Ogle v Tendiris Pty Limited

REASONS FOR JUDGMENT 1 This is a notice of motion wherein the appellant, Donald Gordon Ogle, seeks a stay of proceedings under the sequestration order which was made on 26 September 2007 in the Federal Magistrates Court in relation to his estate until the determination of the appeal or earlier order. 2 There is further order sought, by way of the motion, that the second respondent, Mark William Pearce, who is the trustee of the bankrupt estate of the appellant and applicant, be restrained in particular ways from dealing with the estate of the appellant until the determination of the appeal or earlier order. The motion also seeks provision in respect of costs. 3 A notice of appeal was filed on the same day as the notice of motion, namely 12 October 2007. Like Spender J in Freeman v National Australia Bank Ltd [2002] FCA 427 (Freeman) and Siopis J in Greyson v Commonwealth Bank of Australia [2005] FCA 1108, I am satisfied that, given that there has been a notice of appeal filed, the Court does have power to stay proceedings in respect of the sequestration order pursuant to O 52 r 17 of the Federal Court Rules. 4 In that regard, I refer, respectfully, to a line of cases, as did Spender J, which are to be found in terms of root authority in a decision of Pincus J in Evans v Heather Thiedeke Group Pty Ltd (1990) 95 ALR 424 and the decision of Carr J in Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297. 5 In Freeman, to which I have made reference, Spender J stated, and I respectfully agree, that the relevant considerations in determining whether or not a stay of proceedings should be granted is whether there is an arguable point on the proposed appeal, and whether the balance of convenience favours the granting of a stay. 6 There are three grounds set out in the notice of appeal. As they evolved, in terms of the submissions that were very helpfully made by Mr Greinke on behalf of the appellant and applicant, there were two principal areas in respect of which challenge is proposed to be made to the decision below. They relate to what one might term, firstly, the validity of the bankruptcy notice, and secondly, a question relating to whether there was tender in respect of the sum, the subject of the bankruptcy notice. 7 The first of these was not, so far as one can tell, the subject of agitation before the Federal Magistrates Court. The argument is related in some detail in the outline of submissions that has been provided on behalf of the appellant and which I shall place with the court papers. It suffices to note that the argument turns upon whether the first respondent, Tendiris Pty Ltd (Tendiris) was competent to secure the issuing of a bankruptcy notice. Tendiris was not the beneficiary of a final order, but rather an assignee of such a person. The point concerned then turns on whether, in terms of the Bankruptcy Act 1966 (Cth), Tendiris was able to obtain a bankruptcy notice. In that regard I was taken to particular provisions in the Uniform Civil Procedure Rules 1999 (Qld) which attend the granting of leave in respect of an assignee creditor. 8 In Romano v Peldan [2003] FCA 767, an unreported decision of Dowsett J, his Honour had to consider the circumstance of a second bankruptcy notice having been issued after a first bankruptcy notice in the context of an appeal from the Federal Magistrates Court. At [13] of the reasons that his Honour delivered, he made reference to an earlier decision of his in Hahnheuser v WorkCover Corp of South Australia [2001] FCA 1730, which was also an appeal from a sequestration order made by a Federal Magistrate, in which he had declined to allow the bankrupt to argue a new ground challenging the validity of the bankruptcy notice, because had the point been taken at an earlier stage, it would have been open to the creditor to issue a new bankruptcy notice. 9 I have reflected particularly on that decision and whether or not it has particular consequences in respect of the first of the substantive issues which are sought to be agitated. It may, but that is not a point which, in my opinion, I ought to decide summarily. In other words, I am prepared to accept, for the purposes of the stay application, that there is an arguable case in respect of the first of the issues mentioned. 10 As to the question of tender, the affidavit material read before me contains exchanges of correspondence and also relates to factual circumstances which attended the offering on two occasions of cheques, one a trust account cheque, the other a bank cheque. I was taken by Mr Greinke, in his helpful submissions, to what I might term "vendor-purchaser cases" in respect of the tendering of cheques in payment; those cases being Stirling Properties Ltd v Verba Pty Ltd (1987) 74 ACTR 1 (Miles CJ) and an earlier decision in the High Court. 11 I was not referred to any particular case in the context of bankruptcy law which related to whether or not the provision of a cheque of either of those kinds could amount to a legal tender of payment under and in accordance with the requirements of a bankruptcy notice. 12 I have a very real concern as to whether that is indeed possible by way of tender as opposed to whether or not the acceptance of such a cheque would extinguish a debt. In that regard I refer to a decision of Lindgren J in The Owners Corporation (Formerly The Proprietors) Strata Plan 3438 v Geoffrey Stephen Hudson [1998] 72 FCA 762 given on 3 July 1998. In that regard his Honour noted that Hudson bore the onus of proof on the issue of tender and was not satisfied on the evidence that Hudson was in a position to tender cash in the relevant amount. 13 His Honour further noted, a little later in his reasons, that in accordance with general principle, an unaccepted tender is not payment and that therefore does not discharge the debt, referring in that regard to Australian Mid-Eastern Club Ltd v Yassim (1989) 1 ACSR 399. 14 Whilst I have a reservation about the latter point in particular, it seems to me that each of the points is best dealt with in a more considered way than in the exigencies of a late Friday afternoon. I therefore propose to proceed on the basis that there is an arguable case raised. That being so, the question becomes where the balance of convenience might lie. 15 Obviously enough, bankruptcy proceedings are not proceedings merely between creditor and debtor, but are attended with particular public interest considerations. In that regard, it is of note - as the reasons of the learned Federal Magistrate disclose - for whatever reason, when the offer was extended, Mr Ogle chose not to provide evidence to the Federal Magistrates Court on the hearing of the creditor's petition of his solvency. Of course, the amount involved in this case, the subject of the bankruptcy notice, namely $6300, is in a relative sense, a minor sum. When one takes that factor plus the absence, or at least one might say, the disinclination, to provide evidence of solvency which would have been highly pertinent to the question of whether a sequestration order ought to be made, that is a concern in relation to balance of convenience. 16 On the other hand, bankruptcy involves a change of status. It is also attended with very real restrictions on a person's liberty to travel overseas and their general ability to engage in commerce. 17 Balancing the considerations that have been raised in submissions, my opinion is that a stay ought to be granted. In that regard I have particularly borne in mind that the nature of the appeal is such that it would ordinarily be heard by a Full Court although, subject to an exercise of power that is vested in the Chief Justice of this Court, it can be heard by a single judge of the Court. The case is presently on my docket, and were it wholly a matter wherein it were possible for me, without more, to hear an appeal, it would be possible for me to hear the appeal as early as next week. However, it may well not be possible to secure a decision as to the appropriate composition of an appeal bench for this case prior to that. 18 If the case is one which is to be determined by a Full Court, the November sittings of this Court are already fixed in terms of the cases to be heard. There is a callover in respect of a February sitting of the Full Court which will occur next week. However, in the ordinary practice of the Court, the cases which are to be called over at that stage have already been settled in terms of the number of cases on that callover. 19 Whilst nothing is impossible in this world, there is the contingency that a Full Court may not hear the case in February, in which case, in the ordinary course of affairs, in respect of the constitution of a Full Court in the Queensland Registry, the next sittings would not occur until some months later in April and into May. The fact that it may be that long until an appeal bench could be constituted does intrude on the discretion that I have to exercise in this case. I note that a similar consideration concerned Carr J in Coleman v Lazy Days Investments Pty Ltd, a case to which I have already made reference. 20 There has been the submission made that any particular stay of proceedings ought to be on terms as to the provision of security for costs. That provision would, of course, have to relate to security for costs in respect of the appeal rather than the costs of the trustee's administration of the estate. 21 The disinclination on the part of Mr Ogle at the time of the sequestration proceeding to provide evidence of solvency is certainly a relevant consideration in respect of that particular submission and so too is the extremely general nature of the material that has been provided to the Court in relation to his financial circumstances at present. In that regard, I note that his solicitor, Mr Peter Deed, in his affidavit filed 12 October 2007, has deposed that: The appellant's legal and financial affairs are complex and have a lengthy history. If the sequestration proceeds the trustee in bankruptcy is likely to incur considerable costs in the investigation of his affairs. 22 As against that, there are decisions of this Court which serve to remind one that security for costs, though possible, does not follow as a matter of course where there is an appeal. In that regard I refer to decisions of Moore J in Chen v Pyramid Building Society (In Liquidation) [1999] FCA 272, and also a decision of Hill J in Bates trading as Riot Wetsuits v Omareef Pty Ltd trading as Quiksilver Wetsuits & Ors [1998] FCA 536. In the latter of those decisions, his Honour observed that he was conscious that if the appeal were to proceed, the respondents would incur further costs. His Honour observed, as well: … albeit not quite of the magnitude suggested. 23 I have noted in the affidavit material read before me an exchange of correspondence on the subject of costs and I must say, with respect, that the figures are canvassed by the first respondent as to the possible amount of costs associated with an appeal be it heard by a single judge or the Full Court of this Court seemed rather ambitious to me. The points involved in this case are short and, as was observed also in the exchange of correspondence, ought to be able to be dealt with in one day. 24 On balance, I am not inclined to order security for costs. However, I was informed, without objection, and it does seem to be raised in the material read before me, that there were other creditors interested in the sequestration proceedings. Be that as it may, on the face of the material and considering the factors I have mentioned, namely the absence of any evidence as to solvency that was apparently deliberately not presented at the time of the sequestration proceeding and the reference which I have quoted in Mr Deed's affidavit to Mr Ogle's complicated affairs; I am concerned, having regard to public interest considerations that attend the bankruptcy jurisdiction, that there ought to be some exposure of Mr Ogle's position in relation to his affairs. 25 I note that as a condition of a stay in Freeman, Spender J ordered that the applicant prepare and file a statement of affairs. I am clearly of the view in this case that there is a requirement for the filing of a statement of affairs as well. That being so, the orders that I propose to make are these: (1) proceedings under the sequestration order made on 26 September 2007 against Donald Gordon Ogle be stayed until the determination of Mr Ogle's appeal from the order making that sequestration order or earlier order; (2) that the applicant prepare and file his statement of affairs within 14 days of today; (3) that the stay of proceedings under the sequestration order continue only whilst the appeal against the making of the sequestration order is prosecuted with due expedition and diligence; (4) that there be liberty to apply to each party on three days' notice; (5) that there be no order in respect of the costs of the trustee in respect of today's motion and that otherwise the costs of the motion be costs in the appeal; and (6) further directions adjourned to a date to be fixed. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.