The application to reopen
16 Senior counsel for Bendigo Bank provided the following explanation for the application to reopen.
17 In the minutes of orders circulated in anticipation of the hearing on 24 February 2016, Bendigo Bank had sought, relevantly, an order of the kind it now seeks, namely:
[2] Pursuant to ss 222(1) and 222(11) of the Act, a sequestration order be made against:
[2.1] the estate of Michel Emmanuel Mouglalis;
[2.2] the estate of Julie Ann Mouglalis; and
[2.3] the joint estate of Michel Emmanuel Mouglalis and Julie Ann Mouglalis.
[3] David Mansfield, Registered Trustee in Bankruptcy, of Deloitte Touche Tohmatsu be appointed as the trustee in bankruptcy of the joint and several estates of the second and third respondents.
18 Bendigo Bank had received the submissions of the then counsel for Mr and Mrs Mouglalis in relation to the proposed orders just 30 minutes before the hearing on 24 February 2016. Those submissions provided (relevantly):
[3] Paragraph 2 is opposed for this reason: The debtors were declared bankrupt on 16 May 2012. Upon the compositions being ordered to be set aside, the bankruptcies continue, with the relation-back day in 2012, and the new trustee's ability to pursue antecedent transactions prior to that date.
[4] We apprehend there may be a concern that section 74 of the Act will have the effect that the bankruptcy is annulled but if that is a concern, it can be dealt with by an order made under section 222(8) of the Bankruptcy Act which provides that the Court may make such other orders as it thinks fit. The Revised Explanatory Memorandum to the Bankruptcy Legislation Amendment Bill 2004 stated (in para 94) that this provision was to allow the Court to make orders where necessary to place the parties in the position in which they would have been had they not entered into the agreement. The precise words of the Memorandum were:
[94] Where the Court makes an order setting aside a personal insolvency agreement, proposed subsection 222(8) would also allow the Court to make such other orders as it thinks fit. This is intended to allow the Court to make any orders necessary to place the parties in the position in which they would have been had they not entered into the agreement. By virtue of proposed subsection 222(9), this could include orders for compensation.
[5] In other words, the purpose is to restore the creditors to the same position had the composition not been approved.
[6] Accordingly, we respectfully submit that the order in paragraph 2 ought not to be made, as it would create new bankruptcy estates, but rather, for the purposes of clarity, a consequential order ought to be made that the bankruptcies were not annulled by force of section 74 of the Act when the compositions were approved, and the debtors' bankruptcies pursuant to Order of the Court made 16 May 2012 are still effective.
19 Senior counsel said that on receiving this written submission, he had had "a hurried look for authorities", and had formed the view at the time that an order along the lines made in Hingston would be appropriate. He said that he and the solicitors for Bendigo Bank had been prompted to research the matter further after the hearing on 24 February as a result of an exchange between Bench and Bar. In the course of that research, the decision in Donnelly v Edelsten (1992) 109 ALR 651 had been located. That case confirmed that the effect of s 149 of the Bankruptcy Act (as then in force) was that there is no power to object to a discharge of a bankrupt from bankruptcy after the expiration of the three year period commencing on the filing of the statement of affairs by the bankrupt. Section 149B in the present Act makes that position more explicit.
20 In this case, Mr and Mrs Mouglalis had lodged their respective statements of affairs on 12 December 2012, with the consequence that the three year period to which s 149 refers expired on 12 December 2015. That being so, the orders proposed on 24 February 2016 would not have the effect which Bendigo Bank considered appropriate and which, it submitted, the Court had contemplated by the decision published on 18 February 2016.
21 In short, Bendigo Bank's position was that it had proceeded in the submissions on 24 February 2016 on a misapprehension; that the matters it wished to agitate on the reopening were matters of law; that it did not seek to adduce further evidence; that the application to reopen had been brought promptly (albeit in an irregular fashion); and that the lateness with which the then counsel for Mr and Mrs Mouglalis had provided the submissions on 24 February 2016 had contributed to Bendigo Bank not having considered the position more fully.
22 Mr and Mrs Mouglalis opposed the grant of leave to reopen on the following basis:
(1) the way in which Bendigo Bank had sought the reopening was irregular, and it had apologised for that irregularity only at the commencement of the hearing on 10 March 2016;
(2) although the solicitors for Bendigo Bank had received the written submissions of Mr and Mrs Mouglalis on 24 February only 30 minutes before the commencement of the hearing that day, they had been informed on the previous afternoon that Mr and Mrs Mouglalis objected to the order proposed by Bendigo Bank and had then been referred to the passage in the Explanatory Memorandum quoted in the submissions provided on 24 February;
(3) Bendigo Bank had not provided any evidence in support of its application to reopen;
(4) this case did not fall within any of the recognised categories of cases summarised by Kenny J in Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24] in which courts have granted leave to reopen, namely, circumstances of fresh evidence, inadvertent error, mistaken apprehension of the facts, or mistaken apprehension of the law;
(5) Bendigo Bank should not be permitted to resile from the position which it had agreed at the hearing on 24 February 2016, when it does not rely on any new evidence and had had a full opportunity to present its submissions at that hearing. Counsel emphasised the public interest in the finality of litigation and in litigants presenting all their submissions at the one hearing.
23 In addition to Bradshaw, counsel for Mr and Mrs Mouglalis referred to Autodesk Inc v Dyason (No 2) [1993] HCA 6, (1993) 176 CLR 300 at 303 and to The Silver Fox Company Pty Ltd as Trustee for the Baker Family Trust v Lenard's Pty Ltd (No 2) [2004] FCA 1310 in support of these propositions.
24 The Court's power to permit a reopening of submissions is discretionary. Prominent considerations in the exercise of the discretion are the public interest in the finality of litigation and in the efficient disposal of the Court's business. For these reasons, parties are expected to bring forward all their evidence and submissions at the one hearing and the circumstances in which courts allow a reopening of submissions once judgment has been reserved tend to be exceptional: Re Application by the Chief Commissioner of Police (Vic) [2005] HCA 18; (2005) 79 ALJR 881 at [22].
25 Nevertheless, there are circumstances in which it is appropriate to grant leave. A change in the subject matter of the litigation, new evidence, the publication of a binding or persuasive judgment, the character of the matter on which judgment is reserved, the importance of the issues sought to be raised on the reopening to the just disposition of the proceedings, and the reason for the matters not having been raised earlier may, by themselves or in combination, warrant a favourable exercise of the discretion. This is not intended to be an exhaustive list.
26 I have concluded that Bendigo Bank should be granted leave to reopen the matter so as to make further submissions. A number of considerations indicate that the grant is appropriate. First, there is the character of the hearing on 24 February. That character is indicated by the final paragraph in the principal judgment:
[145] For the reasons given above, I consider that Bendigo Bank has shown that the compositions should be set aside and that a new trustee should be appointed to investigate the bankrupt estates of Mr and Mrs Mouglalis. Orders to that effect will be made. Bendigo Bank is directed to bring in minutes of the orders which will be appropriate, including any consequential orders. I will hear from the parties as to costs.
27 The formal orders made at the time of judgment delivery were:
1. Bendigo Bank is to file and serve within seven days minutes of the orders which will be appropriate to give effect to the Court's conclusion that the compositions of the bankrupt estates of the Second and Third Respondent be set aside.
28 Thus, the purpose of the hearing on 24 February was to hear the parties' submissions as to the form of orders appropriate to give effect to the Court's conclusions and the relief to which it had previously held Bendigo Bank was entitled. A hearing of this character is different from a hearing concerning the entitlement or otherwise of a party to substantive relief. Amongst other things, the Court itself has an interest in the orders which it makes achieving the effect intended by its judgment.
29 Secondly, the decisions in Bradshaw, Autodesk v Dyason and in The Silver Fox Company on which counsel for Mr and Mrs Mouglalis relied do not concern circumstances like the present at all. Instead, they concern applications to reopen a matter after the Court had delivered judgment. Plainly, the approach which the courts adopt in circumstances of that kind will be more restrictive than their approach in circumstances of the present kind.
30 Thirdly, the absence of evidence from Bendigo Bank on the application to reopen is not, to my mind, a significant matter. Senior counsel informed the Court, frankly, that he accepted responsibility for what had occurred. The circumstances to which he referred are matters which were self-evidently within his knowledge and were consistent with the course of the hearing on 24 February. There is no reason why the Court should not accept senior counsel's explanation. Counsel for Mr and Mrs Mouglalis did not contend to the contrary, even though maintaining the submission that the Court did not have evidence in support of the application to reopen. As I pointed out during the hearing, it should go without saying that the Court can proceed on the basis that senior counsel would not knowingly mislead the Court.
31 I agree with counsel for Mr and Mrs Mouglalis that the manner in which the solicitors for Bendigo Bank went about seeking the reopening was irregular.
32 A party is not entitled as of right to provide supplementary submissions once judgment has been reserved. At best, a party may seek leave to do so (which Bendigo Bank's solicitors did in this case) but any such application should be made only after the attitude of the other parties has been sought and obtained. The decision of the Court of Appeal in New South Wales in Bale v Mills [2011] NSWCA 226; (2011) 81 NSWLR 498 contains a convenient statement of the relevant principle:
[57] … It is useful, however, to remind the parties (and through the publication of these reasons the profession and public generally) of the correct position that has been stated, over and over again, by the courts. The High Court, intermediate courts of appeal and other courts have deprecated in strong terms the filing of material after an appeal without, or outside, any leave given: … .
[58] Notwithstanding these clear statements the practice still occurs. That the practice still occurs notwithstanding the regular statements of the courts that it should not is no reason not to continue to state clearly to the profession and the public the correct position.
[59] Not only have the parties and their legal representatives no right (whether they agree among themselves to do it or not) to place before the court without prior leave further material after an appeal has been heard, it is wrong. It undermines and derogates from the principle of the open administration of justice. The practice is not legitimated by sending the material and in that material seeking leave. The proper course (unless prior leave, statute or court rule permits otherwise) is for the proceedings to be relisted so that an application to enlarge the record can be made and determined in open court: … .
[60] The appeal is not an occasion merely for a discussion of the issues so that the parties can go away to marshall and develop their ideas further, bearing in mind the discussion with the court. It is the time and place when and where argument, and sometimes decision, occurs. Once the appeal is reserved, the parties' rights to argument and to be heard have been exhausted.
[61] The consequence of this is not only that sending submissions to the court is wrong, but also the court may (and generally will) ignore what has been sent.
(Citations omitted)
33 However, this is not a case in which Bendigo Bank seeks to rely upon a supplementary written submission. The Court has held a further hearing and both parties have had the opportunity to address the matters in open court.
34 Counsel for Mr and Mrs Mouglalis did not suggest that, if a reopening was allowed, they would suffer any prejudice over and above that which could be cured by an order for costs.
35 For these reasons, I grant Bendigo Bank leave to reopen the matter for the purpose of making further submissions and now turn to the substantive matters agitated by the parties on the reopening.