DISPOSITION
42 Returning now to the primary premise upon which the application is based, namely, that if the sequestration order is annulled or set aside, in effect, it will obviate the need to determine all the issues in the appeal except for the fourth issue (that is, the fourth group of issues, the compensation resulting from the freeze of BOQ1 in the main portfolio) and the second group of issues, namely, compensation and losses associated with the orders made in the Supreme Court of Western Australia.
43 If the sequestration order were annulled or set aside, it would resolve the question of removal of the respondent, that is, it would essentially, deal with ground 6 of eight, so one of the eight grounds. It would not resolve the second group of issues, that is, the question of losses flowing from the orders in the Supreme Court of Western Australia which is ground 5 of eight. Most significantly, there is very considerable uncertainty as to whether it would resolve the disputed asset issue. It certainly would not resolve that issue, but it also would not obviate the need, necessarily, to determine what assets truly form part of the estate of the bankrupts.
44 Insofar as the appellants seek annulment in WAD 66 of 2021, the effect of an annulment was dealt with by the primary judge in Frigger v Trenfield (No 9) [2021] FCA 652 at [13]-[17]. In short, the annulment would not invalidate anything the respondent has done as trustee in bankruptcy. Further, the property vested in her will remain vested in her so that she may apply it in the payment of costs, charges and expenses of the administration of the bankruptcies, including her remuneration and expenses.
45 There is evidence before the Court on this application that these costs exceed $1 million. There is no evidence before the Court on this application as to what assets may be available to be realised to recover the costs of the administration in bankruptcy and I am not in a position to form a view about the reasonableness of the fees or the assets vested in the respondent overall. However, I accept the respondent will claim in excess of $1 million and will seek to recover that sum from assets vested in her, including the disputed assets.
46 As to the claim for compensation for freezing BOQ1 and the main portfolio, that claim turns, in part, on demonstrating that the assets were assets of the Frigger Superannuation Fund. Therefore, that issue remains live and is the substance of grounds 2-4 of eight.
47 As to the issue of setting aside on the grounds of fraud, as I have mentioned earlier, that is not currently an issue that is in play in WAD 66 of 2021. There is no certainty that it will become an issue in those proceedings and it is very unlikely, in my view, if raised, that it will be resolved before August 2022 on information currently before the Court.
48 But even if I were to assume fraud will be permitted to be raised in WAD 66 of 2021, it would not necessarily result in a different outcome to the annulment application. There are good arguable grounds for considering that the outcome would not be substantially different.
49 The first is that s 153B of the Bankruptcy Act provides that if the Court is satisfied that the sequestration order ought not to have been made or in the case of the creditor's petition that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy. In its terms, it is sufficiently wide to capture the idea that there should be an annulment on the grounds that the original sequestration was obtained by fraud. If so, it is difficult to see the basis for which a court would apply a different set of rules or principles in dealing with the working out post an order setting aside a bankruptcy order, or sequestration order and an annulment.
50 The second reason is that a judgment of a superior court of record is valid until set aside. Third parties who have acted on statutory powers that depend on the 'fact of' an order, rather than the 'legal validity' of an order would arguably be protected from the consequences of acting on the face of the order. For example, New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118 at [32]-[41], [51]-[61].
51 Third, there would be a power for the Court to make such orders as are necessary to deal with the respondent's remuneration costs and expenses under s 23 of the Federal Court Act. By way of analogy see Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 [2021] FCAFC 143; (2021) 392 ALR 93 at [24], [30], [38], [40], [92], [254]-[255], [273] and [298].
52 In Robson, a Registrar of the Federal Circuit of Australia made a sequestration order under a delegated judicial power. A Federal Circuit Court judge later reviewed and set aside the sequestration order. Section 104(4) of the Federal Circuit Court of Australia Act 1999 (Cth) provided at that time that on review of the exercise by a registrar of delegated power, the Federal Circuit Court 'may make any order or orders it thinks fit in relation to the matter in respect of which the power was exercised'. The trustee in bankruptcy appointed after the Registrar made the order applied for orders that the creditor petitioner and former bankrupt pay the remuneration costs and expenses of the trustee in administering the former bankrupt's estate.
53 On appeal to the Full Court of the Federal Court of Australia an issue was whether there was a power to make that order under s 104(3) of the Federal Circuit Court of Australia Act. The Full Court of this Court held that there was such a power and it made orders, in effect, requiring the creditor's petitioner to pay the trustee's costs.
54 Section 23 of the Federal Court Act is in similar terms to s 104(3) of the Federal Circuit Court of Australia Act as it stood. In the course of the Full Court's decision, there was a distinction drawn between an order with no legal effect and an order with legal effect until set aside. Although there was a difference between the various judges of the Court on that issue, it made no difference in the end in exercising the power under s 104(3).
55 By analogy, even without the application of s 153B and s 154 of the Bankruptcy Act, if an order were made under s 23 of the Federal Court Act, the Court would have power to make orders dealing with the respondent's remuneration, costs and expenses. That would not be a straightforward question. However, the power is sufficiently wide to consider that orders may be made permitting the trustee to recover all or some of the remuneration, costs and expenses from the former bankrupt's estates. In that context, a decision regarding ownership of the disputed assets may be of considerable assistance. At least, it is not obvious that the appeal would be inevitably rendered inutile on those issues.
56 Now, to be clear, I am not seeking to deal with the propositions as if they were certain or beyond argument or doubt. I have raised these for the point of illustrating that the outcome in WAD 66 of 2021, even if the appellants were to succeed, is by no means certain or straightforward. Put another way, it is speculative to contend that the dispute asset issue is of no relevance if the appellants succeed in WAD 66 of 2021.
57 That is sufficient to refuse the appellants' application. However, I would add that there are the grounds that weigh against the grant of an adjournment. The public interests in the efficient resolution of legal proceedings is also a significant factor. The Court has allocated time and resources to determine the appeal in May. And that has been at the expense of other litigants in the system.
58 The appellants proffered an explanation for their delay in bringing the application by way, in effect, of a submission. It was submitted that the decision of Hill J in the Supreme Court of Western Australia proceedings was to be delivered in January of 2022 and, therefore, the appellants considered that there was no need to make this application, as it was thought that WAD 66 of 2021 would be resolved before the appeal. That submission, even if accepted on the factual basis, does not really explain the absence of an application after January 2022 and, in any event, before the more significant costs in the appeal were incurred by the respondent.
59 As Colvin J said in Pedley v Deputy Commissioner of Taxation [2019] FCA 1106 at [3]:
It is a significant disruption to the administration of the work of this Court for an appeal hearing to be vacated close to the date listed for hearing. The Court arranges appeals so that they are listed in special sittings and considerable efforts are made to accommodate limitations on availability and to list matters in an efficient way. If the appeal hearing was to be vacated at this stage, there would be no prospect that the date might be allocated to other litigants. When these matters were raised with Mr Pedley, he apologised for raising matters at this late stage. Nevertheless, the consequence that the date will be lost to other litigants would follow if there was an adjournment.
For similar reasons, the same point could be made here.
60 And the last point I make in this respect is that the appellants have sought an adjournment and that the matter be relisted in the August 2022 listings for the Full Court. There is no certainty that the reasons given for the adjournment or the vacation would be resolved in that period of time. If it were otherwise, it would, in effect, be a stay of the appeal pending the determination of WAD 66 of 2021.
61 As to the question of prejudice to the respondent, I note the submissions in that respect. But it is, essentially, prejudice of a kind that would ordinarily be able to be resolved by reference to a favourable costs order.