FEDERAL COURT OF AUSTRALIA

Bufalo v Official Trustee in Bankruptcy [2011] FCAFC 111

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    The Notice of Motion dated 15 April 2011 is dismissed.

3.    The Notice of Motion filed on behalf of Bufalo Corporation Pty Ltd (in Liquidation) is dismissed.

4.    The Appellants are to pay the costs of the Second and Third Respondents.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    The three Appellants, Messrs Antonio Bufalo, Giovanni Bufalo and Giussepe Bufalo, appeal from the decision of the primary Judge delivered on 23 February 2011: Official Trustee in Bankruptcy v Lendlease Primelife Pty Ltd [2011] FCA 145. Mr Antonio Bufalo is the father of Messrs Giovani and Giuseppe Bufalo. In that proceeding, the now Appellants were the Third, Fourth and Fifth Respondents respectively. The First Respondent was Lendlease Primelife Pty Ltd (“Lend Lease”) and the Second Respondent was Mr Eduard Sent. Mr Sent is the managing director of Lend Lease Primelife Pty Ltd..

2    In the proceeding before the primary Judge, the Official Trustee sought a declaration pursuant to s 134(4) of the Bankruptcy Act 1966 (Cth) that it was justified in accepting an offer to assign certain assets to Lend Lease. Lend Lease and Mr Sent supported the application; the Bufalos opposed it. The primary Judge concluded that the Official Trustee was justified in accepting that offer.

3    Before this Court the Appellants challenge the manner in which the proceeding before the primary Judge was conducted and a number of his discretionary decisions going to matters of practice and procedure.

The Background to the Dispute

4    The background facts which led to the decision of the primary Judge are within a narrow compass and should be briefly mentioned.

5    As summarised by the primary Judge, each of the now Appellants had been declared bankrupt and had been or were to be discharged upon the following dates:

As at the dates of bankruptcy, each of them had also been involved in a proceeding in the Supreme Court of Victoria. The defendant to that proceeding was Lend Lease.

6    In February 2007, Mr Giovanni Bufalo had also commenced a proceeding in the Federal Magistrates Court of Australia seeking an order that the Official Trustee in Bankruptcy assign to him “the chose-in-action constituted by reference to rights arising in respect of or in connection with [the Supreme Court action] and the subject matter of that proceeding as set out in the third amended statement of claim …”. Messrs Antonio and Giuseppe Bufalo were joined as parties to that proceeding. That application was one brought pursuant to s 178 of the Bankruptcy Act. The application was dismissed: Bufalo v Official Trustee in Bankruptcy [2007] FMCA 1411.

7    Thereafter, on 29 September 2010 the Official Trustee – and apparently after prolonged negotiation – entered into a Deed with Lend Lease in which the Official Trustee agreed to assign “the Assets to Lend Lease Primelife …”. The Deed was conditional upon an application being made pursuant to s 134 of the Bankruptcy Act. The Definitions provision to the Deed contained (inter alia) the following provisions:

In this Deed, the following expressions have the meanings indicated hereunder:

1.1    “the Act” means the Bankruptcy Act 1966 (Cth);

1.2    “the Assets” mean the BC Shares, the CN Shares the Bankrupts’ Claims and the Further Claims;

1.3    “the Bankrupts” mean John Bufalo, Joe Bufalo and Tony Bufalo; (and each of them);

1.4    “the Bankrupts’ Claims” mean:

1.4.1    the rights and title of each of the Bankrupts which vested in the Trustee under the Act either upon the Bankrupts’ respective bankruptcies or during the period of their respective bankruptcies to bring and maintain an action for damages or other relief against Lend Lease Primelife, its servants, agents, directors or consultants in respect of, arising from, or in connection with, or comprising the subject matter of the Proceeding and the Related Proceedings, including, without limiting the generality of the foregoing, their right to bring any application to set aside the orders made in favour of Primelife by Master Kings of 15 August 2001 and/or the Honourable Justice Mandie on 29 October 2004 in the Proceeding;

1.4.2    any right or chose-in-action identified in John Bufalo’s submissions to the Federal Magistrates’ Court on or about 15 August 2007 in an undated document entitled “Submissions of Applicant” in the Federal Magistrates’ Court Proceeding”;

1.5    “BC” means Bufalo Corporation Pty Ltd (receiver and manager appointed) (in liquidation) ACN 007 122 296;

1.6    “BC Shares” means John Bufalo’s and Joe Bufalo’s ordinary shares in BC;

1.7    “CN Shares” means John Bufalo’s legal and equitable rights, including any right of redemption, in relation to 1 out of 2 shares in Confalo and 1 out of 3 shares in Newpark which were held by John Bufalo in Confalo and Newpark from in or about October 1998;

1.8    “Confalo” means Confalo Enterprises Pty Ltd ACN 007 326 169;

…

1.19    “Proceeding” means Supreme Court proceeding no 6668 of 1999;

…

1.21    “Related Proceedings” means Supreme Court proceedings no. 6477 of 2000 and 6478 of 2000;

8    The “Assets” agreed to be assigned to Lend Lease were thus:

    the bankrupts’ shares in Bufalo Corporation Pty Ltd;

    the bankrupts’ shares in a company, Confalo Enterprises Pty Ltd; and

    the bankrupts’ claims in the Supreme Court proceeding.

The Deed further provided that the “Trustee agrees to expeditiously make the s.134 Application and to take all reasonable steps to prosecute that application expeditiously”.

9    Section 134(4) provides as follows:

The trustee may at any time apply to the Court for directions in respect of a matter arising in connexion with the administration of the estate.

That section should be read together with s 30(1) which provides as follows:

The Court:

(a)    has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and

(b)    may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.

10    The proper subject of “directions” is the manner in which a trustee is to discharge his functions so as to protect him from liability to a creditor for breach of duty: Re Weber [2006] FCA 636, 154 FCR 80. Finn J there relevantly observed:

[2] While s 134(4) of the Act empowers a trustee to seek directions “in respect of a matter arising in connexion with the administration of the estate”, it is well accepted that the Court is not for that reason obliged to give the directions sought: Re Driller (1972) 21 FLR 159. The proper subject of directions, in my view, is the manner in which a trustee should act in carrying out his or her functions as such: cf Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 679. Their proper effect, if full disclosure has been made to the Court of the material facts, is to protect the trustee from liability to a creditor or a bankrupt for a breach of duty of office for things done in accordance with the directions: see generally the decision of Sackville J in Re Sutherland (In the Matter of Scutts) [1999] FCA 147 at [9] ff. The s 134(4) procedure is not of itself an appropriate vehicle to determine the substantive rights of creditors as against a trustee in bankruptcy or creditors amongst themselves: Scutts at [14]; see also Re Lofthouse (2001) 107 FCR 151 at [9].

In Donnelly (Trustee), in the matter of Hancock v Porteous [2002] FCA 607, Stone J had also said:

[17] Section 134(4) of the Act provides that a trustee may at any time apply to the Court for directions “in respect of a matter arising in connexion with the administration of the estate”. The Court is not under an obligation to give such directions; it is a matter for it to decide in the exercise of its discretion; Re Driller (1972) 21 FLR 159. It is however settled that the Court will not give an advisory opinion in the form of a direction; Willoughby v Official Trustee in Bankruptcy [2001] FCA 1345. It is also said that the duty of the judge on a petition for advice is to advise the trustee on questions of law, but not to tell him how to exercise discretionary powers vested in him; In the Will of Osborne (1863) 2 SCR (NSW) Eq 89.

Instances of situations in which a “direction” has been given pursuant to s 134(4) include cases where a direction is sought as to whether a trustee should be directed to assign causes of action to a particular party (Willoughby v Official Trustee in Bankruptcy [2001] FCA 1345) and directions as to whether a particular person “would be [the] sole trustee of each estate and would be entitled and obliged to act as such” (Condon v Watson [2009] FCA 11 at [37], 174 FCR 314 at 320 per Lindgren J). See also: Re Leask and Trumbich; Ex parte Melsom (1986) 11 FCR 305; Re Hoffman; Ex parte Worrell v Schilling (1989) 85 ALR 145; Re Evans; Ex parte Sweeney v Evans (1995) 61 FCR 556; Sutherland (In the Matter of Scutts) [1999] FCA 258; In the matter of Kenneth Stanley Kitt; Official Trustee in Bankruptcy [2005] FCA 1564. Consistent with the proposition that the Court need not give the direction sought, instances can also be provided where a Court has declined to give the direction sought: e.g., Re Duckworth; Ex parte The Official Trustee in Bankruptcy (Unreported, FCA, Nicholson J, 20 October 1995).

11    It was the jurisdiction conferred by s 134(4) that was being exercised by the primary Judge. It is an important jurisdiction conferred upon this Court for the benefit of both trustees and creditors. It is a jurisdiction which may fundamentally affect the rights and interests of a bankrupt. It is a jurisdiction to be exercised with considerable care.

12    Notice was given to the now Appellants in either late October or early November 2010 of the agreement.

13    The application before the primary Judge had been set down on 20 December 2010 for a three day hearing commencing on 23 February 2011.

The Conduct of the Proceeding

14    The Application as initially filed by the Official Trustee sought a declaration pursuant to “section 154(4)” that it was “justified in accepting the offer to assign the cause of action in the terms of the Deed dated 29 September 2010 comprising exhibits GMA-5 to the affidavit of Gina May Anderson sworn 7 December 2010”. So drafted, the Application:

    erroneously referred to s 154(4); and

    made reference to “the cause of action”, a phrase not employed in the Deed;

and made no reference to:

    the shares in Bufalo Corporation Pty Ltd; or

    the shares in Confalo Enterprises Pty Ltd.

The erroneous reference to “section 154(4)” was the subject of leave to amend granted on 20 December 2010 and assumes no continuing relevance. An Amended Application incorporating the corrected reference to s 134(4) was then filed. A direction was also made on 20 December 2010 that “[a]ny further affidavits in support of or in opposition to the application be filed and served on or before 27 January 2011”.

15    It was the Amended Application which came before the Court on 23 February 2011. But on that date there was no appearance by any of the now Appellants. Mr Antonio Bufalo was supposed to be conducting the proceeding on behalf of his sons, but he was not present.

16    At the outset of the hearing Counsel on behalf of the Official Trustee made an oral application to further amend the Amended Application. Lend Lease no longer wanted the shares in the Bufalo Corporation Pty Ltd – but it did want the shares in Confalo Enterprises Pty Ltd. The amendments which were allowed by the primary Judge were to substitute a reference to the “assets”, as defined in the Deed, for a reference to “the cause of action”. The effect of the amendment was (inter alia) to correct the omission of reference to the shares in Confalo Enterprises Pty Ltd.

17    The hearing thereafter continued.

18    His Honour proceeded to deliver judgment.

19    After His Honour returned to his Chambers, the “Postscript” to his reasons records that he “discovered a fax letter from a Mr Jerome Borazio” which in turn annexed a brief medical certificate. The medical certificate was signed by a doctor at a Medical Centre and was commendably brief. It simply stated:

This is to certify that I am the treating doctor of and this morning I examined:

Antony Bufalo

…

He has presented this morning at 8.00 am with a hacking suffocating cough malaise & weakness & he has been diagnosed with a chest infection & possible left basal pneumonia. He is commencing antibiotics immediately.

In my opinion he is unfit to attend Court

23/2/2011 to 2/3/2011 inclusive.

As His Honour noted, Mr Borazio “is not on the record as a solicitor or representative for” the now Appellants. Those reasons then set forth the text of the information communicated. The “Postscript” to the reasons concludes:

[21] … It appears that the third respondent, acting with the knowledge of the fourth and fifth respondents, assumed that the sending of the material contained in the fax would automatically lead to an adjournment of the proceeding. That assumption if made, was unjustified.

His Honour was of the view that “[n]othing in the letter from Mr Borazio or the certificate from the medical centre moves me to reconsider the judgment I delivered this morning and the orders I made”. The only knowledge that the primary Judge may have recalled was that Mr Borazio had (again inappropriately) forwarded an earlier facsimile to his Chambers immediately prior to 20 December 2010. In that facsimile Mr Borazio asserted that he was “authorized by Bufalo to write to you to express their objection to the proceeding due to be heard on the 20th December 2010”. Even had that earlier facsimile been recalled, it gave Mr Borazio no greater authority to either communicate in private to His Honour or to act on behalf of the now Appellants.

20    On 23 February 2011 there was then filed on behalf of Lend Lease and Mr Sent a Notice of Motion seeking (inter alia) an order that any application made by the Messrs Bufalo was to be made “no later than 4.00 pm on 28 February 2011”. That Motion was dismissed by the primary Judge on 24 February 2011.

The Grounds of Appeal

21    The Notice of Appeal as filed on 16 March 2011 sets forth twelve Grounds of Appeal. Grounds four to seven (inclusive) however are not pressed.

22    The surviving Grounds of Appeal provide as follows:

1.    The Learned Primary Judge erred in law:-

(a)    in hearing and allowing an oral application made by the First Respondent on the 23rd of February 2011, on the day of the hearing of the proceeding, to further amend the first respondent’s Amended Application dated the 20th December 2010 (“the Amended Application”) in the terms sought by the First Respondent in the course of the hearing of the proceeding without Notice to the Appellants, and without giving, or affording, the Appellants any opportunity to be heard on that (oral) application; and

(b)    then proceeding that morning (23rd February 2011) to hear and determine, and make final orders on, the First Respondent’s Amended Application, treated by the learned Primary Judge as further amended in the terms sought by the First Respondent in his oral application made to the court that day, without notice to the Appellants and without giving, or affording, the Appellants any opportunity to be heard on the First Respondent’s Amended Application, as treated by the learned Primary Judge as further amended on the First Respondent’s oral Application made to the Court that same day (23rd February 2011).

2.    The Learned Primary Judge should have:-

(a)    adjourned the trial of the First Respondent’s Amended Application;

(b)    given directions to the First Respondent to file and serve a Notice of Motion on the Appellants, identifying the further amendments proposed to be made to the Amended Application, and to also serve an affidavit, or affidavits, deposing as to the basis for the application (to further amend the Amended Application);

(c)    reserved the Appellant’s costs of, and incidental to, and thrown away on account of, the application of the First Respondent to further amend the Amended Application.

3.    The Learned Primary Judge erred in law in directing that the First Respondent is justified in accepting the offer to assign the Assets as defined in the Deed dated the 29th of September 2010 (other than the BC Shares) contained in Exhibit GMA 5 to the Affidavit of Gina May Anderson sworn on 7 December 2010 and filed in the proceeding (“the Direction”).

…

8.    The Learned Primary Judge erred in not giving reasons for:-

(a)    the Direction;

(b)    his order that the Appellants pay the costs of the Second and Third Respondents of the proceeding.

9.    The Learned Trial Judge erred in the exercise of his discretion in ordering that the Appellants pay the costs of the Second and Third Respondents of the proceeding.

10.    The Learned Primary Judge erred in law in the exercise of his discretion in proceeding to authenticate the orders made by him in court on the 23rd of February 2011 in the context of, and having regard to:-

(a)    the oral application made by the First Respondent that day to further amend the Amended application; and

(b)    the affidavit, or affidavits, sworn by Leonard Warren in the afternoon on the day prior to the hearing, and relied upon by the Respondents in the course of the proceeding on the 23rd February 2011; and

(c)    the documents discovered by the learned primary judge upon returning to his chambers, at the conclusion of the hearing on the 23rd of February 2011, namely:-

(i)    a faxed letter from a Mr Jerome Borazio advising:-

    “…that Antonio Bufalo, Third Respondent, was ill and unable to attend Court, and required a 3 to 4 week adjournment.”

(ii)    a medical certificate from Elsternwick Medical Centre, certifying that Mr Bufalo presented at 8 am that morning with:-

    “a hacking, suffocating cough malaise and weakness, and he has been diagnosed with a chest infection and a possible left basal pneumonia (and) the certificate also says, in the opinion of the treating doctor, Antonio Bufalo is unfit to attend Court.”

11.    The Learned Primary Judge should not have proceeded to the authentication of the orders made by him on the 23rd of February 2011 but recalled the parties to hear submissions on the material discovered by him (the Learned Primary Judge) on returning to his chambers, and made directions for the further carriage and conduct of the proceeding.

12.    The Learned Primary Judge erred in drawing the inference that:-

“it appears… the Third Respondent, acting with the knowledge of the Fourth and Fifth Respondents, assumed that sending the material contained in the fax would automatically lead to an adjournment of the proceeding (and) That assumption, if made, was unjustified…”.

The Decisions Made on 23 February 2011

23    In proceeding to hear and determine on 23 February 2011 the application being made pursuant to s 134 of the Bankruptcy Act, the primary Judge necessarily made a number of decisions going to the practice and procedure of the Court. Those decisions included a decision:

    to proceed in the absence of the then Respondents, the Messrs Bufalo;

    to permit an amendment to be made to the existing Amended Application;

    to permit that amendment to be made notwithstanding the absence of any Notice of Motion filed and served seeking such an order; and

    to permit an affidavit to be relied upon which had only been served the day before.

24    The power of the primary Judge to proceed to entertain the proceeding pending before him in the absence of the Bufalo brothers could not be called into question.

25    The former Federal Court Rules provided in Order 32 r 2 for those circumstances in which a “party is absent”. That rule provided as follows:

Absence of party

(1)    If, when a proceeding is called on for trial, any party is absent, the Court may:

(a)    order that the trial be not had unless the proceeding is again set down for trial, or unless such other steps are taken as the Court may direct;

(b)    adjourn the trial;

(c)    if the party absent is an applicant or cross-claimant dismiss the action or the cross-claim; or

(d)    proceed with the trial generally or so far as concerns any claim for relief in the proceeding.

(2)    Where the Court proceeds with a trial in the absence of a party, and at or at the conclusion of the trial an order is made, the Court may set aside or vary the order, and may give directions for the further conduct of the proceeding.

(3)    Subrule (2) does not enable the Court to vary the verdict, finding or assessment of a jury at a trial except with the consent of each interested party present at the trial.

These Rules also contained in Order 52 r 38A a comparable power where a “party is absent when an appeal is called on for hearing …”. The comparable provisions are now to be found in Rule 30.21 and Rule 36.75 of the Federal Court Rules 2011. Those Rules came into force on 1 August 2011.

26    The power conferred by Order 32 r 2(1)(d) to “proceed with the trial generally” requires the Court to investigate the merits of the matter before it: Applicant A184 of 2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1076 at [89] per Lander J; AA Shi Pty Ltd v Avbar Pty Ltd (No 5) [2010] FCA 971 at [12] per Collier J.

27    There is no question that the primary Judge, when proceeding pursuant to Order 32 r 2(1)(d), could permit an amendment to the Amended Application then before him. Power to grant leave to amend was previously to be found in Order 13 r 2 of the now repealed Federal Court Rules. The power conferred upon the primary Judge to “proceed with the trial generally” included an ability to exercise all of the powers conferred by the Rules then in force. Order 13 r 2 did not impose any constraint upon the powers that could be exercised in the absence of a party or any express constraint upon the manner in which those discretionary powers were to be exercised.

28    Nor can any question arise as to the power of the primary Judge to dispense with compliance with Order 14 r 7(1) of the now repealed Rules. That rule required a “party intending to use an affidavit [to] serve it on each other interested party not later than a reasonable time before the occasion for using it arises”. “Reasonableness”, it has been said, “is something that needs to be determined in the context of the factual matrix in which the affidavit comes to be filed”: Different Solutions Pty Ltd v Commissioner, Australian Federal Police [2008] FCA 1571 at [3] per Graham J. The obvious purpose of the rule was to ensure that an opposing party was given a “reasonable” opportunity to form a view as to how to respond. When determining the amount of time that is “reasonable”, consideration would have to be given to such factors as the novelty of the factual issues sought to be raised by the new affidavit; the amount of time necessary to gather such facts as may be necessary to respond to the new affidavit; and the amount of time that would be necessary to prepare such cross-examination as may be appropriate to test the new factual issues being raised. Rule 29.08 of the new Federal Court Rules 2011, it may be noted, substitutes for the previous reference to “a reasonable time” a requirement that an affidavit be served “at least 3 days before the occasion for using it arises”.

29    But Order 1 r 8 of the now repealed Federal Court Rules conferred a general power upon the Court to dispense with compliance with any of the Rules. In Scoway Pty Ltd v Faxon Pty Ltd [2004] FCA 249, Hely J was there also dealing with a proceeding pursuant to Order 32 r 2(1)(d) and in doing so observed:

[7] It is not entirely clear whether an applicant who seeks to proceed with the trial against absent respondents under Order 32 r 2(1)(d) of the Federal Court Rules is required to provide proof of service of the affidavits on the absent respondents. Order 14 r 7 suggests that this may be so. I gave leave, pursuant to O 1 r 8 to the applicant to rely upon the affidavits which it has read against the first and second respondents, even though those affidavits may not have been served upon those respondents.

[8] A factor which influenced me in granting that leave is that all respondents were notified by the prescribed form of application that if they or their legal representatives did not attend Court on the relevant date (3 February 2003) the application could be dealt with and judgment could be given, or an order made in their absence. On that date I gave directions for the filing of a defence by the respondents with which neither the first nor the second respondent has complied.

In Different Solutions, Graham J allowed parts of an affidavit that was filed on the morning of the hearing to be read. See also: Australian Competition and Consumer Commission v D M Faulkner Pty Limited [2004] FCA 1666 at [327] per Bennett J. The power to dispense “with compliance with any of these Rules” is now to be found in Rule 1.34 of the Federal Court Rules 2011. When determining whether to dispense with compliance with the requirement now imposed by Rule 29.08 to serve an affidavit “at least 3 days before the occasion for using it arises”, presumably consideration will now have to be given to why there should be dispensation from not complying with a period of time now fixed by the Rules and itself considered to be a “reasonable” period of advance notice, together with such other factors as were previously considered relevant to the exercise of the like discretion to dispense with the prior requirement imposed by Order 14 r 7.

Amendment without Adjournment

30    The first and second Grounds of Appeal can be dealt with together. Those grounds, in summary form, contend that the primary Judge erred in hearing and allowing an oral application for leave to further amend the existing Amended Application and to proceed to hear and determine the further Amended Application without adjourning the proceeding.

31    Reliance upon these two grounds, however, confronted at the outset either of at least two formidable hurdles raised on behalf of either the Official Trustee and/or Lend Lease, namely:

    the decisions sought to be impugned were decisions going to the manner in which discretionary powers going to the practice and procedure of the Court were exercised; and/or

    the decisions were interlocutory decisions, which required the leave of the Court to be granted before they could be entertained: Federal Court of Australia Act 1976 (Cth) s 24(1A).

A further contention was that the entire appellate process was “misconceived”. The decision which it is said most immediately affected the now Appellants was the decision of the Official Trustee to make the agreement with Lend Lease. And that decision, so it was contended, should have been challenged by way of an application made pursuant to s 178 of the Bankruptcy Act rather than a challenge to the decision made in respect to the application made pursuant to s 134.

32    The Appellants accepted the need to identify some error of principle in the manner in which the primary Judge exercised his discretionary powers: House v R (1936) 55 CLR 499. Dixon, Evatt and McTiernan JJ there expressed the principles to be applied as follows, at 504 to 505:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

This expression of principle has been repeatedly endorsed: e.g., Welsh v Digilin Pty Ltd [2008] FCAFC 149 at [16], 250 ALR 13 at 19 per Tamberlin, Greenwood and Collier JJ; Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [99] per Besanko, Perram and Katzman JJ; Ali v Collection Point Pty Ltd [2011] FCAFC 87 at [69] per Rares, Foster and Dodds-Streeton JJ.

33    The Appellants, however, denied that the decision of the primary Judge was an interlocutory decision – but further contended, in the alternative, that they satisfied the requirements to be met if leave to appeal was needed. These requirements are frequently expressed as requiring an appellate Court to consider:

    whether in all the circumstances the judgment of the primary Judge is attended by sufficient doubt to warrant it being reconsidered by the Full Court; and

    whether substantial injustice would result if leave were refused, supposing the decision would be wrong.

See: Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 to 399 per Sheppard, Burchett and Heerey JJ. These requirements, it has been said, are “cumulative” and are not satisfied unless each limb is made out: Rawson Finances Pty Limited v Deputy Commissioner of Taxation [2010] FCAFC 139 at [5] per Ryan, Stone and Jagot JJ. But the two limbs are not unrelated: Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111 at [20] per Kenny, Tracey and Middleton JJ. The “sufficiency of the doubt in respect of the decision and the question of substantial injustice should not be isolated in separate compartments”: Sharp v Deputy Commissioner of Taxation (1988) 19 ATR 908 at 910 per Burchett J. In Re CSR Limited [2010] FCAFC 34 at [5], Keane CJ and Jacobson J observed that “[g]enerally speaking, leave to appeal will be granted where there is a reasonably arguable case that the decision below is affected by appellable error, and a grant of leave is necessary to remedy a substantial injustice”.

34    In seeking to establish the error of principle for the purposes of House v R or the “sufficient doubt” and the “substantial injustice” for the purposes of obtaining such leave as was necessary for the purposes of s 24(1A) of the Federal Court of Australia Act, the Appellants place at the forefront of their submissions:

    the not “insignificant” changes which resulted from the further amendment to the existing Amended Application, those changes affecting “the nature of the relief sought in the proceeding, and the scope of the assets which the [Official Trustee] was seeking to have assigned to” Lend Lease; and

    the fact that an important affidavit filed in support of the amendment application on behalf of Lend Lease was only affirmed on 22 February 2011, the day prior to the hearing. No satisfactory explanation, it is pointed out, has been forthcoming as to why this affidavit (or at least parts of the affidavit) was not filed in accordance with the direction as made on 20 December 2010 and no explanation as to why there was (in any event) apparent non-compliance with Order 14 r 7 of the now repealed Federal Court Rules. Part of the affidavit may have been in response to an affidavit that had been filed on behalf of the Bufalo Respondents; but that part of the affidavit directed to the further amendment to be made on 23 February 2011 should have been filed much earlier.

Reliance was also placed upon such further matters as:

    the absence of any inquiry as to when the decision had been made to further amend; and

    the absence of any explanation as to the lateness of the application being made.

35    The Appellants also correctly contended that a distinction was well-recognised between discretionary decisions which were merely matters of practice and procedure and those discretionary decisions which determined substantive rights: National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155. The Full Court there reaffirmed the principles governing the circumstances in which appellate courts would interfere in the exercise of the discretion of primary Judges. In so doing, the Full Court cited with approval the following observations of Gibbs CJ, Aickin, Wilson and Brennan JJ in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177; 35 ALR 625 at 629:

Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively ... For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In Re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 at 323:

“... I am of the opinion that … there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.”

Similarly, in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572, 104 FCR 564 at 583 to 584 French J (as His Honour then was) summarised the principles as follows:

[42] The application of the leave requirement should not involve the expenditure of significant intellectual energy on the distinction between final and interlocutory judgments. … But the policy supports a general principle, applicable with or without a statutory leave requirement, to the exercise of appellate jurisdiction, including that of the Federal Court even before the enactment of s 24(1A). The principle was expressed by the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 in terms that: “... appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure.” The policy supporting the principle was clearly stated by Jordan CJ in Re Will of Gilbert (1946) 46 SR(NSW) 318 at 323, and repeated with approval by the High Court in the Philip Morris case …

[43] Artificial distinctions may be drawn because of the requirement that the Court looks to the legal rather than the practical effect of the order in question … But such artificiality as may arise can be overcome by a sensible exercise of the discretion to grant leave informed by the underlying policy of that requirement. Interlocutory orders cover a spectrum from those concerned solely with the mechanics of case management and pre-trial preparation to those which may, for one reason or another, have a significant impact upon the scope and outcome of the proceedings. If the order, the subject of the application for leave to appeal, is concerned with the mechanics of the pre-trial process then the scales are likely to be weighted against the grant of leave. However if while interlocutory in legal effect it has the practical operation of finally determining the rights of the parties “... a prima facie case exists for granting leave to appeal” …

[44] The Full Court in Minogue restated the two tests enunciated in Decor Corporation which have been developed to justify the grant of leave to appeal from an interlocutory order. The first is that the decision at first instance should be attended with sufficient doubt to warrant its reconsideration on appeal. The second is that substantial injustice would result if leave were refused.

In the present proceeding, the fact that no general principle is involved tells against allowing an appeal; the finality that the primary Judge’s decision had on resolving the direction sought, however, may tell more firmly in favour of an appellate Court intervening. See also: Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39, 182 FCR 124; Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2011] FCAFC 69 at [35] per Rares J, at [165] per Foster J.

36    Whatever may be the difficulty confronting the Appellants, it must necessarily be recognised at the outset that any prospects for success on the present appeal depended – not upon any absence of power to proceed in the manner in which the primary Judge did in fact proceed – but upon a contention that the primary Judge erred in the manner in which he exercised one or other of the discretionary powers. The discretionary decision which really had to be successfully challenged was the decision to “proceed with the trial generally” pursuant to the power conferred by Order 32 r 2(1)(d).

37    But the initial hurdle that any appellant must confront when seeking to challenge discretionary decisions turned out, however, not to be the reason for rejecting the first and second of the Grounds of Appeal. Had it been necessary to resolve whether an error in principle emerged from the events as they unfolded on 23 February 2011, that question may have been resolved in favour of the Appellants.

38    Even in expressing that tentative observation, it must constantly be borne in mind that a considerable latitude must necessarily be extended to any Judge at first instance to deal with matters of practice and procedure. The fact that different Judges of this Court may well have approached the application made on 23 February 2011 in a different manner is, with respect, beside the point. Some Judges may well have adjourned the application and made directions requiring notice to be given to the Bufalo brothers and extending to them a further opportunity to be heard. But the fact that different Judges may have so proceeded is not to be equated with appellable error.

39    It must also be recognised at the outset that the source of the difficulties confronting the primary Judge as they emerged on 23 February 2011 was primarily to be found in the conduct of the Official Trustee. The manner in which it had drafted the Application and its initial affidavit evidence lacked the precision necessary when a direction pursuant to s 134(4) is sought. If attention is focussed upon the Application as initially filed, there was considerable uncertainty in the order then sought: namely, an order that the Official Trustee was “justified in accepting the offer to assign the cause of action in the terms of the Deed …”. What was intended to be conveyed by the expression “the cause of action” – as opposed to an order that the Court approve the Official Trustee assigning “the Assets” to Lend Lease – remained elusive. And the principal evidence initially relied upon by the Official Trustee (an affidavit of Ms Anderson), with respect, failed to remove any uncertainty. Ms Anderson thus stated in part as follows:

9.    By Deed dated 29 September 2010 the Official Trustee has agreed to assign the proceeding to the First Respondent (“Prime Life”) subject to this Court’s approval. Now produced and shown to me and marked “GMA-5” is a copy of this Deed.

10.    Since the signing of the Deed, Prime Life has informed the Official Trustee that it no longer desires to acquire John and Joe Bufalo’s shares in Bufalo Corporation (which is defined in clause 1.6 of the Deed). The phrase “the BC shares” ought to be deleted from the definition of “the assets” in clause 1.2 of the Deed. The balance of the Deed will otherwise continue to apply.

The affidavit concluded:

17.    I respectfully request this Honourable Court to approve of the Official Trustee entering into the Deed (amended as set out in paragraph 10 above) and to make consequential orders in this regard.

Although Ms Anderson quite properly annexed a copy of the Deed to her affidavit and quite properly sought the Court’s approval to the Official Trustee entering into the Deed, with the benefit of hindsight the body of the affidavit could (perhaps) have made express reference to that for which approval was sought rather than that for which approval was not sought. Uncertainty may also be found in correspondence from the Official Trustee to the Bufalo family in October 2010 referring to negotiations “for the assignment of the chose-in-action”. That correspondence, it would appear, did not set forth in any detail “the Assets” which were the subject of the agreement; nor did that correspondence annex a copy of the Deed as executed.

40    The oral application for leave to amend as made on 23 February 2011 may properly be characterised as an application that more accurately set forth the direction which may well have been contemplated from the outset. But the fact remains that the application as ultimately made was different to that as previously expressed in either the initial Application or the Amended Application and different in substance to that which had been outlined in earlier correspondence.

41    Considerable care needs to be exercised when drafting any direction that may be sought pursuant to s 134(4). The terms in which a direction is drafted places the Court in a position where it can properly form a view as to whether it is truly a direction “in respect of a matter arising in connexion with the administration of the estate” and not, for example, a merely advisory opinion.

42    As demonstrated by the present proceeding, sufficient care was not initially taken when drafting the direction which was truly necessary to give effect to the Deed. And, as also demonstrated by the present proceeding, the direction which is sought may change over time. When the Deed was first executed, it was thus the intention of the parties to that Deed to assign “the Assets”. But, at the time when the Court was asked to make a direction, there was no longer a continuing interest in assigning the shares in Bufalo Corporation Pty Ltd.

43    Little attention, however, was apparently given to the precise direction which was sought until shortly before the hearing on 23 February 2011, if not on the day of the hearing itself. The affidavit affirmed on 22 February 2011 was an affidavit of some significance and foreshadowed the further application to amend that was to be made on the day of the hearing as follows:

I make this affidavit in support of the amended application filed in this proceeding on 20 December 2010 save that the order sought by the First Respondent is that “Pursuant to s.134 of the Bankruptcy Act 1966 a declaration that the Applicant is justified in accepting the offer to assign the Assets (as defined in clause 1.2 of the Deed dated 29 September 2010 being exhibit GMA-5 to the Affidavit of Gina May Anderson sworn 7 December 2010 (“the Deed”)), alternatively an order or declaration pursuant to s.134 of the Bankruptcy Act 1966 approving the Deed…

Given the further application to amend which was being foreshadowed, the concern of the now Appellants as to why this affidavit had not been affirmed and filed far earlier is a concern that cannot be summarily rejected.

44    The difficulties occasioned by this lack of attention to the detail of the application in fact being made was only compounded by the fact that the now Appellants were unrepresented and indeed did not appear at the hearing on 23 February 2011.

45    The difficulties that arise when parties are unrepresented is well-recognised. The difficulties have long been recognised by this Court (e.g., Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85, 84 FCR 438; Vaeula v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 147 at [59] to [61] per Beaumont, Conti and Crennan JJ; Croft v Evertop Investments Pty Ltd (No 2) [2011] FCA 749 at [11] to [12] per McKerracher J) and other Courts (e.g., Rajski v Scitec Corp Pty Ltd (Unreported, NSWCA, Kirby P, Samuels and Mahoney JJA, 16 June 1986). In passages which have been frequently cited and applied with approval, in Rajski Samuels JA observed:

In my view, the advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored. But the court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent. In these days of reasonably available legal aid, a litigant in person is becoming increasingly uncommon. At all events, the absence of legal representation on one side ought not to induce a court to deprive the other side of one jot of its lawful entitlement. It may add weight on the unrepresented party's side of the scale; it must not lighten the other. An unrepresented party is as much subject to the rules as any other litigant. The court must be patient in explaining them and may be lenient in the standard of compliance which it exacts. But it must see that the rules are obeyed, subject to any proper exceptions. To do otherwise, or to regard a litigant in person as enjoying a privileged status, would be quite unfair to the represented opponent.

In the same decision, Mahoney JA similarly observed:

Where a party appears in person, he will ordinarily be at a disadvantage. That does not mean that the court will give to the other party less than he is entitled to. Nor will it confer upon the party in person advantages which, if he were represented, he would not have. But the court will, I think, be careful to examine what is put to it by a party in person to ensure that he has not, because of the lack of legal skill, failed to claim rights or to put forward arguments which otherwise he might have done.

A “frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy”: Neil v Nott (1994) 121 ALR 148 at 150. The difficulties confronting both the Court – and the duties imposed upon it – and the difficulties confronting an unrepresented party are obviously made only more complex when the unrepresented party fails to appear.

46    Given both the fact that there was little reason why the application for the directions which were ultimately sought could not have been made at the outset and the fact that the amendment as made on 23 February 2011 did in fact substantially change the direction to be made, an error in the exercise of the discretion to allow the amendment and to continue with the “trial generally” may well have occurred.

47    No error in principle, it is separately concluded, arises in respect to those events which emerged when the primary Judge returned to his Chambers and which are the subject of the “Postscript” to his reasons for decision. Any appellable error is to be found, if at all, in the manner in which His Honour “proceed[ed] with the trial generally”.

48    The reason for dismissing the first and second of the Grounds of Appeal is to be found in either of two separate conclusions, namely:

a)    prior to 23 February 2011 the now Appellants well knew that the substance of the direction being sought by the Official Trustee was approval to go ahead with the agreement set forth in the Deed; and/or

b)    the continuation of the hearing in the absence of the Appellants on 23 February 2011 worked no injustice to them.

49    Notwithstanding the potential for obfuscation that the manner in which the Official Trustee failed to properly formulate the direction to be sought, the fact is that the now Appellants well knew prior to 23 February 2011 that the Official Trustee was asking the Court for approval to give effect to the Deed and approval for the assignment of “the Assets”. A Notice of Grounds of Opposition was thus filed by Mr Antonio Bufalo on his own behalf and on behalf of his two sons (the then Respondents) on 28 January 2011. That Notice stated:

The Third to Fifth respondents oppose the making of the orders sought by The Official Trustee in Bankruptcy as the assets sought to be assigned as identified in the Deed have revested in them (the Third to Fifth Respondents).

There is, with respect, considered to be no ambiguity in the expression “the assets sought to be assigned as identified in the Deed”. The conclusion is thus inevitable that the now Appellants well knew prior to 23 February 2011 the substance of the application to be made.

50    Moreover, it is further concluded that the continuation of the hearing in the absence of the now Appellants worked them no injustice. If the position of Mr Antonio Bufalo is presently left to one side, no injustice was occasioned to either Mr Giovanni Bufalo or his brother Mr Giuseppe Bufalo. They knew as from the hearing on 20 December 2010 that the hearing was listed to commence on 23 February 2011. They had the opportunity to attend that hearing had they so wished. Whatever significance may be attached to any indisposition of the father on that date, they must have known of the father’s ill-health and deliberately opted themselves not to attend.

51    That which is required by the rules of natural justice or procedural fairness is that a party be given an opportunity to be heard; the rules do not impose any obligation to ensure that a party takes the best advantage of that opportunity: Sullivan v Department of Transport (1978) 20 ALR 323. Albeit in the context of addressing s 39 of the Administrative Appeals Tribunal Act 1975 (Cth), Deane J (when a member of this Court) said:

The failure of a tribunal which is under a duty to act judicially to adjourn a matter may, conceivably, constitute a failure to allow a party the opportunity of properly presenting his case even though the party in question has not expressly sought an adjournment (see Priddle v Fisher & Sons [1968] 1 WLR 1478; [1968] 3 All ER 506). In this regard, however, it is important to remember that the relevant duty of the Tribunal is to ensure that a party is given a reasonable opportunity to present his case. Neither the Act nor the common law imposes upon the Tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled.

Smithers and Fisher JJ agreed. Similar observations have also been made in Secretary, Department of Family and Community Services v Verney [2000] FCA 570 at [45], 60 ALD 737 at 748 per Cooper J; Goodricke v Comcare [2011] FCA 694 at [60]; Kenso Marketing (M) SDN BHD v Chief Executive Officer of Customs [2011] FCAFC 26 at [45] per Keane CJ, Downes and Gordon JJ. See also: Re Association of Architects of Australia; Ex parte Municipal Officers of Australia (1989) 63 ALJR 298 at 305 per Gaudron J.

52    Other than to assert that the sons left it to the father to conduct the proceeding, there was no satisfactory explanation for why there was no appearance by anyone on behalf of the now Appellants on 23 February 2011. Nor was there a satisfactory explanation advanced as to why even Mr Antonio Bufalo could not have arranged for somebody – be it a solicitor or a McKenzie friend – to attend and explain his circumstances.

53    Moreover, there was no satisfactory identification of what the now Appellants would have said had they in fact attended. Other than to oppose the direction being sought, the only further factual subject-matter that they may have wished to address was their exclusion from negotiations as between the Official Trustee and Lend Lease. An affidavit that had been filed by Mr Antonio Bufalo on 28 January 2011 thus stated in part as follows (without alteration):

I deny the assertions made by Anderson at paragraph 5 of her affidavit and say that at no time during the course of the negotiations and discussions which, it now appears, the OTB has been conducting with the proposed purchaser of the choses in action (“Lendlease Primelife”), culminating in the preparation of the Deed, did the OTB advise, or inform us, or any of us (my sons and I) of those negotiations discussions with Lendlease Primelife with a view to negotiating and procuring and assignment of the choses in action. We never received, or were advised of, any of the negotiations how they were commenced, in what context those negotiations proceeded and on what bases.

I note that the letters to which Anderson has referred, being exhibits GMA6 and GMA7 of her affidavit are dated the 25th October 20101 and 5 November 2010- after the OTB and its solicitor now appear to have completed their negotiations culminating in the purported Deed between the OTB and Lendlease Primelife, but that Anderson has continued in the conduct of the OTB and tis solicitor, inter alia, in not disclosing to my sons and myself any of the negotiations and discussions between the parties and, in particular, the Deed and its terms. Much of the letters which are exhibits GMA6 (sent to an address at which we were not residing) are misstatements of the facts and the position of the OTB, and are self serving and incorrect in their claims of the state of awareness of my sons and I as to the negotiations, discussions, and dealings between the OTB and Lendlease and their respective solicitors, and I ask this Honourable Court to direct the lawyers for OTB and Lendlease Primelife to produce to produce to the Court their files pertaining to the negotiations and dealings between the parties culminating in the Deed.

Such errors as have been made by Mr Antonio Bufalo in identifying (for example) the paragraphs in Ms Anderson’s affidavit to which he was replying assume no relevance. What is of importance is the fact that the subject-matter of such submissions as may have been made in respect to negotiations assumes little importance in the resolution of the present appeal for either of two reasons.

54    First, there was probably no entitlement on the part of the now Appellants to be consulted when the deal between the Official Trustee and Lend Lease was being negotiated. And, second, there was no evidence as to the now Appellants being in any position to now offer the Official Trustee (or the creditors) any better deal than had been embraced by the Deed. The primary Judge was both conscious of the desire on the part of the Appellants to make a submission as to their involvement in negotiations and the need to secure as favourable a result to creditors as possible. As correctly observed by the primary Judge:

[18] The other points raised against the approval of the deed relate to concerns of the Bufalos of a lack of knowledge by them of the course of negotiations between the applicants and Lendlease. One can understand the concerns of the Bufalos about losing a potential asset or assets. However, the approval of the relevant portions of the deed has the advantage of returning to creditors most of the funds owed to them by the Bufalos. This result is in the public interest. It promotes public confidence in the ability of the legal system to assist creditors recover debts from their debtors. Accordingly, I consider it is appropriate to make an order in the terms of the further amended application.

Had the Official Trustee been presented with a better offer on the part of the now Appellants, perhaps different considerations may have arisen. And, in any event, the now Appellants had been on notice as from at least early November 2010 as to the agreement that had been reached. There was no evidence that as between that date and February 2011 they had been denied any opportunity to further negotiate with the Official Trustee during that four month period.

55    In such circumstances, and even if there had been an error in the application by the primary Judge to the discretionary decisions being made on 23 February 2011, the now Appellants have not suffered any injustice. In resolving the first and second Grounds of Appeal, any discretion which is now to be exercised is resolved against the Appellants. Although an appellate Court should proceed with caution in reaching a conclusion that a denial of procedural fairness has had “no bearing on the outcome of the trial of an issue of fact” (cf. Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145 to 146 per Mason, Wilson, Brennan, Deane and Dawson JJ; House v Defence Force Retirement and Death Benefits Authority [2011] FCAFC 72 at [17] per Greenwood J, at [133] per Gilmour J, at [173] to [174] per Logan J), such is the conclusion to be reached in the present appeal.

56    The decision made by the primary Judge to “proceed with the trial generally” operated no injustice.

57    Grounds one and two of the Grounds of Appeal are rejected.

The Remaining Grounds of Appeal

58    These first two grounds were what occupied the oral submissions during the hearing of the appeal. They were clearly the two grounds upon which the Appellants focussed attention and presumably considered were the grounds which offered the greatest prospects of success.

59    But the remaining grounds, namely grounds three and eight to twelve, were not abandoned and should be briefly addressed.

60    The third ground of appeal challenges the direction in fact made. But no error in principle as to the manner in which the discretion conferred by s 134(4) of the Bankruptcy Act was in fact exercised.

61    The eighth and ninth grounds of appeal are directed to the order as to costs. Albeit briefly expressed, the fact is that the primary Judge did address in his reasons for decision the order for costs he made in favour of Lend Lease and Mr Sent. No more extensive reasons were warranted. And no error in principle emerges as to the exercise of his discretion to make that order. No order for costs was sought by the Official Trustee.

62    Grounds 10 to 12 focus attention upon the manner in which the primary Judge addressed the facsimile message received in his Chambers after the conclusion of the hearing. No course should be endorsed where such “messages” are forwarded directly to the chambers of any Judge of this Court. Such private communications have the potential to undermine a paramount obligation of the Court to exercise the jurisdiction of the Court “in open Court”: Federal Court of Australia Act, s 17. See: Australian Broadcasting Commission v Parish (1980) 43 FLR 129 at 132 per Bowen CJ. But such considerations may, perhaps, be left to one side. The fact of the communication was disclosed and there is no error in principle in the manner in which His Honour adhered to the orders previously made.

Order 32 Rule 2(2)

63    As an adjunct to its submission that the Appellants’ appeal is “misconceived”, Lend Lease further contended that the appropriate course which should have been pursued by the Appellants was to invoke Order 32 r 2(2) of the now repealed Federal Court Rules.

64    That sub-rule provided as follows:

Where the Court proceeds with a trial in the absence of a party, and at or at the conclusion of the trial an order is made, the Court may set aside or vary the order, and may give directions for the further conduct of the proceeding.

The term “trial” was formerly defined as including “any hearing other than an interlocutory hearing”: Order 1 r 4. The “Court” is defined by s 4 of the Federal Court of Australia Act as meaning “the Federal Court of Australia established by this Act”.

65    The failure to follow that course was said on behalf of Lend Lease to be a reason for now withholding relief. The Appellants opposed such a submission upon the basis that the hearing of an application made pursuant to s 134(4) of the Bankruptcy Act was – at least for the purposes of Order 32 r 2(2) – an “interlocutory hearing”.

66    The proper characterisation of an application made pursuant to s 134(4), and any order that may be made pursuant to s 30, occupied the attention of Sackville J in Sutherland (In the Matter of Scutts) [1999] FCA 147. His Honour there helpfully reviewed some of the authorities and the principles to be applied as follows:

The Nature of the Proceedings

[9] As I have noted, the Trustee’s application is made pursuant to s 134(4) of the Bankruptcy Act.  The predecessors to this provision include s 20 of the Bankruptcy Act 1869 (UK) (32 & 33 Vict, c 71) and s 89 of the Bankruptcy Act 1883 (UK) (46 & 47 Vict, c 52).  These enactments are also part of the “legislative pedigree” of what is now s 479(3) of the Corporations Law, which empowers a liquidator to apply to the Court for directions “in relation to any particular matter arising under the winding-up”: Re G B Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674, at 677, per McLelland J.  This language is in substance identical to that used in s 134(4) of the Bankruptcy Act.

[10] There is a good deal of authority concerning the nature and scope of the power conferred by s 479(3) of the Corporations Law, not all of it consistent. 

…

[14] Given the common historical antecedents and language of s 134(4) of the Bankruptcy Act and s 479(3) of the Corporations Law, there is much to be said for the view that both provisions should be construed in the same manner.  If this view is correct and if the views expressed in Re G B Nathan are also correct, it would follow that an application under s 134(4) of the Bankruptcy Act is not an appropriate vehicle, of itself, to determine the substantive rights of creditors as against a trustee in bankruptcy or of creditors among themselves.  On the other hand, s 134(4) must be read in the context of s 30(1) of the Bankruptcy Act.  This sub-section provides that the Court has full power to decide all questions of law or of fact in any case of bankruptcy and may make such orders as the Court considers necessary for the purposes of carrying out or giving effect to the Act.  Section 30(1) might suggest that the Court, when exercising the power conferred by s 134(4), may make binding orders on third parties at least in certain kinds of bankruptcy cases, provided the requirements of procedural fairness are met.  The significance of s 30(1) of the Bankruptcy Act, if any, was not addressed in submissions.

[15] It is not necessary in the present case to reach a final view as to the proper construction of s 134(4) of the Bankruptcy Act.  …

67    It is unnecessary to resolve these competing submissions of Lend Lease and the Appellants, or to form any view as to whether the orders made by the primary Judge were “interlocutory” for the purposes of Order 32 r 2(2).

68    In the absence of any appellable error, it matters not that an application was not made pursuant to that Rule. A provision comparable to the now repealed Order 32 r 2(2), it may be noted, is now contained within Rule 30.21(2) of the Federal Court Rules 2011. Had an application been made to this Court, albeit constituted as a Full Court, pursuant to either Order 32 r 2(2) or Rule 30.21(2), no order would have been made setting aside or varying the order of the primary Judge.

Conclusions

69    None of the Grounds of Appeal have been made out. The appeal is to be dismissed. The inescapable reality of the situation is that the Appellants knew that the Official Trustee’s application was to be heard on 23 February 2011. They knew that that application was to seek approval to give effect to the agreement set forth in the Deed, of which they had knowledge as from at least early November 2010. They deliberately opted to not attend on 23 February 2011 or to arrange for someone to attend on their behalf. The application to adjourn the proceeding was made in a manifestly inappropriate manner and was not supported by any probative material.

70    It should be noted that all Respondents to the appeal filed a Notice of Motion dated 15 April 2011 seeking an order (inter alia) that specified paragraphs of the Notice of Appeal be dismissed. A further Notice of Motion was also filed on behalf of Bufalo Corporation Pty Ltd (in Liquidation) seeking an order that leave be granted to intervene in the appeal. The Liquidator, apparently, communicated with Lend Lease indicating that he did not wish to have the Motion resolved. Given the conclusion reached in respect to the appeal itself, those Notices of Motion should in any event be dismissed.

71    The Official Trustee does not seek an order for costs.

72    There is no reason, however, why the Appellants should not be ordered to pay the costs of Lend Lease and Mr Sent, namely the Second and Third Respondents.

ORDERS

The Orders of the Court are:

1.    The appeal is dismissed.

2.    The Notice of Motion dated 15 April 2011 is dismissed.

3.    The Notice of Motion filed on behalf of Bufalo Corporation Pty Ltd (in Liquidation) is dismissed.

4.    The Appellants are to pay the costs of the Second and Third Respondents.

Associate:

Dated:    26 August 2011