FEDERAL COURT OF AUSTRALIA

Maher v Commonwealth Bank of Australia Ltd ACN 123 123 124

[2008] FCA 773

DENNIS MAHER v COMMONWEALTH BANK OF AUSTRALIA LTD ACN 123 123 124, GREG FIRTH and GRAY & JOHNSON (A FIRM)

VID 214 of 2008

RYAN J

26 MAY 2008

MELBOURNE

THE COURT ORDERS THAT:

1.         The application for leave to appeal be dismissed with costs, including reserved costs.

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

REASONS FOR JUDGMENT

1                          There is before the Court an application for leave to appeal from orders made by Hartnett FM on 18 March this year.  On that date the learned Federal Magistrate ordered;

‘(1)      That there be leave to Mr Maher to withdraw his notice of motion filed and dated 17 March 2008.

(2)       That pursuant to section 52(5) of the Bankruptcy Act 1966 (Commonwealth), the period at the expiration of which the creditor’s petition filed 23 March 2007 will lapse be extended to 23 February 2009.

(3)       That the hearing of the creditor’s petition be fixed for 21 July 2008 at 10.00am with priority and urgency.

(4)       That any further affidavit material sought to be relied upon by the respondent be filed and served prior to 18 April 2008.

(5)       That the applicants respond to any material filed by the respondent pursuant to Order 4 herein within 21 days of service of same upon them.

(6)       That the respondent debtor pay the costs of the applicants fixed in the sum of $3000.

(7)       That there be liberty to apply.’

2                          Her Honour traced the history in the Federal Magistrates Court and this Court of proceedings between the applicant, that is the applicant creditor before her, to which I shall refer as (“the CBA”), and the present applicant, Mr Maher, from the filing of a creditor’s petition on 23 March 2007.  It was noted at [10] of the orders below;

‘The debt, the subject of the second bankruptcy notice, has not been paid.  The debt is in the sum of $57,603 and the respondent has exhausted his avenues of appeal in relation to that debt.  In Maher v Commonwealth Bank of Australia [2008] FCA 205 (29 February 2008) Sundberg J said (referring to the respondent in these proceedings):

“[12]   In my view, the applicant is impecunious.  He has failed to pay the $57,603 costs order and other smaller costs orders.  He has filed no material in support of his solvency or as to his assets.  The material in the respondent’s affidavits (see at [2]) suggesting impecuniosity is unanswered.

13        There is no evidence that the applicant’s impecuniosity has been caused by the respondent.”’

3                          After describing the rationale of s 52(5) of the Bankruptcy Act 1966 (Cth) her Honour Hartnett FM concluded;

‘12.      In the history of the matter as described the court is satisfied that the reasons for the petition not being the subject of a final order within a 12-month period are as a result of the actions taken by the respondent.  In addition this petition proceeding was transferred to the Federal Court in December 2007 to thereupon be transferred by the Federal Court back to this court some two months later.  I am satisfied that the applicant creditors have not effectively been in a position to advance the application in the petition for a sequestration order to final decision.

13.       There is no prejudice to the respondent debtor to grant the orders sought this day.  He retains his right to oppose the petition and argue that it cannot succeed.  I note the applicants’ submission that the respondent debtor’s argument as to flaws in the second bankruptcy notice have already been the subject of consideration by Sundberg J in Maher v Commonwealth Bank of Australia [2008] FCA 205 (29 February 2008), where his Honour (referring to the respondent) said;

“11      Having reviewed the Magistrate’s reasons my assessment is that the applicant’s prospects of succeeding on any appeal are slight:  see at 10.”

14.       The court is satisfied that it is just and equitable to extend the life of the petition and accordingly will so order.’

4                          At the outset of the hearing of the present application, Mr Cook of Counsel for the applicant contended that the order of Hartnett FM was not interlocutory so that leave to appeal is not required.  I disagree.  In my view, the learned Federal Magistrate’s orders were clearly interlocutory, notwithstanding that they finally determined that the life of the petition should be extended.  The applicant did not have a substantive right not to have the life of the petition extended. 

5                          Section 25 of the Federal Court Act provides that an application for leave to appeal may be heard and determined by a single Judge or a Full Court.  When a party, as contemplated by Thomas Borthwick & Sons (Pacific Holdings) Ltd v Trade Practices Commission (1988) 18 FCR 424, makes application for leave to appeal and elects for that application to be dealt with by a single Judge, it is no longer open, I consider, to that party to contend that the order from which leave to appeal is sought, is a final order from which an appeal lies as of right.  In these circumstances the observations of Beaumont J in Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc & Anor (No 2) (1998) 155 ALR 328, to which I was referred by Mr Cook, do not apply to this case.  In that case his Honour observed, at 332;

‘When Tamberlin J made orders (1), (2) and (3) he was exercising the court’s original jurisdiction.  But when his Honour purported to refuse leave, his Honour was exercising its appellate jurisdiction.  This is clear from the statutory language, specifically s 25(2)(a).  As the Full Court said in Borthwick (at FCR 431;  ALR 178):

Applications for leave to appeal to the court or for an extension of time within which to institute an appeal are heard and determined by the court in the exercise of its appellate jurisdiction, not its original jurisdiction, notwithstanding that such applications may be heard not only by a Full Court but by a single judge.  A single judge may sit either in open court or in chambers:   see the definition of “judge” in s 4 to which we referred earlier.  In the expression “the Court or a Judge”, which appears in s 24(1A), the term “Judge” means a judge sitting in chambers.  The combined effect of ss 24(1A) and 25(2) is that applications for leave to appeal to the court and applications for extension of time to appeal shall be heard and determined by a Full Court or by a single judge sitting in open court or in chambers.  By whomsoever the jurisdiction is exercised it is exercised as part of the court’s appellate jurisdiction.  This conclusion is plain from the language of ss 24 and 25.”

And then Beaumont J continued;

‘In my opinion, it is equally plain from the statutory language that a single judge may only exercise the particular limited appellate jurisdiction previously described;  and that this does not embrace the appellate jurisdiction to hear and determine the question whether an appeal lay as of right, that is, whether the appeal was in truth from an interlocutory order.  It must follow, I think, that where, as here, such a question is contentious (and in Borthwick it was not in issue) only a Full Court, and not a single judge, has that appellate jurisdiction.

In his reasons for refusing leave, Tamberlin J dealt with the present issue briefly ( at ALR 350):

“The decision on the stay is interlocutory.  Therefore, leave of appeal is required pursuant to s 24(1)(A) of the Federal Court Act and O 52, r 10 of the Federal Court Rules.”

In my opinion, a single judge had no jurisdiction to decide any such contentious question.  That is a matter for a Full Court.  This is not to say that, absent such contention, a single judge could not consider whether leave should be granted, as in Borthwick, where it is agreed by the parties that the order is interlocutory.  That is not, of course, the present case.  Accordingly, Borthwick should be distinguished for our purposes.  His Honour’s order refusing leave was clearly dependent upon his purported decision that, although contentious, only an interlocutory order was involved.  Since that decision was made without jurisdiction, it must follow that the refusal was also made without jurisdiction. 

Another, related aspect of this is whether there was here, in truth, an election of the kind considered in Borthwick.  In my view, there was not, and the reasoning in Borthwick should be distinguished on this account also.’

6                          As already indicated, I consider that an election has been made by Mr Maher, apparently on advice, to seek leave to appeal and to have that application dealt with by a single Judge.  In those circumstances, I consider that it is appropriate for me to consider the application appealed from on the basis that the orders below were interlocutory.  I am reinforced in that conclusion by my clear view that those orders did not finally determine the substantive rights of the parties.  The right at issue turned on the validity of the bankruptcy notices on which the CBA relied and on whether a sequestration order should be made on one or other of those notices.  The alleged right of the applicant, Mr Maher, not to have the life of the petition extended was not a substantive right of the kind required by the authorities to found an appeal as of right.  If I am wrong in my characterisation of the orders below as interlocutory, the applicant can seek to correct that error on appeal, presumably in conjunction with an application for leave to appeal as of right out of time. 

7                          Upon examination of the reasons of the learned Federal Magistrate, I am not satisfied that her discretion miscarried in one or other of the respects indicated by the High Court in, for example, House v The King (1936)55 CLR 499, as necessary for an appellate court to exercise the discretion afresh for itself.  In any event, a twofold test for the grant of leave to appeal has been laid down by a Full Court of this Court in Décor Corporation Pty Ltd  v Dart Industries Inc (1991) 33 FCR 397, where Burchett J stated the “major considerations” to be applied by the Court upon an application for leave for which Niemann v Electronic Industries Ltd [1978] VR 431 is authority.   The first test, which relates to the prospects of the proposed appeal is whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court.  The second is whether substantial injustice would result if leave were refused, supposing the decision to be wrong.

8                          For the reasons which I have explained, I am not persuaded that the decision by the learned Federal Magistrate is attended with sufficient doubt to warrant its being reconsidered on appeal by a single Judge or a Full Court of this Court.  In any event, I am not satisfied that substantial injustice would result if leave were refused, supposing the decision below to be wrong.  That is because all of the arguments which the applicant now has available to him to resist the making of a sequestration order will remain open when the petition comes on for hearing during the period for which her Honour granted the extension.  On the other hand, substantial injustice would be caused to the CBA if it were ultimately held to be entitled to a sequestration order but were deprived, through no fault of its own, of the benefit of the original period of relation back, by the need to issue a fresh petition.  For these reasons, the application for leave to appeal will be refused with costs, including any reserved costs.

Associate:

Dated:         30 May 2008