FEDERAL COURT OF AUSTRALIA Kellow v Dudzinski [2003] FCA 143 BANKRUPTCY – whether the making of a sequestration order prevents the bankrupt from appealing any such order – whether a sequestration order is "property" which vests with the Trustee Federal Court of Australia Act 1976 (Cth) s 24 Bankruptcy Act 1966 (Cth) s 60 Jury v Westpac Banking Corporation & Anor (Emmett J, 4 November 1997, unreported) affirmed AYNSLEY KELLOW and OTHERS v WALDEMAR DUDZINSKI No Q 7022 of 2002 SPENDER J BRISBANE 3 MARCH 2003 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 7022 OF 2002 BETWEEN: AYNSLEY KELLOW FIRST APPLICANT ROY RICKSON SECOND APPLICANT ERROL STOCK THIRD APPLICANT BILL HOGARTH FOURTH APPLICANT CORDIA CHU FIFTH APPLICANT KEES HULSMAN SIXTH APPLICANT LYN HOLMAN SEVENTH APPLICANT COLIN McANDREW EIGHTH APPLICANT JOHN SCOTT NINTH APPLICANT GRIFFITH UNIVERSITY TENTH APPLICANT AND: WALDEMAR DUDZINSKI RESPONDENT JUDGE: SPENDER J DATE OF ORDER: 3 MARCH 2003 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The application for a stay of the sequestration order is refused. 2. There be no orders as to costs of the motion for a stay. 3. Any appeal from the making of the sequestration order made on 20 February be lodged by 4 pm on Monday, 24 March. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 7022 OF 2002 BETWEEN: AYNSLEY KELLOW FIRST APPLICANT ROY RICKSON SECOND APPLICANT ERROL STOCK THIRD APPLICANT BILL HOGARTH FOURTH APPLICANT CORDIA CHU FIFTH APPLICANT KEES HULSMAN SIXTH APPLICANT LYN HOLMAN SEVENTH APPLICANT COLIN McANDREW EIGHTH APPLICANT JOHN SCOTT NINTH APPLICANT GRIFFITH UNIVERSITY TENTH APPLICANT AND: WALDEMAR DUDZINSKI RESPONDENT JUDGE: SPENDER J DATE OF ORDER: 3 MARCH 2003 WHERE MADE: BRISBANE REASONS FOR JUDGMENT 1 The applicant on the motion, Mr Dudzinski seeks a stay of the sequestration order against him which the Court made on 20 February this year. In the notice of motion in support of his application for a stay of that order, Mr Dudzinski indicates his intention to appeal to the Full Court of the Federal Court the making of the sequestration order in proceedings Q7022/02 made on 20 February 2003, including the order for costs. His affidavit of 24 February 2003 says: "I will not be able [to] appeal the order as the appeal may be nugatory or partly nugatory if such order will not be granted." 2 The question of whether the making of a sequestration order prohibits, or has the effect of denying, a bankrupt the right to appeal the making of a sequestration order was considered in Jury v Westpac Banking Corporation & Anor (Emmett J, 4 November 1997, unreported). In that case Mr and Mrs Jury had filed a notice of appeal against the sequestration order made pursuant to their estate. The appeals were made under s 24 of the Federal Court of Australia Act 1976 (Cth). His Honour noted: "It appears that a question arose, however, as to whether or not those appeals and the right to prosecute them vested in the Trustee as 'property' within the meaning of section 5 of the Bankruptcy Act 1966. His Honour considered that question and concluded that: "… an order by this Court sequestrating the estate of a debtor is in a different category from an order that money be paid or an order that judgment be entered. A sequestration order affects the status of the debtor. It has an effect on the debtor's property to the extent that the 'property' of the bankrupt vests in the Trustee. I do not consider that any right to appeal which is conferred by statute on a bankrupt could in any sense be regarded as property of the bankrupt which vests in the Trustee. It would be a curious consequence if the right to appeal which arises only after a sequestration order has been made is treated as property which vests in the Trustee by reason of the making of the sequestration order itself. In the circumstances I have no doubt, as presently advised, that any right of appeal which the bankrupts have is something which can be prosecuted by them and does not vest in the Trustee." 3 In the light of the judgment of Emmett J, there is no inhibition or prohibition on Mr Dudzinski, if he is so minded, lodging an appeal and prosecuting it from the making of the sequestration order made on 20 February 2002. Notwithstanding that circumstance, I have considered whether, for any other reason, a stay might be granted. Mr Dudzinski has indicated that if he is successful in his appeal the fact that he is currently a bankrupt will nonetheless have a deleterious effect on his reputation and career. 4 He has indicated also that there are other matters which are presently on foot, and which a sequestration order may or may not have the effect of prohibiting. That consideration is not one which would incline the Court to grant a stay. The continuation of whatever other proceedings Mr Dudzinski had on foot prior to this sequestration order which come within the phrase "property of the bankrupt" is a decision for the Trustee. To the extent that proceedings on foot are not property of the bankrupt, they do not vest in the Trustee, and the making of a sequestration order will not affect Mr Dudzinski's prosecution of them, in the same way that the making of the sequestration order does not affect his prosecution of an appeal from the making of that order. 5 Applying the ordinary principles to the application for a stay, I decline to grant it. The main reason for seeking the stay is a weighty one, but Mr Dudzinski is not in any way precluded from initiating or prosecuting an appeal from the making of the sequestration order against his estate of 20 February 2003. 6 I decline to grant a stay application. Notwithstanding that conclusion, my present view is that there ought to be no orders to costs of the motion for a stay. I extend the time for lodging any appeal against the sequestration order to 21 days from today, that is to say any appeal from the making of the sequestration order made on 20 February must be lodged by 4 pm on Monday, 24 March. The orders are as I have indicated. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Associate: Dated: March 2003 Counsel for the Applicant: Ms S. Brown Solicitor for the Applicant: Minter Ellison The Respondent appeared on his own behalf Date of Hearing: 3 March 2003 Date of Judgment: 3 March 2003