Stratton v Bowles - [2014] FCA 1180

FEDERAL COURT OF AUSTRALIA
Stratton v Bowles [2014] FCA 1180

Citation: Stratton v Bowles [2014] FCA 1180

Appeal from: Bowles v Stratton [2014] FCCA 2270

Parties: MELINDA MARGARET STRATTON v ROBIN GLYN BOWLES

File number: VID 613 of 2014

Judge: BEACH J

Date of judgment: 3 November 2014

Catchwords: BANKRUPTCY – stay of sequestration orders sought under r 36.08 of the Federal Court Rules 2011 (Cth) – distinction between staying a sequestration order and staying proceedings under a sequestration order – ss 37(2) and 52(3) of the Bankruptcy Act 1966 (Cth) – rights of appeal in Family Court proceeding – balance of convenience – general stay refused – appellant permitted to exercise and prosecute rights of appeal in Family Court proceeding pending hearing and determination of appeal

Legislation: Bankruptcy Act 1966 (Cth) ss 5(1), 37(2)(a), 52(3), 58
Federal Court Rules 2011 (Cth) r 36.08

Cases cited: Burns v AMP Finance Ltd [2005] FCA 761
Cummings v Claremont Petroleum NL (1996) 185 CLR 124
Kellow v Dudzinski [2003] FCA 143
Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757
Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494
Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65
Singh v Owners Strata Plan No 11723 [2012] FCA 538

Date of hearing: 3 November 2014

Place: Melbourne

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 34

Counsel for the Appellant: The appellant appeared via telephone

Counsel for the Respondent: The respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 613 of 2014

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:
MS MELINDA MARGARET STRATTON
Appellant

AND:
MS ROBIN GLYN BOWLES
Respondent

JUDGE:

BEACH J

DATE OF ORDER:

3 NOVEMBER 2014

WHERE MADE:

MELBOURNE

OTHER MATTERS:

In relation to order 2, the Court makes no adjudication on whether the rights of appeal referred to therein have vested in the Official Trustee and notes Cummings v Claremont Petroleum N.L. (1996) 185 CLR 124 at 132-136 on that point.

THE COURT ORDERS THAT:
1.Subject to order 2, the interlocutory application lodged electronically by the appellant on 20 October 2014 is dismissed.
2.Subject to further order and also subject to order 3, if and to the extent that any rights of appeal of the appellant in Family Court proceedings EA 51 of 2013 have now vested in the Official Trustee, the Official Trustee, but only to the extent that it is not required to incur any expense in so doing, shall either:
(a) exercise and prosecute such rights at the direction of the appellant; or
(b) permit the appellant to exercise and prosecute such rights for herself;

pending the hearing and determination of the appellant’s appeal against the sequestration order.
3.There be general liberty to apply given to the Official Trustee to seek such variation of order 2 as it thinks fit.
4.The parties’ costs of and incidental to the interlocutory application referred to in order 1 be their costs in the appeal.
5.In…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] FCA 1180
Decision Date: 3 November 2014

CaseChat Overview and Summary

The decision in Stratton v Bowles concerns a stay of sequestration orders sought under r 36.08 of the Federal Court Rules 2011 (Cth) with a focus on the distinction between staying a sequestration order itself and staying proceedings under a sequestration order. The appellant sought a general stay of the sequestration order, but the court clarified that such a stay is conceptually inappropriate as sequestration orders have automatic and immediate effect by force of the Bankruptcy Act 1966 (Cth). Instead, the court can only consider staying proceedings or actions taken under a sequestration order, as evidenced by the language of s 52(3) of the Act, which refers to staying "all proceedings under a sequestration order".

The legal issues before the court included whether the appellant could stay any proceedings or actions under the sequestration order and whether the court had the power to direct the Official Trustee to exercise or prosecute the appellant's rights of appeal in Family Court proceedings. The court found that the interlocutory application was poorly conceived as it failed to specify which proceedings or actions should be stayed and why. However, upon refocusing the application, the court permitted the Official Trustee to either exercise and prosecute the appellant's rights of appeal or allow the appellant to do so herself, pending the hearing and determination of the appeal against the sequestration order.

The court's reasoning was grounded in the statutory provisions of the Bankruptcy Act 1966 (Cth), which limit the court's power to stay proceedings or actions under a sequestration order. The court dismissed the interlocutory application for a general stay of the sequestration order but granted a conditional stay of specific actions related to the Family Court appeal. The court also set out detailed procedural orders for the appeal, including timelines for filing notices, submissions, and the appeal book, and adjourned the security for costs application. Ultimately, the court balanced the convenience of the parties and the statutory requirements to reach a reasoned and measured decision.

Orders

Orders of the court

1. Subject to order 2, the interlocutory application lodged electronically by the appellant on 20 October 2014 is dismissed.

2. Subject to further order and also subject to order 3, if and to the extent that any rights of appeal of the appellant in Family Court proceedings EA 51 of 2013 have now vested in the Official Trustee, the Official Trustee, but only to the extent that it is not required to incur any expense in so doing, shall either:

(a) exercise and prosecute such rights at the direction of the appellant; or

(b) permit the appellant to exercise and prosecute such rights for herself;

pending the hearing and determination of the appellant’s appeal against the sequestration order.

3. There be general liberty to apply given to the Official Trustee to seek such variation of order 2 as it thinks fit.

4. The parties’ costs of and incidental to the interlocutory application referred to in order 1 be their costs in the appeal.

5. In addition to order 4 and to the extent necessary and applicable (if the appeal is dismissed), the costs referred to in order 4 are to be treated as costs of the administration of the bankruptcy of the appellant and given the priority accorded by s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

6. The appeal be listed for hearing in Melbourne on 2 February 2015 at 10.15 am before a single judge pursuant to s 25(1AA)(a) of the Federal Court of Australia Act 1976 (Cth).

7. The hearing be listed for an estimate of one day.

8. On or before 17 November 2014 the appellant file and serve an amended notice of appeal.

9. On or before 10 December 2014 the appellant file and serve written submissions (limited to 10 pages only), a chronology and copies of any supporting material addressing the grounds of appeal in her amended notice of appeal.

10. On or before 19 January 2015 the respondent file and serve written submissions (limited to 10 pages only), a chronology and copies of any material responding to the appellant’s submissions and material.

11. On or before 27 January 2015 the appellant file and serve written submissions in reply (limited to 5 pages only).

12. On or before 27 January 2015 the appellant file two copies and serve on the respondent one copy of an appeal book, which appeal book is to consist of copies of an indexed set of the following material:

(a) The amended notice of appeal;

(b) The judgment and orders of the Federal Circuit Court below;

(d) The respondent’s written submissions, chronology and supporting material;

(e) The appellant’s submissions in reply.

13. The requirements of Practice Note APP 2 are otherwise dispensed with.

14. Each party file and serve a list of authorities and legislation in accordance with Practice Note CM 2.

15. Subject to order 16, the security for costs application made by the respondent as set out in paragraph 2 of her interlocutory application lodged electronically on 31 October 2014 is adjourned to 2.15 pm on 11 November 2014.

16. The respondent’s interlocutory application referred to in order 15 is otherwise dismissed.

17. A copy of this order is to be served by the appellant on the Official Trustee.

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

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Decision

Reasons for decision

Presumably the stay is sought under r 36.08 of the Federal Court Rules 2011 (Cth) which provides:36.08 Stay of execution or proceedings under judgment appealed from(1) An appeal does not:(a)operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or(b)invalidate any proceedings already taken.(2)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.(3)An application may be made under subrule (2) even though the court from which the appeal is brought has previously refused an application of a similar kind. The appellant relies on an affidavit sworn on 15 October 2014 and an “amended” affidavit sworn on 27 October 2014. The amended affidavit arises in circumstances where my chambers sent an email to the appellant on 23 October 2014 informing her that her affidavit in support of the interlocutory application was specifically required to address the stay question.FORM OF APPLICATION The form of the stay sought in the interlocutory application is not well conceived. It is apparent from the provisions and operation of the Bankruptcy Act 1966 (Cth) (the Act) that it is inapposite to talk of a stay of a sequestration order as such. When a sequestration order is made, it takes immediate and automatic effect by force of the Act. There is an immediate vesting of property in the trustee in bankruptcy. Moreover, after-acquired property of the bankrupt vests as soon as it is acquired (see generally Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757 at [3] per Yates J). It is conceptually inappropriate to contemplate a judicial stay order as being available to countermand automatic legislative operation where no question of invalidity is involved. In concept, one can only consider whether there should be a stay of any proceedings or action under a sequestration order rather than a stay of the order itself. So much is made plain by the language of s 52(3) of the Act which uses the language of “stay all proceedings under a sequestration order”. I interpolate at this point that s 52(3) also has a time limit of 21 days. Nevertheless, in the Court’s appellate jurisdiction under r 36.08 such a time bar does not limit the Court’s power thereunder. A separate source of jurisdiction can be invoked rather than that applicable under s 52(3). Further, reference should also be made to s 37(2)(a) of the Act which provides that the Court does not have power to suspend the operation of a sequestration order. In summary, the Court only has power to stay proceedings or action under the sequestration order. The present interlocutory application does not expressly identify what proceedings or action ought to be stayed and why. It fails in limine on this aspect alone. Having pointed this matter out to the appellant at hearing, the appellant refocused her application and sought a stay specifically of action or steps that might be taken in relation to an appeal in Family Court proceeding EA 51 of 2013. I will return to this shortly.PRINCIPLES APPLICABLE TO STAYS

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citation:	Stratton v Bowles [2014] FCA 1180
Appeal from:	Bowles v Stratton [2014] FCCA 2270
Parties:	MELINDA MARGARET STRATTON v ROBIN GLYN BOWLES
File number:	VID 613 of 2014
Judge:	BEACH J
Date of judgment:	3 November 2014
Catchwords:	BANKRUPTCY – stay of sequestration orders sought under r 36.08 of the Federal Court Rules 2011 (Cth) – distinction between staying a sequestration order and staying proceedings under a sequestration order – ss 37(2) and 52(3) of the Bankruptcy Act 1966 (Cth) – rights of appeal in Family Court proceeding – balance of convenience – general stay refused – appellant permitted to exercise and prosecute rights of appeal in Family Court proceeding pending hearing and determination of appeal
Legislation:	Bankruptcy Act 1966 (Cth) ss 5(1), 37(2)(a), 52(3), 58 Federal Court Rules 2011 (Cth) r 36.08
Cases cited:	Burns v AMP Finance Ltd [2005] FCA 761 Cummings v Claremont Petroleum NL (1996) 185 CLR 124 Kellow v Dudzinski [2003] FCA 143 Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757 Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 Singh v Owners Strata Plan No 11723 [2012] FCA 538
Date of hearing:	3 November 2014
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	34
Counsel for the Appellant:	The appellant appeared via telephone
Counsel for the Respondent:	The respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 613 of 2014

BETWEEN:	MS MELINDA MARGARET STRATTON Appellant
AND:	MS ROBIN GLYN BOWLES Respondent

JUDGE:	BEACH J
DATE OF ORDER:	3 NOVEMBER 2014
WHERE MADE:	MELBOURNE
OTHER MATTERS:	In relation to order 2, the Court makes no adjudication on whether the rights of appeal referred to therein have vested in the Official Trustee and notes Cummings v Claremont Petroleum N.L. (1996) 185 CLR 124 at 132-136 on that point.