FEDERAL COURT OF AUSTRALIA

Perovich v Whitton [2016] FCAFC 126

ORDERS

IN THE INTERLOCUTORY APPLICATION:

THE COURT ORDERS THAT:

1.    Mango Boulevard Pty Ltd ACN 101 544 601 be joined as second respondent to this appeal.

2.    The respondent to this appeal, Robert William Whitton, be named first respondent to this appeal.

3.    Costs reserved.

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

REASONS FOR JUDGMENT

THE COURT:

Introduction

1    This interlocutory application is brought in the pending appeal between Mr Perovich and Mr Spencer (the appellant debtors), and Mr Whitton. Mr Whitton is the trustee of compositions between the appellant debtors and their creditors, pursuant to s 73 of the Bankruptcy Act 1966 (Cth). The primary judge held that the compositions terminated under s 222D of the Bankruptcy Act when the appellant debtors failed to pay amounts (respectively) of $1 million and $100,000.

2    The applicant, Mango Boulevard, has applied for orders that it be joined as the second respondent to the appeal. The parties consented to this application being considered and determined on the papers.

3    Before the primary judge, Mango Boulevard participated in what it described as an “informal capacity”. It did so pursuant to orders made by the primary judge requiring that any creditor who wished to be joined as a party should make an application for joinder but that any creditor who wished to be heard on the application should file a notice of appearance (see orders of 7 December 2015). There was a dispute before the primary judge concerning whether Mango Boulevard was a creditor. The primary judge found that Mango Boulevard was a creditor and had standing to be heard (Whitton v Perovich [2016] FCA 595 [115]-[117]).

4    One of the debtor appellants’ grounds of appeal challenges this finding. The debtor appellants say that Mango Boulevard was not a creditor and should not have been heard by the primary judge. Unsurprisingly, Mango Boulevard seeks to appear and seeks to make submissions on the appeal. It seeks to be joined as a party for that purpose. But the debtor appellants say that Mango Boulevard should not be joined and should not be heard because it is not a creditor. In other words, the debtor appellants essentially submit that Mango Boulevard should be denied the opportunity to be heard because the very matter upon which it seeks to be heard should be prejudged against it. For the reasons below, we do not accept that submission. Mango Boulevard should be joined as a respondent to the appeal.

Power to join a non-party to an appeal

5    Mango Boulevard relies on r 36.31 of the Federal Court Rules 2011 (Cth) which provides as follows:

Parties

(1)    Each party to the proceeding in the court appealed from who may be affected by the relief sought in a notice of appeal, or who might be interested in maintaining the judgment under appeal, must be joined as an appellant or respondent to the appeal.

(2)    A person must not be named as an appellant without the person’s consent.

(3)    If the relief sought in a cross-appeal might affect a person not a party to an appeal, the person must be joined as a respondent to the cross-appeal.

(4)    A person who is not a party to an appeal or a cross-appeal, but is a person mentioned in subrule (1) or (3), may apply to the Court to be joined as a party.

Note: The Court may order the addition or removal of any person as a party to an appeal.

6    Mango Boulevard was not a party to the proceeding below so it does not strictly fall within the terms of r 36.31(1). However, it relied upon the note to r 36.31 as the Court’s source of power to join it as a party.

7    Section 13(1) of the Acts Interpretation Act 1901 (Cth) would have required notes to be treated as part of the Federal Court Rules. But that section does not apply to the Federal Court Rules because it only applies to Acts and subordinate legislation (by s 13(1)(a) of the Legislation Act 2003 (Cth)) enacted after 27 December 2011: see Explanatory Memorandum, Acts Interpretation Amendment Bill (Cth) 2011 [94]. However, the note to r 36.31 can still be used to interpret the rule: Acts Interpretation Act s 15AB(2)(a).

8    Mango Boulevard submitted that the note has the effect that the Court has a general power on appeals to order the addition of a person as a party irrespective of whether the party falls within subrules (1) to (4) of r 36.31 of the Federal Court Rules. In this respect the note appears to record an intention to preserve the power which was previously contained in Order 52, r 14(2) of the Federal Court Rules 1979 (Cth) and which had been held to permit joinder in an appeal beyond the persons mentioned in subrule (1) or (3): see Suncorp-Metway Ltd (ACN 010 831 722) v Sapuppo [2001] FCA 708 [14] (Drummond J).

9    The appellant debtors do not submit that this Court lacks power to join Mango Boulevard, especially in circumstances in which Mango Boulevard could, in the absence of power to be joined as a party, be granted leave to intervene. We are content to proceed on the assumption that there is power to do so. Our assumption is not based upon the premise that the note to r 36.31 can take effect independently of the text of that rule. Rather, and in the absence of argument, we are content to assume that the provision of persons who must be joined as parties to an appeal in r 36.31 does not exhaust the long standing discretionary power of the Court to join other persons as parties, where interests of procedural fairness require it: State of Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291, 316-317 [76]-[78] (McHugh J); Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, 55-56 (Lord Diplock).

Conclusions

10    The appellant debtors submitted that Mango Boulevard should not be joined as a party because, subsequent to the decision of the primary judge, a stay of orders in the Supreme Court of Queensland was lifted (on 28 June 2016). The stay concerned a liability for Mango Boulevard to pay $643,019.96 due under a Share Sale Agreement between persons including the parties to this appeal. It was submitted that the effect of the lifting of this stay was that Mango Boulevard is not a creditor of the appellant debtors.

11    Even putting to one side questions of timing, this submission is beside the point. The question whether Mango Boulevard should be joined to this appeal is not concerned with whether it is a creditor. The question is concerned with whether it has, or should be given, a right to be heard. As a matter of procedural fairness, Mango Boulevard has a right to be heard. Its rights are directly affected by the orders that were made and which the appellant debtors seek to set aside.

12    Even independently of procedural fairness, as a matter of discretion we would allow the application. Mango Boulevard’s interests are affected by the orders sought on the appeal. As Mango Boulevard submits, its intervention will not unreasonably interfere with the ability of the parties to conduct the appeal; it seeks only to participate in the appeal in the same way as it participated at first instance, albeit with the recognised status as a party. Another discretionary consideration in favour of allowing the application is that it will provide the Court with a contradictor on the appeal. On the current evidence, Mr Whitton will not appear in opposition to the appeal because he is without funds.

Associate:    

Dated:    13 September 2016