The new argument
37 That leaves for consideration the fate of the proposed new argument.
38 The solicitor appearing on behalf of Ms Bechara quite frankly and quite properly accepted that the proposed new argument relied upon in support of the Application for Extension of Time and Leave to Appeal was not an argument advanced before either the Federal Circuit Court Judge or the primary Judge.
39 Pursuant to leave granted at the hearing, a proposed Amended Draft Notice of Appeal was provided to the Court but was not filed. The Amended Draft Notice of Appeal contained seven proposed Grounds of Appeal. But none of the redrafted proposed Grounds, with respect, clearly articulated the new argument sought to be resolved.
40 The argument as advanced before the primary Judge was in substance that the task of the Federal Circuit Court Judge in conducting a review under s 104 was not susceptible of the discretionary powers to summarily dismiss a proceeding conferred by the Federal Circuit Court Rules. The task being undertaken by the Federal Circuit Court Judge was, so the argument ran, a task free of the ability to exercise those discretionary powers. The argument was that s 104 stood outside of the ambit of the Federal Circuit Court Rules conferring a summary power of dismissal. That argument was advanced in terms of a process of construing the Federal Circuit Court Rules.
41 The new argument now sought to be relied upon was in substance an argument more directed to the inability of a Registrar to make a sequestration order without the ability of the bankrupt to seek review of that decision by a Chapter III Judge. It was an argument which accepted the ability of a Registrar to make such an order but an argument which mandated a de novo review of the Registrar's decision upon an application for review being made under s 104. Concealed below this broadly expressed new argument was a further question as to what steps needed to be undertaken by an applicant seeking review to require a de novo review to be undertaken.
42 On one view, this newly formulated argument was the subtext to the arguments previously relied upon before the primary Judge. But, so expressed, it was not the argument previously articulated.
43 On this approach, an applicant seeking review of a Registrar's decision to make a sequestration order need do little more than file an application for review. Even in the absence of further evidence from an applicant, the argument was that it was the function of the Federal Circuit Court Judge to thereafter conduct a de novo review by reference (if necessary) to evidence filed on behalf of those opposing the review. A failure on the part of an applicant seeking review to comply (for example) with Court orders for the filing of evidence, it was submitted, did not absolve the Federal Circuit Court Judge of the necessity to undertake a de novo review.
44 In advancing that submission, reliance was placed on behalf of Ms Bechara upon the following observations of Emmett J in Totev v Sfar [2008] FCAFC 35, (2008) 167 FCR 193 at 197 ("Totev"):
[13] In the case of a hearing de novo, however, the judge reviewing the order begins afresh and exercises for himself or herself any discretion exercised by the registrar. The parties commence the proceeding again, subject to any rules concerning the use of evidence adduced before the registrar. The hearing de novo involves the exercise of the original jurisdiction and the petitioner, in the case of a bankruptcy petition, must start again, call witnesses and make out the petitioner's case (Harris v Caladine 172 CLR at 124).
[14] Because the hearing of an application for review of a sequestration order is a hearing de novo, it would not be sufficient for the reviewing judge to be satisfied that the registrar made no error and simply to dismiss the application for review. The judge who hears the review application must hear the petition afresh and must be satisfied as to the matters referred to in s 52 of the Bankruptcy Act. Thus, the reviewing judge must herself or himself be satisfied with the proof of:
• the matters stated in the petition;
• the service of the petition; and
• the fact that the debt or debts on which the petitioning creditor relies is or are still owing.
The reviewing judge must also exercise afresh the discretions conferred by s 52(2).
[15] In particular, unless the Bankruptcy Rules are waived, the judge must have the affidavits referred to in r 4.06 of the Bankruptcy Rules, which must be sworn shortly before the hearing. Except in the case of a review on the same day as the sequestration order was made, the affidavits relied upon before the registrar would not satisfy r 4.06. In the absence of fresh affidavits, it would be necessary that compliance with the Bankruptcy Rules be waived.
Reliance was also placed upon Martin v Commonwealth Bank of Australia [2001] FCA 87.
45 Given the potential importance of the new argument, leave was granted to the parties to file further written submissions after the hearing had completed. It was not in question that leave could be granted to a party to raise a new argument different to those previously advanced before a primary Judge. The only question was whether the Court in the exercise of its discretion should permit it to do so.
46 Pursuant to leave granted and after the hearing concluded, reliance was also placed upon the following observations of Katzmann, Farrell and Markovic JJ in Zdrilic v Hickie [2016] FCAFC 101, (2016) 246 FCR 532 ("Zdrilic") at 553:
[89] … Whether or not the appellants' opposition to the sequestration proceedings had merit or any reasonable prospect of success, the appellants had a statutory right based on a "constitutional imperative" to a review of the registrar's exercise of power conducted by a judge. It is extremely difficult to contemplate any circumstance where the exercise of that right would constitute an abuse of process. An application for review of a registrar's decision filed pursuant to s 104 of the Federal Circuit Court Act is not an application which is prosecuted by a debtor/applicant for the review; it is a demand that a claim for relief (a sequestration order) brought by the creditor be heard by a judge as if no sequestration order had been made. The "prosecutor" of an application for a sequestration order based on a creditor's petition is the creditor; the only onus a debtor bears is the one (s)he assumes if (s)he seeks to resist the grant of an order based on proof of solvency or "any other sufficient cause" under s 52(2) of the Bankruptcy Act. In our opinion, the respondents should not have filed their application for summary dismissal and the primary judge should not have entertained it. Like Beach J, we find it hard to conceive of any case in which it would be appropriate to see summary dismissal of an application for review brought by a debtor challenging the making of a sequestration order.
47 It is a consideration of those belatedly filed submissions which has led to the conclusion that the new argument is of sufficient merit that it should be resolved on appeal. In granting both the extension of time to raise the new argument and leave to appeal confined to that new argument, no concluded opinion is expressed as to the merit of the new argument. The only opinion that has been reached is that it is in the interests of the administration of justice that it should be resolved. The grant of an extension of time and leave to appeal, however, necessarily had to confront the not insubstantial reasons relied upon by Mr Bates in opposing leave being granted. These arguments should be briefly mentioned.