FEDERAL COURT OF AUSTRALIA

Badcock v Pirie Street Holdings Limited [2010] FCA 628

THE COURT ORDERS THAT:

1.                  The appeal be dismissed.

2.                  The appellant pay the respondents’ costs.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     This is an appeal from orders made by a Federal Magistrate on 28 January 2010 dismissing the appellant’s application to set aside a creditor’s petition dated 19 September 2001 and for other orders.

2                     The application which was amended by filing an amended application on 26 October 2009 sought the following orders:

1.         The Creditor’s Petition dated 19 September 2001 is set aside.

2.         The Federal Magistrates Court order dated 21^st December 2001 is set aside.

3.         The Insolvency Trustee Service of Australia is ordered to clear all public records naming the applicant.

4.         The financial position between the applicant and the respondents is to be agreed or determined by the court.

5.         The respondents are jointly and/or severally liable for the applicant’s costs to be agreed or taxed.

6.         Any other order the Honourable Court deems fit or appropriate.

3                     The Federal Magistrate refused to make any of the orders.

4                     On 1 December 2008 the Adelaide Bank Limited (ACN 061 461 550) transferred all of its assets and liabilities to the Bendigo and Adelaide Bank Limited (ACN 068 049 178).  By reason of that transaction, the second respondent became the successor at law to the first respondent pursuant to s 22 of the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth).

5                     On 21 December 2001, on the petition of the first respondent, the appellant was made the subject of a sequestration order by Registrar Christie.  The appellant sought a review of the Registrar’s sequestration order pursuant to s 104(2) of the Federal Magistrates Act 1999 (Cth) (the FM Act).

6                     On 4 February 2002 Raphael FM dismissed the appellant’s application for review.  As at the date of the hearing before the Federal Magistrate on which this appeal is brought, the appellant was an undischarged bankrupt and that remained his status at the time of this appeal.

7                     The Federal Magistrate dismissed paragraphs 1 and 2 of the appellant’s application on the ground that the appellant was not entitled to seek to have the sequestration order set aside and if he wished that result the proper course would have been for the appellant to appeal from the order made by Raphael FM on 4 February 2002.  The Federal Magistrate appears to make the third order sought on the ground that the Insolvency Trustee Service of Australia (ITSA) was not a party to the proceeding and in those circumstances no order should be made against it.  The Federal Magistrate described the fourth order sought as so vague as to be meaningless.  He described the fifth order as having no proper basis.  As to the sixth order, he said that the only appropriate order was that the appellant pay the respondents’ costs to be agreed or taxed.

8                     The appellant has filed a notice of appeal in which he has identified the grounds of appeal as follows:

1.         The decision of 28 January 2010 did not consider fresh and previously unobtainable evidence likely to result in a different verdict including:

·         Evidence not available at the time of the Creditor’s Petition.

·         Evidence not available at the time of the original orders of Registrar Christie.

·         Evidence not available at the time of a review by Federal Magistrate Raphael.

2.         The application primarily related to grounds other than matters raised before Federal Magistrate Raphael as evidenced by the reasons and orders in AZ202 of 2001.

3.         The decision of 28 January 2010 made no reference to the appellant’s oral and written submissions of 2 December 2009, wherein the appellant confirmed recessionary orders were sought primarily upon the basis of solvency of the appellant.

4.         The affidavit and annexed material detailed to the court on 2 December 2009 and filed in the proceeding by the appellant on 8 December 2009 was not considered.

5.         The Further Written Submissions of the appellant filed on 9 December 2009 in support of the material filed on 8 December 2009 were not considered.

6.         The Creditor’s Petition contravened the mandatory requirements of the Bankruptcy Act 1966 and ought to have been dismissed.

9                     The appellant unfortunately does not recognise the fact or the legal effect of the sequestration order made by the Registrar on 21 December 2001.  He has maintained since that time that the order was for some reason invalid and that it did not preclude him from bringing proceedings in this Court and the State Courts in relation to the bankruptcy itself, and in relation to other controversies.

10                  As my reasons show in Badcock v Pirie Street Holdings Limited [2010] FCA 627, the appellant has embarked upon a number of proceedings in this Court and in the State Court, all of which have been unsuccessful.  He has taken no steps to bring his bankruptcy to an end either by filing his Statement of Affairs and allowing time to run and obtaining a discharge by operation of the Act, or by seeking to set aside the Registrar’s order except insofar as he sought a review of that order.

11                  If the appellant remained dissatisfied with the Registrar’s order after Raphael FM dismissed his application for a review, the appellant should have appealed to this Court from that order seeking to set aside that order and the sequestration order.  Unfortunately he has not taken such a step until he brought the application for an extension of time within which to appeal which was considered in Badcock v Pirie Street Holdings Limited [2010] FCA 627.

12                  The appellant’s inaction has left him without a remedy.  The orders which he sought from the Federal Magistrate which on the subject of this appeal were plainly inappropriate in circumstances where the appellant was an undischarged bankrupt.

13                  The Federal Magistrate was right to conclude that the orders sought in paragraphs 1 and 2 of the appellant’s application could not be made by a Federal Magistrate in circumstances where the appellant’s application for a review of the Registrar’s order of 21 December 2001 had been dismissed on 4 February 2002.

14                  The orders sought amounted to a collateral attack upon the Registrar’s order of 21 December 2001 by asking a Federal Magistrate to set aside that order when the correct procedure was to appeal from the Federal Magistrate’s order dismissing the appellant’s application for a review.  The Federal Magistrate was right to dismiss paragraphs 1 and 2 of the application for the reasons which he gave.

15                  He was also right to refuse to make an order requiring ITSA to clear all public records naming the appellant, but for the reason that no such order could be made whilst the sequestration order made by the Registrar on 21 December 2001 stood.  That application would have had to have been refused even if ITSA was a party to the proceeding.

16                  I agree with the Federal Magistrate that the fourth order sought could not be made because the order sought was vague, but also because the Court lacked jurisdiction to make such an order in circumstances where a sequestration order had been made and had not been discharged, and the appellant was an undischarged bankrupt at the time the application was made.

17                  In the circumstances, of course, the fifth order could not be made because the other orders which had been sought had to be refused.

18                  The Federal Magistrate was right to dismiss the application and to order the appellant to pay the respondents’ costs of the proceeding.

19                  In those circumstances, the appeal from orders made by the Federal Magistrate must be dismissed.  The appellant must pay the respondents’ costs.

Associate:

Dated:         25 June 2010