FEDERAL COURT OF AUSTRALIA

Combe v Ziade (In the matter of Faye Diane Combe)

[2002] FCA 828

BANKRUPTCY – application to set aside bankruptcy notice – where long delay in instituting application for leave to appeal against primary judgments

Bankruptcy Act 1966 (Cth) s 41

Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 applied

Taubert v Eddaglide Pty Ltd [2001] FCA 567 applied

Olivieri v Stafford (1989) 24 FCR 413 referred to

Wiltshire-Smith v Olsson (1995) 57 FCR 572 referred to

FAYE DIANE COMBE v ANTHONY ZIADE (IN THE MATTER OF FAYE DIANE COMBE)

N 7133 OF 2002

GYLES J

SYDNEY

28 JUNE 2002

THE COURT ORDERS THAT:

1.         The application is dismissed.

2.         The applicant is to pay the costs of the respondent including any reserved costs.

3.         Time for compliance with the bankruptcy notice served upon the applicant by the respondent is extended up to and including 12 July 2002.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is an application to set aside a bankruptcy notice or, alternatively, extend time for compliance with the bankruptcy notice, pursuant to s 41 of the Bankruptcy Act 1966 (Cth) (“the Act”) made on 7 May 2002 by Faye Diane Combe (“the applicant”) against Anthony Ziade (“the respondent”).  When the matter came before the Court on 7 May 2002 a Deputy District Registrar of the Court made an interlocutory order extending time for compliance with the bankruptcy notice in question up to and including 28 May 2002, granting liberty to apply to vary or discharge that order.  The matter was stood over to 28 May, when it came on for hearing before me.  In the meantime, the respondent had filed an application for review of the Registrar’s decision, which was also listed before me on 28 May.  As the effect of the Registrar’s decision had ceased on that day, the latter application became academic.  Thus, the substantive application was the matter pursued.  I proceeded to hear that application.

2                     The bankruptcy notice which was served by the respondent upon the applicant is based upon a judgment recovered by the respondent against the applicant in the District Court of New South Wales, Sydney, on 14 November 2000 in the sum of $76,308.93 and his costs.  The liability which underlay the judgment was for legal costs said to have been incurred by the applicant having retained the respondent in relation to an application under the Family Provision Act 1983 (NSW) concerning the estate of the applicant’s father.  The proceedings in the District Court to recover the fees were commenced in May 1994.  When the matter came on before the District Court for hearing no defence challenging the retainer had been raised, notwithstanding some assertions to that effect late in the piece, but a cross-claim had been filed.  On the pleadings, the judge entered summary judgment, leaving the cross-claim to be determined separately.  Application for a stay of the District Court judgment was made and refused on 14 November 2000 at the time of judgment.  The cross-claim was determined by another judge of the District Court on 30 May 2001, after a hearing taking some days.  The cross-claim was dismissed.

3                     It may be that, in a confused way, the applicant raised on each occasion in the District Court her claim that she was not responsible for the fees incurred as they should have been the responsibility of the estate, or some variation of that theme, but that was not regarded as an issue in either case.  There had been ample time and occasion to properly take that point, but that had not been done, and no attempt had been made to join the representative of the estate in the proceedings.  A good deal of material was tendered before me (subject to relevance) as to other proceedings, which were said to have some indirect relevance to the District Court proceedings in question.  In my view, those proceedings have no relevance to what is in issue in this matter.

4                     The bankruptcy notice was issued on 7 December 2001, after an outstanding questions of costs in relation to the cross-claim had been decided.  In other words, the bankruptcy notice was not issued until the whole of the District Court proceedings were completed.  The respondent made unsuccessful attempts to serve the bankruptcy notice.  Prior to the commencement of this application, the applicant had made a misconceived application to the Court on 20 March 2002 to extend time to comply with the bankruptcy notice, although claiming not to have been served.  That application was disposed of on 16 April 2002 but on that day an interlocutory order was made by a Deputy District Registrar extending time for compliance up to an including 7 May 2002 as the applicant had been served with the bankruptcy notice on the same day.

5                     The burden of the argument for the applicant (who represented herself) on 28 May was that she wished to pursue an appeal to the Court of Appeal of New South Wales against both the District Court judgments, but had been hampered in doing so by illness on her own part, great difficulties in obtaining the material necessary to prepare the necessary documents for the Court of Appeal (claiming defaults by the District Court and problems occasioned by the conduct of those acting for the respondent in relation to exhibits) and the difficulty she was having in obtaining legal advice and representation. 

6                     The first step which the applicant took in relation to the Court of Appeal was to file a summons seeking leave to appeal on 7 May 2002, that is, the day upon which the substantive motion to set aside the bankruptcy notice was filed.  No draft notice of appeal was filed and the material filed was quite inadequate to enable an application for leave to be considered, as the Court of Appeal had made clear by requisition.  In those circumstances, I was pressed by counsel for the respondent to decline any further indulgence to the applicant in relation to a judgment given on 14 November 2000 where a stay had been refused, another judgment given on 30 May 2001, where no steps at all had been taken to institute an appeal until after the service of the bankruptcy notice and where the state of the application for leave to appeal to the Court of Appeal was deficient.

7                     Having considered the material tendered on 28 May last, I could see no proper basis upon which I could, or should, conclude that the Court should go behind the judgments.  It would be unusual to do so where appeal rights exist and have not been exercised.  I indicated on that occasion that I was of the view that there was no proper basis upon which the bankruptcy notice could be set aside.  I saw no room for this Court to act as a de facto court of appeal in relation to those District Court proceedings.  Even if I had been disposed to do so, the material referred to by the applicant did not even establish a prima facie case that the District Court judge had been wrong in entering judgment in issue or that the other District Court judge had been wrong in dismissing the cross-claim.  On the other hand, I could not conclude that there was no chance of success of an application for leave to appeal if the application were properly prepared.  I could not rule out the possibility that there might have been some injustice in what occurred.  I also could not exclude the possibility that the Court of Appeal might grant an extension of time, notwithstanding the gross delay which had occurred.  In view of this, and with some misgivings which I expressed at the time, I decided that the applicant should be given a further opportunity, once and for all, to bring the application to the Court of Appeal into proper form so that there could be some realistic assessment as to what should occur, and adjourned the matter for that purpose until 24 June 2002 (Combe v Ziade [2002] FCA 827).

8                     When the matter came on on 24 June it became apparent that no further documents of substance had been filed by the applicant in relation to the application for leave to the Court of Appeal.  She has again offered explanations in relation to her own health and the default of others in relation to the obtaining of documents. 

9                     I am satisfied that, no matter what practical difficulties there may have been in obtaining a full record as to what occurred in both cases, there has been no barrier to the preparation of a properly reasoned application for leave to appeal for very many months, even if a complete appeal book may not have been available.  A complete book is not necessary for an application for leave to appeal to be made.  I am also satisfied that, despite ill-health, there has been adequate time for the applicant to attend to the matter well prior to service of the bankruptcy notice.  Having read the material tendered, and listened to the submissions of the applicant on two occasions, I cannot be satisfied that she will ever be in a position to put a coherent application to the Court of Appeal on her own behalf and there is no evidence that legal representation will be available, or, if available, will be availed of by the applicant.  I am satisfied that, having in mind authorities such as Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264, the applicant has been allowed more than enough opportunity to take appropriate steps to set aside the judgment in question.  As I said in Taubert v Eddaglide Pty Ltd [2001] FCA 567 at [19]:

“… It would be a rare case where this Court would extend time further to explore a shadowy defence when time for compliance had been extended for some months to enable application to be made to the relevant court for judgment to be set aside, particularly where no error of substantive law has been identified in the judgments …”  (Olivieri v Stafford (1989) 24 FCR 413 at 429;  Wiltshire-Smith v Olsson (1995) 57 FCR 572)

10                  The application must be dismissed with costs, including any reserved costs.  I extend time for compliance with the bankruptcy notice up to and including 12 July 2002.

Associate:

Dated:              28 June 2002