Tsimiklis v Sellers

REASONS FOR JUDGMENT 1 This is an application, pursuant to O 52 r 15(2) of the Federal Court Rules, for an extension of time in which to file and serve a notice of appeal from a judgment of the Federal Magistrates Court. That judgment was given on 11 April 2003, though final orders were not pronounced until twelve days later, on 23 April 2003. An extension of time is sought because a notice of appeal was not filed and served within twenty-one days of the magistrate's decision. 2 The judgment, which is sought to be appealed, concerned a disposition by the first applicant of her interest in a property at 12 Koroit Street, Nunawading, to the second applicant, her daughter. The Trustee of her bankrupt estate claimed that this disposition was void as against him, pursuant to s 120 of the Bankruptcy Act 1966 (Cth) ("the Act"). He sought orders that would have the effect of requiring him to be registered as the sole registered proprietor of the property. 3 The first applicant ("the bankrupt") became bankrupt on 31 May 1994 as a result of a sequestration order made that day on the petition of Antony Sdrinis & Co. The petitioning creditors acted for the bankrupt in Family Court proceedings. On 11 December 1989, they delivered an itemised bill of costs to the bankrupt in the sum of $23,633.22 and a consent order was made by a registrar of the Family Court on 27 May 1991 that the bankrupt pay to Sdrinis & Co the sum of $21,630. 4 The bankrupt purchased the property in question on 6 November 1991. By Transfer, dated 7 April 1992, she disposed of all her estate in the property to the second applicant with a life interest in the property to her. 5 In the pleadings, the Trustee claimed that the property settlement was a settlement of property within the meaning of s 120 of the Act, and that the second applicant was not a purchaser in good faith, and for valuable consideration. Accordingly, the Trustee claimed that the settlement was void as against him pursuant to s 120 of the Act. 6 There was an alternative claim relying on s 121 of the Act, it being contended that the property settlement was a disposition of property by the bankrupt with intent to defraud her creditors. The learned magistrate did not find it necessary to determine that claim because he concluded that the transfer was void as against the Trustee, under s 120. 7 The bankrupt claimed that the property settlement was made in favour of her daughter as purchaser in good faith and for valuable consideration. She pleaded that the settlement was made in consideration of payment of sums totalling $25,000 by her daughter, and an agreement by her daughter to provide personal care for, and perform household duties on behalf of, the bankrupt. The second applicant claimed to be entitled to the interest in the property by virtue of financial contributions made by her in respect of the acquisition and maintenance of the property, and pursuant to an agreement between the bankrupt and herself. She claimed that she was entitled to an interest in the property, which would pass to her upon the death of the bankrupt. 8 A notice of appeal must be filed and served within twenty-one days from the date when the judgment appealed from was pronounced (O 52 r 15(1)(a)). However, O 52 r 15(2) provides that, notwithstanding this requirement, "the Court or a Judge for special reasons may at any time give leave to file and serve a notice of appeal". 9 As stated earlier, the magistrate delivered reasons for judgment on 11 April 2003. However, formal orders were not pronounced until 23 April 2003. It is clear that the date of the pronouncement of the judgment is the date on which the order appealed from was made rather than the date on which reasons were given. Accordingly, the notice of appeal should have been filed and served no later than 14 May 2003. 10 On 22 May 2003, the applicants' solicitors approached the Registry of the Court with a purported notice of appeal. However, the notice was rejected as being out of time. Apparently, the magistrate had intimated, at some stage during the course of the proceedings, that he believed that the period within which an appeal had to be brought was twenty-eight days. The applicants' solicitors may have acted upon that intimation. If they did, they should not have done so. 11 There was then some correspondence between the applicants' solicitors, and the solicitors for the Trustee regarding the possibility that a third party might step in and discharge the debt owing to the bankrupt's creditors, provided that the amount in question could be significantly reduced. Nothing came of these discussions. On 2 June 2003, the applicants' solicitors wrote to the Trustee making it clear that the applicants proposed to appeal against the magistrate's decision. However, they did nothing to facilitate any such appeal. It was not until some weeks later, after the Trustee's solicitors had brought proceedings before the magistrate to enforce the orders made on 23 April 2003, that the applicants' solicitors were finally goaded into action. On 8 July 2003, they filed an application in the Federal Magistrates Court seeking a stay of the magistrate's orders, and an extension of time within which to file a notice of appeal from those orders. On 9 July 2003, the magistrate heard these applications. His Honour held that he had no power to extend time, and transferred that application to this Court. It follows that the application for an extension of time was received in this Court on 9 July 2003. In effect, there was a delay of almost two months before that application was filed with this Court. 12 It is clear that an application for an extension of time within which to file a notice of appeal depends upon whether the applicant can demonstrate that there are "special reasons" for extending time. The expression "for special reasons" was considered by a Full Court of this Court (Lockhart, Sheppard and Burchett JJ) in Jess v Scott (1986) 12 FCR 187. Their Honours said at 195: "What is needed to justify an extension of time is indicated in r 15(2) by the words "for special reasons". It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rules gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression "for special reasons" implies something narrower than this." 13 The Court continued: "It should not be overlooked that r 15(2) enables leave to be given "at any time"; the "special reasons" relevant to such a power cannot but describe an elastic test, suitable for application across a range of situations, from an oversight of a day to a neglect persisted in during a prolonged period. It would require something very persuasive indeed to justify a grant of leave after, for example, a year; equally, it may be said, something much less significant might justify leave where a party is a few days late." 14 The first question to be considered is whether the applicants have provided an adequate explanation for the delay of almost two months in filing an application for an extension of time. 15 In substance, the applicants say as follows. On 23 April 2003, when the magistrate finalised his orders in this matter, the question whether a stay would be required arose. The magistrate intimated that he thought that the period within which an appeal should be brought was twenty-eight days. However, the applicants accept that this was nothing more than a statement of his belief as to the time limit, and not a statement upon which they were entitled to rely. 16 During the next few weeks, the question of an appeal was considered. The evidence is that the applicants' legal advisors proceeded upon the assumption that they had twenty-eight days in which to file and serve a notice of appeal. As indicated earlier, an unsuccessful attempt was made to file such a notice with the Court on 22 May 2003. It was at that stage that the applicants learned that their proposed notice of appeal was out of time, and that an extension of time would be required. 17 On 2 June 2003, the applicants' solicitors wrote to the Trustee's solicitors foreshadowing an appeal against the magistrate's decision. It is clear from the evidence that the solicitors were labouring under several misconceptions regarding the nature of the process, because they foreshadowed an application being made to the magistrate for a stay, and also for an extension of time in which to appeal. Plainly, as the magistrate ultimately held, he had no power to grant an extension of time. 18 Nothing further of any consequence occurred until 8 July 2003. On that day, the Trustee lodged an application before the magistrate seeking to enforce the orders made on 23 April 2003. It was that application that seemingly provoked the applicants' solicitors into filing the motion which they did, seeking a stay of those orders, and an extension of time within which to file a notice of appeal. 19 On 9 July 2003, the magistrate dealt with the application for an extension of time. He transferred that application to the Federal Court Registry, where it was marked as having been filed on that day. 20 It is clear that the applicants' solicitors made at least two errors. They wrongly assumed that the period within which an appeal could be brought was twenty-eight days, and they failed to appreciate that an application for an extension of time had to be made to this Court, and not to the magistrate. 21 In endeavouring to explain why the application for an extension of time was not filed in this Court until 9 July 2003, the applicants relied upon several affidavits sworn by their solicitor. He acknowledged that he was partly at fault, but also sought to explain the delay by suggesting that there had been "negotiations or discussions" going on between the parties regarding a possible settlement. 22 I do not regard as adequate the applicants' explanation for the delay that occurred in this case. The first part of that delay, consisting of the period between 14 May 2003 and 22 May 2003 is explicable on the basis of the solicitor's error regarding the period within which a notice of appeal had to be filed. However, there has been no satisfactory explanation for the delay between 22 May 2003 and 9 July 2003. Whether or not the parties were engaged in negotiations or discussions during that period (a suggestion that the Trustee, in any event, denied) is not to the point. There was nothing to prevent the applicants from filing an application to extend time, even if such discussions were taking place. It is important to note that the applicants did nothing to seek an extension of time until after the Trustee had commenced proceedings in the Federal Magistrates Court to enforce the orders previously made. Had the Trustee not commenced those proceedings, the chances are that the applicants' solicitors would simply have allowed matters to continue to drift along. 23 The applicants' solicitors seem to me to have adopted a somewhat lax attitude towards the need to ensure that time limits are complied with. Such time limits are there for a purpose. There must be finality to litigation. A party is entitled to act upon the assumption that, once a time limit has passed, that party's legal rights are protected thereafter. A successful litigant has an interest in knowing that a claim against him has been determined, and that he is no longer "at risk". 24 The only factors put forward by the applicants' solicitors in support of their claim that there were special reasons for extending time were their mistaken belief that they had twenty-eight days within which to file a notice of appeal, and their aspiration that they might be able to settle the dispute with the Trustee. I am not persuaded that these factors amount to "special reasons". 25 The general approach of this Court to cases where a solicitor's default is put forward as the explanation for serious delay is set out in Jess v Scott, and the cases cited therein. These include Fitzgerald v The Trustees Executors and Agency Company Ltd (1892) 18 VLR 521; Re Coles and Ravenshear [1907] 1 KB 1; Re a Debtor (1910) 55 SJ 48; Gatti v Shoosmith [1939] Ch 841; Ratnam v Cumarasamy [1965] 1 WLR 8; Salter Rex & Co v Ghosh [1971] 2 QB 597; R v Secretary of State for the Home Department; ex parte Mehta [1975] 1 WLR 1087; Stollznow v Calvert [1980] 2 NSWLR 749; Wolcott v Davis (1984) 4 FCR 124; and Palata Investments Ltd v Burt & Sinfield Ltd [1985] 1 WLR 942. 26 To these cases I would add Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 where Wilcox J had occasion to consider the principles guiding the exercise of the discretion to extend the time for applying to this Court under s 11 of the Administrative Decisions (Judicial Review) Act 1977 (Cth). His Honour observed that a court will not grant such an application unless "positively satisfied" that it is proper to do so. Time limits are not to be ignored. Indeed, it is the prima facie rule that proceedings brought outside those time limits will not be entertained. It is a pre-condition to the exercise of discretion in favour of an applicant for extension to show an "acceptable explanation" for the delay, and that it is "fair and equitable" to extend time. See also Repatriation Commission v Nugent [2003] FCA 1184 per Cooper J. 27 A delay of almost two months, such as occurred in this case, cannot be regarded as insubstantial. The mere absence of prejudice to the Trustee by that delay is not sufficient to justify the grant of an extension of time. 28 On one view, once it is clear that there is no adequate explanation for the delay, and there are no special reasons for granting an extension of time, that is the end of the matter. However, the Trustee submitted that even if, contrary to his primary submission, an adequate explanation for the delay had been provided, an extension of time should be refused in the exercise of the Court's discretion. He submitted that none of the proposed grounds of appeal had any significant prospects of success. 29 In Howard v Australian Electoral Commission [2000] FCA 1767 Branson J identified some of the factors to be taken into account in the exercise of the Court's discretion. They included the importance of the question sought to be raised by the proposed appeal, its bona fides, and the prima facie strength of the proposed grounds of appeal. 30 The draft notice of appeal in the present case does not identify with precision the grounds upon which it is suggested that the appeal would succeed. However, at the hearing of the application to extend time, affidavit material was filed which was said to remedy this defect. 31 In substance there are three complaints regarding the magistrate's judgment: · first, it is said that the magistrate ought to have granted the applicants an adjournment of the trial so that they could obtain certain documents that they needed to support their case; · next, it is said that certain of the magistrate's findings of fact were against the weight of the evidence; and · finally, it is said that the magistrate erred in law in finding that there was no valuable consideration given for the transfer of the property. 32 The first proposed ground has little prospect of success. An appeal against the refusal of an adjournment, which is a discretionary matter, is fraught with difficulty. The problem is even greater when one has regard to the history of this matter. There had been significant delays in bringing the proceeding on for trial, and the applicants had already been granted at least one adjournment so that they might obtain documents that they claimed were relevant. Moreover, the application for another adjournment was made on the morning of the trial. It was not supported by any proper material. Virtually all that was said was that the applicants needed time to obtain additional documents. No explanation was offered as to why those documents had not been procured, and no adequate explanation as to their relevance was provided. The magistrate was entitled to conclude that the application was little more than a delaying tactic, designed to forestall the hearing of the case. 33 The second proposed ground of appeal involves an attack upon various findings of fact made by the magistrate. That proposed ground also faces significant difficulties. The magistrate had the advantage of seeing and hearing the applicants give their evidence. It is plain that he did not accept their evidence as credible. He described their recollections as "vague". He noted that there were "significant contradictions" between their original version of what had occurred, as given during the course of their examinations under s 81 of the Act, and their subsequent version of events, as given at the trial. He noted that the Transfer recorded that the disposition of the property from the bankrupt to the second applicant had been made "for natural love and affection". That description had been included in the document by the applicants' former solicitors, presumably on instructions. He preferred that description as the true explanation for the disposition rather than what he regarded as the reconstruction of events given by the applicants in their evidence before him. 34 Counsel for the applicants challenged the magistrate's findings of fact regarding these matters. I am not persuaded by his submissions on this point. His Honour said at par [130]: "It is important for the Court to rely upon the content of the documents duly executed by the parties which I am satisfied have been explained by legal advisers and importantly explained to the Bankrupt in the Greek language. To seek to retrospectively assert a vague agreement and then without proper evidence suggest payments of $25,000 were made towards the acquisition of a property pursuant to that agreement is no substitute for clear evidence of a contemporaneous kind based upon accurate documentation. As indicated the vague nature of the evidence of both Respondents and lack of documentary material to support the claims of an earlier agreement leads me to conclude that the submissions on behalf of the Applicant in relation to s.120 of the Bankruptcy Act should be upheld." 35 His Honour's findings on this issue were plainly open. Moreover, it is difficult to see how they could successfully be impugned on appeal to this Court. The critical findings relating to the motive underlying the disposition was based primarily upon a rejection of the creditability of the account given by the bankrupt and the second applicant. The magistrate was in a much better position to make a finding on that issue than would be a judge working solely from transcript. 36 The final proposed ground of appeal is said to raise a question of law regarding the meaning of the expression "valuable consideration". However, in my view, no such question of law arises. The magistrate found that the Transfer had been made for "natural love and affection" just as it recorded. Section 120 makes it clear that a disposition made for this reason is not one for which there is valuable consideration. The issue is one of fact, and not one of law. 37 Much was made of a particular paragraph in the magistrate's reasons in which his Honour said: "113. It is clear from the material that both Respondents have vague recollections of the nature and extent of any agreement between them prior to the purchase of the property. In my view it is more likely that the contribution, if any, by the Second Respondent to the Bankrupt in relation to the property which may be established was a contribution to assist in the renovation of that property by the construction of a studio for the benefit of the Second Respondent." 38 It was submitted that this passage showed that the magistrate found that there was a resulting trust in favour of the second applicant. That meant that she had an equitable interest in the property, and could resist the Trustee's application. 39 I am not persuaded by this submission. In my view, the passage, when read in context, does not support the conclusion that the magistrate found a resulting trust. A contribution to assist in the renovation of the property by the construction of a studio for the benefit of the second applicant is perfectly consistent with the finding that the bankrupt purchased the property, and renovated it with her own funds, together with monies advanced by the second applicant, by way of loan or gift. There may have been "an understanding" that the bankrupt would leave the property to the second applicant in her will. It does not follow that there was a resulting trust. I see no internal inconsistency in the magistrate's findings. 40 I should add that there was additional material filed in support of the application for an extension of time. That material was said to identify some of the documents that would have been obtained had an adjournment been granted. It was said to demonstrate that not only did the magistrate's discretion miscarry, but also that the refusal to grant the adjournment had affected the outcome of this case. 41 In my view, none of the documents so identified would have affected the outcome of the decision. There are no documents of a kind that would have led the magistrate to conclude that the transfer of the property was for valuable consideration, as the applicants contended. For the most part, the new documents are entirely neutral on that issue. 42 It is for these reasons that the application for an extension of time is refused. The applicants must pay the respondent's costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.