Finikiotis v Sandhurst Trustees Ltd [2002] FCA 341

FEDERAL COURT OF AUSTRALIA

Finikiotis v Sandhurst Trustees Ltd [2002] FCA 341

EFSTATHIOS FINIKIOTIS & CHRISAFINA ZERVOS v SANDHURST TRUSTEES LTD S 154 OF 2001 NORTH J 27 FEBRUARY 2002 ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 154 OF 2001

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN: EFSTATHIOS FINIKIOTIS

FIRST APPELLANT

CHRISAFINA ZERVOS

SECOND APPELLANT

AND: SANDHURST TRUSTEES LTD

RESPONDENT

JUDGE: NORTH J

DATE OF ORDER: 27 FEBRUARY 2002

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT: 1. The appeal be dismissed. 2 The motion, notice of which was filed by the appellants on 13 December 2001, is dismissed. 3 The appellants are to pay the costs of the respondent. 4. The trustee of the bankrupt estates of the appellants is entitled to take his costs of this application from the estates of the appellants. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 154 OF 2001

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN: EFSTATHIOS FINIKIOTIS

FIRST APPELLANT

CHRISAFINA ZERVOS

SECOND APPELLANT

AND: SANDHURST TRUSTEES LTD

RESPONDENT

JUDGE: NORTH J

DATE: 27 FEBRUARY 2002

PLACE: ADELAIDE

REASONS FOR JUDGMENT 1 Before the Court is an appeal against orders made by Federal Magistrate Raphael on 23 August 2001. The magistrate dismissed an application for review of orders made by Registrar Baldwin on 19 February 2001. Registrar Baldwin made a sequestration order against the estates of each of the appellants, Dr Finikiotis and Mrs Zervos. The orders were made under s 52(1) of the Bankruptcy Act 1966 (Cth) (the Act). The registrar acted under s 102(2)(i) of the Federal Magistrates Act 1999 (Cth) and rule 1.4(1) in item 8 Federal Magistrates Court (Delegation to Registrars) Rules 2000. 2 The registrar considered and rejected an argument that the hearing of the creditor's petition should be adjourned because Dr Finikiotis and Mrs Zervos were engaged in a number of pieces of litigation connected with the debt upon which the bankruptcy notice was based. 3 The magistrate reviewed the orders of the registrar under s 104(3) of the Federal Magistrates Court Act 1999 (Cth). This was a hearing de novo: r 20.03 Federal Magistrates Court Rules. Again, the focus of the argument was on whether the creditor's petition should be adjourned pending the determination of the outstanding litigation. 4 The appeal to this Court is heard by a single judge pursuant to a direction made by the Chief Justice on 12 October 2001 under s 25(1A) of the Federal Court of Australia Act 1976 (Cth). The appeal is brought under s 24(1)(d) of the Federal Court of Australia Act 1976 (Cth). 5 It is necessary to examine the approach taken by the magistrate to the question of the adjournment. He expressly proceeded on the basis of the principle enunciated in Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 at 148: "It is also well established that in general a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings provided that the appeal is based on genuine and arguable grounds: Re Rhodes; Ex parte Heyworth (1884) 14 QBD 49; Bayne v Baillieu (1907) 5 CLR 64; and Re Verma; Ex parte DCT (1985) 4 FCR 181." 6 I now turn to the background facts, the litigation and how the magistrate dealt with the issues relating to adjournment.