Bourke v Westpac Banking Corporation

REASONS FOR JUDGMENT 1 On 21 December 2011, on the petition of Westpac Banking Corporation, an order was made by the Federal Magistrates Court of Australia ("the FMCA") for the sequestration of the estate of Michael Vincent Bourke (see Westpac Banking Corporation v Bourke [2011] FMCA 1032). The creditor's petition upon which the sequestration order was made resulted from an unsatisfied bankruptcy notice which was, in turn, based upon a default judgment in the Supreme Court of New South Wales in the sum of $7,226,948.05. The Supreme Court judgment was entered by default on 31 August 2010. The judgment of the Supreme Court was based on guarantees given, inter alia, by Mr Bourke and his wife. 2 The proceedings which led to judgment were commenced by summons in the Supreme Court on 11 May 2010. The proceedings were not defended. Mr Bourke says, in an affidavit filed in support of his applications in this Court, that he first became aware of those proceedings after he received a bankruptcy notice on 10 November 2010. Mr Bourke says that on or about 1 December 2010 he filed a notice of motion in the Supreme Court, supported by affidavit, to set aside the default judgment. He repeated that statement orally this morning. There is no other evidence to support the assertion but I will assume that it is true. 3 He says that the motion was listed for hearing on 4 February 2011, but he mistakenly thought the hearing date was 11 February 2011, and did not appear, as a result of which the motion was dismissed. He claims in his affidavit in the present proceedings to have been incapacitated to varying degrees from about January 2011, as a result of an infection caused by a spider bite, although there is no independent evidence to support those assertions, or the claim which he makes that he has been so unwell that he has been unable to instruct lawyers or take other steps to set aside the default judgment. 4 Mr Bourke also says that he filed an application to set aside the bankruptcy notice which he received on 10 November 2010 but, due to his illness, overlooked the hearing date, did not appear at the hearing, and that, as a result, that application was also dismissed. The judgment of the FMCA (at [8]) supports Mr Bourke's statement that proceedings to set aside the bankruptcy notice were dismissed as a result of Mr Bourke's non-appearance. The judgment of the FMCA (at [9]) also refers to a "reasonably long procedural history" in that court, involving a series of adjournments during the course of 2011, preceding a hearing which took place on 21 December 2011. 5 The creditor's petition was heard by the FMCA on 21 December 2011. Mr Bourke appeared in person by telephone. Mr Bourke told the FMCA that documents to commence proceedings to set aside the default judgment were filed in the Supreme Court on 20 December 2011. The documents which are before me, which evidence any application to the Supreme Court to set aside the default judgment, were filed in that court on 9 January 2012. 6 After hearing from Mr Adams, who appeared for Westpac, and from Mr Bourke, the FMCA concluded that a sequestration order should be made. The operation of the order was, however, suspended for 21 days, pursuant to s 52(3) of the Bankruptcy Act 1966 (Cth), to allow Mr Bourke to consider his position. That 21 days expires today. 7 Two days ago, on 9 January 2012, Mr Bourke filed a notice of motion in the Supreme Court, seeking to set aside the default judgment entered on 31 August 2010. Yesterday he filed in this Court a notice of appeal against the sequestration order made on 21 December 2011. At the same time, he filed an application for an interlocutory order. Leaving aside some infelicities in the drafting of the statement of the orders sought in the notice of appeal, and in the interlocutory application, the substance of the steps which Mr Bourke has now commenced in this Court is that he seeks to appeal against the sequestration order and he seeks a further stay of the sequestration order pending the hearing and determination of the appeal. 8 Section 52(3) of the Bankruptcy Act provides a power to stay proceedings under a sequestration order for a period not exceeding 21 days. That step has already been taken, and that time is about to expire. Section 37(2) of the Bankruptcy Act provides that no order may generally be made to suspend the operation of a sequestration order. Nevertheless, I am satisfied, as Mr Bourke has submitted, that the Court possesses power to stay a sequestration order pending the hearing and determination of an appeal. In submissions made to the Court this morning, Mr Bourke relied, in that connection, on the judgment of Yates J in Liprini v Liprini (No 2) [2011] FCA 1150, and the judgment of Pincus J in Evans v Heather Thiedeke Group Pty Ltd (1990) 95 ALR 424. Those judgments support his contention. Further support may be found for that contention in Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297 at 301, and in de Robillard v Carver (2007) 159 FCR 38 at [125]. The power to grant such a stay pending an appeal is now to be found in Rule 36.08 of the Federal Court Rules. 9 The judgment of the FMCA recorded the opinion of the learned magistrate that the proceedings "belatedly taken in the Supreme Court to seek to set aside the default judgment" had little or no prospects of success. 10 In his notice of appeal, Mr Bourke seeks to challenge that conclusion, and also asserts that the FMCA gave insufficient weight to the notice of motion filed in the Supreme Court, and to the material filed in support of that notice of motion. It is clear from the submissions that he made this morning that he wishes to invite the Supreme Court to go behind the guarantees which were given, and upon which Westpac proceeded when it sought and obtained judgment against him. However, beyond making those points, there were no specific matters which were sufficiently identified to provide any support for a conclusion which might differ from that reached by the FMCA. I would not be prepared to simply make assumptions in Mr Bourke's favour about such a matter in light of the procedural history to this point. 11 I have no doubt that the Court has power to set aside a sequestration order on appeal (see de Robillard v Carver at [141] to [150]). If Mr Bourke's appeal succeeds, that step will be available to the Court. However, there is insufficient evidence to persuade me that Mr Bourke has been diligent in the pursuit of his own interests in relation to these matters. It does not appear to me that the Court's discretion to further stay the operation of the sequestration order should be exercised in Mr Bourke's favour, pending the hearing and determination of the appeal. A proper case has not been made out to justify the making of such an order. 12 Accordingly, the interlocutory application for a stay of the sequestration order pending appeal will be dismissed. Costs are to be met from Mr Bourke's estate. The appeal against the sequestration order will proceed in the ordinary way. There will be orders to that effect, which will be available later in the day. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.