Vescio v Australian and New Zealand Bank Ltd

Background 2 On 2 July 2000, the applicant filed an application in this Court under s 153B of the Bankruptcy Act 1966 (Cth) ('Bankruptcy Act') seeking annulment of a 'bankruptcy order' made on 20 May 1999 ('the annulment application'). Given the facts as set out below and the terms of s 153B, the applicant must be taken to have been seeking the annulment of a sequestration order made by Sackville J on 20 May 1999; see [4] below. For this reason, I will refer to this order as the 'sequestration order'. The application under s 153B stated that the sequestration order made against the applicant was 'obtained through an improper purpose in order to obtain an improper collateral advantage'. It was further alleged that the conduct of the parties, presumably referring to some or all of the respondents, included breaches of the Trade Practices Act 1974 (Cth) and the Corporations Law. 3 The circumstances leading to the applicant's bankruptcy are not entirely clear on the material presently before me. It would appear that the applicant was a director of Leunam Pty Ltd ('Leunam'). On 11 June 1998, Cullen ADCJ made orders in the District Court of New South Wales that, inter alia, Leunam and the applicant pay the first respondent the sum of $110,528.26. Leunam was sued by the first respondent pursuant to a mortgage agreement of 14 October 1997. The applicant was sued by the first respondent pursuant to a guarantee in relation to that mortgage. Leunam and the applicant filed notices of motion in the New South Wales Court of Appeal seeking a stay of these orders. On 9 November 1998, Stein J refused the application for a stay of the District Court judgment. 4 On 11 November 1998, the applicant committed an act of bankruptcy when he failed to comply with Bankruptcy Notice 2103/98 and on 30 November 1998 the first respondent presented Creditor's Petition NG8349 of 1998 ('the creditor's petition'). The applicant filed a Notice of Intention to Oppose Petition. Despite attempts by the first respondent and the applicant to settle the matter inter partes, and an attempt by the applicant to have his creditors approve an arrangement, the dispute in respect of the creditor's petition ultimately came before Sackville J on 20 May 1999. The applicant did not appear on this day and his Honour made the sequestration order against the applicant which was the subject of the annulment application. 5 The annulment application came before Conti J on 22 August 2000. His Honour refused an application for an adjournment sought by the applicant in order to seek further legal advice. However, his Honour did allow the applicant a short adjournment to finalise an affidavit the applicant wished to file in Court. In addition, Conti J made it plain that the annulment application did not set out any grounds for annulment and that his Honour required the applicant at least to explain the general basis for seeking an annulment of the sequestration order. His Honour explained to the applicant that he did not require the applicant to file an affidavit and he would permit the applicant simply to explain the essential elements of his complaint. 6 Although Conti J did not provide written reasons for his decision, it appears from the transcript of the proceedings before his Honour that the gravamen of the applicant's annulment application under s 153B of the Bankruptcy Act was that properties owned by Leunam were somehow improperly realised during Leunam's liquidation by the fifth respondent, its voluntary administrator and subsequent liquidator, and, in addition, that the applicant was entitled to the profits that ought to have realised in the sale of the properties, such proceeds being used to satisfy creditors in his bankruptcy. The applicant also appears to have submitted that the creditor's petition was filed in order to frustrate any claims the applicant had in the Supreme Court of New South Wales against, amongst others, the fifth respondent. On 7 August 2000, these Supreme Court proceedings were dismissed and the applicant was refused leave to pursue the claim because, as an undischarged bankrupt, he had no standing to do so. 7 His Honour made clear that whatever the factual basis for such complaints, neither the annulment application nor any of the proceedings in respect of the applicant's bankruptcy was the appropriate forum for ventilating such issues. 8 His Honour held that the applicant had not put forward any basis for the proposition that the sequestration order ought not to have been made and the statutory basis under s 153B of the Bankruptcy Act was not addressed by anything put before the Court. His Honour therefore dismissed the annulment application with costs.

application for an extension of time 9 On 10 June 2005, the applicant filed an application for extension of time within which to file and serve a notice of appeal from the judgment of Conti J dismissing the annulment application. 10 Order 52 rule 15(1)(a) of the Federal Court Rules relevantly requires that a notice of appeal be filed and served with 21 days after the pronouncement of the judgment. However, O 52 r 15(2) states that the Court may, for 'special reasons', give leave to file and serve a notice of appeal notwithstanding the provisions of O 52 r 15(1). In Jess v Scott (1986) 12 FCR 187 (Jess v Scott') at 195, the Full Court stated that: 'What is needed to justify an extension of time is indicated in rule 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 rule 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. … 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. 'Special reasons' must be understood in a sense capable of accommodating both types of situation. It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served.' 11 Applications for extension of time such as that presently before me, generally raise the following issues; whether there is a satisfactory explanation of the delay; the importance of the question sought to be raised by the proposed appeal; the bona fides of the proposed appeal; and the prospects of success of the proposed appeal: see Australian Prudential Regulation Authority v Holloway [2001] FCA 1240 per Spender J, with whom Drummond and Carr JJ agreed, at [4]; Jess v Scott at 188; Howard v Australian Electoral Commission [2000] FCA 1767 per Branson J at [7]; and Cottrell v Wilcox [2003] FCA 600 per Lindgren J at [4]. 12 In an affidavit sworn on 10 June 2005 accompanying the application for extension of time, the applicant purports to set out the grounds on which he seeks such an extension. However, the affidavit merely traverses the factual background to the collapse of Leunam and the applicant's subsequent bankruptcy. The applicant has not provided any satisfactory explanation of the delay of nearly five years since the judgment of Conti J. In addition, the applicant has not demonstrated any basis to suggest that the sequestration order ought not to have been made. At the hearing today the applicant attributed that delay to the time needed to gather evidence to support his claim. 13 The affidavit accompanying the application for an extension of time does not contain any details or any basis to suggest that the sequestration order ought not to have been made. The applicant's draft notice of appeal similarly fails to adequately address these issues. 14 At the hearing today the applicant sought to file in Court an additional affidavit sworn on 15 July 2005. He was permitted to do so and the affidavit was admitted into evidence subject to relevance. It appears from the material in both the affidavits before the Court that the applicant in this application is continuing to take issue with the circumstances surrounding the liquidation of Leunam. Even if I were to accept this evidence in addition to the evidence before Conti J for the purposes of the application presently before the Court, it fails to address the relevant issues under consideration; more particularly the reason for the delay and whether the sequestration order ought not to have been made. 15 The basis of the applicant's claims relate to a guarantee of the debts of Leunam which he had given. As a result of that guarantee being called upon he was unable to meet those obligations and the sequestration order flowed as an inevitable result. Nevertheless, the claims of the applicant appear to relate to circumstances that do not challenge the validity of the sequestration order or raise an issue under s 153B. It is not the role of the Court to direct parties as to the best method to pursue their claims. However, I note that Conti J at the hearing before him attempted to explain to the applicant that his application for an annulment of bankruptcy was not the appropriate way to pursue the grievances that he apparently has. I make no assessment of those grievances or whether they are justified. However, I note Conti J's comments where his Honour said: 'I understand you have a grievance and I am in no way to say whether it is a justified grievance or not, I mean grievance in the legal sense. It would appear from what you've told me that your complaint is against those who have disposed of the property of Leunam Pty Limited of which you are, if not a shareholder, then members of your family were shareholders. That complaint, on the face of it, is something that can be ventilated in the courts by Leunam Pty Limited if it is restored to the register and one of the matters that I suggest you explore with the aid of some competent legal advice as to whether that course is open to you rather than pursuing what seems to me to be, so far, looking at this matter somewhat for the first time, that have been misconceived proceedings.' 16 I agree with his Honour that the proceedings are misconceived. Whether or not the applicant has a genuine grievance I am not in a position to say but nothing that has been said before me today suggests that an appeal from the judgment of Conti J would have any chance of success and in the circumstances I must dismiss the application 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 Stone.

Associate: Dated: 26 July 2005 The Applicant appeared in person

Solicitor for the First Respondent: Kemp Strang

Solicitor for the Second Respondent: Henry Davis York

Counsel for the Fifth Respondent: Mr L Harris

Solicitor for the Fifth Respondent: MD Nikolaidis & Co

Solicitor for the Sixth Respondent: Nash O'Neill Tomko Lawyers

No appearance for the Third, Fourth and Seventh Respondents

Date of Hearing: 18 July 2005

Date of Judgment: 18 July 2005