Jacobs v Wily

Background 2 On 22 February 2012, Justice Edmonds made a sequestration order under s 43 of the Act against the applicant's estate at 58 Johnstone Street, Peakhurst in New South Wales. The sequestration order was made on the basis of a creditor's petition which itself was based on the failure of the applicant to comply with a bankruptcy notice. The bankruptcy notice related to three judgments in which orders for costs were made against Mr Jacobs (two judgments of the District Court of New South Wales both obtained on 23 June 2011 and one of the High Court obtained on 23 March 2011). The respondent (Mr Wily) to the interlocutory application is the trustee in bankruptcy for Mr Jacobs. 3 By an originating application filed on 13 February 2013, Mr Wily sought declarations that items of household and personal property and other items referred to as extraneous items of the applicant, situated at 9/17 Lorraine Street, Peakhurst, be declared property of the bankrupt divisible among creditors. Mr Wily sought a similar declaration in relation to property of Mr Jacobs situated at 75 Clarke Street, Peakhurst. He also sought orders that he be permitted to remove immediately the extraneous items situated at both of those properties. 4 On 27 February 2013, District Registrar Wall made certain directions in the matter and stood it over for further directions only before Jacobson J on 28 March 2013. 5 On 28 March 2013, Jacobson J made further directions and, over Mr Jacobs' opposition, listed the originating application for hearing on 24 April 2013 before his Honour 6 The hearing proceeded on 24 April 2013, notwithstanding that Mr Jacobs was not present. His Honour records in [2] of his reasons for judgment in Wily v Jacobs [2013] FCA 415 that his Honour was satisfied that Mr Jacobs was aware of the hearing because he was present in Court on 28 March 2013 when the matter was set down for hearing on 24 April 2013. His Honour also records that he had been informed by the Registry that Mr Jacobs had contacted the Registry to say that he would not be appearing that day, because of ill health. 7 In deciding to proceed with the hearing despite Mr Jacobs' absence, his Honour drew attention to certain features of the case which made it "an unusual one". Those matters were: (a) there was evidence that it was likely that there would be a substantial surplus of assets in the bankrupt estate; (b) the trustee in bankruptcy gave evidence that, depending upon the time it took to realise the assets of the bankrupt, the trustee may only be required to sell one of the bankrupt's properties to pay all the creditors and cover the costs and disbursements; and (c) having regard to the circumstances and history of the litigation and disputes which led to the bankruptcy, it was evident that if the bankrupt continued to refuse to acknowledge and accept his obligations, the costs of the proceedings would continue to rise and there may be no surplus in the estate. 8 After summarising the evidence before him, Jacobson J concluded that the trustee in bankruptcy was correct to have formed the view that the extraneous items located at both the Lorraine Street and Clarke Street properties were properly divisible amongst the creditors of the bankrupt estate pursuant to s 116(1) of the Act and that he was also correct in forming the view that the extraneous items were not excluded property within the meaning of s 116(2) of the Act. 9 His Honour concluded that he should make the declarations and orders set out in the originating application. 10 Accordingly, on 24 April 2013, his Honour made the following orders: 1. The items of household and personal property and other extraneous items (collectively "Extraneous Items") of the bankrupt situated at 9/17 Lorraine Street, Peakhurst be declared property of the bankrupt divisible amongst creditors pursuant to ss 5, 58, 116(1), 30(1) and 134(4) of the Bankruptcy Act 1966 (Cth) (the Act). 2. The Extraneous Items of the bankrupt situated at 75 Clarke Street, Peakhurst are property of the bankrupt divisible amongst creditors pursuant to ss 5, 58, 116(1), 30(1) and 134(4) of the Act. 3. The Trustee may immediately remove by whatever means the Extraneous Items of the bankrupt situated at 9/17 Lorraine Street, Peakhurst and sell or otherwise dispose of same in whatever manner the Trustee deems fit for the benefit of the creditors of the bankrupt. 4. The Trustee may immediately remove by whatever means the Extraneous Items of the bankrupt situated at 75 Clarke Street, Peakhurst and sell or otherwise dispose of same in whatever manner the Trustee deems fit for the benefit of the creditors of the bankrupt. 5. Any and all costs incurred by the Trustee in respect of the removal and sale or disposal of the Extraneous Items referred to at the properties identified in Orders 3 and 4 above are normal disbursements incurred by the Trustee in the course of him undertaking his duties as the Trustee of the bankrupt. 6. The costs of the application are costs in the bankruptcy. 11 It later transpired that Order 5 of the orders made on 24 April 2013 was in error because his Honour overlooked the fact that, during the course of the hearing, the trustee in bankruptcy had indicated that he no longer pressed that order. 12 Accordingly, acting under the slip rule, on 13 May 2013 Jacobson J made a further order pursuant to r 39.05 of the Federal Court Rules 2011 (the 2011 FCRs), that Order 5 be set aside.

Consideration 28 Rule 36.05 of the 2011 FCRs specifies the following requirements if a party applies for an extension of time: (a) an application in accordance with Form 67; (b) specification that the application may be made during or after the 21 day period as specified in rule 36.03; and (c) the application must be accompanied by each of the following: the judgment or orders from which the appeal is to be brought; the reasons for the judgment or orders, if published; an affidavit stating briefly but specifically the facts on which the application relies and an explanation why the notice of appeal was not filed within time; and a draft notice of appeal that complies with rules 36.01(1) and (2). 29 The principles guiding the exercise of the Court's discretion whether or not to grant an extension of time for the bringing of an appeal are reasonably well established. Some of the relevant principles are helpfully set out by Katzmann J in Dunlop v Fishburn (No. 3) [2012] FCA 315 at [9] and [10]: The Federal Court Rules 2011 (Cth) ("the Rules") retain the 21 day time limit for filing a notice of appeal and the discretion given to the Court in the former Rules to extend that period: r 36.03. The discretion is wide. It is constrained only by the interests of justice and the subject-matter and purpose of the legislation. Section 37M(1) of the Federal Court of Australia Act 1976 (Cth) ("FCA Act") provides that the overarching purpose of the civil procedure provisions of the Act and the Rules is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. That purpose includes the objective of disposing of all proceedings in a timely manner: FCA Act, s 37M(2). Section 37M(3) requires the Court to interpret and apply the Rules and exercise any power conferred by them in the way that best promotes the overarching purpose. Consequently, the discretion conferred by r 36.03 is to be exercised in that way. The requirement in the former Rules (O 52 r 15(2)) that an applicant show 'special reasons' has been removed. Despite the absence of a requirement for special reasons (which, in any event, only meant something out of the ordinary (Jess v Scott (1986) 12 FCR 187) ), it seems to me that the considerations guiding the exercise of the Court's discretion set out by the Full Court in Parker v The Queen [2002] FCAFC 133 at [6] continue to apply: (a) Applications for an extension of time are not to be granted unless it is proper to do so; the legislated time limits are not to be ignored; (b) The applicant must show an 'acceptable explanation for the delay'; it must be 'fair and equitable in the circumstances' to extend time; (c) Other action taken by the applicant to challenge the decision is relevant to the consideration of the question whether an acceptable explanation for the delay has been furnished; (d) Any prejudice to the respondent in defending the proceedings that is caused by the delay is a material factor militating against the grant of an extension but the mere absence of prejudice will not justify the grant of an extension; (e) The merits of the appeal are to be taken into account. 30 The relevance of the merits of the proposed appeal relates to the fact that, if no arguable case is disclosed, no useful purpose would be served by granting leave to appeal out of time. 31 Dealing with each of the proposed grounds of appeal, I make the following observations. First, as to the proposed ground relating to procedural unfairness (fair hearing rule), it appears to be based on Jacobson J's decision to proceed in Mr Jacobs' absence on 24 April 2013. I do not consider that Mr Jacobs has an arguable case on this proposed ground of appeal. Procedural fairness requirements apply to provide an affected person in appropriate circumstances with an opportunity to be heard and to present their case. Whether or not that opportunity is taken advantage of is a matter for the affected person. Rule 17.04(b) of the 2011 FCRs empowers the Court to hear and determine an interlocutory application in the absence of a party if service has been effected but the party does not appear. 32 Mr Jacobs was clearly on notice that there would be a hearing on 24 April 2013. It is evident that Jacobson J was informed that Mr Jacobs was unable to attend because of ill health. It is evident that his Honour took that information into account, but did not accept that it provided a sufficient basis for not proceeding with the hearing on that day as scheduled and in circumstances where the moving party was present and asked for the matter to proceed. That is perhaps understandable, given the terms of the email sent on Mr Jacobs' behalf and the limited terms of the medical certificate issued that day by Dr Ramakrishna. His Honour gave clear reasons why he considered that the case was an unusual one and needed to be heard promptly. Particular emphasis was placed on the concern that, having regard to the long history of litigation and disputes which had led to the bankruptcy, there was a danger that there would be no surplus in the estate if the costs of the proceedings continued to mount. I do not consider that, in these circumstances, Mr Jacobs has an arguable case that he was denied procedural fairness. If a party wishes to rely on ill-health as a basis for an adjournment, they should provide proper medical evidence in support (see the comments of Brereton J in Mirembe Pty Ltd v Craig Dangar [2009] NSWSC 94 at [5] and [10]). 33 Although the draft notice of appeal refers only to a denial of natural justice by reference to the "fair hearing rule", in his second affidavit, Mr Jacobs also seems to raise an allegation of apprehended bias. Again, however, that allegation is based on Jacobson J's decisions to list the matter for hearing on 24 April 2013 and to proceed with the hearing on that day in Mr Jacobs' absence. Mr Jacobs has pointed to no material which suggests that this claim is reasonably arguable. Apprehended bias does not arise merely because a judge makes orders which are adverse to a litigant's interests. Mr Jacobs has not pointed to any evidence or other matter which provides a reasonable basis for any apprehended bias claim. 34 Secondly, I do not consider that Mr Jacobs' other complaints of procedural irregularity warrant time being extended to raise these matters on appeal. He complains of further documents being "informally issued" to him, leaving him uncertain as to the case against him. To the extent that he complains that the respondent's affidavit filed on 23 April was only served on him by way of email on that day, it is evident from the extracts of the transcript in Mr Jacobs' second affidavit that the respondent did not rely on that particular affidavit, and there is no reference to it in his Honour's reasons for judgment. The primary judge referred repeatedly to an affidavit dated 6 February 2013 by Mr Wily, but that is the only affidavit to which reference is made in the judgment. 35 As to the respondent's affidavit dated 26 February 2013, which Mr Jacobs says was not served on him, there is no reference in the primary judge's reasons for judgment to the evidence in that affidavit, but the transcript extracts set out in Mr Jacobs' second affidavit indicate that an unsigned copy of that affidavit was handed up at the first directions hearing. Mr Jacobs confirmed during the course of the hearing that he had received a copy of that unsigned affidavit at that time but he says that he was never served with a signed filed copy. Although the transcript records the primary judge as saying that "I note that affidavit", the fact is that there is no reference in his Honour's reasons for judgment to that affidavit (which incidentally dealt with the insurance position of the properties). Mr Jacobs accepted that the only affidavit referred to and relied on by the primary judge was Mr Wily's affidavit dated 6 February 2013, about which there is no complaint of non-service. 36 I do not consider that Mr Jacobs' complaints concerning the alleged non-service of the affidavit filed on 23 April 2013 are material in circumstances where the transcript records that Mr Wily's legal representative indicated that he did not rely on that affidavit. 37 Mr Jacobs' complaint that only two hours were allocated for the hearing on 24 April 2013 does not give rise to an arguable case of procedural unfairness. All the more so in circumstances where he did not attend the hearing. 38 His complaints regarding a failure to investigate whether there were provable debts owed to him by listed debtors does not give rise to any arguable point. Mr Jacobs failed to take advantage of the opportunity to participate in the hearing on 24 April 2013 and to raise these matters if he wished to do so. The primary judge cannot be criticised for not inquiring into matters which were not raised before him. 39 As to Mr Jacobs' complaint about not having legal representation available to him, the Court was not taken to any evidence demonstrating that Mr Jacobs ever made any request to Jacobson J for a legal referral to be made under r 4.12 of the 2011 FCRs. In any event, the question whether or not the Court should make a referral under that provision is a matter for the Court's discretion, guided by relevant matters (including the possible relevant matters set out in r 4.12(2)). I do not consider that Mr Jacobs has raised any basis to suggest that the Court's discretion miscarried within the sense of the House v The King principles. 40 Mr Jacobs next proposes to argue in an appeal that Order 5 "did not reflect the Court's intention". This proposed argument has no merit in circumstances where, as noted above, Order 5 was set aside by a subsequent order made on 13 May 2013. 41 Finally, Mr Jacobs complains that the respondent's solicitor supplied him with what is described as "a copy of the fraudulent order entered 29 April 2013", incorporating Order 5. The description of the matter as "fraudulent" constitutes a gross misstatement. The orders as entered on 29 April 2013 did, at that time include Order 5 but, again, as noted above, that order was subsequently set aside. To use the word "fraudulent" in those circumstances is entirely inappropriate. 42 For all these reasons, I am not persuaded that Mr Jacobs' proposed appeal has any merit sufficient to warrant an extension of time. Even if I were to accept his explanation for the delay in not filing a notice of appeal, I consider that his proposed appeal has no merit. Accordingly, the application for an extension of time should be dismissed.

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