FEDERAL COURT OF AUSTRALIA

Stankovic v The Hills Shire Council (No 3) [2012] FCA 523

THE COURT ORDERS THAT:

1.    The applicant’s application for leave to file and serve a notice of appeal out of time, filed on 19 May 2011, be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

1    I have before me an application for leave to file and serve out of time a notice of appeal from orders made by the Federal Magistrates Court on 12 May 2009. On that day, Raphael FM ordered that a sequestration order be made against the estate of the applicant, Mr Milovan Stankovic, who is also known as Michael Stankovic. His Honour ordered that all proceedings under that order be stayed for a period of 21 days, and ordered that the costs of the applicant, The Hills Shire Council, be taxed and paid from Mr Stankovic’s estate.

2    The application for an extension of time was filed on 19 May 2011. The respondents to that application are The Hills Shire Council (the Council) and the trustees in bankruptcy appointed following the making of the sequestration order (the Trustees). The application for an extension of time is opposed by the respondents. Kent Attorneys, a firm of solicitors who had acted for Mr Stankovic in relation to various different sets of litigation (Kents), and who appeared on the hearing of the bankruptcy petition, also oppose the grant of an extension of time.

3    Mr Stankovic appeared without legal representation today, although at various times lawyers have appeared for him in the proceeding. On 3 June 2011, Mr Spencer Ferrier, solicitor, filed a notice of appearance in court. On 14 September 2011, a notice of change of lawyer was filed, stating that Mr Stankovic had appointed Ms Simone Pagano, of Pagano Burlovich Lawyers, to represent him in the proceeding in place of Mr Ferrier. Mr Ferrier filed a notice of ceasing to act on 16 September 2011. No notice of ceasing to act has been filed in relation to Ms Pagano. However, as I indicated in reasons that I gave earlier today for refusing Mr Stankovic’s application for an adjournment (see Stankovic v The Hills Shire Council [2012] FCA 521) there was some evidence, proffered in connection with that application, that Ms Pagano was not free to represent Mr Stankovic today.

4    The draft notice of appeal attached to the application for leave filed on 19 May 2011 specifies three grounds. They are as follows:

1.    “Compensation monies received by the Applicant/Appellant were not considered when sequestering my estate” [sic]

2.    “Pursuant to s116[2] Bankruptcy Act 1966 [Cth], protected monies are exempt the provisions of s116[1]” [sic]

3.    “Compensation monies are protected monies” [sic]

5    Those grounds do not make a great deal of sense. The thrust of the complaint by Mr Stankovic appears to be that, although he has substantial assets, those assets are derived from moneys paid to him as compensation for injuries received in the course of his employment. He says that those moneys, and the property that represents the moneys, do not form part of his estate for the purpose of distribution to creditors. While that question has been ventilated from time to time by Mr Stankovic in the course of this proceeding, and in another related proceeding concerning the review of a decision of the Trustees, it is not a matter that was ventilated before the Federal Magistrates Court when the sequestration order was being sought by the Council. Further, it appears that, on 3 May 2012, Mr Stankovic commenced a fresh proceeding in the Court seeking review of decisions of the Trustees in relation to the treatment of property that Mr Stankovic says was acquired with the proceeds of workers compensation payments.

6    Even if Mr Stankovic now has some well-founded complaint about the conduct of the Trustees in relation to exempt assets, that has nothing to do with the question of whether a sequestration order should have been made. The question of what property of Mr Stankovic’s was divisible among his creditors was not raised before the Federal Magistrates Court. There was no error on the part of the Federal Magistrates Court in that regard. It is clear that an appeal based on the grounds specified in the draft notice of appeal could not possibly succeed, and would be doomed to failure. That is a basis for refusing the application for an extension of time.

7    However, in the course of oral submissions today, Mr Stankovic also raised other grounds upon which he complained about the making of the sequestration order. First, he complained that the Federal Magistrates Court took account of contentions advanced on behalf of Kents as a supporting creditor. Raphael FM recorded that Kents claimed a debt of $244,677, together with interest, in respect of bills of costs rendered to Mr Stankovic between January and July 2008. Mr Stankovic had not requested assessments of the bills under the Legal Profession Act 2004 (NSW), as he would have been entitled to do. His Honour observed that those bills represented debts for which Kents were entitled to prove in Mr Stankovic’s bankruptcy, although they were not bills of costs that had yet been made the subject of a judgment of a court. They therefore could not have been the subject of a bankruptcy notice. Mr Stankovic’s complaint about Raphael FM’s reference to Kents is that he now asserts that there was some arrangement that the fees were to be paid only after a property had been sold. That is not a matter that appears to have been put before the Federal Magistrates Court.

8    The second matter complained of by Mr Stankovic in the course of his submissions today concerns the reference made by Raphael FM to evidence advanced by Mr Stankovic that he had received an offer of a line of credit from the ANZ Bank of approximately $500,000. Mr Stankovic submitted to me today that his Honour ought to have adjourned the hearing of the bankruptcy petition to enable those arrangements with the bank to be finalised. However, his Honour observed that the offer from the ANZ Bank was incomplete, and that there appeared to be another document that set out the conditions upon which it was proposed that the loan be given. His Honour considered that he had so little evidence of the loan that he did not believe that he could take it into account to the extent that he would decline to grant a sequestration order.

9    Mr Stankovic apparently contended in the Federal Magistrates Court that the proceeding should be dismissed under s 52(2) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), on the basis that the Court was satisfied that he was able to pay his debts. The reasons of Raphael FM indicate that one of the grounds upon which Mr Stankovic opposed the making of a sequestration order was that he was solvent, by reason of his ownership, at least in part, of a parcel of land that he said was worth at least $5 million, a value that appears to have been conceded by the Council.

10    Raphael FM referred to the fact that the property identified by Mr Stankovic as having a value of at least $5 million was held in joint names and was unlikely to be sold for some time. There is no evidence before me of the arrangements with the ANZ Bank that would suggest that there was any error on the part of Raphael FM in declining to take the arrangements into account. In fact, his Honour granted a stay of the sequestration order for the maximum period of 21 days. His Honour’s reason for doing so was that Mr Stankovic said that all he needed to do to have the loan from the ANZ Bank materialise was to obtain his wife’s signature on the documentation and present it to the ANZ Bank. Mr Stankovic said that, if he received payment from the ANZ Bank, he would pay the Council. Raphael FM was not prepared to dismiss the application, but considered that the appropriate course was to make the sequestration order subject to the stay. If the debt had been paid, it would have been open to Mr Stankovic to seek annulment of the bankruptcy. There does not appear to be any basis for concluding there was any error on the part of Raphael FM in that regard.

11    A third matter raised by Mr Stankovic as a ground for complaint concerns the debt that was owing to the Council, and which formed the basis for a bankruptcy notice upon which the Council’s petition was founded. Raphael FM referred to what, as his Honour understood it, was a long-running dispute between Mr Stankovic and the Council over certain land. It appears that there was an appeal on foot against certain decisions of the New South Wales Land & Environment Court. However, his Honour observed that the costs order that was the basis of the petition did not relate to the proceedings that were the subject of the appeal. His Honour was unable to see how Mr Stankovic’s complaints about the Council, including the existence of the appeal, constituted sufficient cause, for the purposes of s 52(2) of the Bankruptcy Act, for refusing to make a sequestration order. His Honour referred to assertions by Mr Stankovic that the Council had brought the case for an improper motive. His Honour was not satisfied that that assertion had been made out, and was not satisfied that any successful appeal that was then current would alter the situation.

12    In the course of his submissions about the Council today, Mr Stankovic went beyond what appears to have been put to Raphael FM. His submissions involved an assertion that the order for costs that was made by the Land & Environment Court was incompetent, because it was made in a proceeding that had been struck out or dismissed for want of appearance and had not been reinstated. The evidence as to that matter is not entirely clear. Mr Stankovic has tendered an extract from the record of the Land & Environment Court in proceeding 41243 of 2004. Insofar as it is possible to understand that extract, the course of the proceeding that resulted in the costs order appears to be as follows.

13    The proceeding in the Land & Environment Court had been fixed for hearing on 19 January 2005. However, on that day McClellan CJ ordered that the hearing date be vacated and that the proceeding be stood over to 16 February 2005 at 9.15am before a class 4 judge of that Court. On 16 February 2005, the matter was apparently called on before Lloyd J. Mr Stankovic appeared in person, but there was no appearance for the Council. It appears that Lloyd J made an order that the proceeding be dismissed for want of prosecution. There is a further note on the file that, on 22 February 2005, a motion was filed to be listed for 4 March 2005. That appears to have been an ex parte application made to the Land & Environment Court, and the note suggests that Mr Stankovic was to be notified of that application.

14    On 4 March 2005, the Land & Environment Court apparently made an order, although the terms of the order are not clear. At that time, the Council was represented by counsel and Mr Stankovic appeared in person. The parties were directed to approach the Registrar for a hearing date. A note on the file made later on the same day indicates that the hearing of 19 January had been adjourned and that the proceeding would be fixed for hearing on 14 March 2005 before a judge.

15    On 14 March 2005 the proceeding came before Pain J for hearing. Her Honour gave reasons for making orders on that day, which included orders restraining Mr Stankovic from carrying out or undertaking a use of pig keeping on his property. Her Honour also made a declaration that that property was being used as a junkyard, in breach of provisions of the Environment Planning and Assessment Act 1979 (NSW), and made an order restraining Mr Stankovic from carrying out or undertaking the use of a junkyard on the property. The final order made by Pain J was that Mr Stankovic pay the costs of the proceedings. In due course, costs were assessed and judgment was entered for the Council in the Local Court for the amount of the costs taxed and assessed. That is the order that apparently founded the bankruptcy petition.

16    Mr Stankovic’s complaint appears to be that there was no proper reinstatement of the proceeding that had been dismissed by Lloyd J on 16 February 2005. It would be curious for Pain J to have embarked on a hearing, made the orders that I have indicated, and given reasons for those orders, if her Honour had not ordered the reinstatement of the proceeding. In any event, the Land and Environment Court is a superior court of record. The material before me does not support any contention that the order for costs made by the Land & Environment Court was incompetent. In any event, as I have said, that matter was not ventilated before Raphael FM.

17    Even if the proposed notice of appeal raised the additional matters to which I have referred, I am not persuaded that there is any substance at all in those matters. I am not persuaded that there is any prospect that any such ground could succeed, in the event that an extension of time were granted. Any such grant would therefore be futile.

18    In any event, the respondents also oppose the grant of an extension of time by reason of the excessive delay on the part of Mr Stankovic in making the application. No complaint is made about the conduct of the proceeding, once it was commenced on 19 May 2011. The matter was adjourned by consent to enable Mr Stankovic to take steps to obtain access to funds, such access having been denied by orders made by the Family Court of Australia. The complaint is as to the delay between the making of the sequestration order on 12 May 2009 and the filing of the application for an extension of time on 19 May 2011, more than two years later.

19    Under the Federal Court Rules in force on 12 May 2009, any notice of appeal from the orders of the Federal Magistrates Court was required to be filed and served within 21 days after the date on which the judgment appealed from was pronounced. Order 52 rule 15.1(b) provided that a notice of appeal could be filed and served within such further time as was allowed by the Court or a judge, upon application filed within that period of 21 days. Clearly, that requirement was not satisfied. There was, however, a provision in Order 52 rule 15.2 to the effect that, notwithstanding anything in the preceding sub-rule, the Court or a judge, for special reasons, might at any time give leave to file and serve a notice of appeal. Thus there is power for the Court to extend the time for filing a notice of appeal, notwithstanding that the application is brought after the expiration of a period of 21 days.

20    The expression special reasons is intended to distinguish the case from the usual course, according to which the relevant period is 21 days. It may be so distinguished wherever the Court sees a ground that does justify departure from the general rule in the particular case. Such a ground would be a special reason because it would take the case out of the ordinary (see Jess v Scott (1986) 12 FCR 187 at 195). In considering whether an extension of time should be granted, several factors are ordinarily to be taken into account. Apart from the question of the merits of the substantial application – that is, the merits of the appeal assuming leave were granted – one such factor is whether or not there is an acceptable explanation for the delay, such that it would be fair and equitable in the circumstances to extend time. Another factor would be whether any prejudice to the respondents would be caused by the delay.

21    In his application, Mr Stankovic has relied on three affidavits sworn by him on 19 May 2011, 31 January 2012 and 9 March 2012. There is very little material in those affidavits directed to explaining the delay between 12 May 2009 and 19 May 2011. In that regard, it is of some significance that, shortly after the making of the sequestration order, Mr Stankovic paid the amount claimed by the Council. He then made two applications to the Federal Magistrates Court. The first was an application to extend the stay ordered by Raphael FM. It appears that on 5 June 2009 Barnes FM refused that application. Her Honour observed that, where there is no appeal, the Federal Magistrates Court has no power to grant a stay beyond the period of 21 days allowed for in s 52(3) of the Bankruptcy Act. Her Honour was not satisfied that she had power to extend the stay beyond the period of 21 days. The significance of that observation is that it might at least have drawn Mr Stankovic’s attention to the fact that he may have had a right of appeal.

22    Rather than dismissing the application for an extension of the stay, her Honour considered that the appropriate way to deal with the application was to adjourn the matter to the date for the return of a separate proceeding commenced by Mr Stankovic on 20 May 2009, seeking annulment of the bankruptcy. I have no evidence relating to the application for an annulment, other than that an order was made by Smith FM, on 13 October 2009, that the application for an annulment be dismissed by consent. Thus, it appears that Mr Stankovic had some knowledge of a basis for seeking relief in respect of the sequestration order. There is no suggestion in his evidence that he sought legal advice and that his lawyers failed to take steps in time. In the course of his submissions, he said that, at the end of 2010, he consulted Mr Ferrier. There is nothing to suggest that he had made any attempt before then to seek advice as to the possibility of an appeal. The only material is the evidence that he sought an extension of the stay, and that he made an application for an annulment that was dismissed by consent.

23    One must, of course, have sympathy for an individual who appears for himself. Mr Stankovic’s first language is not English and he has some hearing disabilities. Nevertheless, he is articulate. Although I have doubts about the merits of his submissions, I have had no difficulty in understanding those submissions.

24    The delay in this case is extraordinarily long. The length of the delay consolidates the strength of any vested right that the Council has in the judgment that it obtained from the Federal Magistrates Court. The only way in which the question of delay was addressed by Mr Stankovic in his affidavit evidence was to say that he had difficulties in obtaining legal representation and has had financial difficulties over the past few years, during which he has been involved in legal proceedings. He also asserted that he was late because of the conduct and misconduct of the legal profession through all of the courts. He asserted that everything was misconceived by the legal professionals, and that the duty of care and obligation to the courts was ignored. He asserted that, because of that, it took him so long to ascertain that, as he alleges, the case before the Land & Environment Court had not been reinstated. He said that, following the orders of 12 May 2009, it was difficult for him to obtain representation, and that he had on various occasions asked the Trustees for assistance but that the Trustees refused to assist him. Those matters, of course, have no bearing on the question presently before me.

25    I am not persuaded that there is a satisfactory explanation for Mr Stankovic’s delay in applying for an extension of time. Coupled with the complete lack of any merit in the proposed grounds, or any other grounds that have been suggested, I do not consider that it is appropriate to extend the time for filing a notice of appeal from the orders of the Federal Magistrates Court of 12 May 2009. The application for leave to file and serve out of time, filed on 19 May 2011, should be dismissed with costs.

Associate:

Dated:    25 May 2012