FEDERAL COURT OF AUSTRALIA Totev v Sfar [2005] FCA 1281 VASIL TOTEV v MICHAEL SFAR AND ANOR NSD 1246 of 2005 ALLSOP J 9 SEPTEMBER 2005 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1246 of 2005 BETWEEN: VASIL TOTEV APPLICANT AND: MICHAEL SFAR FIRST RESPONDENT ENAYET SFAR SECOND RESPONDENT JUDGE: ALLSOP J DATE: 9 SEPTEMBER 2005 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In this matter there is a notice of motion before me brought by Vasil Totev, who was made bankrupt by orders made by Registrar Hedge on 10 May 2005. On that day a sequestration order was made against the estate of Mr Totev. Mr Totev brought review proceedings under s 104 of the Federal Magistrates Court Act 1999 (Cth) for review of the sequestration order made by Registrar Hedge. That review was unsuccessful. Mr Totev has appealed to this Court. 2 This application for a stay is in the appellate jurisdiction of the Court and can be dealt with by a single judge of the Court pursuant to s 29 of the Federal Court of Australia Act 1976 (Cth). 3 The review was heard by the Federal Magistrate on 5 July 2005. Settled reasons were published on 8 July 2005. The orders sought in the notice of motion are for the Court in its appellate jurisdiction to stay the sequestration order made against the estate of Mr Totev pending the outcome of the notice of appeal to the Federal Court of Australia from the Federal Magistrates Court. It is also sought to reserve the order for costs pertaining to the bankruptcy proceedings. 4 Mr Totev in support of his application has filed an affidavit of himself in which he annexes a notice of grounds of appeal and in which he identifies the apparent errors in his view of the approach of the Federal Magistrate. There are apparently District Court proceedings on foot between Mr Totev and those who instruct Mr Potts of counsel, that is Michael Sfar and Enayet Sfar. 5 The learned Federal Magistrate dealt in his reasons with aspects of those matters, in particular the Federal Magistrate in paragraph 5 and following in dealing with the review, dealt with the application by Mr Totev to go behind the judgment debt (which was an order for costs) to investigate the merits of proceedings in courts in the State of New South Wales. 6 The Federal Magistrate dismissed the application for review. From paragraph 8 of his reasons the Federal Magistrate dealt with the claim in the District Court instituted by Mr Totev. I do not stay to repeat all that the Federal Magistrate said in those paragraphs. The Federal Magistrate also referred in paragraph 11 to what Mr Totev saw as the malign and ulterior purpose in the bankruptcy proceedings to keep him out of his damages. In paragraph 12 the Federal Magistrate said: Some matters would be of concern if there was evidence before me that the District Court proceedings had good prospects of success. 7 Whether or not those comments were correct the Federal Magistrate dealt with the matter in that paragraph in the evidence before him. The Federal Court when it hears the appeal will be dealing with the appeal from the learned Federal Magistrate on the basis of the evidence before the Federal Magistrate unless an application is made to introduce fresh evidence. 8 I have read the reasons of the Federal Magistrate and I have read the grounds of appeal. I make no comment on the likely outcome of the appeal. However, it is not readily apparent to me any obvious errors in approach that the Federal Magistrate has committed, that is said as I said without prejudice to any argument that may be made in the appeal in due course. 9 Mr Barnden who appears for the trustee placed before the Court perfectly properly a notice to creditors. That notice indicates that Mr Totev is insolvent. No attempt has been made by Mr Totev to prove his solvency and indeed in Mr Sfar's affidavit which was made on the application it would appear that on 20 June 2005 Mr Totev filed an affidavit in the Federal Magistrates Court supporting his application for review indicating that he is unemployed and without any substantial resources. Mr Totev to a degree repeated that before me today implicitly in one of the submissions he put to me as to why a stay should be granted in that he said to me that he remained self-represented. 10 The submissions put to me today by Mr Totev as to why I should grant a stay of the sequestration order were as follows. He said that the defendants to the District Court proceedings were intending to strike out his claim and thus, without his attendance as a party to the proceedings, because of the bankruptcy, that would irremediably prejudice him. Secondly, he said he had bona fide and good prospects of success on appeal. Thirdly, he said he was self-represented. Fourthly, he said he had good prospects in the District Court case. Fifthly, he said the bankruptcy was an abuse of process. 11 Mr Totev has apparently received some advice from counsel and others that he may have some reasonable prospects of success in the District Court. That may be. If that is the case, the trustee, no doubt, will, in the exercise of his powers consider all relevant matters in relation to the District Court proceedings. If they are struck out on an interlocutory basis and not dealt with at a final hearing then if Mr Totev succeeds in having the bankruptcy set aside he may be able to reinstitute those proceedings. 12 That proceeding is not left as an orphan. The trustee with the relevant responsibilities he has under the Bankruptcy Act will need to examine the proceedings in the interests of the estate and any residual interest of Mr Totev upon discharge from bankruptcy. The trustee will need to examine the worth of the proceedings. 13 I have already indicated that while I do not pass any comment about whether the appeal will succeed there do not appear to be obvious grounds of error in approach of the learned Federal Magistrate. Mr Totev is self-represented and he appears on the evidence to be insolvent. He may or may not have good prospects of success in the District Court proceedings. I have dealt with that in relation to the trustee's obligations. 14 The question of whether the learned Federal Magistrate was correct in rejecting the assertion that the bankruptcy was an abuse of process will be the subject matter of the appeal. Bearing in mind the public interest in insolvency laws and circumstances in which a tolerably prompt appeal will be able to be given to Mr Totev, I see no reason why the status of Mr Totev as bankrupt pursuant to the order of Registrar Hedge should be interfered with, in particular because of the apparently clear basis that he is without assets. 15 In those circumstances I propose to dismiss the notice of motion. As to the costs in the notice of motion I propose to reserve the costs and deal with the costs of the notion of motion on the appeal. Those costs may or may not follow the appeal but I think it is appropriate in all the circumstances that I await to see or the persons hearing the appeal wait for the merits of the appeal before making a final decision about costs. 16 Therefore the orders I make are: (1) The notice of motion dated 26 July 2005 be dismissed. (2) Costs of the motion be reserved to the Court hearing the appeal. (3) The appeal stand over to Tuesday, 13 September at 9.30 am for directions as to the conduct and disposition of the appeal. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 21 September 2005 The applicant appeared in person Counsel for the Respondent: Mr N Potts Solicitor for the Respondent: McGrath Dicembre & Company Date of Hearing: 9 September 2005 Date of Judgment: 9 September 2005