Jeans v Commonwealth Bank of Australia

The primary judge's decision 4 The primary judge accepted that, at the time it gave the undertaking referred to above, the Bank expected the special leave application made by Mr Jeans would be heard within six months of the date on which the application for an extension of time was dismissed, that is the date on which the act of bankruptcy occurred. 5 Justice Conti granted the relief sought by the Bank. His Honour noted that the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 ('Adam P Brown')held that the Court has power to release a party from an undertaking given to the Court without the consent of the other party even when there was no mistake operative at the time it was given. The High Court held, at 178, that a court must 'remain in control of its interlocutory orders' and specifically stated that such an order would be 'appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust'. 6 His Honour regarded the unanticipated delay in the High Court hearing the special leave application as a new fact that would render the maintenance of the original undertaking unjust. He rejected Mr Jeans' submission that the Bank was seeking to negate its undertaking completely. In his Honour's view the Bank was only seeking to maintain the status quo 'constituted by the Full Court's judgment, and the act of bankruptcy of Mr Jeans subsequently committed by virtue of his non-compliance with the bankruptcy notice based on that judgment'; Jeans v Commonwealth Bank of Australia [2004] FCA 841 at [14]. 7 His Honour held that Mr Jeans had not identified any material detriment that would or might result from the relief sought by the Bank. In particular, Mr Jeans had not identified any creditor who might be able to take advantage of his non-compliance with the Bank's bankruptcy notice. On the other hand his Honour noted that counsel for Mr Jeans acknowledged that if relief were denied: 'the Bank would thereafter find itself compelled to issue and serve a fresh bankruptcy notice after denial of the application for special leave, with the consequential disadvantage thereby conversely occasioned to the Bank of an act of bankruptcy of Mr Jeans no longer crystallising until some time in 2005.'

Leave to appeal from an interlocutory order 8 When considering an application for leave to appeal from an interlocutory decision, the utility of granting leave is a significant consideration. If there is little or no prospect of an appeal succeeding leave should not be granted; Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. 9 Furthermore, where the interlocutory decision involves an exercise of the primary judge's discretion, the basis on which an appeal court may interfere is governed by established principles. The Court is not entitled to substitute its discretion for that of the primary judge unless the primary judge made an error such as was described in House v The King (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ: 'If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.' 10 In addition, there is a need for particular caution where the orders of the primary judge involve matters of practice and procedure. An interlocutory order releasing a party from an undertaking given to the Court is a matter of practice and procedure. It is well established that a court considering an application for leave to appeal from such an order should grant leave sparingly; Adam P Brown at 177; Bright v Femcare Ltd 195 ALR 574 ('Femcare') at 575 per Lindgren J. An appellate court should not merely substitute its own view as to the appropriate exercise of the court's discretion for that of the primary judge.

This application 11 The thrust of the applicant's claim at the hearing of the leave application was that the primary judge had failed to take into account a material consideration. Senior Counsel for the applicant, Mr Ireland QC, drew my attention to a further notation on the orders made by Deputy District Registrar Hedge. It is as follows: 'The Court also notes the statement made by Mr Butler, the solicitor for the applicant that if, at the conclusion of proceedings in the High Court, it becomes necessary for the respondent to serve a fresh bankruptcy notice, then Mr Butler will obtain instructions from the applicant to accept service of such fresh bankruptcy notice.' 12 I have some difficulty in understanding what was intended by this statement. It is hard to see how Mr Butler could deliver on a promise to obtain instructions if the applicant were not willing to give those instructions. Perhaps it was intended to be a promise by the applicant, through his solicitor, that he would co-operate with the Bank if a fresh bankruptcy notice turned out to be necessary. In any event, the meaning is irrelevant for present purposes. Mr Ireland raised the issue, not because of the content of the promise or undertaking, but to show that when the Bank gave its undertaking to delay presenting a creditor's petition it was in the contemplation of both parties that a fresh bankruptcy notice might be required. 13 Mr Ireland pointed out that although Conti J discussed the undertaking given by the Bank at some length, nowhere does his Honour refer to this additional statement made by Mr Butler. He submitted that the statement was a material consideration that 'slipped through the cracks' and that, if leave to appeal were granted, the applicant on such appeal would have a strong argument that the Bank should not be allowed to withdraw its undertaking in circumstances that were anticipated when the undertaking was given and provided for by the parties. 14 If his Honour had overlooked the fact that the parties had provided for the consequences of delay in the High Court hearing the special leave application, Mr Ireland's argument would, in my view, have some merit. However, it was not in dispute that the statement was drawn to Conti J's attention. The fact that his Honour does not refer to it in his reasons for judgment does not necessarily indicate that he overlooked the point. Given its opaque nature and the uncertainty as to what the statement was intended to achieve, it is likely that his Honour attributed little weight to it. In these circumstances I am not prepared to infer that his Honour overlooked the matter. 15 The other issue raised by the applicant on the notice of motion relates to what was referred to as the contract between the parties underlying the orders made by the Court and the undertaking given. It was suggested that the Court ought not interfere with this contract. I attach no weight to this argument. An agreement between the parties may explain why the parties consented to the dismissal of the proceedings and why the undertaking was given. However, the contract was not argued before the primary judge and, in other than in exceptional circumstances (which have not been pleaded here), the Court's interest in keeping control of its interlocutory orders does not require it to go beyond those orders and the material that was before it when those orders were made. 16 Ultimately for the primary judge the question came down to the parties' respective disadvantage. His Honour expressed the view that, given the substitute undertaking proffered by the bank, the presentation of a creditor's petition would not effect any change in the legal status of the applicant. Mr Ireland has pointed to the fact that there is some disadvantage to a person in merely having a creditor's petition issued against them. I accept that submission, just as I accept the submission that there would be a significant disadvantage to the Bank if it were not able to rely on the act of bankruptcy that occurred on 21 January of this year. 17 However, the weight to be attributed to these factors was a matter for the primary judge. His Honour's decision was made in the exercise of his discretion made after careful consideration of the competing views of Mr Jeans and the Bank. There was no dispute as to the applicable principles. While, with hindsight, it might have been preferable for his Honour to have mentioned the statement attributed to Mr Butler, I see no reason to infer that his Honour failed to exercise that discretion properly. 18 Bearing in mind the caution advised in Adam P Brown and reiterated in Femcare, the application for leave to appeal is denied and the applicant on the motion is to pay the respondent's costs of today. In the circumstances it is not necessary to consider the application for a stay of the primary judge's order pending the determination of an appeal. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate: Dated: 19 July 2004 Counsel for the Applicant: Mr J Ireland QC