FEDERAL COURT OF AUSTRALIA

Binetter v Commissioner of Taxation (No 2) [2011] FCA 1214

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    The applicant bear the first respondent’s costs of this application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules

REASONS FOR JUDGMENT

1        On 16 December 2010, Jagot J made orders for the winding up of two deregistered companies, ACN 078 272 867, in liquidation, formerly Advance Finances Pty Limited, and ACN 087 623 541, in liquidation, formerly Civic Finance Pty Ltd. The present applicant, Mr Gary Binetter, had been a director of each of these companies before their deregistration and, on reinstatement of the company, again became a director: Corporations Act 2001 (Cth) s 601AH(5). By interlocutory application filed on 17 October 2011, the applicant seeks to stay the winding up of each company until after the determination by the High Court proceedings No S210 of 2011 and No S167 of 2011.

2        This is one of a number of applications in which Mr Binetter acting in different capacities has sought to challenge the winding up of the companies. The history of these applications is set out in my reasons for judgment in Binetter v Commission of Taxation [2011] FCA 1195. I shall refer to those reasons as my earlier reasons. In that matter, Mr Binetter sought approval for him, acting as a director of the companies, to apply to Jagot J to set aside her winding up orders. In the absence of the liquidator’s approval Mr Binetter required the Court’s approval for this action.

3        I dismissed that application for reasons there given. However, those reasons lead to the first issue before the Court this morning, namely Mr Binetter’s application that I disqualify myself from hearing the stay application. It was submitted that the views expressed in those earlier reasons about the likely success of the application to set aside the winding up orders would raise a reasonable apprehension that I might not bring an entirely open mind to the consideration of whether there is an arguable case in favour of the application for a stay.

4        I am conscious of the views expressed on the issue of disqualification by Mason J, as the Chief Justice then was, in Re JRL: Ex parte CJL (1986) 161 CLR 342. Justice Mason commented on the increasing tendency of litigants to bring applications for judges to disqualify themselves and said, at 352:

It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case other than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be “firmly established”. … Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.

5        The views I expressed in my earlier reasons were not adverse to the character or credit of anyone involved in that case. The fact that I took a particular position on the law does not, per se, raise a reasonable apprehension of bias. If it did no judge would be able to stay orders that he or she had made, presumably in the belief that there were sound reasons for making those orders. I therefore refused the application that I disqualify myself.

Standing

6        Turning to the application itself, the first issue is that of the applicant’s standing. In a judgment delivered on 4 March 2011, Perram J held that Mr Binetter, who was not a party to the proceedings before Jagot J, had no standing in his personal capacity to seek leave to appeal from the winding up order made by her Honour. The fact that Mr Binetter was given leave to intervene in the proceedings before Jagot J, was represented by counsel and was given a full opportunity to make submissions in the proceeding did not give him standing. In a separate judgment given on the same day Perram J dismissed Mr Binetter’s application seeking a stay of Jagot J’s orders. His Honour found that the consequence of s 33(4B)(a) of the Federal Court of Australia Act 1976 (Cth) was that there was no right of appeal from the rejection of his application for leave to appeal. Consequently there was no proceeding to which an application for a stay could be seen as being incidental.

7        In this case, Mr Binetter bases his claim for standing on quite a different basis, namely his standing as a litigant in the High Court. Both Mr Binetter and the companies have filed applications in the original jurisdiction of the High Court seeking constitutional writs to quash the winding up orders. Mr Binetter’s standing as a stranger to seek this relief is not in dispute: Ex parte The Western Australian National Football League (Incorporated) (1979) 143 CLR 190 at 204 per Barwick CJ. The applications came before Heydon J on 12 September 2011 when his Honour gave directions for the future conduct of the matter including for the filing of submissions. I am told both matters (S167 and S210 of 2011) are listed for further directions on Monday, 31 October 2011.

8        The fact that the applications were not dismissed as having no merit at that stage has in my view no implications for the success or otherwise of the applications.

9        Mr Binetter’s argument is that if he has standing in the High Court to seek to set aside the winding up orders, then that is sufficient to give him standing in this Court to seek a stay of the winding up orders pending the resolution of the High Court applications. Given that the object of the stay application is to preserve the status quo until the High Court has determined the applications I am, on balance, persuaded by this submission.

The discretion to grant a stay

10        The principles relevant to the ground of a stay were discussed by the New South Wales Court of Appeal in Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737 at 741. The Court of Appeal there referred to its earlier decision in Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 in the principles to be applied in exercising the court’s jurisdiction to grant a stay pending appeal were restated. In Kalifair Handley, Sheller and Ipp JJA said at [18]:

[T]he relevant principles are analogous to those which govern the grant of interlocutory relief before trial to protect the status quo. The appellant must show that the appeal raises serious issues for the determination of the appellant court, and that there is a real risk that he will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal. This requirement will be satisfied if the appeal will be rendered abortive or nugatory unless a stay is granted. If these pre-conditions are established the Court will then consider the balance of convenience.

11        In a decision handed down only a few days after Kalifair, French J (as the Chief Justice then was) commented on the Court’s discretion in considering whether to grant a stay. In HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd (2002) 44 ACSR 169 at [48] his Honour said:

The grant of a stay under ss 35A(6) or 23 [of the Federal Court of Australia Act] is a matter for the discretion of the court in the light of all the circumstances of the case. There is no rule confining the exercise of that discretion which requires special reasons to be shown for its exercise. In the statutory context of Pt 5.4 of the Corporations Act however, the power is to be exercised with caution so as not unduly to delay the liquidator or hinder his or her capacity to carry out the duties imposed by the statute. There is therefore a clear onus on the applicant to make out a positive case.

12        Although the present application is not brought under the Corporations Act, French J’s concern that exercise of the Court’s power should not unduly delay the liquidator is relevant to the present application. It is a consideration that should be taken into account in assessing the “positive case” to which his Honour referred.

13        Consistently with the observations of the Court of Appeal in Kalifair in applying for a stay Mr Binetter must show that its application to the High Court raises serious issues. It is not necessary to show that the application is more likely than not to succeed but there must be at least an arguable case to be put to the High Court.

14        Ironically, in view of the disqualification application, whether there is an arguable case that Jagot J’s orders were in excess of jurisdiction is perhaps the least problematic aspect of the present application. Put another way, is there an arguable case that I erred in finding that the application did not have sufficient prospect of succeeding before Jagot J? In my view there is such an arguable case, and therefore this is not a ground on which a stay should be denied.

15        Whether the present application should succeed therefore, comes down to a question of the prejudice to each party in the orders not being made or being refused and, if necessary, the balance of convenience. The parties made submissions as to the prejudice that each expected but there is little if any evidence on the point.

16        Mr Binetter’s standing to seek the stay depends on him asserting a public interest, not a private interest. I am inclined to think that it is prejudice to this interest which is relevant rather than prejudice to Mr Binetter’s purely private interests. As it happens I do not need to decide the point as I do not accept that there would be significant prejudice to either the public interest or to Mr Binetter’s private interests. I do not see that the public interest would be prejudiced with the winding up orders remaining in place pending the application of the High Court hearing. Even if one took into account his private interests, it seems to be suggested that, at their highest, there might be some damage to his and or the companies’ reputations, following from the fact that they have been placed in liquidation and from the inquiries being made under it.

17        On the Commissioner of Taxation’s side, it appears to be common ground that the Commissioner is the only creditor, and that the companies have no assets. In those circumstances, the inquiries made in the course of liquidation assume a significance that they might not otherwise have. In my view the disruption to the litigation that would arise in suspending the application of Jagot J’s orders at this stage or in staying the winding up are likely to be greater than the prejudice to the company in allowing the present status to be maintained. That being so, I do not need to consider the issue of balance of convenience.

18        For all of the above reasons the present application is refused. There being no submissions that cost should not follow the event, the applicant must bear the first respondent’s costs of this application.

Associate:

Dated:    24 October 2011