Finikiotis v Knight Frank

1 I agree with the reasons for judgment that Dowsett J has given. I only desire to add one or two comments on issues that arose in argument in relation to the construction of s 60(2) and (3) of the Bankruptcy Act 1966 (Cth). 2 Subsection (2) provides that an existing action commenced by a person who subsequently becomes bankrupt is, upon that event: "stayed until the trustee makes election, in writing, to prosecute or discontinue the action." Subsection (3) provides: "If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action." Subsection (5) defines "action" to mean "any civil proceeding, whether at law or in equity". 3 The appeal that is listed before us today was plainly an "action" for the purposes of subss (2) and (3). It was in existence at the time when the sequestration order was first made against the appellants on 19 February 2001. The trustee has not elected in writing either to prosecute or to discontinue the appeal. A notice was served on the trustee by the second and third respondents to the appeal, calling upon the trustee to make such an election. Within twenty-eight days the trustee did not make such an election. The effect of subs (3) is therefore that the trustee is deemed to have abandoned the action. 4 Counsel for the second and third respondents cited to the Court authorities suggesting that, as a consequence of the deemed abandonment of a proceeding, it is open to the Court to dismiss that proceeding. Indeed, that was the order sought by the notice of motion with which we are dealing. It seems to me, however, that it does not follow from the deemed abandonment of a proceeding that the Court is obliged to dismiss it. The difficulty about dismissing it in the present circumstances is that, if the appellants are successful on appeal from a federal magistrate whose decision on 23 August 2001 confirmed the sequestration order on review of the decision of a registrar, then the right of the appellants to prosecute their appeal would spring into existence again. An order dismissing the appeal in the meantime would cause a possibly insuperable barrier to the appellants exercising their rights to prosecute the appeal. For these reasons, additional to those given by Dowsett J, I would be reluctant to make an order at this stage dismissing the appeal. 5 It may be, as counsel for the first respondent suggested, that s 60(2) itself operates by way of an automatic stay, continuing even after the twenty-eight day period specified in subs (3). Because there is some doubt about that, it seems to me appropriate that the Court should make a specific order staying the appeal until further order. Also, in the circumstances, to prevent a multiplicity of applications, it seems to me to be appropriate that the Court should order that the appellants make no application for a further order unless and until the sequestration orders made against the appellants or either of them are set aside or the bankruptcy of the appellants or either of them is annulled. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.