FEDERAL COURT OF AUSTRALIA

Barodawala v Giasoumi [2015] FCA 608

THE COURT ORDERS THAT:

1.    The applicant be granted leave to appeal from the costs order made against him by order 2 of the orders of Judge Emmett in the Federal Circuit Court of Australia on 9 March 2015.

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

REASONS FOR JUDGMENT

1    This is an application for leave to appeal from a costs order made against the applicant by Judge Emmett (“primary judge”) of the Federal Circuit Court of Australia (“FCC”) on 9 March 2015. The applicant accepts that leave is required by s 24(1A) of the Federal Court of Australia Act 1976 (Cth): cf Kyriackou v Australian Securities and Investments Commission [2010] FCA 253 at [13]; Ejueyitsi v Bond University [2014] FCA 587 at [2].

2    The applicant is a creditor of Sujeetha Perinparajah, a bankrupt. At the relevant time, the applicant had issued a summons to examine the bankrupt under s 81 of the Bankruptcy Act 1966 (Cth).

3    The respondent is the bankrupt’s trustee in bankruptcy.

4    The application for leave to appeal was made on 23 March 2015. Contrary to paragraph 16 of the written submission on behalf of the respondent, the application was not filed out of time: see rule 35.13 of the Federal Court Rules 2011 (Cth).

5    The orders of the FCC made and entered on 9 March 2015 state:

1.    The document titled “Summons for Production” to produce documents on 13 February 2015 and addressed to “Nicholas Giasoumi, Dye & Coe Ltd, 165 Camberwell Road, Hawthorn East Vic, 3123” is set aside.

NOTE A: The Summons for Production does not comply with Rule 6.13 of the Federal Court (Bankruptcy) Rules 2005 (Cth).

2.    The respondent to the interim application, filed on 11 February 2015, pay the costs of the applicant of the interim application, filed on 11 February 2015, as agreed or taxed.

NOTE B: The respondent to the interim application was provided with copies of Rule 6.13 of the Federal Court (Bankruptcy) Rules 2005 (Cth); Form 9 – Summons for Examination; and, Form 10 – Application for Summons to Examine Relevant Person or Examinable Person.

6    There is no separate document recording the primary judge’s reasons.

Background facts

7    In November 2014, the applicant sought to file four subpoenas to obtain documents from various parties for the purpose of the s 81 examination.

8    On the applicant’s version of events (which does not appear to have been contested), the applicant had discussions with staff of the FCC Registry about the form of the documents he should file. Registry staff required the applicant to file summonses for production rather than subpoenas, and provided the applicant with documents including handwritten notes showing the precise form of the summonses that the Registry required in order for the summonses to be issued.

9    On the basis of this experience, in seeking to obtain documents from the respondent, the applicant used the form of summons (incorporating the handwritten notes) that had been accepted by the Registry in November 2014. The summons was issued by the FCC on 30 January 2015.

10    By interim application filed on 11 February 2015, the respondent sought orders that the summons for production issued to him be set aside, and that the applicant pay the respondent’s costs including indemnity costs. The grounds included that the respondent was not an examinable person under s 81 of the Bankruptcy Act 1966 (Cth), that the form of the summons was not the prescribed form, that the claim for the whole of the respondent’s file was too wide and that leave to issue an examination summons against the respondent was refused in Barodawala (in the matter of Sujeetha Perinparajah) [2013] FCCA 1374 (“2013 FCC decision”).

11    The interim application was made returnable on 13 February 2015 before Registrar Ng, who directed that the application be assigned to a docket judge and set down for hearing.

12    On the evening of Sunday 8 March 2015, the applicant was informed that the interim application would be heard the next day at 2pm. The applicant immediately informed his counsel who wrote a letter to the primary judge seeking an adjournment of the interlocutory hearing by reason of his unavailability. That application was refused. The applicant attended the FCC and made another unsuccessful adjournment application. The matter was then heard, with the applicant representing himself.

13    The summons that was set aside is in the form of a modified version of form 9 in Schedule 1 to the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (“Bankruptcy Rules”). In particular, instead of being titled “Summons for Examination”, it is titled “Summons for Production”.

14    Rule 6.13 of the Bankruptcy Rules provides relevantly:

Application for summons (Bankruptcy Act s 81)

(1)    An application to the Court or a Registrar for an examinable person to be summoned for examination in relation to the bankruptcy of a relevant person must be in accordance with Form 10.

…

(3)    The application must be accompanied by:

(a)    a draft of each summons applied for; and

(b)    an affidavit that complies with subrule (4).

(4)    The supporting affidavit must:

(a)    state whether the applicant is:

(i)    a creditor who has a debt provable in the bankruptcy; or

(ii)    the trustee of the relevant person's estate; or

(iii)    the Official Receiver; and

(b)    state the facts relied on by the applicant to establish that each person to be summoned is an examinable person; and

(c)    if the summons is to require an examinable person to produce books at the examination:

(i)    identify the books that are to be produced; and

(ii)    give details of:

(A)    any inquiry by the applicant about the books to be produced; and

(B)    any refusal by the examinable person to cooperate with the inquiry.

(5)    If the supporting affidavit is lodged with a Registry for filing (other than by being sent to the Registry by electronic communication), it may be filed in a sealed envelope marked "Affidavit supporting application for summons for examination under subsection 81(1) of the Bankruptcy Act 1966 ".

(6)    If the supporting affidavit is sent by electronic communication to a Registry for filing:

(a)    the affidavit may be marked "Confidential"; and

(b)    if the affidavit is so marked--the affidavit must be accompanied by a statement that the affidavit is a "confidential affidavit supporting an application for summons for examination under subsection 81(1) of the Bankruptcy Act 1966".

(7)    If the supporting affidavit is:

(a)    filed in a sealed envelope in accordance with subrule (5); or

(b)    marked "Confidential" as permitted by paragraph (6)(a);

the Registrar must not make it available for public inspection.

Consideration

15    At the request of the applicant, and with the respondent’s consent, I have dealt with this matter on the papers.

16    The evidence in support of the application for leave to appeal is contained in the applicant’s two affidavits, each dated 23 March 2015. The shorter of the two affidavits annexes a draft notice of appeal.

17    Each party made written submissions.

18    The relevant considerations are:

(1)    Whether in all the circumstances the costs order is attended by sufficient doubt to warrant its reconsideration on appeal; and

(2)    Whether substantial injustice would result if leave were refused supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 at [2]; (1991) 33 FCR 397 at 398–400; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 at [44]; Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 at [26]–[30].

19    The proposed grounds of appeal raise three alleged errors:

(1)    The applicant was denied procedural fairness by reason of the short notice of the hearing and the resulting inability to obtain legal representation for the hearing;

(2)    The failure to take into account rule 2.04 of the Federal Circuit Court Rules 2001 (Cth), that not being a matter raised by the applicant at the hearing but which, it is said, would have been raised on the applicant’s behalf if he had been legally represented;

(3)    The primary judge’s failure to take into account that the summons was in the form that had been recommended by the Registry.

20    Rule 2.04(1) provides that “unless the Court otherwise orders, strict compliance with forms is not required and substantial compliance is sufficient”.

21    In my view, having regard to the language of the orders and the notes to the orders, it is reasonably arguable that the reason for the primary judge’s decision to set aside the summons was that the summons was not in the correct form, and that her Honour did not have regard to rule 2.04. I accept that there is a question about whether her Honour ought to have had regard to rule 2.04, even though it was not drawn to her attention by the applicant.

22    I also consider that the short notice given to the applicant for the hearing, in the particular circumstances of this case, raises a doubt about whether the applicant was afforded procedural fairness. Those circumstances include the fact that the applicant had retained counsel, and was given very little time to prepare to appear on his own behalf without the representation he contemplated.

23    I also accept that, having regard to the language of the note to order 2, it is arguable that the primary judge did not take into account the applicant’s evidence that he followed the form of summons recommended to him by the Registry. It is arguable that this evidence was relevant to whether the costs order should have been made. On this basis, I accept that there is a doubt as to whether the exercise of her Honour’s discretion miscarried.

24    On the other hand, I also note that, in Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16; (2010) 265 ALR 112 at [113], the Full Court stated that “appellate courts are loathe to overturn discretionary costs orders made by single judges. This reluctance reflects a history of caution expressed by appellate courts when asked to overturn discretionary judgments generally.”

25    Concerning the respondent’s submissions:

(a)    It is not obvious on the available material that the applicant had no entitlement to issue a summons to produce to the applicant. In particular, contrary to the respondent’s submissions, the 2013 FCC decision does not appear to support that proposition, or the proposition in the written submissions that an examination summons against the respondent had been set aside;

(b)    It is not obvious that the ambit of the summons was so wide that it was liable to be set aside as an abuse of process. In particular, the decision in Karounos v Official Trustee (1988) 19 FCR 330 does not appear to support a conclusion that the summons was liable to be set aside as an abuse of process;

(c)    It is not clear that the summons constituted an application by the creditor to examine the trustee (at least, not apart from establishing the production of the documents), where the summons sought production of the trustee’s files.

(d)    It is not clear that the summons was liable to be set aside by reason of the decision in Vitek v Taheri [2012] FMCA 536.

26    Taking all these matters into account, I am satisfied that the costs order is attended by sufficient doubt to warrant its reconsideration on appeal. I accept that substantial injustice would result if leave were refused supposing the decision to be wrong because the costs order would put the applicant out of pocket for a significant sum.

27    Accordingly, I will grant leave to appeal from the costs order.

Associate:

Dated:    22 June 2015