FEDERAL COURT OF AUSTRALIA

Conley v Commonwealth Bank of Australia [2006] FCA 1255

BANKRUPTCY – extension of time to appeal from the grant of a sequestration order – allegation that the primary judge had not read the whole of the material – no specific relevant material referred to – whole of material said to give rise to an inference of abuse of process – not clearly raised in evidence or submissions before the primary judge – alleged abuse to delay Supreme Court proceedings – new evidence on appeal – prejudice to respondent – admission of insolvency – creditor’s motive not sufficient cause to refuse sequestration order – application dismissed

Bankruptcy Act 1966 (Cth) s 52(2)(b)

Bride v KMG Hungerfords [1998] FCA 412 cited

In re King; Ex parte the Commercial Bank of Australia (No 2) [1920] VLR 490 cited

N1202/01A v Minister for Immigration & Multicultural Affairs (2002) 68 ALD 21 cited

STEPHEN CONLEY v COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)

NSD 1527 OF 2006

BENNETT J

4 SEPTEMBER 2006

SYDNEY

THE COURT ORDERS THAT:

1.                  The application is dismissed.

2.                  The applicant is to pay the respondent’s costs.

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

REASONS FOR JUDGMENT

1                     The applicant (Mr Conley) applies for an extension of time in which to file a notice of appeal from a judgment of a judge of the Court on 4 July 2006 that a sequestration order be made against his estate (Commonwealth Bank of Australia v Conley, in the matter of Conley [2006] FCA 1011). Mr Conley needs an extension of time to appeal as he did not file a notice of appeal within 21 days after the date of his Honour’s judgment (O 52 r 15(1) of the Federal Court Rules). The application was filed on 14 August 2006.

Delay

2                     Mr Conley has filed an affidavit in support of his application. Nothing in his affidavit explains the delay in filing a notice of appeal. There does, however, appear to be some explanation for Mr Conley’s delay. His Honour delivered judgment ex tempore on 4 July 2006 but his Honour’s written reasons are dated 3 August 2006. Mr Conley, who appears in person, informs the Court that he did not wish to file his appeal until he received the written reasons for judgment. He also says that he relied on a Court brochure explaining that he could apply to obtain an extension of time to file a notice of appeal if the time to appeal had expired. Although this provides some explanation for Mr Conley’s delay, it should be noted that his Honour put Mr Conley on notice of the need to file an appeal within time. Before the lunch recess and after delivering ex tempore reasons his Honour said:

‘Mr Conley, if you want to make any application for the matter to be stayed for 21 days, if you want to consider appealing or anything like that, you had better consider your position over that period as well.’

3                     Mr Conley replied:

‘All right, your Honour. Thank you.’

4                     His Honour continued:

‘I am not suggesting that you should, or that I would make such an order, but that is a matter for you.’

5                     When the matter resumed no application for a stay was made.

6                     Even if the period of time between his Honour’s judgment and the publication of written reasons is sufficient to explain the delay, it is necessary to look at the merits of the proposed appeal to determine whether or not special reasons have been shown as to why there should be an extension of time (N1202/01A v Minister for Immigration & Multicultural Affairs (2002) 68 ALD 21 at [13]).

Grounds of appeal

7                     No draft notice of appeal has been prepared by Mr Conley and he does not seek an adjournment of this application in order to prepare that document. In the absence of any draft notice of appeal, I repeatedly asked Mr Conley to identify the proposed grounds of appeal. In response, Mr Conley consistently raised the same ground of appeal, that he had filed substantial material before his Honour and that his Honour had not and could not have read all of the material in detail in the time available to him.

8                     The consequence of that alleged failure was said to be that his Honour did not consider the evidence in the filed material and its relationship to the ground there pressed. The contention before his Honour was that the proceedings in this Court (‘the bankruptcy proceedings’) were commenced and continued by the respondent (‘the Bank’) as an abuse of process.

Abuse of process

9                     The abuse of process is said to be the issuing of the bankruptcy proceedings by the Bank for the purpose of delaying indefinitely proceedings that Mr Conley had commenced against the Bank in the New South Wales Supreme Court (‘the Supreme Court proceedings’). The Supreme Court proceedings concern the manner in which the Bank, as mortgagee, exercised a power of sale over Mr Conley’s home.

10                  When asked to identify any evidence in the material tendered before his Honour directly probative of that assertion, Mr Conley was unable to do so. In fact, he conceded that there was no direct evidence of that nature.

11                  The evidence that was tendered, which included the statement of claim filed in the Supreme Court proceedings, concerned the matters in dispute in those proceedings. Mr Conley’s submission is that his Honour should have inferred from the whole of that evidence that the bankruptcy proceedings in this Court were an abuse of process. Some difficulty arises in substantiating that allegation of abuse of process because the Supreme Court proceedings were commenced on 26 June 2006, almost 5 months after the issue of the bankruptcy notice founding the proceedings in this Court. It is hard to understand how the bankruptcy proceedings could have been commenced with a view to delaying indefinitely Supreme Court proceedings which had not yet been commenced. However, Mr Conley asserts that the Bank would have been aware from previous proceedings against it in the District Court of New South Wales (‘the District Court proceedings’) that he intended to commence the Supreme Court proceedings.

12                  This matter has a complex litigation history which need not be set out here. The primary judge in his reasons set out that history in some detail, referring to the District Court proceedings, proceedings in the Local Court of New South Wales and the Supreme Court proceedings (at [1] to [9]). While his Honour did not refer in detail to the evidence before him, he was satisfied that there ‘is a bona fide dispute that Mr Conley could raise in litigation to contest the exercise of the power of sale’ (at [5]). His Honour was also satisfied that the statement of claim in the Supreme Court proceedings discloses a bona fide cause of action which was not colourable as an abuse of process (at [11]). His Honour noted that it was for the trustee in bankruptcy to decide whether to prosecute the Supreme Court proceedings if a sequestration order were made (at [20]).

13                  The primary judge, having been presented with an admission by Mr Conley that he was insolvent, considered his task to be an inquiry as to whether Mr Conley had shown sufficient cause why a sequestration order ought not to be made pursuant to s 52(2)(b) of the Bankruptcy Act 1966 (Cth) (at [13] to [14]). His Honour had regard to the public interest and concluded that he was not so satisfied (at [20] to [21]).

14                  Although Mr Conley submits that the primary judge should have inferred from the whole of the evidence before him that the bankruptcy proceedings in this Court were an abuse of process, no allegation of an abuse of process was clearly presented to his Honour. Mr Conley refers me to the first ground in his notice of grounds of opposition to the creditor’s petition filed in this Court before his Honour. Ground 1 in that notice states:

‘The Applicant is manipulating the Court System to avoid or make it as difficult as possible for the Respondent to progress an ongoing claim against the Applicant in future court proceedings involving the fraudulent mortgagee sale by the Applicant of a property previously owned by the Respondent.’

15                  By reference to the transcript before the primary judge, it is apparent that this ground was not pressed or dealt with in any detail before his Honour. The only reference to a possible abuse of process that the parties identified in the transcript of the proceedings before his Honour is a statement made by Mr Conley in the context of a discussion of the effect of the bankruptcy on him. Mr Conley submitted that the bankruptcy proceedings were intrusive, that he was unable because of personal reasons to pursue his proceedings and that:

‘[i]t is a very curious matter, because it is only doing this to make it as difficult as possible for me to proceed in the Supreme Court.’

16                  That submission, in the absence of any evidence, was insufficient to raise for consideration an allegation as serious as an abuse of process. It did not provide sufficient support to ground 1 in the notice of opposition.

17                  An affidavit was tendered before his Honour which had been filed in the Federal Magistrates Court by Mr Conley on 6 March 2006. It annexed a number of medical reports on which Mr Conley relied. That affidavit included a paragraph stating in general terms that the respondent was attempting to prevent Mr Conley from pursuing further claims in the Supreme Court. His Honour’s attention was not drawn to the paragraph which, in any event, is cast in an inadmissible form and has the difficulties referred to at 11 above.

18                  In the affidavit in support of his application for an extension of time, Mr Conley recites a conversation which he says he overheard between solicitor and Counsel for the Bank during the District Court proceedings. The substance of that conversation relates to the creation by the Bank of ‘an indefinite delay through [the issue of] bankruptcy proceedings’ against him. The conversation is denied and evidence of it was not before the primary judge. No explanation was given why it was not adduced. It would constitute new evidence on the appeal and a grant of leave to rely on it would be prejudicial to the Bank. This is a circumstance that argues against the proposed ground being argued on appeal. A sequestration order should not be refused if, apart from that alleged motive, the Bank is entitled to the order sought (In re King; Ex parte the Commercial Bank of Australia (No 2) [1920] VLR 490 at 510; Bride v KMG Hungerfords [1998] FCA 412 at 9). His Honour found that to be the case.

The District Court transcript

19                  Mr Conley also asserts that his Honour erred in failing to take into account the detail of the District Court proceedings and the fact that there was no transcript of those proceedings available, despite repeated requests having been made by Mr Conley to obtain the transcript. No application for adjournment was, however, made to his Honour to delay the bankruptcy proceedings pending the receipt of any such transcript from the District Court. It is difficult to see how his Honour was in error in failing to take account of a transcript that was not before him or of the fact that that transcript was not yet available.

Conclusion

20                  As the primary judge noted, Mr Conley has commenced proceedings in the Supreme Court and it is a matter for the trustee in bankruptcy whether or not to continue with those proceedings.

21                  Even accepting that Mr Conley waited until the written reasons were available, he has not shown special reasons why an extension of time to file a notice of appeal should be granted. He relies upon a ground of appeal not clearly raised below. That ground would need to be supported by new evidence and prejudice would be suffered by the Bank. There is no demonstrable error by the primary judge, who gave detailed reasons for his decision, by reference to the evidence before him. It has not been established that his Honour failed to consider any matter relevant to the decision before him. There is little prospect of success in the appeal on this ground.

22                  In the circumstances, I am not satisfied that special reasons have been shown as to why an extension of time for filing a notice of appeal should be granted. The application should be dismissed. The applicant should pay the respondent’s costs of the application.

Associate:

Dated: 21 September 2006

The Applicant appeared in person.