FEDERAL COURT OF AUSTRALIA

Zdrilic v Hickie [2016] FCAFC 101

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the respondents’ costs as agreed or taxed.

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

REASONS FOR JUDGMENT

THE COURT:

1    The appellants, who are husband and wife, were made bankrupt on the petition of the respondents when a registrar of the Federal Circuit Court of Australia (Federal Circuit Court) made a sequestration order against their estates. The appellants, who at that stage were self-represented, applied for review of that order and the other orders made by the registrar at the time (the Review Application). About two weeks later, the respondents applied for summary dismissal. The primary judge granted that application, dismissing the Review Application and confirming the sequestration order: Zdrilic & Anor v Hickie & Anor [2015] FCCA 2882.

2    The appellants applied for leave to appeal and on 10 February 2016 that application was granted by consent and the appeal listed for hearing before a Full Court. In their notice of appeal, the appellants seek orders that the orders of the primary judge be set aside and that the matter be remitted to the Federal Circuit Court, differently constituted, for further consideration pursuant to s 104(2) of the Federal Circuit Court of Australia Act 1999 (Cth) (Federal Circuit Court Act).

3    The proceeding below has an unfortunate history. Two events occurred which contributed to their complexity, caused confusion and, to a degree, led to this appeal.

4    First, the judge who heard and dismissed the appellants’ notice of opposition did not then hear the creditor’s petition. Rather, he ordered that the creditor’s petition proceed to a hearing before a registrar. This bifurcation of the creditor’s petition understandably confused the appellants as to their appeal rights. It also raised questions about the nature of the hearing before the registrar and his exercise of discretion under the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act).

5    Second, the application for summary dismissal filed in the Review Application was misconceived and could have led the primary judge into error.

6    Nevertheless, for the reasons which follow we are not persuaded that the primary judge erred as alleged.

Legislative framework

7    Section 102 of the Federal Circuit Court Act concerns the powers of registrars. Its object is to allow certain powers of the court to be exercised by a registrar upon the direction of the court or a judge. Subsection (2) lists those powers. They include a power of the court prescribed by the Rules of Court: s 102(2)(i). The “Rules of Court” are the Rules of Court made under the Federal Circuit Court Act: s 5.

8    Section 103 of the Federal Circuit Court Act sets out the delegation of powers to registrars. Subsection (1) provides that the Rules of Court may delegate to the registrars any of the court’s powers including, but not limited to, any of the powers mentioned in s 102(2).

9    Section 104(2) of the Federal Circuit Court Act entitles a party to a proceeding in which a registrar has exercised any of the powers of the court under s 102(2) or under a delegation under s 103(1) to apply to the court for review of that exercise of power. Section 104(3) provides that the court may, on an application under subs (2) or on its own initiative, review an exercise of power by a registrar under s 102(2) or under a delegation under s 103(1) and may make any order it thinks fit in relation to the matter in respect of which the power was exercised.

10    Registrars’ powers are to be found in Div 20.1 of Pt 20 of the Federal Circuit Rules 2001 (the FCC Rules). Division 20.2 deals with review of the exercise of those powers. Rule 20.03 sets out the procedure for review. It states that the review “must proceed by way of a hearing de novo” (para (a)). Any affidavit or exhibit tendered before the registrar may be received as evidence (para (b)). Further evidence may be received with leave (para (c)); so too, any transcript of the proceeding before the registrar or, if there is no transcript, an affidavit of a person who was present at the hearing before the registrar as a record of the proceeding (para (d)).

11    The Rules of Court in force at the relevant time also included the Federal Circuit Court (Bankruptcy) Rules 2006 (the 2006 Bankruptcy Rules) which were made under the Federal Circuit Court Act: 2006 Bankruptcy Rules, r 1.02A. Rule 2.02 provided that, for the purposes of s 102(2)(i) of the Federal Circuit Court Act, if the court so directs, a registrar may exercise a power of the court under a provision of the Act mentioned in Schedule 2 to those Rules. Schedule 2 included at items 9, 10 and 11 respectively, as powers of the court that could be exercised by a registrar, ss 52(1), (2) and (3) of the Bankruptcy Act.

12    Section 52 of the Bankruptcy Act relevantly provides:

Proceedings and order on creditor’s petition

(1)    At the hearing of a creditor’s petition, the Court shall require proof of:

(a)    the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)    service of the petition; and

(c)    the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

…

(2)    If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a)    that he or she is able to pay his or her debts; or

(b)    that for other sufficient cause a sequestration order ought not to be made;

it may dismiss the petition.

…

13    Rule 2.06 of the 2006 Bankruptcy Rules prescribes the obligations of a debtor wishing to oppose a creditor’s petition:

Opposition to application, interim application or petition

(1)    In this rule:

application includes an interim application.

(2)    A person who intends to oppose an application or petition must, at least 3 days before the date fixed for the hearing of the application or petition or, with the leave of the Court, at the hearing:

(a)    file a notice of appearance in accordance with Form 4; and

(b)    file a notice in accordance with Form 5 stating the grounds of opposition; and

(c)    file an affidavit in support of the grounds of opposition; and

(d)    serve the notices and supporting affidavit on the applicant.

14    The power of the Federal Circuit Court to order summary judgment is found in s 17A of the Federal Circuit Court Act which provides:

Summary judgment

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

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

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

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

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

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

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

(a)    hopeless; or

(b)    bound to fail;

for it to have no reasonable prospect of success.

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

15    Division 13.3 of the FCC Rules relates to summary disposal and stay of proceedings. Rule 13.10 provides:

Disposal by summary dismissal

The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:

(a)    the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or

(b)    the proceeding or claim for relief is frivolous or vexatious; or

(c)    the proceeding or claim for relief is an abuse of the process of the Court.

The nature of a hearing de novo

16    As the FCC Rules recognise, a review of an exercise of power by a registrar must proceed by way of a hearing de novo. Anything less than a hearing de novo would probably constitute a failure to adhere to what Beach J referred to in Tran v Pu (2015) 228 FCR 562 (Tran v Pu) at [19] as “the constitutional imperative”, that is to say the requirement that the judicial power of the Commonwealth only be exercised by judges of federal courts or other courts exercising federal jurisdiction: see Totev v Sfar and Another (2008) 167 FCR 193 (Totev v Sfar) at [10] (per Emmett J) and Harris v Caladine (1991) 172 CLR 84 at 164 (Harris v Caladine) (per McHugh J) (discussed later in these reasons).

17    Harris v Caladine concerned a consent order made by a deputy registrar of the Family Court for the settlement of property under s 79 of the Family Law Act 1975 (Cth). The husband and wife had attended before a deputy registrar and signed short minutes relating to their property interests. An order was made by consent reflecting the terms of the short minutes. A formal order was subsequently signed and sealed. The consent order was made pursuant to O 36A r 2(1) of the Family Law Rules 2004 which delegated certain powers to registrars, including, in para (n), the power to make consent orders. Thereafter, pursuant to O 36A r 5(2), the wife applied for review of the order made by the deputy registrar. At the time, O 36A r 7(4) of the Family Law Rules provided that a court reviewing an exercise of a power by a registrar shall proceed by way of hearing de novo but may have regard to the proceedings, including the evidence given and any affidavit filed before the registrar, as the case requires.

18    The wife’s application for review came on for hearing before Maxwell J. Her Honour dismissed the application, holding that the exercise of power by the deputy registrar did not constitute the exercise of judicial power as it merely embodied the terms of a contract between the parties. As a result she held that no review of the order was available under O 36A r 7 and that the only available avenue for relief was an application under s 79A of the Family Law Act for an order varying or setting aside the deputy registrar’s order. The wife appealed to the Full Court of the Family Court, her appeal was allowed, and her application for review was remitted to a single judge for rehearing. The Full Court held that the power to make the consent order under s 79 was validly delegated under s 37A of the Family Law Act (which empowered the judges of the Family Court to make rules of court delegating powers of the Family Court to registrars) and that there was a power to review the order. However, the Full Court held that the application for review did not set aside the consent. It required a reconsideration of whether, on the material before the registrar, he ought to have made the consent order.

19    The issue before the High Court concerned the nature of a registrar’s power to make a consent order and the validity of the delegation of the power to make such an order. The majority (Mason CJ, Deane, Dawson, Gaudron and McHugh JJ) upheld the validity of s 37A(1) of the Family Law Act on the basis that the Family Law Rules provided for review “by way of a hearing de novo”. Mason CJ and Deane J explained (at 94) that the legislative power of the Commonwealth, including the power to delegate aspects of its jurisdiction and some of its powers and functions, cannot be exercised in a way that is inconsistent with the continued existence, in that case, of the Family Court as a federal court constituted under Chapter III of the Constitution. That is to say, “both the legislative power and the power of delegation must be exercised in conformity with the requirement that the Court’s federal jurisdiction, powers and functions are to be exercised by a court whose members are judges appointed pursuant to s 72 of the Constitution”.

20    Mason CJ and Deane J observed that, because a federal court may be organised in a variety of ways for the purpose of the exercise of its jurisdiction, it does not follow that all the jurisdiction, powers and functions of the court must be exercised by its judges. However, their Honours said “the requirement does mean that the judges of the Court do effectively control and supervise the exercise of its jurisdiction, powers and functions by participating in the hearing and determination of cases and otherwise by having the capacity to review the decision of officers of the Court and other persons to whom jurisdiction, powers and functions may be delegated”. Their Honours emphasised that the role of officers of the Court, such as its registrars, is secondary to that of the judges. They continued (at 95):

The importance of insisting on the existence of review by a judge on appeal or an appeal to a judge is that this procedure guarantees that a litigant may have recourse to a hearing and a determination by a judge. In other words, a litigant can avail him or herself of the judicial independence which is the hallmark of the class of court presently under consideration.

21    Mason CJ and Deane J referred (at [96]) to O 36A r 7(4) of the Family Law Rules, which required that a court reviewing an exercise of power by a registrar must proceed by way of a hearing de novo, and said:

The direction that the review is to be by way of hearing de novo plainly indicates that the jurisdiction of the court on review is not relevantly confined and extends not only to any issue which might have arisen before the deputy registrar but also to any issue which might properly arise in the meantime. … The complication was that before Maxwell J. the making of the order was contested, whereas the making of that order was not in contest before the Deputy Registrar. Maxwell J. considered that the consent order could only be set aside in proceedings under s. 79A, which specifically makes provision for cases in which there has been a miscarriage of justice by reason of fraud, duress or any other circumstance. With respect we consider that the approach is too restricted. By its very nature, a review by way of hearing de novo enables the reviewing court to examine, inter alia, whether the consent order is vitiated by fraud, duress or mistake. Clearly the grounds mentioned in s 79A are open to be raised on a review under O. 36A, r. 7(4). What we have said about a review under O. 36A, r. 7(4) has equal application to a review under s 37A(9) and (10).

Moreover, in our opinion, the reviewing judge, as well as the Deputy Registrar, was required to have regard to the matters mentioned in s 79(4), though, in the case of the Deputy Registrar, as a consent order was sought, comparatively little was required to satisfy him on that score. We do not understand why the fact that a consent order was initially sought absolved the reviewing court from the need to comply with the obligation cast upon it by s 79(4).

22    McHugh J considered that nothing less than a hearing de novo would suffice. In other words, s 37A(1) was only valid because there was provision in the Family Law Rules for a hearing de novo. His Honour said (at 164):

[A]ppellate review is an insufficient condition of the delegation of the exercise of the power; there must be a complete rehearing of the facts and the law as they exist when the Justice or judge reviews the order made by the officer. Otherwise, the officer and not the Justices or judges of the court would be exercising the original jurisdiction of the court.

23    Dawson J, after noting that an order made by a registrar is reviewable by way of a hearing de novo, said (at 124):

That means that the court reviewing the order begins afresh and exercises for itself any discretion exercised below by the Registrar. The parties commence the application again, subject to any restrictions in the rules upon the calling of evidence or provisions relating to the use before the court of evidence called before the Registrar. A hearing de novo involves the exercise of the original jurisdiction and “the informant or complainant starts again and has to make out his case and call his witnesses”…

(citations omitted)

24    Similarly, s 35A(6) of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) confers a power on this Court to review an exercise of power by a registrar. In Martin & Another v Commonwealth Bank of Australia (2001) 217 ALR 634 a Full Court of this Court (North, Mansfield and Katz JJ) considered whether, in exercising the power of the Court under s 35A(6), the primary judge, although required to do so, failed to hear de novo the respondent’s creditor’s petition. A registrar had made sequestration orders against the estates of the appellants. The appellants filed a notice of motion seeking that the registrar’s orders be “overturned”. The Full Court held that it was appropriate to treat that notice of motion as an application to review the exercise by the registrar of the Court’s power under s 52(1) of the Bankruptcy Act to make a sequestration order against a debtor’s estate and that it was apparent that the primary judge had treated the notice of motion in that way.

25    The Full Court concluded that the primary judge had not heard the respondent’s creditor’s petition de novo because:

(1)    in making his findings, which related to the primary judge’s view of the appellants’ proposed application for special leave to the High Court, the primary judge found that he was not persuaded that there was a sufficiently strong prospect of that application being successful to warrant interfering with the exercise of discretion by the registrar. The Full Court found at [14] that it could not be fairly said that implicit in those findings was a “statement by the primary judge of his satisfaction with the proof of the matters of which s 52(1) of the Act requires the court to be satisfied before it can make a sequestration order against a person’s estate” and that:

when adverting to the prospects for success of the Martins’ special leave application, the primary judge did not do so for the purpose of exercising his own discretion whether to make sequestration orders against the Martins’ estates, assuming the conditions precedent to the exercise of that discretion were satisfied; rather, he did so for the purpose of deciding whether the exercise by the registrar of her discretion had miscarried…

(2)    the primary judge made no reference elsewhere in his reasons to being satisfied of proof of the matters of which s 52(1) of the Bankruptcy Act requires the court to be satisfied before it can make a sequestration order: at [15]; and

(3)    the respondent had not filed affidavits on the appellants’ application for review. This meant that if the primary judge were to hear de novo the respondent’s creditor’s petition it would be necessary to have regard to affidavits which had been earlier filed by the respondent and relied on before the registrar. The Court observed that, while that could presumably be done, two of those affidavits did not comply with the timing requirements imposed for their swearing by the relevant rules: at [16].

26    The Full Court also considered whether, if contrary to the view it had taken, the primary judge was satisfied with proof of the matters required by s 52(1) of the Bankruptcy Act before making a sequestration order, it was not necessary for him to refer to his having had that satisfaction in his judgment. The Full Court determined (at [17]) that such reference was necessary. At [18] the Court said:

A judge must, in the judge’s reasons for judgment, apprise the parties to the litigation before the judge of the “essential ground or grounds” of the judge’s decision: see, for example, Colonial Mutual Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418 at 432; 154 ALR 417 at 430 per Wilcox, O’Connor and Sackville JJ. Such a requirement appears to us to be particularly important when the reasons for judgment concerned are the reasons for sequestrating a debtor’s estate (or, what is the same thing, affirming an earlier decision doing so). That is so because “[b]ankruptcy … involves a change of status and has quasi-penal consequences”: Ahern v DCT (Qld) (1987) 76 ALR 137 at 148 per Davies, Lockhart and Neaves JJ. It is an essential ground of a judge’s decision to make an order sequestrating a debtor’s estate or affirming a registrar’s decision to do so that the judge is satisfied with the proof of the matters of which s 52(1) of the Act requires the court to be satisfied before it can make a sequestration order and the judge must therefore apprise the parties, in the judge’s reasons for judgment, of the existence of that satisfaction.

27    In Totev v Sfar a Full Court of this Court (Emmett, Bennett and Cowdroy JJ) allowed an appeal from an order of the Federal Magistrates Court (as the Federal Circuit Court was then known) declining to interfere with a sequestration order made in relation to the appellant’s estate.

28    Emmett J considered the nature of a review of a registrar’s order. Referring to Harris v Caladine his Honour observed that, for a delegation of power to a registrar to be valid, the powers and functions of the registrar must be subject to review by a judge on questions of both fact and law and that the review of the exercise of the power by the registrar must be by way of hearing de novo. His Honour continued at [10]:

Indeed, on one view, nothing less than a hearing de novo would be sufficient. That is to say, there must be a complete rehearing of the facts and the law as they exist when the judge reviews the order made by the registrar; otherwise, the registrar, and not the judges of the court, would be exercising the original jurisdiction of the court: Harris and Caladine at CLR 164; ALR 249–50; Fam LR 643–4.

29    At [13]-[14] Emmett J described the nature of a hearing de novo and in particular the nature of such a hearing in relation to the review of a sequestration order:

13.    In the case of a hearing de novo, however, the judge reviewing the order begins afresh and exercises for himself or herself any discretion exercised by the registrar. The parties commence the proceeding again, subject to any rules concerning the use of evidence adduced before the registrar. The hearing de novo involves the exercise of the original jurisdiction and the petitioner, in the case of a bankruptcy petition, must start again, call witnesses and make out the petitioner’s case: Harris and Caladine at CLR 124; ALR 220–1; Fam LR 617–18.

14.    Because the hearing of an application for review of a sequestration order is a hearing de novo, it would not be sufficient for the reviewing judge to be satisfied that the registrar made no error and simply to dismiss the application for review. The judge who hears the review application must hear the petition afresh and must be satisfied as to the matters referred to in s 52 of the Bankruptcy Act. Thus, the reviewing judge must herself or himself be satisfied with the proof of:

•    the matters stated in the petition;

•    the service of the petition; and

•    the fact that the debt or debts on which the petitioning creditor relies is or are still owing.

The reviewing judge must also exercise afresh the discretions conferred by s 52(2).

30    In Tran v Pu Beach J allowed an appeal from a judge of the Federal Circuit Court who had dismissed an application for review of a sequestration order made by a registrar of that court. That matter involved a deed of settlement entered into after the respondent had issued a bankruptcy notice. Pursuant to the deed, the parties agreed that the appellant, who was liable to the respondent for a judgment debt obtained in the Magistrate’s Court of Victoria, would pay the respondent and an associated company the sum of $20,000 in full settlement of the judgment debt. The deed included a term to the effect that it could be pleaded as a full and complete defence to any proceedings taken by any party in connection with any matter referred to in the deed. The appellant defaulted on the first payment due under the deed. The respondent then filed a creditor’s petition and a sequestration order was made by a registrar of the Federal Circuit Court against the appellant’s estate. The appellant filed an application for review of the sequestration order.

31    The primary judge dismissed the application for review on the ground that the deed executed by the parties was “a bar” to the application. Beach J found that the primary judge had failed to conduct a hearing de novo. At [20] his Honour said:

No private contractual bar could foreclose the operation of s 52 and the task required of the Federal Circuit Court under s 52. The language of s 52 required that Court to consider and apply its terms. For example, s 52(1) refers to “…the Court shall require proof…”. Further, under s 52(1) the Court is only empowered to make a sequestration order “if it is satisfied with the proof of…” the matters set out in s 52(1)(a)-(c). Further, the Court’s satisfaction or non-satisfaction of various matters under s 52(2) is relevant to the exercise of its power to dismiss the petition. On a rehearing de novo, the Federal Circuit Court was required to consider and deal with all such matters. And only after that consideration could disposition of the application for review occur.

32    Beach J doubted whether an application for summary dismissal was appropriate in an application for review of a sequestration order, observing at [28] and [31]:

28.    Fourth, there may be cases where an application for review is brought mala fide, for an improper purpose or otherwise constitutes an abuse of process (Williams v Spautz (1992) 174 CLR 509 at 526-531 per Mason CJ, Dawson, Toohey and McHugh JJ). But in such a case, an application to stay the review (or summary dismissal) may be the appropriate process to follow. But in this case, no such application was brought. Further, no such circumstance was alleged. Further, I say this generally, for it is hard to conceive of such a case in the context where an application for review is brought by a debtor challenging the making of a sequestration order. Further, if the effect of the stay produces an impermissible absence of review of the Registrar’s order, then yet further problems may arise.

31.    It was said that the Court had a power of summary dismissal (s 17A(2) of the FCC Act and r 13.10 of the FCC Rules) and that this power had been exercised by her Honour in the present case on the basis of the Deed being a bar. But no such formal application was made; there was no formal document and my review of the transcripts for the hearings on 21 and 26 August 2014 does not support the contention that such a power was being exercised. … Further, if such a summary dismissal power was available, then it might be used in circumstances such as discussed in [28] above. But such circumstances were not the present case. Further, if it was to be used in circumstances such as the present, her Honour would first have been required to consider the matters set out in [20]-[27] above before considering whether to exercise her powers to summarily dismiss the application for review on the basis of the Deed alone being a bar. No such consideration occurred. More particularly in that context, her Honour would have been required to consider the public effect and third party consequences of exercising her powers of summary dismissal. …

Procedural history

33    On 21 March 2013, bankruptcy notice BN159172 of 2013 was issued by the Official Receiver to the appellants naming the respondents as creditors for the sum of $358,588.89. The bankruptcy notice was based on a judgment of the Supreme Court of New South Wales entered on 14 March 2013 against the appellants and two companies of which they were directors: Land Enviro Corp Pty Ltd and Amy Holdings Pty Ltd (the Supreme Court Judgment).

34    On 17 April 2013, the appellants filed an application in the Federal Circuit Court seeking orders that the bankruptcy notice be set aside and that the time for compliance with the notice be extended on the basis that the appellants had commenced proceedings to set aside the Supreme Court Judgment (the Bankruptcy Application).

35    On 30 April 2013 an order was made in the Bankruptcy Application that the time for compliance with the bankruptcy notice be extended until 21 May 2013 on condition, among other things, that the appellants diligently prosecute the proceedings to set aside the Supreme Court Judgment.

36    The Bankruptcy Application came before the court on four subsequent occasions. Eventually, on 18 March 2014, upon being informed that the appellants’ proceedings to set aside the Supreme Court Judgment had been dismissed, a registrar of the Federal Circuit Court dismissed the Bankruptcy Application.

37    The appellants filed an application in the Federal Circuit Court seeking review of the registrar’s decision dismissing the Bankruptcy Application. On 24 July 2014, Judge Lloyd-Jones dismissed that application with costs and ordered that any creditor’s petition based on the bankruptcy notice should come before him: Zdrilic & Anor v Hickie & Anor [2014] FCCA 1593 (the Bankruptcy Notice Judgment).

38    On 20 August 2014, the respondents filed a creditor’s petition in the Federal Circuit Court. On 15 September 2014, the appellants filed a notice stating grounds of opposition to the creditor’s petition (the Notice of Opposition) which raised the following grounds:

1.    The debtors did not commit the act of bankruptcy on the day the Registrar dismissed the application to set aside the Bankruptcy Notice.

2.    If the Court goes behind the judgment on which the Bankruptcy Notice is based, it will find that the judgment debt was based on a conspiracy to defraud the debtors.

3.    The Creditors petition was issued for an improper purpose.

4.    Issuing the sequestration order is not in the applicant’s interest.

5.    The debtors are not impecunious in the true (real) sense.

6.    Justice Harrison, in relation to an application for an extension of the stay of the costs order, erred in not granting the extension.

7.    There is no public interest in the making of the sequestration order.

39    On 27 May 2015 Judge Lloyd-Jones dismissed the Notice of Opposition and ordered that the creditor’s petition proceed to hearing before a registrar of the Federal Circuit Court forthwith: Hickie & Anor v Zdrilic & Anor [2015] FCCA 1329 (Hickie v Zdrilic).

40    On the same day, a registrar of the Federal Circuit Court ordered that a sequestration order be made against the estate of the appellants, that the applicant creditor’s costs (including any reserved costs) be taxed and that they be paid from the estate of the respondent debtors in accordance with the Bankruptcy Act (the Sequestration Orders). In addition, pursuant to s 52(3) of the Bankruptcy Act, the registrar stayed the sequestration order for 21 days. The transcript of the hearing before the registrar reveals that the purpose of granting the stay was to allow the appellants to consider their appeal rights in relation to the orders made by Judge Lloyd-Jones dismissing the Notice of Opposition.

41    On 17 June 2015 the appellants filed the Review Application relevantly seeking orders that:

1.    Pursuant to s 104(3) of the Federal Circuit Court of Australia Act 1999, the orders made by Registrar NG on 27 May 2015 in the proceedings SYG2324/2014 be set aside or in the alternative the bankruptcy be annulled.

2.    The Creditor’s Petition be set aside or in the alternative be adjourned until 30 days after the determination of the NSW Court of Appeal proceedings 2012/156726 against the related respondents (HTT Respondents). If the Creditor’s Petition is adjourned and ultimately the appeal proceedings 2012/156726 are successful the Creditor’s Petition be set aside on payment of the debt. Further, if the appeal proceedings 2012/156726 are successful the adjournment of the petition to continue until the recovery by the Zdrilic parties of costs and/or damages, whichever one occurs first.

4.    In the alternative, a stay of the execution of the sequestration order made on 27 May 2015 to continue beyond the 21 days already stayed until 30 days after the determination of the NSW Court of Appeal proceedings 2012/156726. If the appeal proceedings 2012/156726 are successful the stay to continue until the recovery by the Zdrilic parties of any money or costs and/or damages, whichever one occurs first.

…

42    The appellants did not file a notice of appeal from the orders of Judge Lloyd-Jones or apply for leave to do so.

43    On 29 July 2015 the respondents filed an interlocutory application seeking orders that the Review Application be dismissed pursuant to r 13.10 of the FCC Rules and for payment of their costs (the Summary Dismissal Application).

44    On 17 September 2015 the Review Application and the Summary Dismissal Application were listed for hearing before the primary judge. On 26 November 2015 the primary judge made orders dismissing the Review Application, confirming the sequestration order, and ordering that the creditor’s costs (including any reserved costs and the costs of the Review Application) be taxed and paid from the appellants’ estate in accordance with the Bankruptcy Act.

The judgment dismissing the notice of opposition: Hickie v zdrilic

45    Given the way in which this matter has proceeded it is necessary to consider the orders made and the judgment given by Judge Lloyd-Jones in dismissing the Notice of Opposition.

46    Judge Lloyd-Jones commenced his reasons by noting that the creditor’s petition seeking orders for the sequestration of the appellants’ estates was before the court. His Honour then reproduced the background to the issue of the bankruptcy notice and the creditor’s petition by extracting the history as recorded in the Bankruptcy Notice Judgment, the grounds raised in the Notice of Opposition, the evidence relied on by the appellants in support of the Notice of Opposition and the evidence relied on by the respondents. In relation to the respondents’ evidence, his Honour noted that the respondents also “filed numerous affidavits in support of the making of sequestration orders” but that it was “not necessary to consider these for the purposes of these reasons”: at [11].

47    Judge Lloyd-Jones then summarised the parties’ respective submissions on each of the grounds raised in the Notice of Opposition and made findings on each of those grounds:

(1)    in relation to ground 1 (that there was no act of bankruptcy committed), that the appellants did commit an act of bankruptcy by failing to comply with the requirements of the bankruptcy notice: at [51]-[52];

(2)    in relation to ground 2 (that the court should go behind the Supreme Court Judgment), that the appellants had failed to demonstrate that there was a prima facie case that the Supreme Court Judgment was obtained by fraud as alleged and concluded that this was not an occasion where the court would be minded to go behind the judgment: at [56] and [63];

(3)    in relation to ground 3 (that the petition was issued for an improper purpose), that the Supreme Court Judgment still stands, the appellants had exhausted their avenues of appeal in relation to it, the appellants had alleged fraud and collusion between various parties but had failed to support those assertions with admissible evidence and that accordingly, the respondents were entitled to lodge the creditor’s petition: at [67]-[69];

(4)    in relation to ground 4 (that the making of sequestration orders was not in the respondents’ interests), that this ground was misconceived and that it was the right of a judgment creditor to pursue a judgment debt, in the current case by the issuing of a bankruptcy notice and a creditor’s petition. His Honour concluded that this ground should be dismissed: at [70]-[71];

(5)    in relation to ground 5 (that the appellants are not impecunious), that the ground must fail as it is premised on the appellants’ potential success in the New South Wales Court of Appeal proceedings. The appellants accepted that they did not have the resources to satisfy the debt in the creditor’s petition and were not able to raise the capital required through refinancing or by taking out loans: at [72]-[75];

(6)    in relation to ground 6 (that Harrison J erred in not granting a further stay of the Supreme Court Judgment), that the court had no jurisdiction to go behind the judgment of Harrison J not to grant a stay. In any event, the appellants had sought leave to appeal the judgment of Harrison J and that application had been dismissed: at [76]-[78];

(7)    in relation to ground 7 (that there was no public interest in making the sequestration orders, having regard to the authority of Lahood v Bank of Western Australia (No.3) [2013] FCA 861 and the circumstances of the case), that there was no evidence that the New South Wales Court of Appeal proceedings would be resolved expeditiously and, in view of the fact that the appellants accepted that there was no prospect that they could satisfy the debt in the foreseeable future, the ground could not be sustained: at [79]-[81].

48    Judge Lloyd-Jones also found that there was no utility in granting the appellants, as an alternative to dismissal of the creditor’s petition, an adjournment of the creditor’s petition pending the outcome of the New South Wales Court of Appeal proceedings.

49    Having made these findings, Judge Lloyd-Jones concluded at [91] to [92]:

91.    For the reasons above, there are no sustainable grounds for the Petition to be set aside. Further, there is no utility in either a brief or lengthy adjournment of the Petition for the reasons set out above. The Notice of Opposition should be dismissed with costs awarded to the Applicants.

92.    Accordingly, the Petition should proceed to be heard by a Registrar of this Court and, subject to the relevant requirements of the Bankruptcy Act being satisfied, a sequestration order should be made. It is not necessary to make a costs order at this stage on the basis that such an order would normally follow the making of a sequestration order(s).

50    He then made the following orders:

(1)    The Notice Stating Grounds of Opposition to the Creditors’ Petition filed on 15 September 2014 be dismissed.

(2)    The Creditors’ Petition proceed to hearing before a registrar of the Court forthwith.

(3)    Costs be reserved.

The proceedings before the primary judge

51    Both the Review Application and the Summary Dismissal Application were listed for hearing before the primary judge.

52    In the Summary Dismissal Application the respondents claimed that the matters raised by the applicants in the Review Application had no reasonable prospects of success. They also claimed that the Review Application was an abuse of process because it was no more than an attempt to re-litigate issues already determined against them by Judge Lloyd-Jones in Hickie v Zdrillic and in various other courts.

53    In the course of his reasons the primary judge:

(1)    noted the extensive litigation history dating back to 2001, set out that history in a schedule to the reasons and noted the appellants’ “spectacular failures” in their litigation: at [5];

(2)    noted that Judge Lloyd-Jones considered the extensive litigation history and the Notice of Opposition before dismissing it, that the case was heard over two days, that he delivered “comprehensive reasons” and that no appeal had been lodged in relation to his Honour’s orders: at [6];

(3)    under the heading “The applicable law”, set out s 17A of the Federal Circuit Court Act dealing with summary judgment and r 13.10 of the FCC Rules dealing with disposal by summary dismissal and considered case law relevant to those provisions and the meaning of the term “no reasonable prospects of success”: at [7]-[12]. We interpolate that the primary judge did not refer to the review powers and obligations, s 104 of the Federal Circuit Court Act, Div 20.2 of the FCC Rules, or any of the cases canvassed at [16]-[32] above;

(4)    listed the evidence and written submissions relied on by the appellants and the respondents, including affidavits of search and debt filed in May 2015 and on 17 September 2015, the day of the hearing before the primary judge: at [13]-[14]. The primary judge noted that the appellant’s submissions and material in support amounted to hundreds of pages and the submissions “specifically deal with the issue of summary dismissal”: at [18]; and

(5)    found that he “simply could not discern any new ground of opposition to the Creditor’s Petition that had not already been dealt with by Judge Lloyd-Jones or agitated without success elsewhere”, having noted that he told Mr Zdrilic at a directions hearing that the court was “not interested in hearing arguments that had not succeeded in superior courts or before Judge Lloyd-Jones”: at [17] and [22].

54    The primary judge heard and disposed of the Review Application by upholding the Summary Dismissal Application. The primary judge found at [23]-[24]:

23.    There is no doubt that the Applicants for review genuinely believe that there have been grave injustices in relation to the various proceedings involving them and their associated corporations. That does not change the reality that they have been unsuccessful in every case. The fact of the judgment debt against them is incontrovertible. They never put in contention their insolvency. Indeed, there is no contention that the formal requirements set out in s.52(1) of the Bankruptcy Act 1966 have not been complied with. They did not put in contention any of the evidence filed in support of the Creditors Petition. In an extensive judgment, Judge Lloyd-Jones deals with all of the issues the Applicants for review raise, but dismisses them. No new issues are raised before the Court.

24.    This Court recognises that to give summary judgment against the Applicants for review is a very serious step. Barring an appeal, it ends the bankruptcy litigation. Indeed, bankruptcy for the Applicants will have significant implications on their capacity to pursue further litigation, as well as in many other respects. The legislation is clear. The Applicants have no reasonable prospects of success. They appear to merely seek to regurgitate arguments previously made in other Courts without success. The Application for Review is plainly an abuse of process. Other Courts have determined against them the matters now once again sought to be raised by the Applicants. The litigation must end at some time. The legal system cannot sustain the luxury of quixotic litigants who consume finite judicial resources to the detriment of other litigants.

55    The primary judge concluded at [25] that the Review Application should be summarily dismissed pursuant to s 17A of the Federal Circuit Court Act and r 13.10 of the FCC Rules. At [26] the primary judge said that, “to the extent it is necessary” for the court to consider the creditor’s petition, it was satisfied that the evidence before it “would have justified the making of a fresh sequestration order” against the appellants as the requirements of s 52 of the Bankruptcy Act “have been established”. As a sequestration order was already in existence, the primary judge “confirmed” that order.

The notice of appeal

56    In their notice of appeal filed on 9 March 2016 the appellants raise the following grounds of appeal:

1.    The Federal Circuit Court Judge failed to conduct a review of the Registrar’s decision of 27 May 2015 in the manner required by s.104(2) of the Federal Circuit Court of Australia Act 1999.

2.    In confirming the decision of the Registrar, the discretion granted to the Court below by s.52(2) of the Bankruptcy Act miscarried by reason of the failure of the Federal Circuit Court Judge to consider de novo whether the evidence and submissions relied upon by the Appellants constituted sufficient cause as to why a sequestration order ought not be made.

3.    The Applicants for Review were entitled as a matter of right to a re-hearing of the Petition. That entitlement ought not have been denied or circumscribed, as occurred in the Court below, by an order for summary dismissal of the Application for Review.

4.    Alternatively if, by grant of summary judgement, the Court below is taken to have adjudicated upon the entitlement of the Applicants to seek a favourable exercise of the discretion granted by section 52(2) of the Bankruptcy Act, and not merely their entitlement to seek a review of the Registrar’s Orders, the Court erred in granting summary judgment by treating the decision in Hickie and anor v Zdrilic and anor [2015] FCCA 1329 and the other decisions referred to in Schedule One to the judgement below as conclusively determining the outcome of the Court’s consideration of the principal issue before it – namely whether sufficient cause existed to decline to make (or confirm) the sequestration order.

The effect of the judgment in Hickie v Zdrilic

57    In determining the appeal it is necessary to consider the effect of the orders made and judgment given by Judge Lloyd–Jones in Hickie v Zdrilic on both the hearing before the registrar of the creditor’s petition and the Review Application. Relevant to that question is the judgment of the High Court in Bass v Permanent Trustee Company Limited (1999) 198 CLR 334 (Bass v Permanent Trustee), though neither side referred to it in written or oral argument.

58    Bass v Permanent Trustee involved three appeals arising out of the NSW Government’s HomeFund scheme, the purpose of which was to enable people, who might not otherwise be able to do so, to purchase their own homes. Six questions were referred to a Full Court of this Court, to be heard separately from, and before, any other question in the proceedings. The appeals before the High Court were from the answers given by the Full Court to four of those questions.

59    In response to the respondents’ argument that the grant of special leave should be revoked, a majority of the High Court (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ) observed at [55] that, if that occurred, the appellants’ claims would be remitted to a single judge to be determined in accordance with the answers given by the Full Court without the facts ever having been found. Relevantly, their Honours said (at [57]) that:

Once an issue is determined at the interlocutory stage, and the trial continues, the primary judge's hand is tied in respect of all matters of fact and law involved in that determination. In Fidelitas Shipping Co Ltd v V/O Exportchleb, Diplock LJ pointed out:

“Where the issue separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment and, where appropriate, an application to the appellate court to adduce further evidence.”

60    After the conclusion of oral argument, the parties to this appeal were invited to make submissions in relation to the significance of the judgment in Bass v Permanent Trustee to the matters in issue in the appeal.

61    The appellants submitted that whether a particular interlocutory judgment or order will have the effect found by the High Court in Bass v Permanent Trustee, that is to bind the parties to the proceedings for the remainder of the proceeding and beyond, will depend upon its terms, subject matter, and the litigation context in which the order is made. The appellants observed that the orders made and judgment given in Hickie v Zdrilic dealt with the matters raised in the Notice of Opposition but that s 52(2) of the Bankruptcy Act was not mentioned explicitly in the judgment, nor the discretion involved in the making of an order under s 52(1) or in s 52(2).

62    Accordingly, the appellants submitted that the orders made in Hickie v Zdrilic did not address the ultimate issue to be determined upon hearing of the creditor’s petition namely whether a sequestration order should be made.

63    In a similar vein, the respondents submitted that the issues determined by Judge Lloyd-Jones in Hickie v Zdrilic were interlocutory in nature, separately determined but not finally decisive of the creditor’s petition which was finally determined when the registrar made the sequestration order.

64    The appellants further submitted that the arguments in the Notice of Opposition addressed not only those matters which the creditor was obliged to prove but also matters of fact going to the s 52(2) discretion. In its context, they contended, the Notice of Opposition should be understood as seeking to oppose the making of a sequestration order, even if the judgment of Judge Lloyd-Jones was beyond reproach, and seeking to do so by invoking the exercise of the broad discretion implicit in the words “other sufficient cause” as they appear in s 52(2).

65    The appellants accepted that the orders made in Hickie v Zdrilic determined, in a binding way, matters of fact raised in support of each of the grounds in the Notice of Opposition but, they submitted, that did not excuse the registrar or the primary judge on the Review Application from considering for themselves the ultimate issue and, when doing so, from giving appropriate attention to all of the circumstances of the case.

66    We accept these submissions. When the creditor’s petition was before the registrar and then the primary judge, the appellants were still entitled to be heard as to why, notwithstanding the findings in Hickie v Zdrilic, a sequestration order should not be made. In short, in light of what was said by the majority in Bass v Permanent Trustee, the parties were bound by the determination by Judge Lloyd-Jones of the issues in the Notice of Opposition and could not challenge those findings in subsequent proceedings, other than in an appeal of Hickie v Zdrilic. Both the registrar and the primary judge were bound by those findings. But both were still required to consider the discretions under s 52 of the Bankruptcy Act.

What was delegated to the registrar?

67    A central issue in argument on the appeal was the nature and content of the delegation to the registrar by Judge Lloyd-Jones on 27 May 2015.

68    The respondents submitted that Judge Lloyd-Jones delegated the very narrow task of determining whether the petitioning creditors had satisfied the formal requirements of s 52(1) of the Bankruptcy Act and nothing more. That is, there was no delegation of the s 52(2) discretion. The respondents rely on the rejection by Judge Lloyd-Jones of each of the grounds raised by the appellants in their Notice of Opposition, the refusal to adjourn the creditor’s petition, and his Honour’s statement at [92] of his judgment, which they classify as a direction, that the “petition should proceed to be heard by a Registrar of this Court and, subject to the relevant requirements of the Bankruptcy Act being satisfied, a Sequestration Order should be made”.

69    The respondents submitted that Sch 2 to the 2006 Bankruptcy Rules identify 22 subsections of the Bankruptcy Act under which the registrar could exercise the court’s powers including, as separate items, s 52(1) and s 52(2) of the Bankruptcy Act. That is, they are distinct powers and do not have to be delegated to the registrar together. In his judgment at [92], they argued, Judge Lloyd-Jones was clearly delegating to a registrar the discretion to make a sequestration order and not the discretion to dismiss the creditor’s petition under s 52(2). It would not, they continued, have been a sensible use of judicial resources to have the s 52(2) discretion exercised twice in one day by a judge and then a registrar. They submitted that there is nothing in s 102(2) of the Federal Circuit Court Act which prevents a judge delegating to the registrar the specific power under s 52(1) of the Bankruptcy Act and that it was not unusual for a Federal Circuit Court judge to make such a limited delegation.

70    The respondents contended that it would have been extraordinary for Judge Lloyd-Jones to delegate the discretion under s 52(2) to be determined by the registrar afresh and thereby give the registrar the opportunity to nullify his decision not to dismiss the petition. They referred to Re Mirko Trepic Ex Parte: Arrowcrest Group Pty Ltd [1990] FCA 583 as an example of a delegation of a limited power to a registrar after hearing and dismissing a debtor’s notice of opposition to a creditor’s petition. There, O’Loughlin J said (at pp 7–8):

I propose to list the hearing of the petition before a Registrar. It will be necessary for the petitioning creditor to ensure that it has, on the hearing date, duly complied with the provisions of Rule 21. Hence I further order that the petition in this matter be listed for a hearing before a Registrar of this Court on Monday 29 October 1990.

71    These submissions cannot be accepted. The submission that the registrar only needed to concern himself with proof of the “formal requirements” under s 52(1) and that was all that was delegated to the registrar is misconceived.

72    The order made by Judge Lloyd-Jones on 27 November 2015 was that “the Creditors’ Petition proceed to a hearing before a Registrar of the Court forthwith”. As the respondents point out, the powers of the court that may be exercised by a registrar pursuant to Sch 2 to the 2006 Bankruptcy Rules are relevantly those in subss 52(1), (2) and (3) of the Bankruptcy Act. Despite the language employed by Judge Lloyd-Jones in [92] of his reasons, when he made his orders, he did not direct the registrar to exercise a power to make a sequestration order under a particular subsection of s 52 of the Act. He delegated the exercise of the powers under subss 52(1), (2) and (3) to the registrar. If the order had the effect contended for by the respondents, it would have been beyond power because a judge cannot direct a registrar to make a sequestration order. That is because a registrar is not subject to the direction or control of anybody in relation to the way he or she exercises powers delegated under s 102(2): see the Federal Circuit Court Act, s 104(1). Judge Lloyd-Jones referred the whole of the creditor’s petition to the registrar to proceed to a hearing and, for the reasons set out at [66] above, the registrar was required to consider the exercise of all of the discretions under subss 52(1), (2) and (3) in light of the findings and orders made by Judge Lloyd-Jones in Hickie v Zdrilic. Practically, this means that the registrar might be called upon to form a view on only a few new issues (if any) and the “formal matters” in deciding how to exercise the discretions under subss 52(1), (2) and (3) but that is because the registrar is bound by the findings and orders made by Judge Lloyd-Jones in dismissing the Notice of Opposition, not because of the nature of the delegation made.

73    Although from time to time some judges of this Court and of the Federal Circuit Court may have availed themselves of the practice employed by Judge Lloyd-Jones, it is not a desirable one. Having considered the difficult issues raised by the Notice of Opposition, had his Honour simply proceeded to exercise the discretion conferred upon the court by s 52 of the Bankruptcy Act and determined whether a sequestration order ought to be made after affidavits required to satisfy the court of so-called “formal matters” had been obtained and read, the issue now before the Court, together with the attendant cost to the parties, would not have arisen. In a bankruptcy jurisdiction, where, unsurprisingly, parties are often unrepresented, the practice adopted by Judge Lloyd-Jones introduces a layer of complexity in relation to avenues of review and appeal which do not serve the ultimate objective of the Federal Circuit Court Rules or, for that matter the civil procedure provisions of the operative legislation in this Court: the “just, efficient and economical resolution of proceedings”: Federal Circuit Court Rules, r 1.03 (compare Federal Court Act, s 37M).

Did the primary judge conduct a hearing de novo?

74    Another central question which arises on this appeal is whether the primary judge conducted a hearing de novo as required by the Federal Circuit Court Act having regard to the concurrent hearing of the Summary Dismissal Application. At first blush, the reasons suggest that he did not. The question of whether a sequestration order ought to have been made is dealt with in a rather perfunctory manner, almost as an afterthought. Nevertheless, we are satisfied that a hearing de novo was in fact conducted.

75    Both parties relied on the transcript of the hearing.

76    At the commencement of the hearing the primary judge explained how he was going to proceed. The following exchange took place:

His Honour:    All right. Now, Mr Zdrilic, Ms Botskias, it seems to me that if I’m dealing with an application for summary dismissal that I need to deal with that first.

Mr Zdrilic:    I agree.

His Honour:    Yes. So what I’m going to do then, Ms Botskias, is basically treat you as the applicant in the summary dismissal application. I will get Mr Zdrilic to respond to that. Now, after I’ve heard from you, and bearing in mind that I’ve read the evidence – read the material that you both relied on – I’m going to form an impression. If I think that I need to reserve my judgment on the summary dismissal application then obviously it will have to stop there, and I will reserve my judgment.

If I don’t think I need to because, for example, I’m just going to dismiss it, then I will proceed, of course, to hear with the substantive issue. I think, Mr Zdrilic, you understand that the issues are very much meshed, and I foreshadow from what I’ve read from both of you that the focus, this morning, is going to be on new arguments not old arguments. All right.

Mr Zdrilic:    Well, it’s a hearing de novo. That’s right.

His Honour:    Well, no, no. No, no. No, Mr Zdrilic, no, no.

Mr Zdrilic:    Sorry.

His Honour:    No, no. Let me clarify what I mean here. I’m interested in arguments that go to the question of the bankruptcy – the sequestration order – that have not been run anywhere else because, Mr Zdrilic, I’m not going to give you another opportunity to advance arguments that have been run before other judges both in this court and in other court, and which have not succeeded. I’m only interested in new arguments. All right.

77    Had the matter rested there, the appellants would have had cause for concern. But it did not.

78    The respondents put to the primary judge that the appellants were impermissibly attempting to “appeal or review the judgment of Lloyd-Jones”, that the primary judge could not review Judge Lloyd-Jones’ decision, and that the Review Application was not really a review of the registrar’s decision but that, if it is, it “ought be restricted to the documents put before Registrar Ng on …27 May…”.

79    As the proceedings continued the primary judge said:

His Honour:    Well, I think it’s a little bit broader than that, though Ms Botskias. I think that when I’m reviewing a decision it is, as Mr Zdrilic said, an application - I’ve got to consider the matter afresh. It’s de novo and, therefore, that does open up the question of whether, for example, there’s other sufficient cause not to make the sequestration order, but that doesn’t mean that I’m going to engage in a process of doing that which others have done before.

80    The primary judge informed the appellants on a number of occasions during the course of the hearing that he was only interested in “new” arguments and that he was not going to permit the appellants to raise any argument that had been rejected by another judge. A little later in the discussion the primary judge emphasised the point when addressing Mr Zdrilic, who was appearing on behalf of himself and his wife, “… all I’m saying is that I suspected this morning the focus will be very much on those new grounds, all right, rather than — we will call it, the old grounds”.

81    Senior counsel for the respondents took the Court to parts of the transcript of the hearing before the primary judge where, it was submitted, the appellants made submissions in relation to arguments or grounds that they classified as “new” grounds and to the extensive written submissions filed by the appellants to which the primary judge had regard. The respondents submitted that at the hearing (and in his judgment) the primary judge stressed that he had gone through the material provided to him and that the appellants were given an opportunity to present the whole of their case. We accept that submission.

82    At the conclusion of the hearing the transcript reveals that the primary judge told the parties that he was going to “reserve on the summary dismissal application” and that “if I decline to summarily dismiss, we will have to relist and I have to give Mr Zdrilic … the opportunity to address, again, the substantive issues. But if I am for you on the summary dismissal application, let me just, sort of, find out what the consequences are. Summary dismissal means that the application for review is dismissed; does that mean that the registrar’s decision on the sequestration order stands?” The respondents’ solicitor agreed. The following exchange then took place:

Ms Botsikas:    That’s how I understand it to operate.

His Honour:    All right. So there’s no need to do anything else, is there, from your client’s perspective?

Ms Botsikas:    From what I understand, there is a need to re-verify certain elements of the petition.

His Honour:    All right. So that means you would need to tender some further evidence though.

Ms Botsikas:    Yes.

His Honour:    All right. Do you want to do that now?

Mr Botsikas:    Yes I have it here.

83    All relevant affidavits were tendered, including affidavits of debt and search sworn on 16 and 17 September 2015: see [13]-[14] of the primary judge’s reasons.

84    At [23] of his judgment, in addressing the submissions put by the appellants, his Honour said that despite the genuine belief of the appellants that there had been grave injustices to them in the various proceedings “that does not change the reality that they have been unsuccessful in every case”, that the “fact of the judgment debt against them is incontrovertible” that they “never put in contention their insolvency”, that there was “no contention that the formal requirements set out in s 52(1) of the [Bankruptcy Act] have not been complied with” and that they “did not put in contention any of the evidence filed in support of the Creditor’s Petition”. He also observed that in his judgment Judge Lloyd-Jones “deals with all of the issues the Applicants for review raise, but dismisses them” and that no “new issues are raised before the Court”.

85    The findings at [23] indicate that the primary judge performed the evaluative consideration of the requirements of subss 52(1) and (2) necessary for a de novo hearing of the question whether a sequestration order should be made based on the creditor’s petition. He did not limit himself to “formal matters”; his emphasis on seeking out “new grounds” was directed at eliciting information which would support dismissing the creditor’s petition, notwithstanding that he might be satisfied with the proof of the “formal matters” or “for other sufficient cause”. To the extent that the appellants re-agitated the matters raised by their Notice of Opposition, the primary judge deferred to the findings of Judge- Lloyd-Jones, as he was obliged to do in the absence of a successful appeal from that decision. For this reason, grounds two and four of the notice of appeal cannot be made out.

86    The difficulties of considering a review application in the context of a summary dismissal application under s 17A of the Federal Circuit Court Act and FCC Rule 13.10 are apparent from [24] and [26] of the primary judge’s reasons and in the discussion between the primary judge, Mr Zdrilic and the solicitor for the respondents referred to at [76] and [79] above.

87    Section 17A of the Federal Circuit Court Act and r 13.10 of the FCC Rules permit the Federal Circuit Court to stay or dismiss a proceeding generally or in relation to any claim for relief in the proceeding if the party prosecuting the proceeding or claim for relief has no reasonable prospects of success or it is frivolous or vexations or it is an abuse of process. At [24] the primary judge held:

The legislation is clear. The Applicants have no reasonable prospects of success. … the Application for Review is plainly an abuse of process.

88    The primary judge then dismissed the application for review under s 17A of the Federal Circuit Court Act and r 13.10 of the FCC Rules.

89    Had he stopped there, the primary judge would clearly have fallen into appealable error. Whether or not the appellants’ opposition to the sequestration proceedings had merit or any reasonable prospect of success, the appellants had a statutory right based on a “constitutional imperative” to a review of the registrar’s exercise of power conducted by a judge. It is extremely difficult to contemplate any circumstance where the exercise of that right would constitute an abuse of process. An application for review of a registrar’s decision filed pursuant to s 104 of the Federal Circuit Court Act is not an application which is prosecuted by a debtor/applicant for the review; it is a demand that a claim for relief (a sequestration order) brought by the creditor be heard by a judge as if no sequestration order had been made. The “prosecutor” of an application for a sequestration order based on a creditor’s petition is the creditor; the only onus a debtor bears is the one (s)he assumes if (s)he seeks to resist the grant of an order based on proof of solvency or “any other sufficient cause” under s 52(2) of the Bankruptcy Act. In our opinion, the respondents should not have filed their application for summary dismissal and the primary judge should not have entertained it. Like Beach J, we find it hard to conceive of any case in which it would be appropriate to see summary dismissal of an application for review brought by a debtor challenging the making of a sequestration order.

90    But his Honour went further. At [26] of his judgment his Honour said that, “to the extent that it is necessary” in the circumstances of the case to consider the creditor’s petition, the court was satisfied that the evidence “would have” justified the making of a fresh sequestration order as the requirements of s 52 have been established. The use of the expression “to the extent that it is necessary” is troubling. It was undoubtedly necessary that he consider the creditor’s petition. And the use of the term “would have” raises a question of whether the primary judge failed to exercise the discretions under s 52 and to carry out a hearing de novo. It is also of concern that the primary judge’s reasons do not address the statutory basis upon which the review was to be conducted or the principles derived from relevant case law dealing with review applications. Still, and despite the exchange with the solicitor for the respondents referred to at [79] and [82], a reading of the transcript demonstrates that the primary judge allowed Mr Zdrilic to make extensive submissions with a view to establishing that he was solvent or that there was “other sufficient cause” as envisaged by his remarks recorded at [79] above. When [26] is read with [23], it is clear that the primary judge performed the evaluative process necessary to make an order under s 52(1) and to decline to dismiss the creditor’s petition under s 52(2), not merely to the standard of whether there were “reasonable prospects of success”. Having done so, the primary judge took the step, common in review applications, of confirming the sequestration order in existence under r 20.02 of the FCC Rules rather than proceeding to make a fresh sequestration order. That is reflected in his order 2.

91    We note that the appellants did not suggest in this Court that they had been denied a reasonable opportunity to be heard or that there was anything more that they would or could have said on the hearing of the Review Application.

92    For these reasons grounds 1 and 3 of the notice of appeal cannot be made out.

Conclusion

93    The appeal should be dismissed and the appellants should pay the respondents’ costs as agreed or taxed. We shall make orders accordingly.

94    Finally, although his arguments did not ultimately prevail, we wish to record our gratitude to Mr Golledge of counsel who appeared pro bono for the appellants and whose submissions were of considerable assistance.

Associate:

Dated:    5 August 2016