CATCHWORDS Bankruptcy - Appeal against sequestration order - Applicetion to strike out appeal for want of prosecution - Application to lift stay of sequestration order. Federal Ccurt Rules 0.52; Bankruptcy Rules 12 and 195. ERNST ABRANAM SIEWERTS2 VAN REESEMA v. FNMANOUIU Grate No. G9 of 1979 Coram: Bowen C.J., Fisher and Lockhart JJ. Sydney 20 December 1979. IN THE FLDERAT. COURT OF AUSTRALIA ) DISTRICT REGTSTRY OF THE STATE OF NO. G 9 OF 1979 SOUTH AUSTRALLA | GENERAL DIVISTON ON APPEAL FROM THE COURT OF INSOLVENCY OF TOE STATE OF SOUTH AUSTRALTA EXERCISING TPDERAL JURISDICTION IN BANKRUPTCY BANKRUPTCY DLSTRTICT OF SOUTH AUSTRALIA NO, 500 OF 1979 BETWEEN: ERNST ABR 'ILAM SLEVERTSZ VAN REESE ALS Appellant AND: EMMANOULL GLAMEOS Respondent ORDER JUDGES MAKING ORDER: BOWEN C.J., FISHER AND LOCKHART JJ. WHERE MADE: SYDNEY DATE OF ORDER: THURSDAY, 20 DECEMBER 1979 THE COURT ORDERS THAT: 1. The stay of proceedings under the sequestration order made on 14 September 1979 be removed; « Appeal No. G 9 of 1979 be dismissed for want of prosecution; nh and 3. That the respondent's costs of proceedings before this court in appeal No. G 9 of 1979, ancluding the costs of all applications heard by Fisher J. and the costs of the proceedings before this Full Court, be paid by the appellazit. -1- IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY OF THE STATE OF SOUTH AUSTRALIA NO. G 9 OF 1979 ee ewe Se GENERAL DIVISION ON APPEAL FROM THE COURT OF INSOLVENCY OF THE STATE OF SOUTH AUSTRALIA EXERCISING FEDERAL JURISDICTION IN BANKRUPTCY BANKRUPTCY DISTRICT OF SOUTH AUSTRALIA NO. 500 OF 1979 BETWEEN: ERNST ABRAHAM SIEWERTSZ VAN REESEMA APPELLANT AND: EMMANOUIL GIAMEOS RES PONDENT CORAM: BOWEN C.J., FISHER AND LOCKHART JJ SYDNEY Thursday, 20 December 1979 REASONS FOR JUDGMENT This is an application for an order that the appeal rE ~2- by Ernst Abraham Siewertsz Van Reesema ("the appellant") from a sequestration' order against his estate be dismissed for want of prosecution and for an order lifting a stay of proceedings under the sequestration order. The history of the matter is as follows:- On 17 September 1979 the Court of Insolvency of the State of South Australia exercising Federal Jurisdiction in Bankruptcy (Sangster J.) made a sequestration order against the estate of the appellant. It is not necessary to set out the events which led to the making of that order as they are fully stated in the reasons for judgment of his Honour. On 1 October 1979 the appellant filed a notice of appeal in this court against the sequestration order together with a notice of motion for a stay of proceedings. The motion for a stay came on for hearing before Fisher J. on 5 October 1979, Upon the appellant, who appeared in person, giving the following undertakings to the court:- (a) that he would prosecute the appeal without delay; (b) that he would file within fourteen days with the Official Receiver a statement of his affairs co ee - - - = ane =e eee mee = + ai Inte ee et Serpe eae = -3- as at 14 September 1979; and (c) that he would refrain from dealing with his assets otherwise than in the ordinary course of business; his Honour made the following orders with the consent of the appellant:- 1. That proceedings under the sequestration order be stayed until the determination of the appeal or further order; 2. That the appellant pay $100.00 within fourteen days as security for costs of the appeal; 3. That the appeal be heard in Adelaide on Tuesday 11 December 1979; and 4. That either party be at liberty to apply to discharge the stay or vary any of the orders upon 48 hours notice to the other. wa -+ - sen ee ee me 8 By mw ee nae ~4- The appellant filed a statement of affairs in accordance with' his undertaking and paid the sum of $100.00 into court in accordance with Fisher J.'s order. . Before 5 October 1979 the District Registrar of the court had fixed Monday 22 October 1979 at 10.00 a.m. before him to settle the index to the appeal papers. The solicitor for Emmanou1ll Giameos, the petitioning creditor in the proceedings before the Court of Insolvency, the respondent in the appeal and the applicant for the removal of the stay and the dismissal of this appeal ("the respondent") attended before the District Registrar at the appointed time notwithstanding that no draft index to the appeal papers had been served on him as required by order 52 rule 26 of the rules of this court. There waS no appearance by or on behalf of the appellant before the District Registrar. On 21 November 1979 the respondent filed a notice of motion in the court to lift the stay of proceedings granted by Fisher J. on 5 October 1979 and to dismiss the appeal for want of prosecution, At the date of filing the notice of motion, the solicitor for the respondent had not heard from the appellant or anyone on his behalf. -5- The notice of motion came on for hearing before Fisher J. on 26 November 1979. His Honour adjourned the application to lift the stay to 3 December 1979 at the request of the solicitor who then appeared for the appellant who had informed his Honour that he had insufficient instructions at that stage. His Honour referred the application to dismiss the appeal for want of prosecution to the Full Court of this Court to be heard in Adelaide on 11 December 1979. The application to lift the stay was further heard by Fisher J. on 3 December 1979 in the presence of counsel for the appellant whose firm was also acting as solicitors for the appellant and his Honour made the following orders with the concurrence of counsel for the appellant who assured him that the appeal could be ready for hearing:~ 1. That the index for the appeal papers be settled before the Deputy Registrar at 9.00 a.m. on 4 December 1979. 2. That the appeal books be filed with the Deputy Registrar and served on the respondent by 2.30 p.m. on 6 December 1979, -6- 3. That each party file a list of authorities in the form required by the court with the Deputy Registrar by 1.00 p.m. on 7 December 1979. 4, That the appeal be set down for hearing by the appellant by 1.00 p.m. on 7 December 1979; and 5. That the application to lift the stay be adjourned until 11 December 1979 and that the question of costs be adjourned until that date. Order 1 was complied with. Orders 2, 3 and 4 have not been complied with by the appellant. Indeed, when the application to dismiss the appeal for want of prosecution came on for hearing before this court on 11 December 1979, not only were there no appeal books failed with the Deputy Registrar or before us but it was the solicitor for the respondent who prepared a book of documents for the assistance of the court relevant to the application to lift the stay. Ground (b.) of the notice of appeal filed by the appellant in person states "This matter involves a matter arising under the Constitution or involving its ae a an eee ee ee ee ~ aoe eee eae - eee Ke -7- interpretation." No particulars were given of this ground indicating what was the matter which so arose or how the interpretation of the Constitution was involved. In view of the provisions of s. 78 B of the Judiciary Act 1903, Fisher J. conducted a directions hearing in this matter on 4 December 1979 and ordered that a notice in accordance with order 51 of the rules of the court be served on _ the Attorney-General of the Commonwealth and on the Attorney-General of the State of South Australia. His Honour dispensed with compliance with the requirements of order 51 insofar as that order requires the appellant to give those notices and directed that they be given by the Deputy District Registrar of the court and that he otherwise comply, so far as possible, with the provisions of order 51. His Honour further ordered that if the appellant proposed to direct argument to the Full Court, based on ground (b.) he should file in thts court and deliver to the respondent a notice specifying the nature of the matter which iut 1s contended arises under the Constitution or involves its interpretation and also indicating the facts upon which he relies to show that the matter arises under the Constitution or involves its interpretation. His Honour directed that the notice was to be filed and served by 1.00 p.m. on Friday 7 December 1979. The costs of the application were reserved. woe eee de The Députy District Registrar duly gave notice to the Attorneys-General of the Commonwealth of Australia and the State of South Australia. No notice, as required by the order of 4 December to be filed and served by 1.00 p.m. on Friday 7 December, was filed or delivered to the respondent by or on behalf of the appellant. The applications came on for hearing before us on 11 December 1979 in Adelaide. Both parties were represented by counsel. The Attorney-General of the Commonwealth was represented by counsel. There was no appearance by or on behalf of the Attorney-General of South Australia.- By consent of the applicant we gave leave to the appellant to file in court and to read his own affidavit in which he said, inter alia, that he had complied with the undertakings given by him to Fisher J. on 5 October 1979 as to the filing of a statement of affairs and refraining from dealing with his assets otherwise than in the ordinary course of business and that he had paid the sum of $100.00 to the court by way of security for costs. He deposed to the fact that he had informed Fisher J. on the hearing of the notice of motion that he would be wpe on . eee - ee a a oro ee et ee ee wee -9- travelling to the United States of America and Europe "for the purpose of earning a livelihood by promoting the product known as 'Busy Bag'"; that he had informed his Honour that he would be returning to Australia on 19 November 1979 to prosecute the appeal which was set down for hearing on 11 December 1979. He then narrated at some length details of his overseas travels from 16 October to 8 December 1979 when he returned to Australia, including visits to the United States of America, London, The Hague, Frankfurt, France, Luxembourg and Brussels. He says that he then engaged in discussions with business people. He gave details of some personal misfortunes involving members of his family and relations which he says were responsible for delaying his return to Australia until 8 December 1979. He said that upon his return to Australia he paid the equivalent in Australian currency of five hundred pounds sterling into the trust account of his solicitors, Messrs. Peter Marker & Associates of Adelaide in respect of prospective costs of his .appeal to the Privy Council in litigation between himself and the applicant commenced in the Supreme Court of South Australia in 1975 which is referred to in the judgment of Sangster J. odie a pease eee = wel eof et eke fe ee ee -- - ' " -10- At the commencement of the hearing before us, counsel for the parties agreed that we should consider not only the application to dismiss the appeal for want of prosecution but the application to lift the stay together with all ancilliary and related questions including questions of costs. Turning first to the application to dismiss the appeal for want of prosecution. The application 1S made pursuant to order 52 rule 38 which provides as follows:- "38. (1) Where an appellant has not done any act required to be done by or under these Rules, or otherwise has not prosecuted his appeal with due diligence, the Court may -- (a) order that the appeal shall _ be dismissed for want of prosecution;" The power to dismiss appeals for want of prosecution must not be lightly exercised. Each case depends on 1ts own circumstances. See Allen v. Sir Alfred McAlpine & Sons Limited 1968 2 Q.B. 229; Birkett v. James (1978) A.C. 297; Republic of Peru v. Peruvian Guano Co. (1887) 36 Ch.D. 489; the Supreme Court Practice 1976 (English) 25/1/3A, 25/1/3D. ethene ae tenn dee ane | etre ee ewe Ln -11- In Birkett v. James (Supra) Lord Diplock said at p. 321:- "The court may and ought to exercise such powers as it possesses under the rules to make the plaintiff pursue his action with all proper diligence, particularly where at the trial the case will turn upon the recollection of witnesses to past events. For this purpose the court may make peremptory orders providing for the dismissal of the action for non-compliance with its order as to the time by which a particular step in the proceedings 1s to be taken. Disobedience to such an order would qualify as "intentional and contumelious" within the meaning of the first principle laid down in Allen v. McAlpine." The sequestration order was made on 17 September 1979 and the appellant filed his notice of appeal to this court on 1 October 1979. All that he has done to prosecute the appeal is to pay $100.00 into court as security for costs in accordance with the order of Fisher J. made on 5 October 1979. Notwithstanding that he undertook to the court (Fisher J.) on 5 October 1979 to prosecute the appeal without delay, he did not prepare or file in the registry a draft index of the appeal papers or serve it on the applicant (order 52 rule 26); and he failed to attend before the District Registrar at the time appointed on 22 October 1979 to settle the appeal Papers (order 52 rule 27). nt te em -12- He breached the order of Fisher J. made on 3 December 1979 by not filing the appeal bonks with the Deputy Registrar of the court or serving them on the applicant by the time appointed by Fisher J. or at all; he did not file a list of authorities in the form required by the court with the Deputy Registrar by the time appointed in the order and he did not set the appeal down for hearing by the time appointed by the order. Appeal books have not been prepared, filed or served. Indeed, at the time of the hearing of the applications by us on 11 December 1979, appeal books had not been lodged with the court, no list of authorities had been filed by the respondent and the appeal had not been set down. Notwithstanding that the notice of appeal contained ground (b.) (namely that there was a matter arising under the Constitution or involving its interpretation) and the order of Fisher J. made on 4 December 1979 which we have referred to earlier, no notice specifying the nature of the matter which is said to arise under the Constitution or involve its interpretation and indicating the facts upon which the appellant relied to show that the matter arose under the Constitution or involved its interpretation, was filed or delivered to the respondent. It would be consistent with we -13- this that the appellant did not intend to pursue this ground of appeal; yet: before us, his counsel said that he proposed to rely upon it. Fisher J. informed the appellant and his legal representatives at the hearing of the various applications before him that strict compliance with the orders of the court was essential and that non-compliance could constitute a ground for dismissing the appeal. Notwithstanding this, the appellant failed to comply with the rules of court relating to the prosecution of appeals, has breached orders of the court, and breached his undertaking to the court to prosecute his appeal without delay. The bare recital of the instances of default 1s eloquent enough; but the default 1s compounded when it is remembered that the appellant has the benefit of a stay of proceedings on the sequestration order and that the stay was granted by the court upon the appellant giving undertakings to the court, including his undertaking to prosecute the appeal without delay. It has never been suggested that the times fixed by Fisher J. for taking the various steps for prosecuting the appeal, including the filing of appeal books, were insufficient, Quite the contrary. They were fixed by his Honour after discussion with counsel. Indeed, counsel for epee ie -14- the appellant informed his Honour that the times prescribed in the orders cquld be adhered to. The reasons given by the appellant for his failure to prosecute the appeal are unconvincing. He waS overseas from 16 October 1979 to 8 December 1979; but he was in touch with his solicitor by telephone during that period and each step that he should have taken to comply with the rules and the orders of Fisher J., but did not take, could have been taken by his solicitor on his behalf. All that was reguired of him was his instructions. In any case, it is no excuse for breaching rules of court and special orders of the court, especially when the appellant has the benefit of a stay of execution of the order appealed from, that he has been overseas attending to business and personal matters, Not only is the respondent prejudiced by the fact of the failure of the appellant to prosecute his appeal without delay; but, as the order appealed from 1S an order sequestrating the appellant's estate, it does not operate merely inter parties; it affects the property of the appellant and the rights of his other creditors. -15- Public policy demands that the business of the courts should be conducted with expedition and that its rules and orders should be complied with. The notice of appeal contains 18 grounds of appeal, some in very general and amorphous terms. We invited counsel for the appellant to outline briefly to us the argument that would be put by the appellant if the appeal were to proceed to a hearing, so that we could determine 1f there was «6 reasonably arguable case for the appellant. After we extended this invitation an adjournment was sought by counsel for the appellant for a short time to enable him to receive instructions from the appellant and to prepare his argument. We adjourned for the time requested by counsel, Upon resuming the hearing, counsel for the appellant asked for a further adjournment for the same purpose. Again we adjourned. When the hearing resumed at 2.15 in the afternoon, counsel for the appellant addressed us only as to grounds (a.), (b.) and (c.) an the notice of appeal. | Ground (a.) provides "That the Honourable Mr. -16- Justice Sangster ought to have disqualified himself from hearing this matter." Sangster J. was asked by counsel then appearing for the appellant to disqualify himself from sitting. His Honour declined to accede to the application and set out in his reasons for judgment, his reasons for so doing as follows:- 1. Van Reesema's reguest that I not sit Mr. Pertl, van Reesema's counsel, asked me to disqualify myself by reasons of Matters referred to in correspondence between van Reesema or his solicitor and the Deputy Registrar in Bankruptcy, with emphasis on some words I had used some years ago in the Supreme Court of South Australia. I declined. There was and is no reasons why I should not sit. Van Reesema's previous belief that the words used by me referred to him must have been erased by the Deputy Registrar's letter pointing out that van Reesema's name did not appear on the file then before me and had not been mentioned, that I had not been referring to him, and that I had no recollection of ever seeing van Reesema or having any impressions of or concerning him which could in any case inhibit a fair hearing of any case in which van Reesema might be involved. In fact on the first day of the hearing of this matter I speculated as to which of the men then in Court might be van Reesema, only to find next day that van Reesema had not been in Court whilst I was there on the first day, and that when he did give evidence (on the second day) he appeared to me as a stranger." Counsel for the appellant informed us that the ve ve -17- matters relied on in the appeal to support this ground of appeal would be. the same as those relied on before Sangster J. and which are referred to by his Honour in the passage from his reasons for judgment cited by us. In our opinion, this ground of appeal is not reasonably arguable, Sangster J.'s reasons for judgment on the matter conclusively answer the point. Counsel for the appellant told us that the point to be argued in respect of ground (b.) of the notice of appeal is that the bankruptcy petition was a nullity as it was not Clear whether 1t was filed in the office of the registrar in bankruptcy or the office of the Deputy Registrar of the Court of Insolvency of South Australia. Counsel told us that ground (c.}) in the notice of appeal, notwithstanding the language in which it is couched, 1s intended to raise the Same point and no other point. In our opinion there is no substance in this point for a number of reasons. The petition bears a stamp upon its face to the effect that it was filed on 19 June 1979 with the Registrar in Bankruptcy at Adelaide and that the ftling fee of $60.00 was paid. It thus complied with rule 12 of the Ne RPT amt em te ae * - a -- cee me ee em ew -18- Bankruptcy Rules which .requires a creditor who presents a petition to do so "by filing the petition in the office of a Registrar in Bankruptcy." That is sufficient in itself to dispose of the point; but we endorse the additional reasons for judgment given by Sangster J. on this matter. Further, even if the petition had been filed with a Deputy Registrar of the Court and not with a Registrar in Bankruptcy so as to result in non compliance with rule 12, the appellant would have to surmount the hurdle that the non compliance with the rules does not render the petition a nullity by reason of the provisions of rule 195 which, so far as relevant, provides that non compliance with the rules does not render a proceeding void unless the court so directs. The appellant was unable to satisfy us that there was any substance in this point. The appellant submitted another ground relied on to Support the contention that a matter arose under the Constitution or involved its interpretation. This point had not been taken by him in the proceedings before Sangster J. The point is that the Parliament of the Commonwealth of Australia had no power to make laws investing the Court of Insolvency of South Australia with Federal Jurisdiction in ete ne yeewse ~~ -19- Bankruptcy, and to the éxtent that it purports to do so the Bankruptcy Act 1966 1s invalid. As the point was put but not argued or developed in any way, we do not pause to consider it save to say that in our opinion, it appears to have no substance and to be contrary to the decision of the High Court in Le Mesurier v. Connor (1929) 42 C.L.R. 481. In our opinion, there has been inexcusable delay on the part of the appellant and breach by him of his undertaking to the court and of the orders of the court. Additionally, we are not satisfied that there is any reasonably arguable case for the appellant on the appeal. Further delay will increase the prejudice to the respondent and any other creditors, For these reasons, in our opinton the appeal should be dismissed for want of prosecution. Turning to the application to remove the stay. The application to Fisher J. to stay execution of proceedings under the sequestration order was made pursuant to order 52, rule 17 of the rules of this court which provide that an appeal to the court shall not operate as a stay of execution or of proceedings under the judgment appealed from except so ™ Pot antierwmane a ore -20- far as the court may direct. As the order of the court (Fisher J.) made on 5 October 1979 was "that proceedings under the sequestration order made on 14 September 1979 be stayed until disposal of the appeal instituted by notice of appeal dated 1 October 1979 or further order" it follows that the dismissal of the appeal for want of prosecution will automatically remove the stay. If we had been minded not to dismiss the appeal, we would in any event, have removed the stay for the reasons given by us for dasmissing the appeal; in particular because the stay was granted upon the appellant giving undertakings to the court, including an undertaking that he would prosecute the appeal without delay, and clearly he has breached this undertaking. In addition, the statement of affairs filed by the appellant discloses that his only assets consist of cash in hand of $30.00 and cash deposited with his solicitor of $1320.00, a total of $1350.00; and that there are claims by unsecured creditors, which he disputes, totalling $130,858.24. This ignores the claim of the petitioning creditor of $12,384.91 for taxed costs in relation to action No. 1959 of 1975 in the Supreme Court of South Australia. a ee aN wee ee ee -21- Although the appellant disputes the claims referred to in his statement of affairs, we notice that the creditors mentioned therein include the Commissioner of Taxation in the sum of $9,638.86; A.N.Z. Banking Group Limited in the sum of $15,179.03 and Pembroke School $4,407.01 in respect of school fees for 1977 and 1978. The affidavit of the appellant filed by him and read in these proceedings discloses that he was absent overseas for almost two months. This could not have been inexpensive. His statement of affairs which was made out as at 14 September 1979 discloses no potential source of moneys to fund such a trip. It may be that the trip was funded by moneys from sources other than himself; but he offered no explanation as to the source of these funds. We make the following orders:- 1. The stay of proceedings under the sequestration order made on 14 September 1979 be removed; 2. Appeal No. G9 of 1979 be dismissed for want of prosecution; and oe Re ew ne Beem ee ~- ne hee -22- That the respondent's costs of proceedings before this court in appeal No. G9 of 1979, including the costs of all applications heard by Fisher J. and the costs of the proceedings before this Full Court, be paid by the appellant. I certify that this and the ~?/ preceding pages are a true copy of the Reasons for Jucgment here_n of his Honour the Chief Judge, Sir Nigel Bowen," Me Justice Fisker anol Ma Tostice Wockhact, | Associate ¢ , Dated! s/o /2 -74. t _—