Grigorieva v The Owners - Strata Plan No 31534 - [2017] FCA 1099 - FCA 2017 case summary

Federal Court of Australia|2017-09-05|Before: Bromwich J

The application for an extension of time in which to file a notice of appeal be dismissed.
The applicants pay the first respondent's costs fixed in the sum of $11,000.
The applicants pay the second respondent's costs as taxed or agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BROMWICH J: 1 This is an application for an extension of time to file a notice of appeal from orders made by a judge of the Federal Circuit Court of Australia on 28 November 2016. The primary judge ordered that a sequestration order be made against the estate of each of the applicants, who are husband and wife, and also made related orders as to costs and the provision of the sequestration orders to the Official Receiver. 2 The debt upon which the bankruptcy notice was based arose from proceedings in the Local Court of New South Wales by which the owners of a strata block of units (Strata Owners), which includes a unit owned by the applicants, successfully sued the applicants for an unpaid special levy and other levy amounts originally totalling $25,548.96 and costs. The special levy concerned rectification of defective concrete, including in the applicants' unit. The evidence suggests that the overall sums due by the applicants had reached $116,756.02 by 6 June 2017. 3 Rule 36.03 of the Federal Court Rules 2011 (Cth) relevantly provides that a notice of appeal must be filed within 21 days after the date on which the judgment appealed from is pronounced or orders made. Any notice of appeal was therefore required to be filed by 20 December 2016. That deadline was not met. 4 On 25 January 2017, the applicants filed an application for an extension of time within which to file a notice of appeal. Annexed to that application was a draft notice of appeal. The application was supported by two affidavits filed at the same time. The first is an affidavit of the first applicant, Natalia Nikiforova-Grigorieva, sworn on 25 January 2017 but dated 30 November 2016 on the first page. The second affidavit was deposed by the second applicant, Yuri Grigoriev, and was sworn on 24 January 2017 but dated 29 December 2016 on the front page. The respondents to the application for an extension of time are the Strata Owners and the applicants' trustee in bankruptcy. The trustee has filed a submitting appearance save as to costs. 5 The factors which this Court should generally take into account in determining whether to grant an extension of time include the length of delay and whether there is an acceptable explanation, the merits of the appeal, and any prejudice to the opposing party, although the mere absence of prejudice is not sufficient: SZTRY v Minister for Immigration and Border Protection [2015] FCAFC 86 at [6]; see also AAQ15 v Minister for Immigration and Border Protection [2016] FCA 963 at [12]. 6 The delay in filing the present application was relatively minor and, although this remained unexplained, it was not suggested by the Strata Owners that this of itself was a sufficient reason to refuse an extension of time if the application was otherwise meritorious. The Strata Owners did not identify any relevant prejudice. The main barrier advanced to the grant of an extension of time was the lack of merit in the proposed appeal, which in turn depends upon the prospects of such an appeal succeeding. 7 The draft notice of appeal contains the following grounds: 1. The Appellants were not present when the judgement [sic] was given contrary to the law of natural justice which dictates that they should be given an opportunity to be heard. The First Appellant was charged with wounding with intent of her neighbour. She pleaded not guilty to the offence and on hearing of her second bail application Ms Nikifororva-Grigorieva [sic] was released on bail. There is a history of AVO [apprehended violence order] against the neighbour who implicated the First Appellant in the crime. The Second Appellant did not receive a notification in the mail about the hearing because he lives at a different address. 2. The Appellants are able to pay their debts when they fall due. They are not insolvent. 3. The Appellants dispute the amount owed to the creditor. 8 None of those grounds alleged any error in the reasons or conclusions of the primary judge, although the third paragraph of the first proposed ground of appeal would appear to take issue with the primary judge's decision to proceed to hear the application by the Strata Owners in the absence of the second applicant. The first applicant appeared before the primary judge. The second applicant did not appear, but the primary judge was satisfied that he had notice of the hearing and proceeded to hear the application in his absence. There is nothing to indicate any error in the way that his Honour decided to proceed in the absence of the second applicant. A mere reference by the second applicant to living at a different address (to that of his wife, the first applicant) is insufficient to raise any viable ground of appeal. 9 The primary judge was satisfied that the petitioning creditor, the Strata Owners, had proven what was required for the purposes of s 52(1) of the Bankruptcy Act 1966 (Cth). His Honour's clear and concise reasons disclose no error on their face. 10 The applicants made no written submissions in these proceedings, as provided for in procedural orders made by this Court on 28 March 2017. Nor did they appear at the hearing of this application. Instead, their daughter, Ms Caroline Grigorieva, appeared and advised the Court that her father was unable to appear and her mother could not appear because she was in gaol. She advised the Court that her parents now wished to settle the debt owed to the Strata Owners and did not wish to press on with their appeal. 11 Counsel for the Strata Owners advised the Court that they wished to have the application for an extension of time heard and determined, rather than have it left to any process of negotiation. Counsel also indicated that the Strata Owners sought a lump sum costs order for the costs of the application if dismissed. 12 The evidence for the Strata Owners comprised an affidavit of Mr John Frankcom, a principal of the law firm acting for the Strata Owners. The affidavit deposed to the history of the judgment by which the bankruptcy notice was issued, including unsuccessful attempts to set that judgment aside. 13 The Strata Owners provided written submissions on each of the proposed grounds of appeal. There were no submissions, oral or in writing, for the applicants.

Proposed ground 1: whether a breach of natural justice was caused by the applicants not being present at judgment delivery in the proceedings below 14 As to proposed ground 1, the complaint made by the applicants concerns them not being present when the primary judge delivered judgment. While it is not disputed that the applicants were not present at that time, the submissions for the Strata Owners point out that there was no hearing on that date, which was confined to the delivery of judgment and making of orders. In case this proposed ground was intended to extend to the hearing that did take place before his Honour on 15 June 2016 and 10 August 2016, the submissions for the Strata Owners note that the reasons for judgment given by the primary judge at [32]-[51] provided a comprehensive consideration of the grounds of opposition raised by the first applicant and the evidence in support of those grounds. The Strata Owners submitted that it is patent that the first applicant had a reasonable opportunity to lead evidence and make submissions before his Honour. They also submitted that it is clear that his Honour had due regard to the first applicant's special status both as a self-represented litigant and a person whose first language is not English. 15 In relation to the absence of the second applicant, both at the hearing before the primary judge and at the time of judgment delivery, the Strata Owners' submissions point out that, as the primary judge observed, the second respondent had never appeared in the proceedings, signed any notice of opposition, put on any evidence, sought to make any submissions, nor sought to be represented. There was no evidence before his Honour of any of the health concerns asserted in relation to the second respondent. He had been properly served with the required notice and documents and had reasonable notice of court events. The primary judge considered that the circumstances existed for the court to proceed under r 13.03C(1)(e) of the Federal Circuit Court Rules 2001 (Cth). 16 The only reasonable conclusion is that the first proposed ground of appeal is devoid of merit.

Proposed ground 2: question of the applicants' solvency 17 As to proposed ground 2, by which it is asserted that the applicants are solvent, the written submissions for the Strata Owners point out that there is no evidence to support the assertion of solvency. Indeed there is almost no evidence of the applicants' financial position before this Court at all. It was pointed out that solvency was not even raised before the primary judge. 18 It was submitted on behalf of the Strata Owners that, to the extent that the applicants own assets, presumably including their unit which gave rise to the debt proceedings, there is no evidence before this Court of their value or encumbrances or whether the applicants are in a position to "realise assets, sufficient to pay the debt, within a relatively short time": Stankiewicz v Plata [2000] FCA 1185 at [30], a decision of the Full Court of this Court. In the absence of such evidence, this Court has no understanding of what the position is as to the income, expenses, assets or liabilities of either of the applicants. To the extent that the second applicant refers to compensation to which he is entitled, such compensation is not divisible property in bankruptcy by reason of s 116(2)(b) of the Bankruptcy Act. In circumstances in which the second respondent has hitherto been unwilling to pay the debt that is the subject of the creditor's petition, it was submitted that such compensation should not be considered on a question of whether he is able to pay the debt. That is even more so when this is the only evidence expressly said to go to the second applicant's solvency. It was pointed out on behalf of the Strata Owners that, to the extent that the applicants are able to pay their debts, their bankruptcy may be brought to an end by means of s 153 of the Bankruptcy Act. In those circumstances, it was submitted that there is no obvious injustice to them consequent upon either the making of the sequestration order or a refusal by this Court to extend the time in which they can file a notice of appeal. 19 The submissions for the Strata Owners should be accepted. Proposed ground 2 is without merit.

Proposed ground 3: dispute as to the amount the applicants owe to the creditor 20 As to proposed ground 3, which raises a possible dispute concerning the underlying debt, the submissions for the Strata Owners point out that the underlying debt is a judgment debt for strata levies. An application was made to set aside that default judgment, which was dismissed on 19 November 2015. In those circumstances, it was submitted that the matters referred to in the applicants' evidence are only relevant to this Court's consideration of the present application in the sense that they have been raised before, and considered by, the primary judge: see [32]-[51] of his Honour's reasons. No error in those reasons is identified. 21 It was further pointed out on behalf of the Strata Owners that none of the matters raised in the affidavit evidence of the applicants were relevant to the petition, nor amounted to a set-off consideration. None of the evidence filed in support of this application improves upon that position. 22 In all the circumstances, the primary judge correctly declined to go behind the judgments of other courts dealing with the applicants' many assertions. It was submitted by the first respondent that this Court should adopt the same approach. Reliance was placed on the decision in Shaw v Yarranova Pty Ltd [2017] FCAFC 88 at [18]-[22]. None of the material placed before this Court constitutes any attempt to mount the significant hurdle referred to by their Honours in demonstrating that this Court should go behind the prior judgment in circumstances where the primary judge has declined to do so. 23 The submissions for the Strata Owners should be accepted. Proposed ground 3 is without merit.

Conclusion 24 The proposed grounds of appeal have no prospect of success. In those circumstances, granting the application for an extension of time would be futile. The application must therefore be dismissed. The applicants must pay the respondents' costs. 25 On the question of quantification of costs, I have been provided with an unsigned short form bill of costs which totals the solicitors' costs for the first respondent at $7,698.40 and for counsel's fees at $3,850, which comes to a total of $11,818.40. I have considered each of the items in that bill of costs and am of the view that they generally appear to be reasonable, save that the duplication of costs for submissions filed in this Court does not seem to be justified. In my view, the appropriate costs order is that the applicants pay the first respondent's costs in the sum of $11,000, and that the applicants pay any costs of the second respondent trustee as taxed or agreed. 26 The orders made are as follows: (1) The application for an extension of time in which to file a notice of appeal be dismissed. (2) The applicants pay the first respondent's costs fixed in the sum of $11,000. (3) The applicants pay the second respondent's costs as taxed or agreed. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromwich.

Grigorieva v The Owners - Strata Plan No 31534

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