FEDERAL COURT OF AUSTRALIA

Luck v University of Southern Queensland (No 2) [2018] FCA 1297

ORDERS

THE COURT ORDERS THAT:

1.    Notwithstanding the dismissal of the appellant’s appeal by the orders of the Full Court on 29 June 2018, proceedings under the sequestration order made by the Federal Circuit Court on 4 April 2017 be stayed, pending the hearing and determination by the High Court of Australia, of the appellant’s application for special leave to appeal to that court against the orders of the Full Court.

2.    The costs of and incidental to the stay application, abide by the result of the special leave application.

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

REASONS FOR JUDGMENT

(Revised From Transcript)

LOGAN J:

1    On 4 April 2017, the Federal Circuit Court made a sequestration order in respect of the estate of the present applicant, Ms Gaye Luck (University of Southern Queensland v Luck [2017] FCCA 639). That order was made upon a creditor’s petition presented by the University of Southern Queensland (University) some two years prior, on 9 April 2015.

2    In the ordinary course, the effect of the Bankruptcy Act 1966 (Cth) (the Act) is that a creditor’s petition lapses at the expiration of 12 months, commencing on the date of presentation of the petition or at the expiration of a period fixed by a Court having jurisdiction in bankruptcy in accordance with s 52(5) of that Act (see s 52(4)).

3    Ms Luck appealed against the sequestration order to a Full Court of this Court. On that appeal, the issue was whether the period prescribed by s 52(4) of the Act was validly extended by an order made by a Federal Circuit Court registrar on 22 March 2016 as varied, or purportedly varied, by a further order of the registrar under the then r 16.05(2)(e) of the Federal Circuit Court Rules 2001 (Cth). In the result, and by majority, the Full Court dismissed Ms Luck’s appeal.

4    Ms Luck has filed an application in the High Court of Australia for special leave to appeal to that court against the orders made by the Full Court. That special leave application is presently pending in the High Court. Pending the hearing and determination by the High Court of her special leave application, Ms Luck has sought a stay of the operation of the orders of the Full Court. In effect though, what she is seeking is a continuation of the operation of a stay of proceedings under the sequestration order granted by a judge of this Court on 20 April 2017, pending the hearing and determination of her appeal to the Full Court.

5    Either a single judge or the Full Court is given power by s 25(2) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to stay an order of the Full Court. Such applications must be heard and determined by a single judge unless either a judge directs that the application be heard and determined by a Full Court or the Full Court considers it appropriate to hear and determine the application (see s 25(2)(e) and (f) of the FCA Act). Suffice it to say, this particular application is not one with which the Full Court considers it appropriate to be deal; hence it falls to me as a single judge to hear and determine the application.

6    Whilst there is particular power to grant a stay pending the hearing and determination of a special leave application referred to in s 25, it is also the case that s 23 of the FCA Act grants a more general power to make orders of such kinds as the Court thinks appropriate in relation to the exercise of a jurisdiction conferred on the Court. Thus, Ms Luck has sought the exercise of a power which the Court possesses.

7    As to the considerations which attend the granting of a stay pending the hearing and determination of a special leave application, these were conveniently summarised by Beaumont J, with the agreement of Black CJ and Hill J, in Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2003] FCAFC 82 at [13] – [22]. His Honour there makes reference to a series of earlier pronouncements in the High Court when seized with applications for a stay of proceedings pending a special leave application.

8    The principles to which reference is made in those High Court cases are no different when this Court is asked to exercise a like jurisdiction staying the operation of an order pending the hearing and determination of a special leave application. Suffice it to say, the jurisdiction is one which is exceptional, exercised where a stay is necessary to preserve the subject matter of litigation or where an application for special leave might otherwise be futile unless a stay is granted. Considerations which are relevant are whether there is a substantial prospect that special leave to appeal will be granted and whether the grant of a stay would cause loss to a respondent and where the balance of convenience lies.

9    Ms Luck has the benefit in relation to prospects of a quite sharp, with respect, difference of views evident in the Full Court in relation to the ability, at all, of a registrar to make the order extending time in the circumstances of her case. In the course of submissions today, Ms Luck made reference to a wider question not presently evident in her special leave application as to whether a registrar had, quite apart from the views expressed in dissent by Charlesworth J in the Full Court, any power at all, having regard to the scheme in relation to the exercise of the judicial power of the Commonwealth evident from Chapter III of the Constitution. She would need, though, to amend her special leave application to raise arguments of that kind and need also to give notices under s 78B of the Judiciary Act 1903 (Cth).

10    As it is, the case falls for assessment just by reference, in terms of prospects, to an evident difference of views in the Full Court. Assessment of prospects in relation to special leave is somewhat fraught but for all that, it cannot, in my view, be said that Ms Luck is bereft of prospects. It may just be that the serious consequence of bankruptcy is such that it is regarded as necessary, in the interests of justice, for special leave to be granted so as to allow the correctness of the difference of views evident to be determined at ultimate appellate level. There is certainly an important point of bankruptcy practice, which arises more frequently than one might hope and expect, raised by the circumstances of Ms Luck’s case in relation to an extension of time in respect of a petition. It is certainly not uncommon for parties to advert to time limits prescribed in respect of the life of a petition by the Bankruptcy Act, either not at all, or at least until very late in the piece.

11    In terms of the adverse effect on a respondent as a consideration, the University, for its own reasons, and as it is entitled so to do in respect of the present application, has chosen neither to consent to, nor oppose, the stay application. Instead it has filed a submitting appearance with respect to the stay application. So no overt prejudice is asserted by the University nor, for that matter, is any such prejudice immediately obvious in any event.

12    The trustee in respect of Ms Luck’s bankrupt estate, as a sequel to the Federal Circuit Court order, is the Official Trustee in Bankruptcy. The view of the Official Trustee in respect of that order, when subject to the stay of proceedings granted by North J, is evident in a letter from the Official Trustee to Ms Luck dated 10 May 2017, which became Exhibit 1 at today’s hearing. That view of the Official Trustee is that a stay of proceedings did not prevent Ms Luck’s bankruptcy from taking legal effect and, for example, did not prevent the recording of the making of a sequestration order on the National Personal Insolvency Index, or prevent her property vesting in the Official Trustee as from the date the sequestration order was made. Rather, the Official Trustee’s view at that time was that the effect of the stay was that the Official Trustee would not actively administer the estate by, for example, realising property vested in the Official Trustee.

13    At least as presently advised, it does seem to me that the effect of the making of the sequestration order, by virtue of the Act itself, was to vest the property of the bankrupt in the Official Trustee. So it might be expected that further to grant a stay would have the result that the Official Trustee would not, as he was disposed not to do earlier, actively administer Ms Luck’s bankrupt estate, pending the outcome of the special leave application.

14    The active administration of the bankrupt estate would visit costs of administration which would fall either on the University, if Ms Luck is ultimately successful, or, in any event, diminish the worth of Ms Luck’s bankrupt estate for creditors generally.

15    Bankruptcy has particular consequences which include penal consequences. Not all of these can be affected by a stay of proceedings, because the Act itself operates upon the making of a sequestration order, but at the very least the estate can remain in a state of what one might term “suspended animation” if a stay is granted. The case is not one which entails the seeking of a stay in respect of the enforcement of a money judgment; bankruptcy is quite different to that.

16    It is uncertain as to when the special leave application will come on for hearing and determination. Ms Luck filed it promptly and it is certainly possible that it will be heard and determined by the end of this year. But it may just be that it will not be until early next year that it is heard and determined by the High Court. In prospect, as best I can tell, in terms of an understanding of the ordinary course of disposal of special leave applications, there is a period of some six months from today which might elapse before the High Court deals with the special leave application.

17    What it comes to then is that Ms Luck has some prospect of securing a grant of special leave, there is a respondent that is neutral in relation to a stay and significantly does not point to any prejudice and, in prospect, particular diminution of a bankrupt estate if a stay is not granted by administration costs. These circumstances, as they do in respect of any stay application, necessarily interplay but the end result, in my view, is that the balance of convenience does favour, exceptionally, the granting of a stay of further proceedings under the sequestration order pending the hearing and determination of the special leave application.

Associate:

Dated:    24 August 2018