Qureshi v Commonwealth Bank of Australia

Federal Court of Australia|2010-02-26|Before: Foster J

REASONS FOR JUDGMENT 1 The appellant appeals from orders made by Raphael FM on 3 November 2009 (Commonwealth Bank of Australia v Qureshi [2009] FMCA 1111). Raphael FM ordered that: 1. A sequestration order be made against the estate of Zia Ul-Islam Qureshi.

The applicant creditor's costs (including any reserved costs) be taxed (in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006) and paid from the estate of the Respondent Debtor in accordance with the Act.

(4) The appellant file and serve his written submission on or before 29 January 2010. 6 The appellant failed to comply with either of the orders which I have extracted at [5] above. For this reason, on 19 February 2010, the parties were informed that the matter would be listed this morning for the purpose of the Court considering whether to strike out the appellant's Notice of Appeal or to dismiss the appeal for failure to comply with the orders made on 25 November 2009. 7 On 24 February 2010 the respondent notified both to the Court and to the appellant its intention to seek to have the appeal dismissed summarily when the matter came before the Court today. This morning the appellant sent a fax to the Registry of the Court in which he said the following: Due to my ongoing illness, I will not be able to attend court today, and further advise, as a result of my ill health and pending surgery, I formally withdraw my appeal. 8 The appellant has not appeared today. 9 No formal discontinuance or notice withdrawing the appeal has yet been filed. 10 The appellant filed an Amended Notice of Appeal on 24 November 2009. In that document he sought an order that the orders made by the Federal Magistrate on 3 November 2009 be set aside "… until the NSW Court of Appeal decides" and an order that the appointment of his trustee in bankruptcy be terminated. In the grounds of appeal forming part of that document, the appellant expanded somewhat in respect of the second order sought by him, suggesting that the trustee should be removed or his appointment terminated because of a conflict of interest. 11 The bankruptcy effected by the orders made by the Federal Magistrate on 3 November 2009 was based upon a judgment debt obtained in the Supreme Court of New South Wales after a lengthy and complex hearing in front of Einstein J, a Judge of that Court. The amount of the judgment debt was approximately $3.382 million. The appellant sought to appeal from the judgment of Einstein J. It is not necessary now to traverse the detail of what occurred in relation to the appellant's attempts to appeal from that judgment. Ultimately, an appeal was heard by the NSW Court of Appeal and determined by a judgment of that Court delivered on 22 December 2009 (Qureshi v Commonwealth Bank of Australia [2009] NSWCA 421). At the very end of a lengthy judgment Young JA said at [232] and [233]: 232 Despite thick masses of paper and many thousands of words, there is nothing in the submissions made by the appellant which casts any serious doubt on the primary judge's decision.

233 I thus propose that the appeal be dismissed with costs. The other members of the Court of Appeal, Beazley and Macfarlan JJ, agreed with his Honour. 12 A slight difficulty arose as a result of the sequestration order having been made in November 2009, but that was resolved in February 2010 when the Court of Appeal made final orders dismissing the appellant's appeal with no order as to costs. 13 This Court has ample power to deal summarily with unmeritorious claims, be they at first instance or on appeal. One source of power is s 31A of the Federal Court Act which is in the following terms: 31A Summary judgment

(1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a) the first party is prosecuting the proceeding or that part of the proceeding; and

(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a) the first party is defending the proceeding or that part of the proceeding; and

(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(4) This section does not limit any powers that the Court has apart from this section.

(5) This section does not apply to criminal proceedings. Proceeding, when used in s 31A, includes an appeal (see the definition of proceeding in s 4 of the Federal Court Act). 14 In Wang v Anying Group Pty Ltd [2009] FCA 1500, I set out the principles which govern the exercise of the Court's power pursuant to s 31A of the Federal Court Act. At [43] and [44] I said: 43 The critical words of s 31A(1), when applied to the present case, require me to be satisfied that the respondents have "… no reasonable prospect of successfully defending the proceeding …". The following principles may be extracted from the authorities:

(a) The moving party does not have to demonstrate that the defence is hopeless or unarguable;

(b) The Court must consider the pleadings and the evidence with a "critical eye" in order to see whether the respondent party has evidence of sufficient quality and weight to be able to succeed at trial (Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 at [23] (p 382) (per Finkelstein J));

(c) The respondent party is not obliged to present its whole case in order to defeat the summary judgment applicant but must at least present a sufficient outline of the evidence in order to enable the Court to come to a preliminary view about the merits for the purpose of considering the statutory test in s 31A(1)(b) (Jefferson Ford Pty Ltd 167 FCR 372 at [22] (p 382) (per Finkelstein J)); and

(d) The test may require greater scrutiny of the pleadings and evidence in some cases than in others. In my judgment, the words of s 31A(1) compel a flexible approach. The real question in every case is not so much whether there is any issue that could arguably go to trial but rather whether there is any issue that should be permitted to go to trial. This seems to be the approach of Finkelstein J in Jefferson Ford Pty Ltd 167 FCR 372 and of Gordon J in the same case (as to which see [123]-[134] (pp 406-409)), although Rares J in that case at [73]-[74] (p 394) and in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 esp at [45] (p 731) favoured a test which is much closer to the older test articulated in authorities decided under Rules of Court expressed in terms different from the language of s 31A(1)).

44 I agree with the helpful summary of the relevant principles given by Gilmour J in Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 where, at [5] and [6] of his Honour's Reasons, his Honour said:

5 Section 31A lowers the bar for obtaining summary judgment: White Industries Australia Ltd v Commissioner of Taxation (2007) 160 FCR 298. The second reading speech of the Migration Litigation Reform Bill 2005 which introduced s 31A stated that its purpose was to strengthen "the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases": Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146 at [45]; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60 at [124].

6 Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A:

(a) the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings;

(b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed;

(c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading;

(d) it is not Parliament's intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial;

(e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is 'no reasonable prospect of success';

(g) it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial;

(h) evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects;

(i) in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party.

See Genovese v BGC Construction Pty Ltd [2007] FCA 923 at [5]; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146 at [42]-[48]; Hicks v Ruddock (2007) 156 FCR 574 at [13]; Bond v Barry (2007) 73 IPR 490 at [46]; Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (in Liq) (formerly Stanley Thompson Valuers Pty Ltd) [2006] FCA 1416 at [30]; Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [21]; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60. 15 Although other judges of this Court have used slightly different language to describe the onus which an applicant for summary judgment carries in this Court, I think that the above extract adequately covers the position for present purposes. 16 The Court also has ample power to make an order dismissing an appeal if the appellant fails to comply with orders designed to ready the appeal for hearing and otherwise fails to prosecute the appeal with due expedition, as is the case here. 17 The present appeal, on its face, discloses no reasonable prospects of success. I say that because, in substance, what was claimed by the appellant in his Amended Notice of Appeal was a deferral or postponement of the effect of the appellant's bankruptcy, pending a final decision from the New South Wales Court of Appeal. Such a ground could not possibly succeed by way of appeal from the Federal Magistrate's decision and would have been hopeless, even if the New South Wales Court of Appeal had not delivered its judgment by the time the appeal came to be heard. The appellant did not assert in his Notice of Appeal that the Federal Magistrate had erred in the exercise of his discretion by failing to grant an adjournment of the bankruptcy petition. The sole ground of appeal relied upon by the appellant is rendered completely hopeless by the delivery of the decision of the Court of Appeal on 22 December 2009 and the making of final orders on 7 February 2010. The appellant has not asked this Court to look behind the judgments in the Supreme Court of NSW. Nor did he make such a request of the Federal Magistrate. Were he to have done so, it is highly unlikely that either Court would have acceded to his request. 18 The second order sought by the appellant in the appeal raises a matter which, as far as I can tell, was not argued before the Federal Magistrate and has not been sought to be supported in this Court. 19 Finally, the appellant has indicated a firm and irrevocable intention to withdraw his appeal, no doubt because the only ground upon which he sought to sustain it has fallen away. 20 It seems to me that I should now dismiss the appellant's appeal and I will make an order accordingly. 21 I order that the appeal be dismissed. I order that the appellant pay the respondent's costs of and incidental to the appeal. I vacate the hearing of the appeal which was previously fixed for 17 March 2010. I direct the solicitors for the respondent to notify the appellant that I have dismissed his appeal with costs and to do so by a letter sent by no later than the close of business today. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

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