Badcock v Pirie Street Holdings Limited

REASONS FOR JUDGMENT 1 On 4 February 2002 Raphael FM dismissed an application by the present applicant for a review of the exercise of power by Registrar Christie, who on 21 December 2001 had made orders: 1. Pursuant to r 1.06 of the Federal Magistrates Court Rules 2001 dispense with the need for compliance with r 31.04. 2. A Sequestration Order be made against the estate of Robert John Badcock. 3. The Petitioning Creditor's costs, including reserved costs, be taxed pursuant to the Federal Court Rules and paid in accordance with the Bankruptcy Act. The Court notes that the date of the Act of Bankruptcy is 7 September 2001 2 Registrar Christie was empowered to exercise the power under Division 4 of the Federal Magistrates Act 1999 (Cth) (the FM Act). Federal Magistrate Raphael was empowered to review the exercise of the Registrar's power where a party to the proceeding seeks such a review: s 104(2) of the FM Act. Such a review is a hearing de novo: Martin v Commonwealth Bank of Australia [2001] FCA 87. 3 On 4 February 2002 the Federal Magistrate dismissed the application: Adelaide Bank Limited v Badcock [2002] FMCA 10. In doing so the Federal Magistrate made it perfectly clear that he was hearing the matter de novo and that he needed to be satisfied of proof of the matters in s 52(1) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act). In his reasons given on 30 January 2002 when he adjourned the matter to allow the creditor to furnish proof of financial matters under the Bankruptcy Act, the Federal Magistrate said that he agreed with and adopted the Registrar's reasons and that there was, contrary to the applicant's contention, no evidence whatsoever that the applicant could pay his debts and that the evidence was to the contrary. 4 It is from the Federal Magistrate's order that the applicant now seeks to appeal and seeks an extension of time within which to appeal. 5 The application which the applicant filed in the Registry seeks special leave for an extension of time within which to appeal from the orders made on 4 February 2002 and claims that leave is required by s 104(2)(b) of the FM Act and Pt 20, r 20.01(2)(a) of the Federal Magistrate Court Rules 2001 (the FM Rules). The application is in that sense misconceived. The right to appeal to this Court from the Federal Magistrates Court is given by s 24(1)(d) and (e) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). 6 A review of the Registrar's powers requires a hearing de novo. Both the applicant who is unrepresented and the respondent proceeded on the basis that the Federal Magistrate's order was a final order from which an appeal lay as of right. I am prepared to proceed on the same basis, although it might otherwise be contended that the order was interlocutory. 7 A party has a right to appeal to this Court from judgments of the Federal Magistrates Court. If the judgment complained of is interlocutory, leave is required: s 24(1A) of the FCA Act. The appellate jurisdiction of the Court in relation to an appeal from a judgment of the Federal Magistrates Court is to be exercised by a single judge or, if a judge considers it as appropriate for the appellate jurisdiction of the Court in relation to the appeal to be exercised by a Full Court, by the Full Court: s 25(1AA). 8 In the end, because so much time has elapsed between the making by the Federal Magistrate of the order, little turns upon whether the order is interlocutory or final. Order 52 rule 15 of the Federal Court Rules provides that a notice of appeal shall be filed and served within 21 days after the date when the judgment appealed from was pronounced. Order 52 rule 15(2) provides that notwithstanding the obligation to file and serve a notice of appeal within 21 days "the Court or a judge for special reasons may at any time give leave to file and serve a notice of appeal". 9 Order 52 rule 15(2) was considered by the Full Court in Jess v Scott (1986) 12 FCR 187 where the Court said at 195: What is needed to justify an extension of time is indicated in r 15(2) by the words "for special reasons". It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression "for special reasons" implies something narrower than this. 10 An application for an extension of time within which to appeal is not granted unless the applicant can show special reasons why the making of an order is appropriate. The applicant in this case would need to show that there is some reason which takes this case out of the ordinary. The applicant would also need to explain why a period of eight years has been allowed to elapse since the order was made. Even if the applicant can show that there are special reasons and there is a good and sufficient explanation for the delay, the Court must have regard to any prejudice that the respondent might suffer by the making of an order. Moreover, in a consideration of whether or not an order should be made, some regard must be had as to whether or not it is likely that if an extension of time were granted that the appeal would be successful. 11 In an affidavit sworn on 18 February 2010 the applicant contends that the grounds upon which an extension of time would be granted are: 1. Substantial injustice will result if leave were to be refused. 2. The appeal includes fresh and previously unobtainable evidence at the time of the decision of Federal Magistrate Raphael, likely to result in a different verdict. 3. The appellant was substantially solvent. 4. The Creditor's Petition ought to have been dismissed. 5. No sequestration order ought to have been made. 12 The applicant also relied upon three other affidavits sworn by himself on 12 March 2010, 26 March 2010 and 17 May 2010. 13 In none of those affidavits does the applicant give any explanation for the delay of eight years in seeking to appeal from the Federal Magistrate's dismissal of his application for review of the sequestration order. In his latest affidavit he says in paragraph 36: In addition to seeking paid and pro bono legal assistance the appellant has made every effort to pursue all relevant matters at the earliest possible time subject to health or other unforeseen circumstances. 14 In his submissions he claimed that his health over the years precluded him from pursuing any appeal from the Federal Magistrate's order. 15 The applicant has not given any satisfactory reason for the delay in bringing this application. He said in his submissions that he has suffered medical problems since the order was made and has suffered depression. There is no evidence to support that assertion but, even if it were so, whatever medical problems he has suffered have not interfered with his ability to bring other proceedings. The respondents contended that the applicant had during the course of the last eight years involved himself in a number of proceedings in this Court and in the District Court. 16 On 27 April 2004 the applicant was summoned to the Court to be examined pursuant to s 81 of the Bankruptcy Act. When the matter came on before the Registrar the applicant failed to appear and the Registrar issued a warrant for the applicant's apprehension. Later that day the applicant appeared and the Registrar indicated she would proceed with the examination. The applicant applied for an adjournment but the Registrar refused that application. The applicant applied for a review of the Registrar's order and I embarked upon a review immediately. I affirmed the Registrar's decision and ordered the examination to continue before the Registrar. When the examination resumed the applicant again applied for an adjournment so that he could seek leave to appeal from my order in which I affirmed the Registrar's order refusing the adjournment. The Registrar again refused that application for an adjournment and the applicant again sought a review of that order. Again I embarked upon that review immediately and again I affirmed the decision. The applicant filed a notice of motion seeking leave to appeal from my order refusing the adjournment. On 25 May 2004 I refused leave to appeal: Badcock v Ambrose [2004] FCA 691. 17 On 16 October 2006 Finn J dismissed an application brought by the applicant which purported to seek an annulment of his bankruptcy on two grounds. First, that there was no evidence adduced in support of the application and in those circumstances the application has no reasonable prospects of success. Secondly, on the ground that the applicant failed to appear: Badcock v Ambrose [2006] FCA 1372. 18 On 2 December 2009 Simpson FM dismissed an application by the applicant to set aside the creditor's petition; to set aside the Federal Magistrate's order of 21 December 2001; for the Insolvency Trustee Service of Australia (ITSA) to "clear all public records naming the applicant"; to the Court to determine "the financial position between the applicant and the respondents"; and for an order that the respondents be jointly and severally liable for the applicant's costs: Badcock v Adelaide Bank Limited [2010] FMCA 35. The applicant has appealed from the orders made by the Federal Magistrate on that day and that appeal is the subject of a separate judgment delivered by me today: Badcock v Pirie Street Holdings Limited [2010] FCA 628. 19 On 1 September 2006 her Honour Judge Simpson in the District Court of South Australia dismissed the applicant's appeal against a decision of a Master refusing relief sought by the applicant on the ground that the applicant was an undischarged bankrupt: Badcock v PriceWaterhouseCoopers (Reg) & Anor [2006] SADC 101. On 14 November 2006 Debelle J in the Supreme Court of South Australia dismissed the applicant's appeal from the order of Judge Simpson on the ground that the applicant was an undischarged bankrupt and lacked standing to sue: Badcock v PriceWaterhouseCoopers & Anor [2006] SASC 346. 20 On 15 February 2007 his Honour Judge Beazley in the District Court of South Australia dismissed an appeal by the applicant against orders of a Master of the District Court refusing an extension of time to appeal: Badcock v Channel Seven Adelaide & Ors [2007] SADC 8. 21 On 17 October 2008 her Honour Judge McIntyre in the District Court of South Australia dismissed an appeal against a decision and an order of a Master striking out the applicant's statement of claim on the ground that the applicant was an undischarged bankrupt: Badcock v State of South Australia & Ors [2008] SADC 133. 22 On 21 October 2008 Judge McIntyre again dismissed an appeal by the applicant against orders made by a Master staying the applicant's claim and requiring the applicant to comply with previous orders relating to discovery: Badcock v Channel Seven Adelaide Pty Ltd & Ors [2008] SADC 138. 23 It can be seen that the applicant is no stranger to the justice system. His health has not apparently interfered with the prosecution of the proceedings to which I have referred. More particularly, it can be seen that the applicant has been on notice by reason of judgments given since the sequestration order was made that whilst the sequestration order remains in place and he remains an undischarged bankrupt, his ability to bring any claim against any party is seriously compromised. 24 It is simply not satisfactory for a person who has been adjudged bankrupt to sit on his or her rights for a period of eight years and then seek to appeal from effectively what was an order for the sequestration of the estate of that person. 25 I cannot accept his claim from the Bar table that his health precluded him from bringing an appeal from the Federal Magistrate's order any earlier than this application was made. As has been demonstrated, the applicant has vigorously pursued litigation against a number of parties over the last eight years. If his health did not preclude him pursuing those proceedings, it certainly would not have precluded him from bringing an appeal within a timely fashion. 26 In my opinion the applicant's application must fail because of his failure to explain why he did not either appeal or seek to appeal from Raphael FM's decision at the time it was made and why he has delayed eight years in bringing this application. In my opinion, the applicant has not demonstrated any special reason why an order should be made. 27 The respondent contended in evidence in an affidavit of Ms Katherine Mary Haigh sworn on 16 April 2010 that the respondent would suffer prejudice if an extension of time were granted. 28 Ms Haigh, who is a legal practitioner employed by the second respondent, deposed that three of the four officers of the respondents who were involved with the applicant at or about the time of his bankruptcy are no longer employed by the respondents. The fourth officer was on annual leave and, in those circumstances, Ms Haigh was unable to obtain any information as to that person's recollection of the events leading up to the sequestration order. I am prepared to accept the respondents' contention that the respondents would be prejudiced if an extension of time were granted if it meant that it would lead to an inquiry into the circumstances leading up to the sequestration order made by the Registrar and the review by the Federal Magistrate. The respondents would suffer the normal and natural consequences of substantial delay which include fading memories and inability to access witnesses. 29 The applicant contended the Federal Magistrate failed to carry out a hearing de novo as he was required by the authorities. Such a contention cannot be maintained having regard to the Federal Magistrate's reasons. He said at [12]: The decision in Martin makes it quite clear that the responsibility of a judge in bankruptcy hearing a review of a Registrar's decision to make a sequestration order is to hear de novo the creditor's petition. In order to hear the creditor's petition de novo it is necessary for the judicial officer to be satisfied with the proof of the matters of which s 52(1) of the Bankruptcy Act requires the Court to be satisfied. Those requirements include matters which have to be proved by way of affidavit evidence. Rule 31.06 of the Federal Magistrates Court Rules sets those out in detail. 30 The Federal Magistrate clearly understood his responsibility on the review hearing and, in particular, understood that he had to hear the creditor's petition de novo. 31 The applicant has exhibited to his various affidavits voluminous material which he says establishes that the creditor's petition should have been dismissed and establishes that he was solvent at the relevant time. 32 An examination of that material shows that the bulk of the material was available to the applicant at the time the Registrar heard the creditor's petition and at the time that the Federal Magistrate embarked upon the rehearing. 33 The material which has been created since the date of the two orders does not support the applicant's contention that he was solvent at the time the orders were made. In particular the applicant contends that he had assets available to him in loans which he had made to a company with which he was associated. The material which is exhibited to the affidavits does not establish that at the relevant time the applicant was solvent. 34 There is nothing in any of the material which has been provided by the applicant which tends to indicate that the applicant was the victim of any injustice by the making of the orders. Clearly the applicant believes that the creditor ought not to have presented the petition and that the orders should not have been made. However, his belief does not translate into evidence that the making of the orders by the Registrar and by the Federal Magistrate in dismissing the application for a review should not have been made. 35 Nothing has been presented on this application which would support an order extending time within which the applicant could either apply for leave to appeal or appeal from the orders made by the Federal Magistrate or indeed by the Registrar. 36 The applicant's application must be dismissed. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.