Buckby v Ark Energy Ltd

1. The respondent, Ark Energy Ltd, have leave to be represented on the hearing of its Notice of Objection to Competency by Mr Thomas Quinlan Mehrtens.
2. The appeal be dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

CHARLESWORTH J: 1 On 17 April 2019 I made an order summarily dismissing this appeal pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). I gave oral reasons on that day and now publish written reasons to the same effect. 2 By this proceeding Mr John William Bucky appeals from a sequestration order made by a single judge of the Court on 7 December 2018: Ark Energy Ltd v Buckby, in the matter of John William Buckby [2018] FCA 2095. The respondent, Ark Energy Ltd was the petitioning creditor. 3 By a notice of objection to competency dated 12 March 2019, Ark Energy seeks the following alternative orders: a. the appeal be dismissed for incompetency; or b. in the alternative, that summary judgment be entered in favour of the Respondent pursuant to s.31A of the Federal Court [of Australia] Act 1976 (Cth) on the basis that the grounds have no reasonable prospect of success and/or are an abuse of the Court's process; or c. in the further alternative, that individual grounds of appeal that are deemed incompetent by this Honourable Court be struck out prior to the hearing of the appeal. 4 It is convenient to deal first with the contention that the appeal should be summarily dismissed under s 31A of the Act on the basis that the appeal has no reasonable prospect of success. 5 The order is sought in the appellate jurisdiction of the Court. Section 25(1) of the Act provides that the Court's appellate jurisdiction shall, subject to s 25, be exercised by a Full Court. Section 25(2B)(aa) provides that a single Judge (sitting in Chambers or in open court) may give summary judgment. An application for the exercise of the power to give summary judgment on an appeal must be heard and determined by a single Judge unless: (a) a Judge directs that the application be heard and determined by a Full Court; or (b) the application is made in a proceeding that has already been assigned to a Full Court and the Full Court considers it is appropriate for it to hear and determine the application. 6 In this case there has been no direction that the application for summary dismissal be heard and determined by a single Judge. Nor is the application made in a proceeding that has been assigned to a Full Court. It follows that Ark Energy's application must be heard and determined by the Court as presently constituted of a single Judge. 7 Section 31A of the Act relevantly provides: 31A Summary judgment … (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. 8 In Riva NSW Pty Limited v Official Trustee in Bankruptcy [2017] FCA 188, Perry J helpfully summarised the principles that may guide the exercise of the power to summarily dismiss a proceeding under s 31A: 45 First, the respondent as the moving party bears the onus of persuading the Court that the application has no reasonable prospects of succeeding: Australian Securities and Investments Commission v Cassimatis [2013] FCA 641; (2013) 220 FCR 256 (Cassimatis) at 271 [45] (Reeves J). 46 Secondly, the intention behind the enactment of s 31A is 'to lower the bar for obtaining summary judgment (including summary dismissal) below the level that had been fixed by such authorities as Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91-92, and General Steel Industries Inc v Commissioner for Railways (NSW) [1964] (1964) 112 CLR 125 at 129-130 …': White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511; (2007) 160 FCR 298 (White Industries) at 310 [54] (Lindgren J); see also Cassimatis at 271 [46] (Reeves J). In the cases to which Lindgren J referred in White Industries, the requirement had been expressed in such terms as 'manifestly groundless' or 'hopeless'. As Hayne, Crennan, Kiefel and Bell JJ held in Spencer v The Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 (Spencer) at 139 [52]-[53]: 52. … effect must be given to the negative admonition in sub-s (3) that a defence, a proceeding, or a part of a proceeding may be found to have no reasonable prospect of successful prosecution even if it cannot be said that it is 'hopeless' or 'bound to fail'. … [I]t is important to begin by recognising that the combined effect of sub-ss (2) and (3) is that the inquiry required in this case is whether there is a 'reasonable' prospect of prosecuting the proceeding, not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail. 53. In this respect, s 31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. 47 Thirdly, the assessment required by s 31A of whether a proceeding has no reasonable prospects of success necessitates the making of value judgments in the absence of a full and complete factual matrix and argument, with the result that the provision vests a discretion in the Court: Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401 (Kowalski) at 408-409 [28] (the Court). That discretion includes whether to deal with the motion at once or at some later stage in the proceedings when the legal and factual issues have been more clearly defined: Butorac v WIN Corporation Pty Ltd [2009] FCA 1503 at [19] (Buchanan J); Cassimatis at 272 [50] (Reeves J). 48 In the fourth place, despite the threshold for summary dismissal having been lowered, the discretion must still be exercised with caution (Spencer at 131 [24] (French CJ and Gummow J) and 141 [60] (Hayne, Crennan, Kiefel and Bell JJ)). Consistently with this, the discretion is concerned 'with the bringing and defending of proceedings, not just with pleadings; with substance, not just with form': White Industries at [50] (Lindgren J) (approved in Kowalski at 409 [30] (the Court); see also Spencer at [23] (French CJ and Gummow J)). 49 Finally, in his Honour's helpful explanation of how these principles are to be applied, Reeves J in Cassimatis further explains at 271-272 [46] that: … the determination of a summary dismissal application therefore does not require a mini-trial based upon incomplete evidence to decide whether the proceedings are likely to succeed or fail at trial. Instead, it requires a critical examination of the available materials to determine whether there is a real question of law or fact that should be decided at trial. Each application for summary judgment or summary dismissal has to be determined according to its particular circumstances. What is required is a practical judgment of the case at hand. ... 9 The events leading up to the hearing of the creditor's petition are summarised in the reasons of the primary judge. Mr Buckby did not contend that his Honour's factual account of the events was inaccurate. The following narrative is drawn from the reasons of the primary judge and is in some part evident on the face of the materials before me. 10 Ark Energy filed its creditor's petition on 2 July 2018. 11 On 19 September 2018, Mr Buckby filed a notice stating his grounds of opposition to the creditor's petition. By that notice, Mr Buckby asserted that he was solvent. He also asserted that he had been attempting to deal with the creditor's petition while receiving treatment for cancer. The treatment, he said, had caused him to be "considerably unwell and genuinely stressed as to his prognosis". Mr Buckby also asserted that he should be afforded a reasonable period within which to be able to deal further with his illness and to provide evidence concerning his insolvency. 12 On 25 September 2018, a Registrar made orders progressing Ark Energy's creditor's petition to a hearing in the following terms: 1. The Respondent is to file and serve any further affidavits upon which he wishes to rely in support of the grounds set out in his notice of opposition filed on 19 September 2018 by 29 October 2018. 2. Should the Respondent seek a variation to these orders because of the medical condition referred to in his affidavits filed on 19 September 2018 and 24 September 2018, such application is to be supported by an affidavit from his treating specialist that addresses: a. The nature of the condition/illness suffered by the Respondent; and b. How the condition/illness impacts upon the Respondent dealing with these proceedings. 3. The Applicant is to file and serve any affidavits in reply upon which it wishes to rely by 26 November 2018. 4. The parties are to file and serve any objections to the affidavits filed in the proceedings by 30 November 2018. 5. The parties are to file and serve any written submissions upon which they wish to rely by 3 December 2018. 6. The Creditor's Petition be referred to a Judge of the Federal Court to be heard at a date and time to be advised. 7. Costs of today are reserved. 13 At the time that the Registrar's orders were made, Mr Buckby was represented by the law firm Case Legal and in particular by a member of that firm, Mr Raj. 14 On 9 October 2018, the Associate to the primary judge sent an email to the parties by their legal representatives informing them that the creditor's petition was set down for hearing on 7 December 2018. 15 On 26 October 2018, Mr Buckby sent an email to the Court. The content of that email and the Court's response to it are explained in his Honour's reasons: 9 The respondent has not complied with either of the orders. He did, on 26 October 2018, send an email to the Court informing the Court that he could not comply with the timelines in the Registrar's order. He explained in the email that he had not been able to obtain a report from the treating specialist by reason of the time it was taking to obtain an appointment and set out some details of the medical condition, said to be a malignant thyroid cancer, from which he suffers. The respondent set out some details of stress and pressure to which he is subject, and said that he has provided instructions for the preparation of a solvency report but expected that this would be at least two weeks away from completion. 10 The respondent did not provide a copy of that email to the applicant's solicitors. My Associate responded to that email on 29 October 2018. In addition to drawing the respondent's attention to the Court's Guide to Communications with Chambers and Registry Staff, my Associate said: Unless you have the consent of the respondent, you will need to apply by Interlocutory Application with a supporting affidavit for a variation of the timetable. Any application of this kind should be made as soon as practicable. 11 The respondent's response to that email on 2 November 2018 has a somewhat arch tone, but it is apparent that he had received the email, and can be taken to have been aware, accordingly, that, unless he obtained the consent of the applicant, an interlocutory application and supporting affidavit was required… 16 Mr Raj filed a Notice of Ceasing to Act on 9 November 2018. 17 Mr Buckby made no application (whether by his solicitor or on his own behalf) for a variation of the Registrar's orders in the manner specified in [2] of those orders. Nor did Mr Buckby file an interlocutory application in response to the email sent by the Associate to the primary judge. 18 On 3 December 2018, Mr Buckby sent to the Court a copy of an affidavit of an accountant made on 30 November 2018. The accountant deposed that he had received instructions to prepare a report concerning Mr Buckby's solvency and that he anticipated the report would be completed by 21 January 2019. 19 On the day before the hearing, Mr Buckby sent to the Associate to the primary judge an affidavit that had not been filed. By that affidavit, Mr Buckby deposed that he had not been able to comply with the Court's timeframes but had used his best endeavours to do so. He also deposed that he expected to have a medical report provided to him by his specialist and that he was expecting the preparation of a report by the accountant. 20 At the commencement of the hearing on 7 December 2018, Mr Buckby made an oral application for an adjournment of the hearing on four bases, identified in the reasons of the primary judge (at [5]) as follows: … First, he had not been aware of the hearing until yesterday when he received an email from the applicant's solicitors. Secondly, that he has had insufficient time to prepare for the hearing. Thirdly, because he suffers from a medical condition which impedes his ability to prepare and represent himself. Fourthly, because he wishes to obtain a report from an accountant to support his claim that he is solvent. … 21 The primary judge made an order dismissing Mr Buckby's oral application for an adjournment. On this appeal, it is Mr Buckby's case that the refusal of the adjournment application resulted in a breach of the rules of procedural fairness and so constituted an appealable error.