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[2004] FCAFC 303
Federal Court of Australia (Full Court)
2004-11-16
Goldberg J, Crennan JJ
Original judgment source is linked above.
THE COURT 1 On 12 July 2004, an originating process was filed in the Court, which was headed "IN THE MATTER OF THE CREDITOR'S OF ANTAL-AIR PTY LTD (ACN 007 213 738), Applicants, and ANTAL-AIR PTY LTD ("ADMINISTRATOR APPOINTED") (ACN 007 213 738), Respondent, and AUSTRALIAN SECURITIES & INVESTMENT COMMISSION (as per Rule 2.8(3)), Respondent". The application was filed by or on behalf of Mr Antal Bittmann. It claimed to have been made under ss 449A, 449B(a), 473(1) and 447B of the Corporations Act 2001 (Cth) ("the Act"), and under paras 8, 139, 208, 211 and 212 of The Law Reform Commission Report No. 45. 2 In substance, the "applicants" sought to have "the Respondents' Administrator" removed from office, for having "destroyed the Respondent, Antal-Air Pty Ltd, rather than save it", as per paragraph 15 of the Corporate Law Reform Bill 1992 - Explanatory Memorandum. The applicants also sought to invoke ss 558FA(1)(b), 558FB(1)(b) and 596AB to restrain the "Administrator/Liquidator" from entering into a transaction that was to the detriment of the first Respondent's "genuine creditors" and the employees' entitlements. 3 On 12 July 2004, Mr Bittmann filed an affidavit in support of that process. To that affidavit there were exhibited a number of documents. In those documents, Mr Bittmann claimed that Antal-Air Pty Ltd ("Antal-Air") either had been, or ought to have been, in external administration. He further claimed that the liquidator had "destroyed the company". 4 There were several additional interlocutory applications filed prior to the matter being heard by Goldberg J on 10 August 2004. The first was an interlocutory application filed on behalf of Mr Bittmann on 23 July 2004 by which he sought to have the liquidator examined in relation to the winding up of Antal-Air. Next, a notice of motion was filed by or on behalf of Antal-Air and the liquidator on 30 July 2004 in which they sought an order that the proceeding be dismissed pursuant to O 20 r 2(1)(a) of the Federal Court Rules ("the Rules"). Finally, on 9 August 2004, Mr Bittmann filed a notice of motion seeking (1) an order that the notice of motion filed on 30 July 2004 itself be dismissed under O 20 r 1(1)(a) and (b) of the Rules; (2) an order that the liquidator be removed from office; (3) that the Court make such orders under s 447B(2) of the Act as it deemed necessary to protect the interests of creditors; and (4) that the Court order the liquidator to compensate the creditors for their losses. 5 On 10 August 2004, Goldberg J ordered that the interlocutory process filed on 23 July 2004 and notice of motion filed on 9 August 2004 be dismissed. His Honour also ordered that the originating application filed on 12 July 2004 be dismissed and that Mr Bittmann pay both Antal-Air's, and the liquidator's costs of and incidental to the application, the interlocutory processes and the notices of motion. In effect, Goldberg J found that the originating process did not disclose any reasonable cause of action. 6 On 30 August 2004, Mr Bittmann filed a "notice of appeal", purporting to appeal from the whole of the judgment of Goldberg J and seeking to have the Court set aside his Honour's orders. In response, Antal-Air filed an objection to competency dated 13 September 2004 seeking orders that the appeal be dismissed as incompetent pursuant to O 52 r 18(1) of the Rules. 7 The objection to competency contained two grounds. First, it contended that the judgment below was interlocutory, and that an appeal could not be brought from that judgment without leave: s 24(1A) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"). Next, it argued that the "appellants" ("the Creditors of Antal-Air Pty Ltd") had no legal standing to bring an appeal given that, collectively, they were not "a legal person". 8 On 29 September 2004, Mr Bittmann filed a notice of motion seeking to have the objection to competency dismissed pursuant to O 20 r 1(1)(a)(b) or O 20 r 2(1)(c) of the Rules. The notice of motion also sought costs from the liquidator and an order that "the appeal process proceed to the Full Court to accept Chapter 5 - External Administration and all of the parts within". 9 Clearly, the first issue to be considered is whether the objection to competency should be upheld. However, before turning to that issue, it is appropriate to summarise briefly the reasoning of Goldberg J in ordering that the application be dismissed. 10 In his consideration of the matter, Goldberg J made the following pertinent findings: · the application had been filed by or on behalf of Mr Bittmann notwithstanding that the heading of the application read "In the Matter of the Creditor's [sic] of Antal-Air Pty Ltd". · Mr Bittmann believed that Antal-Air either had been, or should be, in external administration. Moreover, he believed that the liquidator had "destroyed" the company by proceeding to wind it up. · what the liquidator had in fact done was to take such steps as he considered appropriate for the winding up of the company and the termination of its commercial activities. · even though no proper applicant had been named in the originating process, that was a matter that could easily be cured by substituting the name of a proper identifiable applicant. However, because his Honour had reached a view about the nature of the cause of action sought to be raised, he was prepared to assume for the purposes of the proceeding and the notices of motion before the Court that the proceeding had been brought by an applicant competent to bring the application. · under the Act, there was a clear division between the appointment of, and the consequences of appointing, a liquidator and the provisions that relate to the appointment of an administrator under Pt 5.3A. · it was clear that, on 20 April 2004, the Court, through Registrar Connard had ordered that Antal-Air be wound up in insolvency under the provisions of the Act, and that a liquidator be appointed for the purposes of the winding up. That order had been entered, and had not been set aside. Accordingly, the liquidator had been properly appointed and the order that Antal-Air be wound up stood undisturbed. · the records maintained by the Australian Securities and Investments Commission indicated that there had been notification of the making of a winding up order on 20 April 2004 and also notification of appointment of a liquidator by the Court. To the extent that Mr Bittmann contended that one of the documents in question, a Form 505, suggested that an administrator had been appointed, he had simply misunderstood the document; and · there was no justification for the view that the liquidator either was, had been, or should have been, appointed as an administrator under Pt 5.3A of the Act. He was properly appointed as a liquidator, and the order of 20 April 2004 was authority for that appointment. 11 Furthermore, Goldberg J stated at [17]: "I am satisfied that the originating process filed on 12 July 2004 does not disclose any reasonable cause of action. I am also satisfied that there is no basis disclosed in the material for the examination sought in the interlocutory process. I am satisfied that there is no basis upon which the relief sought in Mr. Bittmann's notice of motion of 9 August 2004 that the respondent's notice of motion be dismissed should be granted. There is no basis or cause of action shown as to why the liquidator should be removed from office and, in the present circumstances, the company being in liquidation and not under external administration, there is no basis upon which the Court can make an order under s 447B(2) of the Act or, indeed, any other provision of Pt 5.3A of the Act". 12 As already indicated, as a result of those findings, Goldberg J made the orders to which we have previously referred. The reason that his Honour ordered Mr Bittmann personally to pay the costs of Antal-Air and the liquidator was that he regarded Mr Bittmann as being, in reality, the applicant in the proceeding. Moreover, Mr Bittmann had been given every opportunity to withdraw his misconceived application, without costs, but had declined to do so.
The Objection to Competency 13 It is clear that Mr Bittmann does not appreciate the distinction between an appeal, and an application for leave to appeal. In his originating process, he sometimes refers to the "creditor's [sic] of Antal-Air Pty Ltd" as "the applicants" while in his notice of appeal he describes them as "the appellant". It is clear that he has neither sought leave to appeal nor an extension of time within which to do so. 14 Section 24(1A) of the Federal Court Act provides: "An appeal shall not be brought from a judgment referred to in subsection (1) that is an interlocutory judgment unless the Court or a Judge gives leave to appeal". 15 Goldberg J concluded that the originating process filed on 12 July 2004 should be summarily dismissed because it failed to disclose any reasonable cause of action. It is clearly established that an order summarily dismissing proceedings on the ground that no reasonable cause of action is disclosed is interlocutory, and that leave to appeal from such an order is required. See for example Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 92 FCR 101 at [8]-[9] ("Weatherall"); Dai v Telstra Corporation Limited (2000) 171 ALR 348 at [21]; and Marketing Advisory Services (MAS) v Football Tasmania Ltd (2002) 42 ACSR 128 at [29]-[30] ("MAS v Football Tasmania"). 16 Given that the appellant, howsoever described, has not sought the required leave, the purported appeal is plainly incompetent. In the circumstances, it is strictly unnecessary to determine whether the "creditor's [sic] of Antal-Air Pty Ltd" can be a proper party to any application or appeal to this Court. 17 However, because Mr Bittmann is not legally represented, the Court is prepared to treat his notice of appeal as though it were an application for leave to appeal, brought by a proper party, and within time. 18 The principles that govern applications for leave to appeal from interlocutory judgments are well established. The question is whether the decision sought to be appealed is attended with sufficient doubt to warrant being reconsidered, and whether substantial injustice would result if leave were refused, supposing the decision to be wrong: see Décor Corporation Pty Ltd v Dart Industries (1991) 33 FCR 397 at 398-9 ("Décor Corporation"). 19 As was pointed out in Weatherall at 104, citing Lloyd Werft Bremerhaven GmbH v Owners of Ship "Zoya Kosmodemyanskaya" (1997) 70 FCR 71 at 80-81 ("Lloyd Werft Bremerhaven"), where the practical effect of an interlocutory order is to determine, once and for all, the fate of the action, that fact must be taken into account as it may strongly favour the grant of leave. The Full Court in Lloyd Werft Bremerhaven observed at 80-81: "In any event, having regard to the effective finality of his Honour's disposition of the matter, if leave to appeal were required, it would be appropriate to grant it, provided we find substance in the appellant's arguments". 20 In MAS v Football Tasmania the Full Court similarly recognized that a judgment dismissing an application as disclosing no reasonable cause of action, though interlocutory, had an effective finality about it. That meant that it would be appropriate to grant leave to appeal from a judgment of that kind, and to extend time if necessary, if the applicant could point to any material suggesting that he might be able to make out a case against the respondent. However, in the particular circumstances of that case, the applicant could not pass even that low threshold. Accordingly, the Full Court dismissed his purported appeal as incompetent, and refused to grant an extension of time for the filing of an application for leave to appeal. 21 Mr Bittmann has endeavoured to persuade us that Goldberg J's judgment was in some way incorrect. He claimed that his Honour had failed to give proper weight to the "false declaration" by the liquidator that Antal-Air Pty Ltd was "in Liquidation". He also claimed that his Honour failed to give proper weight to the meaning of "External Administration", the requirements of Pt 5.3A and the object of external administration. Finally, he claimed that his Honour failed to give proper weight to ss 437A, 437B, 437C and 437D of the Act. 22 Mr Bittmann's arguments, so far as we can understand them, reflect a complete inability on his part to understand the basic principles of corporations law, or insolvency. 23 In particular, during oral submissions, Mr Bittmann showed an inability to understand the legal consequences of the appointment of a liquidator by the Court. Before Goldberg J, and before this Court, the substance of his claim was for removal of the liquidator by the Court. The application for removal turned on references to the correct construction of certain phrases in the Act such as "External Administration", "winding up" and "in liquidation". Mr Bittmann tried to gain support for his contentions from the Law Reform Commission Report No. 45. The meanings he sought to give these phrases were patently wrong, and not apposite to any application to remove a Court-appointed liquidator. It is clear that Mr Bittman failed to appreciate that the use of the expression "External Administration" in Ch 5 of the Act was apt to include not merely the appointment of an administrator under Pt 5.3A, but also the appointment of a liquidator under Pt 5.4B. 24 There is nothing to suggest that Mr Bittmann has an even remotely arguable case. In our view, Goldberg J's decision was plainly correct. Leave to appeal, and an extension of time within which to seek such leave, should therefore be refused. 25 It follows that the objection to competency must be upheld. The appeal, being incompetent, should be dismissed. Mr Bittmann must pay the respondents' costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Ryan, Weinberg and Crennan.
Associate: Dated: 16 November 2004 Counsel for the Appellant: Mr A. Bittmann appeared in person
Solicitors for the Respondents: Abbott Stillman & Wilson
Creditors of Antal-Air Pty Ltd (ACN 007 213 738)
Antal-Air Pty Ltd
(1999) 92 FCR 101
(2000) 171 ALR 348
(1991) 33 FCR 397
(1997) 70 FCR 71