McKinnon v Commonwealth Bank of Australia [2004] FCA 325

FEDERAL COURT OF AUSTRALIA

McKinnon v Commonwealth Bank of Australia ACN 123 123 124 [2004] FCA 325 JEANETTE BEVERLY DAWN McKINNON and DONALD NEIL MCKINNON -v- COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 V 325 of 2004 RYAN J MELBOURNE 24 MARCH 2004

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 325 of 2004

BETWEEN: JEANETTE BEVERLY DAWN McKINNON

First Applicant

and DONALD NEIL MCKINNON

Second Applicant

AND: COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124

Respondent

JUDGE: RYAN J

DATE OF ORDER: 24 MARCH 2004

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The application for leave to appeal be dismissed. 2. The applicants pay the respondent's costs, to be taxed in default of agreement. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 325 of 2004

BETWEEN: JEANETTE BEVERLY DAWN McKINNON

First Applicant

and DONALD NEIL MCKINNON

Second Applicant

AND: COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124

Respondent

JUDGE: RYAN J

DATE: 24 MARCH 2004

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 There is before the Court a motion on notice dated 23 March 2004 seeking: '1. To overturn the decision of Weinberg J in: (a) dismissing our application to overturn the decision of Registrar Mussett in refusing an extension of time in which to comply with a Bankruptcy Notice. (b) refusing to grant an extension of time to at least the hearing date of an Application to Set Aside the Bankruptcy Notice till 4.00 pm on 25 March 2004, or such time as needed to comply with the Notice.' 2 In essence, the applicants seek leave to appeal from the interlocutory order of Weinberg J refusing to review a decision of Registrar Mussett. The learned Registrar refused to extend the time for compliance with a bankruptcy notice, which had been served on the firstnamed applicant, Jeanette Beverly Dawn McKinnon, on 24 February 2004. A bankruptcy notice based on the same judgment debt had been served on the second applicant, Donald Neil McKinnon, on 28 October 2003. The judgment debt had arisen on the making of an order in favour of the respondent, Commonwealth Bank of Australia ("the Bank"), by Byrne J in the Supreme Court of Victoria on 27 June 2001. That order was affirmed by the Victorian Court of Appeal. The applicants sought special leave from the High Court to appeal against that dismissal of their appeal, but special leave was refused, apparently by Gleeson CJ and Gummow J on 3 October 2003 (although the applicants contend that Hayne J also participated in that refusal of special leave). 3 Weinberg J considered, correctly in my view, that he had no power to grant an extension of time for compliance with the bankruptcy notice which had been served on the second applicant, Mr McKinnon, because the application had been made after the time for compliance had expired. His Honour also refused an extension of time for compliance with the bankruptcy notice served on the first applicant, Ms McKinnon. He did so in the exercise of the discretion conferred by s 41(6A) of the Bankruptcy Act 1966 (Cth) ("the Act"), which provides; 'Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice: (a) proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or (b) an application has been made to the Court to set aside the bankruptcy notice; the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.' 4 Subsection (6C) directs that, where the Court is of the opinion that the proceedings to set aside the judgment order have not been instituted bona fide, or are not being prosecuted with due diligence, the Court shall not extend the time for compliance. 5 In the course of exercising the discretion under s 41(6A), Weinberg J noted that the first applicant had raised two principal contentions in support of her application for an extension of time. The first, which has been reiterated before me, was that Hayne J had improperly participated in the refusal of special leave on 3 October 2003, after he had earlier, on 20 June 2003, declined to sit with McHugh J on the same application because he (Hayne J) held shares in the Bank. 6 The second contention relied on before Weinberg J was also advanced before me, although not pressed in the oral submissions made by the first applicant who appeared in person. That was that the applicants are not insolvent. As to that argument, Weinberg J said in his extempore reasons for judgment at p 4 of the transcript of the extempore judgment, line 34; 'That argument was not particularised, although there is a summary of some of the contentions underlying it in the dialogue between Ms McKinnon and the High Court. In my view, the fact that there is a judgment of the Supreme Court of Victoria in favour of the Commonwealth Bank which was upheld by the Court of Appeal and which went to the High Court, which refused special leave, is sufficient to demonstrate that Ms McKinnon's prospect of arguing that that judgment should not be accepted as binding and determinative are remote.' 7 The principles generally governing leave to appeal from an interlocutory order of a Judge of the Court are clear. They are that leave should be granted if: (1) in all the circumstances the decision is attended by sufficient doubt to warrant its being reconsidered by a Full Court; and (2) a substantial injustice would result if leave were refused supposing the decision to be wrong. See Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. 8 The first ground rejected by Weinberg J clearly cannot avail the applicants because for it to succeed, this Court would have to pass on the propriety of the High Court's conduct of proceedings in that Court, which it clearly lacks jurisdiction to do. His Honour's rejection of the second ground is also not attended by the requisite degree of doubt, as I consider it to be correct beyond argument. Nor has the second limb of the test in Decor v Dart been satisfied because the refusal of an extension of time means only that the applicants have committed an act of bankruptcy. There remains a discretion under s 52 subs (1) and (2) of the Act to decline to make a sequestration order notwithstanding proof of commission of an act of bankruptcy. That discretion is exercisable on grounds, amongst others, which are essentially the same as have been advanced in support of the application for an extension of time under s41(6A); see also Cain v Whyte (1933) 48 CLR 639 at 646. 9 For these reasons the motion for leave to appeal must be refused with costs. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.