FEDERAL COURT OF AUSTRALIA

Jacobs v Wily [2013] FCA 544

THE COURT ORDERS THAT:

1.    The applicant for an extension of time filed on 24 May 2013 is dismissed.

2.    The interlocutory application filed on 24 May 2013 is dismissed.

3.    The costs of the applications referred to in paragraphs 1 and 2 above are costs in the bankruptcy.

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

REASONS FOR JUDGMENT

1        The applicant seeks an extension of time for leave to appeal from a decision of Jacobson J delivered on 24 April 2013. His Honour made various orders relating to the question whether certain property of the applicant who is a bankrupt, is properly divisible amongst creditors, with particular reference to ss 58 and 116(1) of the Bankruptcy Act 1966 (Cth) (the Act). The applicant also seeks a stay of Jacobson J’s judgment and orders, as well as a stay of a sequestration order made by Edmonds J on 22 February 2012.

Background

2        On 22 February 2012, Justice Edmonds made a sequestration order under s 43 of the Act against the applicant’s estate at 58 Johnstone Street, Peakhurst in New South Wales. The sequestration order was made on the basis of a creditor’s petition which itself was based on the failure of the applicant to comply with a bankruptcy notice. The bankruptcy notice related to three judgments in which orders for costs were made against Mr Jacobs (two judgments of the District Court of New South Wales both obtained on 23 June 2011 and one of the High Court obtained on 23 March 2011). The respondent (Mr Wily) to the interlocutory application is the trustee in bankruptcy for Mr Jacobs.

3        By an originating application filed on 13 February 2013, Mr Wily sought declarations that items of household and personal property and other items referred to as extraneous items of the applicant, situated at 9/17 Lorraine Street, Peakhurst, be declared property of the bankrupt divisible among creditors. Mr Wily sought a similar declaration in relation to property of Mr Jacobs situated at 75 Clarke Street, Peakhurst. He also sought orders that he be permitted to remove immediately the extraneous items situated at both of those properties.

4        On 27 February 2013, District Registrar Wall made certain directions in the matter and stood it over for further directions only before Jacobson J on 28 March 2013.

5        On 28 March 2013, Jacobson J made further directions and, over Mr Jacobs’ opposition, listed the originating application for hearing on 24 April 2013 before his Honour

6        The hearing proceeded on 24 April 2013, notwithstanding that Mr Jacobs was not present. His Honour records in [2] of his reasons for judgment in Wily v Jacobs [2013] FCA 415 that his Honour was satisfied that Mr Jacobs was aware of the hearing because he was present in Court on 28 March 2013 when the matter was set down for hearing on 24 April 2013. His Honour also records that he had been informed by the Registry that Mr Jacobs had contacted the Registry to say that he would not be appearing that day, because of ill health.

7        In deciding to proceed with the hearing despite Mr Jacobs’ absence, his Honour drew attention to certain features of the case which made it “an unusual one”. Those matters were:

(a)    there was evidence that it was likely that there would be a substantial surplus of assets in the bankrupt estate;

(b)    the trustee in bankruptcy gave evidence that, depending upon the time it took to realise the assets of the bankrupt, the trustee may only be required to sell one of the bankrupt’s properties to pay all the creditors and cover the costs and disbursements; and

(c)    having regard to the circumstances and history of the litigation and disputes which led to the bankruptcy, it was evident that if the bankrupt continued to refuse to acknowledge and accept his obligations, the costs of the proceedings would continue to rise and there may be no surplus in the estate.

8        After summarising the evidence before him, Jacobson J concluded that the trustee in bankruptcy was correct to have formed the view that the extraneous items located at both the Lorraine Street and Clarke Street properties were properly divisible amongst the creditors of the bankrupt estate pursuant to s 116(1) of the Act and that he was also correct in forming the view that the extraneous items were not excluded property within the meaning of s 116(2) of the Act.

9        His Honour concluded that he should make the declarations and orders set out in the originating application.

10        Accordingly, on 24 April 2013, his Honour made the following orders:

1.    The items of household and personal property and other extraneous items (collectively “Extraneous Items”) of the bankrupt situated at 9/17 Lorraine Street, Peakhurst be declared property of the bankrupt divisible amongst creditors pursuant to ss 5, 58, 116(1), 30(1) and 134(4) of the Bankruptcy Act 1966  (Cth) (the Act).

2.    The Extraneous Items of the bankrupt situated at 75 Clarke Street, Peakhurst are property of the bankrupt divisible amongst creditors pursuant to ss 5, 58, 116(1), 30(1) and 134(4) of the Act.

3.    The Trustee may immediately remove by whatever means the Extraneous Items of the bankrupt situated at 9/17 Lorraine Street, Peakhurst and sell or otherwise dispose of same in whatever manner the Trustee deems fit for the benefit of the creditors of the bankrupt.

4.    The Trustee may immediately remove by whatever means the Extraneous Items of the bankrupt situated at 75 Clarke Street, Peakhurst and sell or otherwise dispose of same in whatever manner the Trustee deems fit for the benefit of the creditors of the bankrupt.

5.    Any and all costs incurred by the Trustee in respect of the removal and sale or disposal of the Extraneous Items referred to at the properties identified in Orders 3 and 4 above are normal disbursements incurred by the Trustee in the course of him undertaking his duties as the Trustee of the bankrupt.

6.    The costs of the application are costs in the bankruptcy.

11        It later transpired that Order 5 of the orders made on 24 April 2013 was in error because his Honour overlooked the fact that, during the course of the hearing, the trustee in bankruptcy had indicated that he no longer pressed that order.

12        Accordingly, acting under the slip rule, on 13 May 2013 Jacobson J made a further order pursuant to r 39.05 of the Federal Court Rules 2011 (the 2011 FCRs), that Order 5 be set aside.

Extension of time to appeal

13        As noted above, Jacobson J delivered an ex tempore judgment on 24 April 2013. The final date for filing a notice of appeal was Wednesday, 15 May 2013. The applicant missed that deadline. On 24 May 2013, he filed an application for an extension of time to appeal from all the orders made on 24 April 2013, including Order 5 (which, as noted above, was subsequently set aside on 13 May 2013).

14        The proposed grounds of appeal, as set out in a draft notice of appeal, are in the following express terms:

1.    Denial of Natural Justice contrary to the Principle of the Fair Hearing Rule.

2.    Lack of Procedural Correctness, particularly in that further documents were informally issued to the appellant, thereby the appellant was uncertain of the case(s) of which he was to respond to.

3.    Only two (2) hours were allocated for the hearing. The time allocated was insufficient to hear Expert Witnesses and/or undertake cross-examinations of deponent(s).

4.    Provable debts owned by the appellant by listed debtors were not agitated and no investigation was undertaken, involving the appellant. As to the legal means/process of recovery of such.

5.    Legal representation was not available to the appellant; even though the Federal Court Rules 2011 – Rule 4.12 enables the Court to refer a party to a lawyer for legal assistance.

6.    The Order (in particular Order Prayer 5) did not reflect the Court’s intention.

7.    On Monday, 6 May 2013 Mr Andrew Williams, solicitor for Mr Andrew Hugh Jenner Wily supplied the Appellant with a copy of the fraudulent Order entered 29 April 2013 (incorporating Order Prayer 5) embossed with the Court seal.

15        In the draft notice of appeal, the applicant indicated that he would seek an order setting aside the orders made on 24 April 2013 (excluding Order 5) and seek further directions for the filing of affidavits etc.

16        By an interlocutory application filed on 24 May 2013, the applicant also seeks a stay of the orders made on 24 April 2013, as well as a stay of the sequestration order made by Edmonds J on 22 February 2012. He also seeks an order requiring the Court to exercise its powers under:

(a)    r 4.12 to refer his case to a lawyer for legal assistance; and

(b)    its powers under Practice Note CM1.

17        The applicant relies on two affidavits in support of his applications. Both are dated 24 May 2013.

18        One deals with the applicant’s recent medical history, including during the period 5 to 20 February 2013 when he was suffering from a kidney stone condition. He also produced evidence of various dental visits and medical certificates during the period 4 March 2013 to 6 May 2013. During the course of the hearing he tendered various additional documents relating to these dental and medical matters, as well as to his ongoing issues with high blood pressure.

19        Mr Jacobs draws attention to the fact that he says he sent a letter by fax to Jacobson J’s Chambers, apparently some time in March 2013 seeking an adjournment of a proposed directions hearing to 11 April 2013, relying on his medical condition. He was advised that the directions hearing would remain on 28 March 2013.

20        He also gave evidence as to matters which were raised by him at the directions hearing on 28 March 2013, including his poor medical health and his failure to obtain legal representation. He sought to defer the hearing of the trustee in bankruptcy’s originating application so that he could better prepare his case. He was given another two weeks to file any evidence, but his request for an adjournment was refused by Jacobson J.

21        He also gives evidence that, in addition to caring for his 89 year old mother, on 31 March 2013, his 82 year old father was taken by ambulance to St. George Hospital. Mr Jacobs tendered evidence during the course of the hearing supporting those matters. He says that he is also responsible for the care of his father.

22        He also tendered a medical report regarding a counselling session he attended on 16 April 2013 with a clinical psychologist, Deborah Martin-Smith, who diagnosed him then as having “a severe level of depression”. The clinical psychologist’s report records that Mr Jacobs stated that he was first diagnosed with clinical depression in 2002, following an ongoing legal dispute with Hurstville Council. She adds that: “The distressing nature of the dispute has contributed to the maintenance of his ongoing depression”.

23        Mr Jacobs says that he asked a friend to use his email address and contact the Registry by email on 24 April 2013 regarding his inability to attend the hearing scheduled on that day. He makes reference in his affidavit to a doctor’s certificate dated 24 April 2013 and certain prescriptions. Mr Jacobs tendered an email dated 8:51 am on 24 April 2013 which said:

Dear Registrar,

Pleased be advised that I am unable to attend today’s hearing (Wednesday, 24 April 2013) due to health reasons.

Please note that I do not concede to any possible notion that I may be in Default (pursuant to Federal Court Rules 2011 (SLINO134 of 2011) – RULE 5.22), due to the described all consuming circumstances (as verified by copies of electronic documents in the File for the matter). Could you please advise the Court of my inability to attend on this occasion.

Yours sincerely,

Kevin Jacobs.

24        Mr Jacobs also tendered a medical certificate dated 24 April 2013 by Dr Sughan Ramakrishna, which certifies that Mr Jacobs was receiving medical treatment for the period Wednesday, 24 April 2013 to Wednesday, 24 April 2013 inclusive and that “he will be unfit to continue his usual occupation”. Mr Jacobs says that the medical certificate was forwarded to the Registry on the morning of 24 April 2013. It is notable that it does not state that Mr Jacobs was unable to participate in the hearing because of his medical health. It simply states, in a pro forma fashion, that he was unfit to continue his “usual occupation” on that day.

25        It might also be noted that no evidence was produced to the Court to suggest that Mr Jacobs ever sought an adjournment of the hearing of 24 April 2013. He simply said that he was unable to attend that day due to health reasons.

26        Mr Jacobs then gives further evidence regarding his health during the period 9 May to 23 May 2013, during which period he says he developed a severe bout of influenza. These later matters are relied upon by way of explanation for his failure to file a notice of appeal within the prescribed time. His evidence includes two doctor’s certificates by Dr Ramakrishna which are dated 14 May 2013 and 25 May 2013 respectively stating that Mr Jacobs “will be unfit to continue his usual occupation” during the periods 14 May to 17 May 2013 and 23 May to 26 May 2013 respectively. He also provided copies of a prescription dated 23 May 2013 for an antibiotic. Mr Jacobs also tendered numerous other medical and dental records relating to his health issues. I will not describe them because I consider that they do not advance his present applications any further than the other material to which I have made reference above.

27        Mr Jacobs’ second affidavit dated 24 May 2013 repeats some of the material set out in his first affidavit, but then adds various other matters, many of which are in the nature of submissions in support of his applications. Although the affidavit is not easy to follow, it also appears that Mr Jacobs contends that he was not served with copies of two of the respondent’s affidavits leading up to the hearing on 24 April 2013. Those affidavits were apparently dated 26 February 2013 and another which was filed on 23 April 2013. Mr Jacobs contests claims made by the respondent’s legal representative at the hearing on 24 April 2013, as is reflected in the relevant transcript extracts, that both those affidavits had been served on him.

Consideration

28        Rule 36.05 of the 2011 FCRs specifies the following requirements if a party applies for an extension of time:

(a)    an application in accordance with Form 67;

(b)    specification that the application may be made during or after the 21 day period as specified in rule 36.03; and

(c)    the application must be accompanied by each of the following:

    the judgment or orders from which the appeal is to be brought;

    the reasons for the judgment or orders, if published;

    an affidavit stating briefly but specifically the facts on which the application relies and an explanation why the notice of appeal was not filed within time; and

    a draft notice of appeal that complies with rules 36.01(1) and (2).

29        The principles guiding the exercise of the Court's discretion whether or not to grant an extension of time for the bringing of an appeal are reasonably well established. Some of the relevant principles are helpfully set out by Katzmann J in Dunlop v Fishburn (No. 3) [2012] FCA 315 at [9] and [10]:

The Federal Court Rules 2011  (Cth) (“the Rules”) retain the 21 day time limit for filing a notice of appeal and the discretion given to the Court in the former Rules to extend that period: r 36.03. The discretion is wide. It is constrained only by the interests of justice and the subject-matter and purpose of the legislation. Section 37M(1) of the Federal Court of Australia Act 1976  (Cth) (“FCA Act”) provides that the overarching purpose of the civil procedure provisions of the Act and the Rules is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. That purpose includes the objective of disposing of all proceedings in a timely manner: FCA Act, s 37M(2). Section 37M(3) requires the Court to interpret and apply the Rules and exercise any power conferred by them in the way that best promotes the overarching purpose. Consequently, the discretion conferred by r 36.03 is to be exercised in that way.

The requirement in the former Rules (O 52 r 15(2)) that an applicant show ‘special reasons’ has been removed. Despite the absence of a requirement for special reasons (which, in any event, only meant something out of the ordinary (Jess v Scott  (1986) 12 FCR 187) ), it seems to me that the considerations guiding the exercise of the Court's discretion set out by the Full Court in Parker v The Queen [2002] FCAFC 133 at [6] continue to apply:

(a)    Applications for an extension of time are not to be granted unless it is proper to do so; the legislated time limits are not to be ignored;

(b)    The applicant must show an ‘acceptable explanation for the delay’; it must be ‘fair and equitable in the circumstances’ to extend time;

(c)    Other action taken by the applicant to challenge the decision is relevant to the consideration of the question whether an acceptable explanation for the delay has been furnished;

(d)    Any prejudice to the respondent in defending the proceedings that is caused by the delay is a material factor militating against the grant of an extension but the mere absence of prejudice will not justify the grant of an extension;

(e)    The merits of the appeal are to be taken into account.

30        The relevance of the merits of the proposed appeal relates to the fact that, if no arguable case is disclosed, no useful purpose would be served by granting leave to appeal out of time.

31        Dealing with each of the proposed grounds of appeal, I make the following observations. First, as to the proposed ground relating to procedural unfairness (fair hearing rule), it appears to be based on Jacobson J’s decision to proceed in Mr Jacobs’ absence on 24 April 2013. I do not consider that Mr Jacobs has an arguable case on this proposed ground of appeal. Procedural fairness requirements apply to provide an affected person in appropriate circumstances with an opportunity to be heard and to present their case. Whether or not that opportunity is taken advantage of is a matter for the affected person. Rule 17.04(b) of the 2011 FCRs empowers the Court to hear and determine an interlocutory application in the absence of a party if service has been effected but the party does not appear.

32        Mr Jacobs was clearly on notice that there would be a hearing on 24 April 2013. It is evident that Jacobson J was informed that Mr Jacobs was unable to attend because of ill health. It is evident that his Honour took that information into account, but did not accept that it provided a sufficient basis for not proceeding with the hearing on that day as scheduled and in circumstances where the moving party was present and asked for the matter to proceed. That is perhaps understandable, given the terms of the email sent on Mr Jacobs’ behalf and the limited terms of the medical certificate issued that day by Dr Ramakrishna. His Honour gave clear reasons why he considered that the case was an unusual one and needed to be heard promptly. Particular emphasis was placed on the concern that, having regard to the long history of litigation and disputes which had led to the bankruptcy, there was a danger that there would be no surplus in the estate if the costs of the proceedings continued to mount. I do not consider that, in these circumstances, Mr Jacobs has an arguable case that he was denied procedural fairness. If a party wishes to rely on ill-health as a basis for an adjournment, they should provide proper medical evidence in support (see the comments of Brereton J in Mirembe Pty Ltd v Craig Dangar [2009] NSWSC 94 at [5] and [10]).

33        Although the draft notice of appeal refers only to a denial of natural justice by reference to the “fair hearing rule”, in his second affidavit, Mr Jacobs also seems to raise an allegation of apprehended bias. Again, however, that allegation is based on Jacobson J’s decisions to list the matter for hearing on 24 April 2013 and to proceed with the hearing on that day in Mr Jacobs’ absence. Mr Jacobs has pointed to no material which suggests that this claim is reasonably arguable. Apprehended bias does not arise merely because a judge makes orders which are adverse to a litigant’s interests. Mr Jacobs has not pointed to any evidence or other matter which provides a reasonable basis for any apprehended bias claim.

34        Secondly, I do not consider that Mr Jacobs’ other complaints of procedural irregularity warrant time being extended to raise these matters on appeal. He complains of further documents being “informally issued” to him, leaving him uncertain as to the case against him. To the extent that he complains that the respondent’s affidavit filed on 23 April was only served on him by way of email on that day, it is evident from the extracts of the transcript in Mr Jacobs’ second affidavit that the respondent did not rely on that particular affidavit, and there is no reference to it in his Honour’s reasons for judgment. The primary judge referred repeatedly to an affidavit dated 6 February 2013 by Mr Wily, but that is the only affidavit to which reference is made in the judgment.

35        As to the respondent’s affidavit dated 26 February 2013, which Mr Jacobs says was not served on him, there is no reference in the primary judge’s reasons for judgment to the evidence in that affidavit, but the transcript extracts set out in Mr Jacobs’ second affidavit indicate that an unsigned copy of that affidavit was handed up at the first directions hearing. Mr Jacobs confirmed during the course of the hearing that he had received a copy of that unsigned affidavit at that time but he says that he was never served with a signed filed copy. Although the transcript records the primary judge as saying that “I note that affidavit”, the fact is that there is no reference in his Honour’s reasons for judgment to that affidavit (which incidentally dealt with the insurance position of the properties). Mr Jacobs accepted that the only affidavit referred to and relied on by the primary judge was Mr Wily’s affidavit dated 6 February 2013, about which there is no complaint of non-service.

36        I do not consider that Mr Jacobs’ complaints concerning the alleged non-service of the affidavit filed on 23 April 2013 are material in circumstances where the transcript records that Mr Wily’s legal representative indicated that he did not rely on that affidavit.

37        Mr Jacobs’ complaint that only two hours were allocated for the hearing on 24 April 2013 does not give rise to an arguable case of procedural unfairness. All the more so in circumstances where he did not attend the hearing.

38        His complaints regarding a failure to investigate whether there were provable debts owed to him by listed debtors does not give rise to any arguable point. Mr Jacobs failed to take advantage of the opportunity to participate in the hearing on 24 April 2013 and to raise these matters if he wished to do so. The primary judge cannot be criticised for not inquiring into matters which were not raised before him.

39        As to Mr Jacobs’ complaint about not having legal representation available to him, the Court was not taken to any evidence demonstrating that Mr Jacobs ever made any request to Jacobson J for a legal referral to be made under r 4.12 of the 2011 FCRs. In any event, the question whether or not the Court should make a referral under that provision is a matter for the Court’s discretion, guided by relevant matters (including the possible relevant matters set out in r 4.12(2)). I do not consider that Mr Jacobs has raised any basis to suggest that the Court’s discretion miscarried within the sense of the House v The King principles.

40        Mr Jacobs next proposes to argue in an appeal that Order 5 “did not reflect the Court’s intention”. This proposed argument has no merit in circumstances where, as noted above, Order 5 was set aside by a subsequent order made on 13 May 2013.

41        Finally, Mr Jacobs complains that the respondent’s solicitor supplied him with what is described as “a copy of the fraudulent order entered 29 April 2013”, incorporating Order 5. The description of the matter as “fraudulent” constitutes a gross misstatement. The orders as entered on 29 April 2013 did, at that time include Order 5 but, again, as noted above, that order was subsequently set aside. To use the word “fraudulent” in those circumstances is entirely inappropriate.

42        For all these reasons, I am not persuaded that Mr Jacobs’ proposed appeal has any merit sufficient to warrant an extension of time. Even if I were to accept his explanation for the delay in not filing a notice of appeal, I consider that his proposed appeal has no merit. Accordingly, the application for an extension of time should be dismissed.

Interlocutory application

43        The determination of the application for an extension of time must have consequences for Mr Jacobs’ interlocutory application filed on 24 May 2013, in which he seeks certain stays and other orders.

44        In my view, Mr Jacobs has failed to establish any basis warranting a grant of any of the orders sought by him in the interlocutory application. The rejection of his application for an extension of time requires his related interlocutory application also to be dismissed.

Conclusion

45        Accordingly, for all these reasons, and while the Court is not unsympathetic to Mr Jacobs’ personal health issues and responsibilities of caring for his aged parents, I dismiss the applicant’s application for an extension of time filed 24 May 2013 and his interlocutory application filed on the same day and order that the costs of those applications be costs in the bankruptcy.

Associate:

Dated:    31 May 2013