FEDERAL COURT OF AUSTRALIA

Shannon v Commonwealth Bank of Australia [2012] FCA 1378

THE COURT ORDERS THAT:

1.    The application is dismissed with costs.

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

REASONS FOR JUDGMENT

1    This judgment deals with an application for an extension of time and for leave to appeal against an interlocutory judgment of the Federal Magistrates Court of Australia (“the FMCA”) given on 5 November 2012. At the conclusion of argument on 4 December 2012 I dismissed the application with costs. What follows are my reasons for making that order.

2    Evidence was provided by the solicitors who acted for the applicant about the steps that were taken by them between first receiving instructions a week after the judgment and attempts to file an application for leave to appeal on 20 November 2012. Although it was at first accepted that the attempt to file the application was one day out of time (as it was), it was later suggested on behalf of the applicant that time in which to seek leave to appeal remained available until the Registry closed on 20 November 2012. I do not accept this contention, but that will make no difference in this case.

3    I am satisfied that a reasonable explanation was given for the short delay involved. I am satisfied that no prejudice to the respondent would be involved in granting an extension of time if otherwise leave to appeal should be granted.

4    The respondent took steps to serve the applicant with a bankruptcy notice on 12 September 2012. The effectiveness of those steps is in issue. The applicant had 21 days in which to comply with the bankruptcy notice, if it was effectively served. He did not do so. In due course a creditor’s petition was filed and served and on 26 October 2012 the applicant moved to set it aside summarily on the ground that the bankruptcy notice was not properly served. That interlocutory application to summarily dismiss the creditor’s petition was dealt with by the FMCA on 5 November 2012 (Commonwealth Bank of Australia v Shannon [2012] FMCA 1064). The interlocutory application was dismissed, as the FMCA was not satisfied that the tests for summary disposition had been met.

5    The FMCA provided a concise summary of the factual material. Efforts were made to serve the applicant with the bankruptcy notice. The applicant sought to avoid service. The documents were left at his feet and he moved away from them without taking them up or examining them. There was no evidence before the FMCA that the applicant was told what the documents were. It was not clear on the evidence whether the applicant had been in a position to appreciate the nature of the documents. The judgment of the FMCA makes it clear that a live issue about whether service of the bankruptcy notice was effective may remain for attention at any final hearing on the creditor’s petition. In that respect, the FMCA said the following:

8.    The debtor’s application is for summary dismissal, rather than as a ground of objection to the creditor’s petition. The test in rule 13.10 of the Bankruptcy Regulations is that the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting that proceeding or claim. The difficulty for Mr Shannon is that the circumstances are somewhat obscure.

9.    If I had been dealing with a final hearing on the creditor’s petition, I may well, based on the current state of the evidence, have been not satisfied that the bankruptcy notice had been served in accordance with regulation 16.01(1)(d), but I cannot conclude that the petitioning creditor is unable to argue that the documents were served in accordance with that Regulation. If the issue remains in dispute between the parties, it would be necessary to resolve that by whatever evidence is available at a final hearing. It would, presumably, be necessary for Mr Welmeela to be cross-examined on his affidavit of service. Mr Shannon may also wish to give evidence as to what occurred and his understanding or lack of understanding about what was happening. I am unable to conclude that the petitioning creditor has no reasonable prospect of successfully prosecuting the petition.

6    It is clear from these observations that the FMCA felt that the applicant had not satisfied the test for summary dismissal. It is also clear that the position about the effectiveness of service was left open.

7    The matter is to return to the FMCA for hearing of the creditor’s petition on 13 December 2012.

8    The grounds for the present application for leave to appeal include the following:

3.    At the hearing of the Applicant’s Strike Out Application before Mr Driver Federal Magistrate, the affidavit evidence sworn on 12 September 2012 of the process server as to the service of the said Bankruptcy Notice was not put to issue by either party.

4.    The Learned Magistrate correctly, with respect, found that the contents of such affidavit did not establish service of the Bankruptcy Notice under Reg 16.01.

5.    Having found that, it is submitted that he should have upheld the Strike Out Motion with costs, but misdirected himself in then holding that the relevant criteria under Reg 13.10 had not been established and listing the Creditor’s Petition on 13 December, 2012.

9    The statement in ground 4 is not correct. It does not accurately state the terms or effect of the findings of the FMCA. The premise in ground 5 is therefore not sound.

10    At the hearing of the present application it was submitted that the applicant should be granted leave to appeal because he would lose significant rights if the question of service of the bankruptcy notice was not now decided in his favour. The difficulty with this contention is that whatever rights the applicant may have, there will be no difference to them whether the question of service is dealt with by the FMCA on 13 December 2012, as foreshadowed, or by way of appeal in this Court.

11    Furthermore, although time to comply with the bankruptcy notice will not now be extended, if the applicant wishes to attempt to go behind the alleged debt, or rely on a set-off to answer his alleged indebtedness (see ss 41(6A) and 41(7) of the Bankruptcy Act 1966 (Cth)), there is no reason why such a matter (or other matters) may not be raised in opposition to the creditor’s petition (see s 52 of the Bankruptcy Act). At the conclusion of proceedings before the FMCA consent orders were made to accommodate that possibility. It appears the applicant may not have complied with the timetable embraced by those orders but that affords no reason to uphold the present application. Control of those procedural matters is in the hands of the FMCA. In the meantime, the applicant has chosen to devote his resources to making good a technical argument about service. That is his choice, but the possible consequences of that choice carry little weight for the application before this Court.

12    The test for whether leave to appeal against an interlocutory decision should be granted is well-established. It is whether the decision is attended with sufficient doubt to warrant its being reconsidered and whether substantial injustice would result if leave to appeal were refused, supposing the decision to be wrong (Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398; see also Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257 at [26]-[28]; Spencer v Commonwealth of Australia [2012] FCAFC 169 at [6]).

13    In my view it is neither necessary nor expedient to grant leave to appeal. There is no apparent error in the decision of the FMCA. Furthermore, I can see no additional prejudice to the applicant’s position if any outstanding question about proper service of the bankruptcy notice is addressed, if necessary, at a final hearing on the creditor’s petition. There would, in those circumstances, be no utility either in granting an extension of time in which to seek leave to appeal.

14    For the foregoing reasons, the application for an extension of time and for leave to appeal was dismissed with costs.

Associate:

Dated:    5 December 2012