FEDERAL COURT OF AUSTRALIA

Lahood v Bank of Western Australia (No 2) [2013] FCA 150

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    Costs be costs in the cause.

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

REASONS FOR JUDGMENT

1    On 14 February 2013, a Federal Magistrate made an order sequestrating the estate of Mr David Lahood. He did so at the instance of a respondent named as the Bank of Western Australia, but which I understand is in fact now the Commonwealth Bank of Australia.

2    On 26 February 2013, that is, yesterday, Mr Lahood applied through his solicitor for a stay of that sequestration order, and also, at the same time, an interlocutory injunction which, if granted, would have the effect of permitting Mr Lahood to continue trading from the premises at 131A Parramatta Road, Homebush. At the same time, Mr Lahood’s solicitor filed an amended notice of appeal from the Federal Magistrate’s sequestration order. That application came before me yesterday, and after substantial argument on Mr Lahood’s behalf by his solicitor, I declined to grant either the stay or the interlocutory injunction.

3    In the reasons I gave yesterday, I canvassed the source of power for the Court to grant a stay, being located in s 52(3) of the Bankruptcy Act 1966 (Cth), and also the Court’s power under the Federal Court Rules 2011 (Cth) r 36.08(2). Those considerations required me to assess two matters: First, the prospects of Mr Lahood’s appeal succeeding; and secondly, the question of the balance of convenience.

4    The substantive ground put forward in yesterday’s application for the appeal was that the Federal Magistrate had erred in refusing to give Mr Lahood an adjournment of the sequestration proceedings on the day of the hearing. An adjournment of the hearing had been sought because it was said that the bank had not complied fully, or perhaps adequately, with a notice to produce which had been issued by Mr Lahood’s solicitor, and which was designed or, in any event, succeeded in part in bringing forth from the bank documents evidencing or particularising the manner in which the bank had calculated the debt alleged to be owed by Mr Lahood.

5    It is apparent that that notice to produce had been issued at an earlier time, and that documents had been produced, so far as I can see, before the hearing. They had been used to assist in the preparation of a draft forensic accountant’s report prepared by a Mr Paul. A draft but unsigned copy of that report was available on the day of the hearing before the Federal Magistrate, and as I understand it, formed part of the basis for the argument that the proceedings should be adjourned.

6    In the events which occurred, the Federal Magistrate was not persuaded to rely upon an unsigned, draft report. As I indicated in yesterday’s judgment, it is perhaps regrettable that the reasons for judgment of the Federal Magistrate are not available for perusal by this Court, but it was not suggested to me yesterday, and it has not been suggested to me today that anything which fell orally from the Federal Magistrate involved demonstrable error.

7    That left me yesterday in the quandary of having to assess the merits of Mr Lahood’s appeal for the purpose of assessing the outcome of the tests under s 52(3) and r 36.08(2), without the benefit of the actual reasons the subject of challenge. The resolution of that debate necessarily took place in a context, or through a prism, which required Mr Lahood to demonstrate the arguable nature of his appeal.

8    The background to the events leading up to the sequestration order included multiple adjournment applications, some of them at the instance of the bank, and some of them opposed at the instance of Mr Lahood.

9    Yesterday I concluded that, doing the best I could with the limited materials which were before me, it was not obvious to me that those circumstances indicated the presence of an arguable appealable error by the Federal Magistrate. Indeed, to the contrary, it seemed to me that the refusal of an adjournment in the circumstances of which the Federal Magistrate was confronted was a judgment which was likely within the range of possible or acceptable outcomes. For that reason, I assessed the likelihood of the appeal succeeding for s 52(3) or r 36.08(2) purposes as being low.

10    I then turned to assess the balance of convenience, and I accepted that a considerable inconvenience, to put it mildly, will be visited upon Mr Lahood if the stay is not granted. I also accepted that the prejudice to the bank and to the trustee would not be enormous. I therefore accepted that, insofar as balance of convenience issues were concerned, Mr Lahood has the better part of at least that part of the questions which fell for answering. Ultimately, however, I did not accept that that was a sufficient reason to grant the stay and this was principally because I was not satisfied that the proposed appeal had any real prospects.

11    I was satisfied yesterday, and I am satisfied today that Mr Lahood has a genuine desire and wish to achieve a refinancing of the bank’s facilities so as to avoid the continued existence of the sequestration order. I also accept that the presence of the sequestration order presents or makes more difficult the obtaining of finance. Yesterday those matters did not dissuade me, after very full argument by Mr Lahood’s solicitor, that I should nevertheless not grant a stay.

12    The application which is made today is made without the benefit of Mr Lahood’s solicitor. It seems, in effect, the same relief which was sought yesterday. There has been placed before me a further affidavit of Mr Lahood in addition to yesterday’s, which gives a fuller description of some of Mr Lahood’s health concerns which he had in 2007 through to 2010. It also makes clearer a number of aspects of the nature of the business and the assets and securities which are concerned.

13    The application was filed during the course of the day, whilst I was conducting a trial, and has had to be heard in the evening at 6.00pm. There is nothing which has been put before me this afternoon which is substantially different to that which was put before me yesterday, although I now have seen Mr Lahood in person, and I accept the bona fides of his desires. I am aware of the difficulties with which he is confronted.

14    The principles to be applied where a fresh application of an interlocutory nature is made have been authoritatively stated by McClelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44. Generally speaking, a party is not permitted to make fresh interlocutory applications because, in effect, this constitutes a species of abuse of process.

15    That is not to say that it is always impossible. McClelland J accepted in Honeysett that, were different circumstances to be shown, or if it was demonstrated that the state of affairs which was obtaining had altered since the initial application, then it might well be possible to bring a second application, even though a first application had failed. Save in those circumstances, however, the bringing of an identical second application is a species of abuse of process and the Court would not ordinarily entertain it.

16    Notwithstanding my ready acceptance of the passion with which Mr Lahood’s application is brought, and the significant consequences of the orders I made yesterday, it does not seem to me that the circumstances which are before me this afternoon are materially different to those which were before me yesterday. It follows that the appropriate order for the application is that it should be dismissed. I do so with some regret. Costs will be costs in the cause.

Associate:

Dated:    27 February 2013