Mahaffy v Australia and New Zealand Banking Group Ltd

Federal Court of Australia|2014-04-01|Before: Jagot J

The application 1 This is an application made under rule 36.05 of the Federal Court Rules 2011 (Cth) (the FCR) for an extension of time to file a notice of appeal from orders made by the Federal Magistrates Court of Australia on 4 March 2013 sequestrating the estate of David Bruce Mahaffy on the basis of an act of bankruptcy on 23 August 2012 (Australia and New Zealand Banking Group Ltd v Mahaffy [2013] FMCA 150). The application is required because the time in which any notice of appeal was required to be filed, fixed by rule 36.03 of the FCR, expired 21 days after 4 March 2013 (that is, on 25 March 2013). The application for an extension of time was filed on 8 November 2013, nearly eight months after the expiry of the prescribed period. 2 The question whether to grant an extension of time under rule 36.05 calls for the exercise of the Court's discretion. The following statements of principle are relevant: (1) The discretion is wide, and is constrained only by the interests of justice and the subject matter and the overarching purpose in s 37M(1) of the Federal Court of Australia Act 1976 (Cth) which includes the objective of disposing of all proceedings in a timely manner: Dunlop v Fishburn (No 3) [2012] FCA 315 at [9]. (2) The application should not be granted unless the court is satisfied that it is proper to do so, and the prescribed period is not to be ignored: Luck v The University of Southern Queensland [2011] FCA 1335 ("Luck") at [23]. (3) An acceptable reason for the delay is expected and would normally be required: Luck at [23]. (4) Any prejudice to the respondent, including any prejudice in defending the proceedings occasioned by the delay, is a material fact militating against the grant of an extension: Luck at [23]. (5) The mere absence of prejudice is not enough to justify the grant of an extension: Luck at [23]. (6) The merits of the appeal are properly to be taken into account in considering whether an extension of time should be granted: Luck at [23]; SZQBI v Minister for Immigration and Citizenship [2011] FCA 1388 at [17]-[18]; Franich v Secretary, Department of Families, Housing Community Services and Indigenous Affairs [2011] FCA 1362 at [20]. 3 Factors relevant to the exercise of the discretion include the length of any delay (Flint v Richard Busuttil & Co Pty Ltd [2013] FCA 925), the attitude of the applicant to the default, and the Court's judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period: Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR 388; [1990] FCA 745 at 395-6; Welsh v Digilin Pty Ltd (2008) 250 ALR 13; [2008] FCAFC 149 at [12] (decisions concerning dismissal of proceedings but equally applicable to rule 36.05 of the FCR).

Background 4 In the Court below, Australia and New Zealand Banking Group Ltd (ANZ), the respondent to this application, sought by way of creditor's petition a sequestration order and related orders against Mr Mahaffy. On 4 March 2013, the primary judge held that he was satisfied the applicant committed the act of bankruptcy alleged in the creditor's petition, and that the other matters requiring proof under s 52(1) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) had been proven. Accordingly, a sequestration order was made against the estate of Mr Mahaffy, along with other related orders and an order for costs against Mr Mahaffy. These orders were made in Mr Mahaffy's absence because, as next explained, he failed to appear at the hearing. 5 During the course of the proceedings below, Mr Mahaffy filed a Notice of Grounds of Opposition to the creditor's petition along with a supporting affidavit. Despite being informed that he would be required for cross-examination on his affidavit, there was no appearance at final hearing by Mr Mahaffy or any other person on his behalf. In respect of Mr Mahaffy's absence, the primary judge said: [4]…I noted from the court file that Mr Mahaffy apparently faxed to the Court yesterday a letter and purported medical certificate stating that he would not be attending Court today, for a medical reason. I note, from exhibit C1, that Mr Mahaffy has previously raised illness as a reason to avoid attending Court for significant periods. I also note that, in a number of the many Court events in this matter over the past six months, Mr Mahaffy was given the opportunity to attend by telephone… [5] In the circumstances, the faxing of the letter and a purported medical certificate the day before the hearing of the petition is an unsatisfactory way to seek a further adjournment. I stood the matter in the list until 2.15pm today in order to attempt to contact Mr Mahaffy by telephone in order to provide him with the opportunity to apply for an adjournment in a proper way. However, it has not been possible to contact him on his nominated mobile telephone number. [6]…Notwithstanding the serious consequences of a sequestration order for Mr Mahaffy, I have decided that the interests of the administration of justice are best served by the Court proceeding today. 6 Mr Mahaffy's Notice of Grounds of Opposition challenged the judgment debt founding the creditor's petition. In respect of the merits of Mr Mahaffy's opposition, the primary judge held (at [7]) that he was satisfied that, …Mr Mahaffy has had an opportunity to take proceedings against [ANZ] to address the underlying issue of the judgment debt. He has been unsuccessful in the attempt he has made in the District Court of New South Wales, for procedural reasons. Although he was aware of the opportunity to seek to appeal to the New South Wales Court of Appeal, he has apparently not, to date, done so. I am not persuaded, on the basis of the available material, that there is any real question about the judgment debt relied upon by the petitioning creditor. 7 As noted, Mr Mahaffy filed the present application for an extension of time to appeal on 8 November 2013.

Evidence and submissions supporting the application 8 In his affidavit in support of the present application, Mr Mahaffy claims that: (1) He was never served with a bankruptcy notice by the process server identified in the primary judge's reasons. (2) He has served various subpoenas on ANZ's solicitors which have not been complied with and which, if answered, would show that he owed no debt to ANZ. (3) "On the hearing on the 4/3/2013 I sent the Federal Court a doctor's certificate stating I was very sick plus an affidavit from myself asking for an adjournment. I do not think this paperwork was ever presented to the Federal Magistrate…". (4) He had "nearly completed all the forms for an appeal within the appeal period of 28 days (which I was told by Court staff)" but learned upon lodging the forms that the period was 21 days. Further, a "solicitor friend" was going to assist him with the "appeal paperwork" but "has been away a lot or very busy". (5) He has been "very sick since the 4th March 2013 with being hospitalised many times and unable to attend work with attack, severe diabetic complications, cirrhosis of the liver and confined to my home unable to travel hardly at all… The cirrhosis of the liver is becoming life threatening, I am seeing a liver specialist for the week next week so I can survive more than 12 months, which one doctor gave me a couple of months ago". (6) He has not been able to attend upon his solicitor friend in Sydney to receive help with the forms and has not been able to pay another solicitor to do the work. 9 Mr Mahaffy's written submissions repeated the claims in his affidavit and made further, extensive and wide-ranging assertions of fact including serious allegations against ANZ, its solicitors, a process server and a registrar of the District Court, involving numerous allegations of fraud. These allegations do not appear in Mr Mahaffy's affidavit and Mr Mahaffy has provided no other evidence in support of them. Mr Mahaffy repeated and added to these assertions of fact in oral submissions made on 27 February and 19 March 2014.

Discussion 10 Mr Mahaffy's affidavit and submissions traverse a wide range of issues. However, their essence is that: - (i) Mr Mahaffy was given incorrect information by the Court regarding the time in which an appeal had to be filed; (ii) he had difficulty obtaining professional legal assistance to complete the relevant appeal documents; (iii) he is gravely ill, which has affected his ability to prepare and lodge the relevant documents; and (iv) he does not owe ANZ any money and has claims against ANZ for substantial sums owed to him. 11 The fundamental difficulty with the matters raised by Mr Mahaffy is that many of his claims are unsupported by any evidence and are disputed by ANZ, in circumstances where Mr Mahaffy's failure to attend the hearing before the Court below deprived ANZ of any opportunity to test his claims by cross-examination. In particular, despite Mr Mahaffy's repeated assertions during oral submissions that he could obtain medical certificates to support his claims of serious illness, throughout 2013 and to date, he has not provided the Court with any of them. Not only has he had eight months between the primary judge's judgment and the filing of his application in which to obtain such evidence, but he has had a further four months since filing this application in which he could have sought leave to adduce it. Yet he has failed to do so. 12 With respect to Mr Mahaffy's first contention, misinformation about the appeal period, the difficulty is that, even if Mr Mahaffy's assertion that the Court told him he had 28 days in which to file his appeal is accepted, the period of delay in lodging this application was nearly eight months. This delay far exceeds the seven days Mr Mahaffy claims to have lost as a result of the alleged misinformation. Beyond his assertions of illness, there is little to explain the significant delay. While Mr Mahaffy may have had difficulty obtaining legal advice in preparing his application, I do not accept that the limited steps he claims to have taken would justify the significant delay. Nor am I satisfied that Mr Mahaffy would prosecute his appeal with any greater diligence were I to grant an extension. Indeed, his submissions concerning the ongoing severity of his illness and his poor prognosis, if accepted, indicate that he would be incapable of prosecuting his proposed appeal in a timely manner. The lack of any reasonable explanation for the delay, the length of the delay, and the apparent incapacity of Mr Mahaffy to prosecute any appeal in a timely manner weigh heavily against the grant of an extension of time. 13 It is appropriate also to note ANZ's submission with respect to Mr Mahaffy's failure to comply with the requirements of his trustee in bankruptcy. An affidavit from the trustee states that Mr Mahaffy has failed to provide certain information lawfully requested under the Bankruptcy Act. Mr Mahaffy states in his written submissions that he has no intention of providing "any information to any trustee in bankruptcy ever as I should not be bankrupt". To the extent that Mr Mahaffy seeks to use this application and his own delay as an excuse for failing to cooperate with the trustee's lawful requests, it constitutes an abuse of process, prejudices ANZ and any other creditors, and is a further factor weighing against the granting of an extension of time. 14 Finally, with respect to the merits of the prospective appeal, it is clear from the primary judge's reasons that in deciding to proceed with the substantive hearing of the creditor's petition in Mr Mahaffy's absence his Honour took account of the evidence before him, weighed up the competing considerations and reached a decision that was reasonably open. Mr Mahaffy provided a medical certificate the day before the hearing. There was evidence before the primary judge which addressed the probity of the certificate. Mr Mahaffy did not attempt to appear by telephone despite having done so on a number of occasions previously in the proceedings. He did not make himself available to be contacted by telephone, or have anyone contact the Court on his behalf, despite a direction made on an earlier occasion that he would need to provide evidence if he was to be absent or seek leave to appear by telephone. These were matters to which the primary judge was entitled to have regard in exercising his discretion to proceed in Mr Mahaffy's absence. 15 By not making himself available for cross-examination at the hearing below, Mr Mahaffy has avoided any testing of his contentions. Accordingly, no inference should be drawn in Mr Mahaffy's favour in respect of the substantive merits of his appeal. In essence, Mr Mahaffy's substantive contentions are:- (i) he was not served with a bankruptcy notice, (ii) he does not owe the debt upon which ANZ based its petition for bankruptcy, (iii) ANZ has taken possession of his property illegally, and (iv) ANZ sold his property at an undervalue. Mr Mahaffy's affidavit in the proceedings below dealt with some but not all of these contentions. His contentions rest on serious allegations of fraud and dishonesty. As untested evidence, it should not be accepted at face value. Accordingly, it cannot be concluded that Mr Mahaffy has a strong case on the substantive merits. Moreover, if ANZ's evidence is accepted, Mr Mahaffy's case lacks any prospect of success.

Conclusion 16 Weighing up the discretionary factors, the material before me points overwhelmingly against granting an extension of time to appeal. Accordingly, the application should be dismissed with costs. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

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