FEDERAL COURT OF AUSTRALIA

Pollak v National Australia Bank Limited [2001] FCA 1643

JOSEPH POLLAK v NATIONAL AUSTRALIA BANK LIMITED

N7978 of 2000

MADGWICK J

29 OCTOBER 2001

SYDNEY

THE COURT ORDERS THAT:

1.                  The application for a stay be dismissed.

2.                  The appeal have an expedited hearing.

3.                  The applicant have liberty to apply for a stay in the event that the Official Trustee in Bankruptcy institutes, before the determination of the appeal, any curial proceeding concerning the property of the applicant or against any person concerning property to which the Trustee claims should be included in the estate for the purposes of the bankruptcy.

4.                  The costs of the application be costs in the appeal.

REASONS FOR JUDGMENT

(revised from transcript)

HIS HONOUR:

1                     This is an application by the bankrupt for a stay of proceedings in relation to a sequestration order I made on 5 October 2001.

2                     The bankrupt has appealed.  It is invidious for me to pass upon the merits of the appeal.  Although there are cases in which the trial judge can readily concede that the matter is very arguable, this is not one of those.  Nevertheless, it cannot be said there is nothing to be argued in support of the appeal and there is nothing to indicate that it has not been instituted bona fide.

3                     Dr Pollak, the bankrupt, is both a medical practitioner and a barrister admitted to practise in New South Wales.  It is his intention to continue medical practice, which he does energetically, as an employee of a family company in a number of locations in New South Wales and sometimes elsewhere in Australia.  He also believes he can manage a part time specialty practice as a barrister in short medical malpractice cases.  Having regard to recent publicity given to some bankrupt barristers, Dr Pollak fears involvement in needing to make

explanations to the Bar Association, a process which, understandably, he would find upsetting.

4                     However, a stay of proceedings would not affect his status as a bankrupt.  Whilst it may be conceded that if a stay were ordered, this would put beyond any reasonable likelihood, further investigation of the matter by the Bar Association, he has not positively shown that there is any real prospect of further investigation in the matter by that body before the appeal is heard. 

5                     The second matter urged on the issue of balance of convenience, relates to possible difficulties in connection with a particular credit card that Dr Pollak uses for his extensive air travels in the course of the medical practices that he conducts.  It is true that the Official Trustee in Bankruptcy (“the Trustee”) could, if he wished, take steps that may make a continuance of use of that particular card, impossible.  However, Dr Pollak’s relationship with the family company, which is controlled by his wife is such, and the financial arrangements between him and the company as to payment of the credit card account, are such that I think this matter could be readily overcome and it is not a matter of significance.

6                     Reference was also made to possible disturbance of Dr Pollak, his wife and children in their occupancy of the family home, but on examination, this does not appear a likely problem, unlike the position in respect of many persons who are made bankrupt. 

7                     Lurking in the background, as a practical matter, is the prospect that the respondent Bank, which was the successful petitioning creditor, will seek to cause the Trustee to take proceedings to obtain – for the benefit of the creditors, principally the bank – certain items of property which those advising the Bank consider should be brought to account.  The effect of a stay of proceedings generally would be to prevent the Trustee doing anything and that would include investigating those matters which may be complex.  Those matters were not fully ventilated before me.  I am sympathetic to the view that Dr Pollak should not have to fight on several litigious fronts at once and, if he has a bona fide appeal, it is desirable that it should be heard and determined before he has to face proceedings, in effect, asserting that arrangements he may have entered into constituted illegal preferences or otherwise illegal attempts to put property that should be available for creditors, beyond their reach.

8                     It seems highly likely that such proceedings will be instituted.  If they were instituted before the hearing of the appeal then, in my view, it would be proper that Dr Pollak should be able quickly to approach the Court to have the hearing of those matters delayed.  As it has been pointed out, the Bank appears to be well protected by Mareva type orders made in the course of the trial which gave rise to the judgment debt before Tamberlin J.

9                     Mr Aldridge SC, counsel for Dr Pollak, suggested that one can spell out, in reality, from other cases before the Court, in particular Coleman v Lazy Days Investments Pty Limited (1995) 55 FCR 297 per Carr J at 303, that the prospect of the ordinary exercise of powers by a trustee in bankruptcy sufficiently makes out a case for the Court to intervene and order a stay where a bona fide appeal, not shown to be unarguable, has been instituted.  I doubt that that is correct.  I see no reason why in bankruptcy cases, as in others, the party who is in possession of the favourable judgment appealed against should not prima facie have the fruits of that judgment pending the appeal.  What does often appear is that the result in particular cases, of the ordinary incidence of exercise of the Trustee’s powers may be to create an appropriate case for the Court to intervene by way of a stay after weight has been given, as it must be, to the fact that the judgment below has been in favour of the other party.  Such is no more than the test for staying judgments in general adopted in Powerflex Services v Data Access Corporation (1996) 137 ALR 498.

10                  I am not satisfied that this is an appropriate case for a stay of that kind.  However, in the course of argument it has appeared that it is a case where the appeal should be heard with expedition and I propose to so order.  I will give leave to apply on short notice should the Trustee institute any other curial proceedings relating to the property or alleged property of the bankrupt or of any other person which may affect the property to which the Trustee can have access to for the purposes of administering the bankrupt’s estate.

11                  Accordingly, the application for a stay will be dismissed.  I will order that the appeal instituted by the bankrupt have an expedited hearing and the matter be brought to the attention of the appeals list judge by my Associate today.  The bankrupt will have liberty further to apply for a stay in the event that the Trustee institutes, before the determination of the appeal, any curial proceeding concerning the property of the bankrupt or against any

person concerning property to which the Trustee claims should be included in the estate for the purposes of the bankruptcy.  The costs of the application will be costs in the appeal.

Associate:

Dated:              22 November 2001