business” had a long and notable history of difficulties in a series of corporate guises. There should be judgment against Cytrix (to whom the $50,000 had been advanced); and against Mr Slater, who had breached the fiduciary duties which he owed to the plaintiff, to the extent that the plaintiff did not recover the amount of the advance from Cytrix.”
In paragraph 80 of his Judgment Ashley J concluded that the pleading before him was no more than an artifice whereby the Slater side, the applicants before him and, in effect, substantially the applicant before me, sought to relitigate a concluded question. He said “that is properly described as an abuse of process”.
Of course I appreciate that I am assessing as low, perhaps very low, the prospects of success of an appeal in proceedings other than those before Ashley J in the Supreme Court. But His Honour’s assessment of the County Court Judgment itself is of some relevance as is my consideration of all the other material before me. I also note that nowhere in this material is there any evidence of an opinion of counsel as to the prospects of the success of the appeal.
DELAY
I have noted that an appeal is unlikely to be resolved, if pursued, before later 1999 or even early 2000 and the applicant has not sought to expedite the hearing of the appeal.
NO STAY OF JUDGMENT
There is no stay in the judgment which founds the bankruptcy notice. The Court of Appeal refused a stay and the applicant failed to satisfy pre-conditions which might have activated a stay pursuant to orders of His Honour Judge F.B. Lewis in the County Court.
CONCLUSION
Given my conclusion on low prospects of success on appeal, if appeal be pursued, given the delay in the hearing of such an appeal, given an unstayed judgment founding the bankruptcy notice, I will on those grounds decline to exercise a discretion extending time for compliance with the notice. The conduct of the applicant who has failed to obtain a stay in the Court of Appeal and has failed to comply with conditions which would have resulted in a stay by order of the County Court, has failed to seek an expedited hearing in the Court of Appeal, has failed to pay certain outstanding costs’ orders, has taken proceedings in the Supreme Court categorised as an abuse of process, this is conduct which likewise tells against the exercise of a discretion in his favour. I stop short of any finding as to likely clandestine or open dealing by the applicant with assets or any finding as to his solvency generally.
In my view, this is not a case where the Court should exercise its discretion in favour of the debtor by extending time for compliance with the bankruptcy notice. The question whether a sequestration order should be made upon the notice, in circumstances where the appeal against the judgment is outstanding, is not a matter with which I am currently concerned. I do not consider this is a case like McLeod v Falvey (unreported) 20 September 1995, Federal Court of Australia, Cooper J. I do not consider this a case for any undertaking by the respondent to refrain from presenting a petition based on non-compliance or to refrain from seeking to progress the petition to obtain an order for sequestration.
I dismiss the application with costs.
ORDERS
The application to extend time for compliance with Bankruptcy Notice No. VN952/98 dated 17 June 1998 is dismissed.
The applicant is to pay the costs of the respondent of and incidental to the application.
I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar Ryan
Associate:
Dated: 27 October 1998
Counsel for the Applicant: Mr P. Finkelstein Solicitor for the Applicant: FLA Partners Counsel for the Respondent: Mr D. Christie Solicitor for the Respondent: MacPherson & Kelley Date of Hearing: 26 October 1998 Date of Judgment: 27 October 1998
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