FEDERAL COURT OF AUSTRALIA Nguyen v Pascoe [2006] FCA 719 PRACTICE AND PROCEDURE – leave to appeal from a Federal Magistrate's refusal to set aside orders made by him ex parte on a trustee's application for relief under s 30 of the Bankruptcy Act in respect of a property jointly owned by the bankrupt and his wife in which the wife claimed a 100% equitable interest Held: leave to appeal granted, appeal allowed and matter remitted to the Federal Magistrates Court of Australia for hearing Bankruptcy Act 1966 (Cth) ss 30(1)(a) and (b), 58(1)(a) and (2), 156A(3) Federal Court of Australia Act 1976 (Cth) ss 24(1A), 25(1A) Federal Magistrates Court Rules 2001 (Cth) Part 13 Rule 13.03A(d), 16.05(1) and (2)(a) Federal Court Rules Order 52 Rules 5(2) and 5(3), Order 52 Rule 18(1), Order 62 Re Bilen; Ex Parte Sistrom [1985] FCA 141 referred to Bienstein v Bienstein (2003) 195 ALR 225 applied Re Luck (2003) 203 ALR 1 referred to Shocked v Goldschmidt [1998] 1 All ER 372 applied Calverley v Green (1985) 155 CLR 242 referred to Muschinski v Dodds (1985) 160 CLR 583 referred to Baumgartner v Baumgartner (1987) 164 CLR 137 referred to Parsons v McBain (2001) 109 FCR 120 referred to LIEN THI KHUAT NGUYEN v SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN NSD 495 OF 2006 GRAHAM J 8 JUNE 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 495 OF 2006 ON APPEAL FROM A MAGISTRATE IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: LIEN THI KHUAT NGUYEN APPELLANT AND: SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN RESPONDENT JUDGE: GRAHAM J DATE OF ORDER: 8 JUNE 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. In respect of the application for leave to appeal filed 4 May 2006, compliance with Order 52 rule 5(2) be dispensed with. 2. Leave be granted to the appellant to appeal from the judgment of Federal Magistrate Raphael delivered on 16 February 2006 in proceedings SYG3351 of 2005 in the Federal Magistrates Court of Australia. 3. The appeal be allowed. 4. The orders numbered 1 to 8 inclusive made by Federal Magistrate Raphael on 16 February 2006 and entered on 3 March 2006 be set aside. 5. The respondent's application filed 16 November 2005 be remitted to the Federal Magistrates Court of Australia for hearing. 6. The respondent's Notice of Motion filed 18 May 2006 be dismissed. 7. There be no order as to costs in respect of the application for leave to appeal, the appeal or the respondent's motion. 8. The appellant pay the costs of the respondent of and incidental to the hearings in the Federal Magistrates Court of Australia on 6 December 2005 and 16 February 2006 on an indemnity basis, such costs to be taxed, in the absence of agreement thereon, in accordance with Order 62 of the Federal Court Rules. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 495 OF 2006 ON APPEAL FROM A MAGISTRATE IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: LIEN THI KHUAT NGUYEN APPELLANT AND: SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN RESPONDENT JUDGE: GRAHAM J DATE: 8 JUNE 2006 PLACE: SYDNEY REASONS FOR JUDGMENT 1 These proceedings concern the property known as 9 Rosemont Street, Punchbowl ('the property'), being the whole of the land in Folio Identifier 24/7/5701. 2 On 20 October 2004 a sequestration order was made against the estate of Thanh Y Nguyen ('the bankrupt') and, by virtue of s 156A(3) of the Bankruptcy Act 1966 (Cth) ('the Act') Scott Darren Pascoe, the respondent, became the trustee of the bankrupt's estate. Lien Thi Khuat Nguyen, to whom I will refer as the appellant, is the wife of the bankrupt. 3 Until about 4 July 2005 the appellant and the bankrupt were the registered proprietors as joint tenants of the property. 4 By virtue of s 58(1)(a) and (2) of the Act the interest of the bankrupt in the property vested in equity in the respondent forthwith upon the making of the sequestration order. 5 On or about 4 July 2005 the appellant and the respondent became the registered proprietors of the property as tenants-in-common in undivided one-half shares. 6 Section 30 of the Act confers general powers on the court. Relevantly, s 30(1) provides: '30(1) The Court: (a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and (b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.' 7 By an application filed 16 November 2005 in the Federal Magistrates Court of Australia ('the Federal Magistrates Court') the respondent sought relief pursuant to s 30(1)(b) of the Act in respect of the realisation of the property and the disposition of the proceeds of any sale. In Re Bilen; Ex Parte Sistrom [1985] FCA 141 Neaves J at [8] said in relation to an application by the trustee of a bankrupt seeking declarations as to the beneficial ownership of land registered in the names of a bankrupt and his wife as joint tenants and in respect of the disposition of the bankrupt's undivided half share: 'In my opinion s 30(1) of the Bankruptcy Act 1966 is not a provision limiting the Court's jurisdiction. It is a facultative provision giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation but of extension.' 8 Later his Honour said at [17]: '… this Court is not restricted in considering what orders it would be appropriate to make in exercise of the power conferred on it by s 30(1) of the Bankruptcy Act 1966 by the kinds of limitations which may be found in the Partition Act, 1900 (NSW)' [see also s 66G of the Conveyancing Act 1919 (NSW)] 9 The respondent's application came before the learned Federal Magistrate on 6 December 2005, 17 January and 16 February 2006. 10 On 6 December 2005 the Federal Magistrate ordered the appellant to file and serve a Notice of Appearance by 7 December 2005, but this did not occur. However, at about 4.01 pm on 7 December 2005 Mr Thanh Tung Vo, a solicitor in the firm known as Australasia Legal & Migration Services, Solicitors attempted to file a Notice of Appearance dated 7 December 2005 by forwarding same by facsimile to facsimile number 9230 8535, which he believed to be the facsimile number for the Federal Magistrates Court. Whether this Notice of Appearance reached the Court or not is uncertain. It certainly did not reach the relevant Federal Magistrates Court file number SYG 3351 of 2005. The Federal Magistrate also ordered that the Respondent file and serve 'a Notice in accordance with Form 149 stating grounds of opposition and affidavit supporting grounds of opposition' by 22 December 2005. Once again, this did not occur. 11 Whilst a notice in accordance with Form 149 stating the appellant's grounds of opposition to the trustee's application was never filed, an attempt was made to prepare an affidavit for the appellant propounding that she had contributed $37,000 out of a total purchase price of $67,000 paid for the property, that the balance had been funded by an advance from Commonwealth Bank of Australia to the appellant and the bankrupt and that she had paid all the monies due under the mortgage. Page 1 of the affidavit suggests that it was sworn on 15 December 2005. This is patently incorrect, but I am satisfied that no deception of the Federal Magistrates Court was intended. Each of the annexure notes in respect of annexures 'A', 'B' and 'C' to the affidavit indicate that it was in fact sworn on 15 February 2006. Mr Vo's evidence is that he was responsible for the insertion of the date 15 December 2005 which was the date when he set about drafting the affidavit. Due to inadvertence on his behalf he failed to cause the correct date to be inserted on page 1 of the affidavit when it came to be sworn on 15 February 2006 in its final form. No attempt was ever made by the appellant to file the affidavit and it was never read. However, on 16 February 2006 it was handed up to the Federal Magistrate. It was not formally tendered but it seems clear to me that it was intended by Mr Vo that it should become an exhibit on the hearing of an application made by him orally on that day to which reference will be made hereafter. The affidavit included the following: '3. Although my husband and I were registered as proprietors of the Property as joint tenants, I in fact paid all the monies as necessary to purchase the Property in our joint names together with the monies advanced by the original mortgagee, the Commonwealth Bank of Australia (CBA). … 6. Annexed and marked "B" is a copy of another payment made by me to my conveyancing solicitor, although the receipt was in joint names. 7. I made the mortgage payment from my monies solely. 8. My husband did not contribute any to the purchase or the mortgage repayment at any time. … 13. I having made an informed decision, I oppose the sale of the Property which, is in fact mine and which is the only home of myself, my husband and my three children. …' 12 On 6 December 2005 the proceedings were adjourned to 16 February 2006 at 9.30 am and the costs were reserved. 13 In cross-examination before me it was put to Mr Vo that there had been no suggestion by the appellant prior to 16 February 2006, when reliance was placed on the abovementioned affidavit, that the interest of the appellant in the property had been greater than 50%. This was disputed by Mr Vo who referred to passages on pages 2, 3, 15 and 16 of the transcript of proceedings before the Federal Magistrate on 6 December 2005 where reference was made to documents having been handed up by Mr Vo to the Court. The document entitled 'Respondent's Submission' dated 6 December 2005 and the annexures to it were tendered before me to demonstrate that claims had been made before 16 February 2006 to a greater equitable interest than 50%. The Submission included: '1. The Respondent [referring to the appellant] is a registered owner and is in fact the sole contributor, and therefore the sole owner, of the residential property known as Folio Identifier 24/7/5701 ("the property"). … … 4. The Respondent needs time to: a) apply for funds or assistance from various organizations to defend her 100% ownership. … …' (emphasis in original) 14 Given the appellant's default in complying with the orders of 6 December 2005, the matter was listed before the Federal Magistrate on 17 January 2006, whereupon he ordered that the matter proceed to a hearing on 16 February 2006 'on basis of documents lodged'. He also ordered the appellant to pay the respondent's costs assessed in the sum of $750.00 within 28 days. According to Mr Vo, the costs ordered to be paid on 17 January 2006 have already been paid. 15 On 16 January 2006 the bankrupt filed a notice of motion in the proceedings in which the sequestration order had been made, namely proceedings SYG 2821 of 2004, in which he sought an order that the sequestration order against his estate be set aside and other relief. The relevant filing fee of $173 was paid by Mr Vo on the bankrupt's behalf, but he was not identified as the bankrupt's solicitor. On the same day, namely 16 January 2006 Mr Vo filed an affidavit sworn 16 January 2006 by the appellant in SYG 3351 of 2005 to which she annexed a copy of her husband's Notice of Motion seeking an order that the sequestration order be set aside. 16 On 17 January the Federal Magistrates Court noted that if the bankrupt was unsuccessful in his application to set aside the sequestration order, the appellant would consent to orders for the sale of the property known as 9 Rosemont Street, Punchbowl. In relation to the indication provided by the appellant that she would consent to a sale of the property, the transcript of proceedings before the Federal Magistrate on 17 January 2006 relevantly recorded the following on pages 6-7: 'MR VO: But we wait for that so that if the sequestration order is to be set aside … HIS HONOUR: What happens if it isn't? MR VO: Then we come back to this court and we consent to the sale of the estate but if the sequestration order is set aside then actually the trustee doesn't have any interest in that property. … HIS HONOUR: … I think that's the best way and if Mr Vo has said, if Me (sic) Vo has said that if the sequestration order is not set aside he will consent, is that right Mr Vo? MR VO: That's right. HIS HONOUR: Well, we'll make a note of that.' 17 It may be observed that the indicated consent to a sale did not, in terms, abandon any claim that the appellant may have had to a greater equitable interest in the property than 50%. 18 Somewhat curiously, the appellant swore an affidavit on 5 June 2006 in which she said: '6. I have never consented to the sale of my home by the Respondent.' 19 Whilst the apparent inconsistency with the consent indicated by Mr Vo, when addressing the Federal Magistrate on 17 January 2006, was the subject of cross examination before me of Mr Vo, it seems to me that it would be more germane to address the inconsistency with the appellant at an appropriate stage in the proceedings. Mr Vo's evidence left the matter hanging explaining that in his draft of the affidavit sworn by the appellant on 5 June 2006 the paragraph quoted above had not been included. 20 Mr Vo did file a 'Response' on behalf of the appellant in accordance with Rules 4.03 and 4.04 of the Federal Magistrates Court Rules on 16 January 2006, in which he nominated himself as 'Solicitor for the Respondent'. It is clear that he has been the solicitor for the appellant throughout. According to the Federal Magistrate, Mr Vo also made submissions, at times, on the part of the bankrupt (see [2006] FMCA 227 at [1]). 21 On 16 February 2006 the matter was listed for hearing before the Federal Magistrate at 9.30 am but the appellant did not appear. In the circumstances, the matter proceeded ex parte at about 9.38 am and a number of orders were made as sought by the respondent shortly thereafter. The orders would appear to have been incorporated in short minutes of order which were apparently initialled by the Federal Magistrate and amended in green. These orders were as follows '1. The land comprised in Certificate of Title Folio Identifier 24/7/5701 and known as 9 Rosemont Street Punchbowl in the State of New South Wales (Land) be sold by the Applicant as Trustee for sale, with all the obligations and privileges pertaining (including signing for and on behalf of the Respondent any Contract for the Sale of Land and any Real Property Act form of Transfer and determining the price at which the Land is to be sold) and the proceeds after payment of all expenses of and incidental to such sale be divided equally between the Applicant and Respondent and that prior to distribution of the Respondent's share, there be deducted from such share the Applicant's costs of and incidental to this application. 2. For the purposes of giving effect to Order 1, the Respondent must do all such things, acts and deeds and sign all documents to list for sale and sell the Land, and for that purpose, including but not limited to the following: 2.1 agree upon a real estate agent(s) to be appointed to facilitate a sale of the Land; 2.2 agree upon a sale or reserve price at which the Land is to be listed for sale; 2.3 deliver a signed Real Property Act form of Transfer (Form No. 01T_v3-0) within 24 hours of being requested to do so by the Applicant; 2.4 maintain the Land in a clean and presentable manner as required for the proper and effective marketing of the Land; 2.5 allow for an inspection of the Land on 24 hours notice of a request made by the Applicant or agent for sale; and 2.6 give vacant possession of the Land on 7 days notice of a request made by the Applicant or agent for sale or otherwise within 4 weeks from the date contracts for the sale of the Land have been exchanged. 3. Pending the sale of the Land, and to the extent that she is able, the Respondent shall continue to meet one half of the mortgage instalments and meet all other outgoings (including electricity, gas, telephone, council rates) in respect of the Land. 4. In the event that the Respondent defaults in payment of any money available pursuant to Order 3, then the appropriate adjustment and deduction shall be made from that person's share of the proceeds on completion of a sale of the Land. 5. That upon completion of the sale of the Land, the proceeds thereof be distributed in the following manner and priority: 5.1 First, in discharge of any mortgage or encumbrance now registered upon the title of the Land; 5.2 Secondly, in payment of agent's commission, auctioneers and auction expenses, legal and any other costs associated with and reasonably incurred to effect the sale of the Land and/or place the Land in a saleable condition; 5.3 Thirdly, in adjustment of council rates, water rates and other statutory imposts appropriate and reasonable for a residential property of this nature; 5.4 Fourthly, in payment of the Applicant's costs (professional and legal) per order 6 below; 5.5 Fifthly, and subject to order 1, 4 and 5.4 above, in payment of the balance to be divided equally between the Applicant and the Respondent. 6. The Respondent pay the Applicant's costs of and incidental to this application to be taxed, if not agreed in accordance with the Federal Court Act and Rules. 7. These orders be entered forthwith.' 22 It was undoubtedly within the power of the Federal Magistrate to proceed with the matter in the absence of the appellant (see Part 13 Rule 13.03A(d) of the Federal Magistrates Court Rules 2001 (Cth)). 23 After the orders had been made ex parte, Mr Vo arrived at the Federal Magistrates Court. It would appear that he then made an application to the Federal Magistrate ore tenus for an order setting aside the abovementioned orders which had been made earlier in the day. He did not articulate his application with any clarity. The transcript of proceedings before the Federal Magistrate on 16 February 2006 is a little over six pages in length. It does not indicate the time at which the hearing concluded, but one might reasonably guess that it lasted for somewhere between 10 and 20 minutes before a short ex tempore judgment on Mr Vo's application and on matters of costs was delivered. The record of the ex parte hearing commenced at the top of page 2 of the transcript, the ex parte orders are recorded as having been made in the middle of page 3. The Court was then engaged in considering whether an additional order should be made in respect of the costs of the trustee who was represented by Mr Soliman, solicitor, when the proceedings were interrupted by Mr Vo. The transcript records at the top of page 4: 'MR SOLIMAN: Yes, but the dealings with the respondent … HIS HONOUR: No, you're Mr Vo. Mr Vo, you're a bit late. I have made an order already against you. Yes? MR VO: With respect to costs … HIS HONOUR: Well let Mr Soliman finish. MR SOLIMAN: Thank you. …' Later on page 4 the transcript recorded: 'HIS HONOUR: … Mr Vo? MR VO: Yes, your Honour, may I ask if the evidence explaining as to why the respondent has been actually opposing the sale of the property … HIS HONOUR: Why he (sic) has opposed the sale of the property? MR VO: Because … HIS HONOUR: I know why she's opposed the sale of the property, she says her husband was forced into these agreements. MR VO: That is one other thing, that is a bankruptcy matter. Another property matter is actually contained in this one [referring so it would seem to the affidavit sworn 15 February 2006 which bears the date 15 December 2005 on the first page], so would you please have a look at it to see whether that is a good ground for actually opposing the sale because she has a claim of 100 per cent ownership in that property by way of constructive and … resulting trust and that's a matter for the equity division in the Supreme Court to decide on the issue of this … The husband and wife and therefore the trustee. MR SOLIMAN: Your Honour, I must reserve my objection. I haven't seen this material. HIS HONOUR: You say the 15th of December 2005, why wasn't it filed? MR VO: The wife has been restrained from actually doing any sort of submission because she didn't have money to actually present to the court and until this day she hardly can raise the funds to actually go to a solicitor for the submission. HIS HONOUR: She went to you didn't she? MR VO: Your Honour? HIS HONOUR: I thought she went to you didn't she? MR VO: Yes, she went to me just that she did not have money and then we have to actually reserve our time, whenever she wants to but she was not actually … HIS HONOUR: But you did this on 15 December, you didn't file it did you? MR VO: And she actually seek my instruction to retain a counsel to actually lodge a claim in the equity division of the Supreme Court so that there is an end – there can be an equitable split between the husband and wife and therefore to the trustee. I mean 50 per cent is not appropriate. It is not fair to her because … MR SOLIMAN: Your Honour, I might be able to shortcut this. On 17 January 2006 I brought this matter before the court for the respondents default. The respondent – and the court noted on that day that the respondents indicated that if the bankrupt was unsuccessful in this application to set aside the sequestration order the respondent will consent to orders for the sale of property known as 9 Rosemont Street, Punchbowl. HIS HONOUR: Yes, well there you go. MR VO: Yes, we have been trying to negotiate in a meaningful way so that we can achieve a very inexpensive way of actually dealing with this matter … … MR VO: Yes, but I mean has your Honour decided the outcome of this case already or we can still actually … HIS HONOUR: I have given him leave to – you weren't here. I have given him leave to sell and orders to make your client take part in the sale. MR VO: Yes. HIS HONOUR: Right, now if you want to buy the property you can buy it. You can make an offer and if you want to go to the Supreme Court and get some order that you are actually the owner of the property … MR VO: We respectfully submit that I mean this court has the power in terms of equitable split, that it's actually the Supreme Court actually decides that matter in a broad term, actually spell that out, it doesn't actually give express intention for the court to decide on section 30 because that is although very wide … HIS HONOUR: Section 30? MR VO: Section 30, that's the … the applicant actually relying on, that section doesn't in any express statement that the property can be sold other than anything … HIS HONOUR: But there's a wealth of authority Mr Vo to say that section 30 covers the sale of property. MR VO: Yes, it might. I mean that can be a jurisdiction of this court that actually … HIS HONOUR: Well I've got the jurisdiction to say that they can sell the property and what you're trying to get me to say is that they shouldn't sell the property because your client has an equitable interest in 100 per cent of it. Isn't that right? MR VO: Yes, that's right, your Honour. HIS HONOUR: Yes, well you've been here and you've been here and you've been here and you've never raised this before. You raise it now at the heel of the hunt. MR VO: Yes, we have raised before the issue of … HIS HONOUR: You have raised all sorts of things. You've raised all sorts of other things. MR VO: … the wife actually rely on the husband to actually resolve his bankruptcy matter. The wife has nothing to do with the bankruptcy but the wife has something to do with the property and that property cannot be distributed in a fair manner when the trustee actually assume 50 per cent interest when the wife actually brought this property and paid for that and we have been mentioned this to … HIS HONOUR: The house is in joint names isn't it? MR VO: The house was in both names and there was a wealth of authority that actually say that if the wife can prove that she owned the deposit and she's been paying for everything then that property was held in trust for the benefit of the wife. …' 24 It may be observed that his Honour's observation that the appellant wanted to raise her claimed entitlement to a 100% equitable interest in the property 'at the heel of the hunt' was incorrect. As indicated above this matter had been raised in the 'Respondent's Submission' of 6 December 2005. 25 It may also be observed that on about 60% of the occasions when Mr Vo was addressing the Court he was cut off in his submissions either by the Federal Magistrate or Mr Soliman. 26 Rule 16.05 of the Federal Magistrates Court Rules relevantly provides: '16.05(1) The Court may vary or set aside its judgment or order before it has been entered. (2) The Court may vary or set aside its judgment or order after it has been entered if: (a) The order is made in the absence of a party; or …' 27 The Federal Magistrate described Mr Vo's application, which, of course, was made before any orders had been entered, in the following terms at [2]: '2. … After I had made orders pursuant to s.30 of the Bankruptcy Act 1966(Cth) permitting the sale of the property, Mr Vo arrived. He presented me with an affidavit dated 15 December 2005. In that affidavit, the respondent suggests that she is in fact the equitable owner of the entire property. Mr Vo, I think, was asking me to set aside the order I had made in his absence and to declare that the sole benefit of the property belonged to his client. Alternatively, Mr Vo was asking me to adjourn this matter so that he could make a similar application in the Supreme Court of New South Wales. …' 28 The Federal Magistrate proceeded to refer to the affidavit of 15 December 2005, which, he said, only 'surfaced' on 16 February 2006 notwithstanding that the matter had previously been before the Court on 17 January 2006. The Federal Magistrate said of that affidavit at [3]: 'The affidavit suggests that the respondent [referring to the appellant] advanced $37,000 of the $67,000 purchase price [for the property], the balance being a mortgage to the Commonwealth Bank of Australia, which she says she made all the payments for. …' 29 The Federal Magistrate declined to set aside the orders which he had earlier made. Relevantly, he said at [4]-[5]: '4. … I cannot be satisfied that the respondent has any arguable case that should prevent the sale of this property. In all probability the sale will not take place for some weeks, so that if the respondent is able to provide more convincing evidence of her alleged equitable interest, the matter can be reopened. … 5. I confirm the orders which I made before Mr Vo's appearance, being the orders contained in the short minutes of order initialled by me and amended in green, and I also order that the respondent pay the costs of the trustee in the total sum of $11,963 on the basis of the matters contained in the affidavit of Scott Darren Pascoe dated 15 November 2005 and the second affidavit of Scott Darren Pascoe dated 14 February 2006. I further order that the respondent pay the applicant's costs of the proceedings excluding the specific order for costs made on 7 February 2006 (sic) in relation to that day's hearing only. The costs are to be taxed if not agreed pursuant to the Federal Court Act and Rules on a party and party basis.' 30 My understanding is that the orders which were confirmed were those set out above as orders 1-5 and 7 (later re-numbered as 8). An additional order was made at the conclusion of the hearing of the appellant's application: '(6) Respondent to pay the costs of the trustee in the total sum of $11,963 on the basis of the matters contained in the affidavit of Scott Darren Pascoe dated 15 November 2005 and the second affidavit of Scott Darren Pascoe dated 14 February 2006.' The previous order 6 was re-numbered as 7 and amended to read, at least when entered: '(7) Respondent to pay the applicant's costs of the proceedings excluding the specific order for costs made on 17 January 2006 in relation to that day's hearing only, to be taxed, if not agreed, pursuant to the Federal Court Act and Rules on a party and party basis.' 31 On 3 March 2006 the orders numbered 1 to 8 were duly entered. 32 On 8 March 2006 the appellant filed a notice of appeal in which she appealed 'from the whole of the Judgment and Orders of Raphael FM … given and made on 16 February 2006 …'. 33 The grounds of appeal specified in the notice of appeal were: '1. The Court below erred in law in failing to find that the Appellant's Affidavit dated 15 December 2005 disclosed a prima facie or arguable case that the Appellant is the equitable owner of the entire property comprised in Certificate of Title Folio Identifier 24/7/5701 and known as 9 Rosemont Street Punchbowl in the State of New South Wales ("the property"). 2. The Court below erred in law in failing to set aside orders made in the absence of the Appellant on 16 February 2006. 3. The Court below denied to the Appellant procedural fairness by failing to permit her an opportunity to be heard as to whether she is the equitable owner of the property.' 34 In the Notice of Appeal the principal orders sought were that the judgment and orders of the Court below given and made on 16 February 2006 be set aside and that the Trustee's application 'be remitted to the Court below for further hearing in accordance with law'. 35 The appeal came before Sackville J for directions on 30 March 2006 and again on 27 April 2006. 36 By an order made by Sackville J on 27 April 2006 as varied by me on 10 May 2006, the orders of the Federal Magistrate made on 16 February 2006 were stayed pending the hearing of the current appeal or the determination of any application for leave to appeal which may be filed or any further order. 37 On 4 May 2006 the appellant filed an application for leave to appeal should such leave be necessary. 38 On 18 May 2006 the respondent filed a notice of motion seeking an order pursuant to Order 52 Rule 18(1) of the Federal Court Rules that the appeal be dismissed as incompetent. The respondent submitted that the contingent nature of the application for leave to appeal meant that it was not in reality an application for leave to appeal at all. I reject that submission. Whilst the nature of the challenged decision in this case is quite clear, there are many instances where the doubt attending the status of a judgment – is it interlocutory or is it final – renders it appropriate to seek leave to appeal as a precautionary measure. The form which the application took is unimportant. 39 Under s 24(1A) of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act') an appeal may not be brought from a judgment of the Federal Magistrates Court, such as that of the learned Federal Magistrate in this case, unless the Court or a Judge gives leave to appeal, if it is 'an interlocutory judgment'. 40 The usual test for determining whether an order is final or interlocutory is whether the order, as made, finally determines the rights of the parties. The test requires the appellate court to look at the consequences of the order itself and to ask whether it finally determines the rights of the parties in a principal cause pending between them. Accordingly, orders refusing to set aside a default judgment or refusing to grant an extension of time are not final judgments because the unsuccessful party could make a further application for the same relief, even though such an application might have very little prospect of success (per McHugh, Kirby and Callinan JJ in Bienstein v Bienstein (2003) 195 ALR 225 at 230 [25]; see also per McHugh ACJ, Gummow and Heydon JJ in Re Luck (2003) 203 ALR 1 at 2 [4]). 41 It is clear from the learned Federal Magistrate's reasons for judgment that he intended that his decision, declining to set aside his earlier orders, would be interlocutory, he having indicated that if the appellant was able to provide more convincing evidence of her alleged equitable interest, the matter could be reopened. His intention is, of course, not determinative of the matter. Not only was this his intention, I am satisfied that it was the legal effect also. The appellant submitted that the Federal Magistrate's decision to refrain from setting aside his earlier orders was final in its legal effect, but this seems to me to be plainly wrong. In the circumstances, the appeal filed 8 March 2006 was incompetent in the absence of a grant of leave to appeal. It is open to the Court to now grant leave to appeal, notwithstanding that the application for leave was not filed within the time permitted by Order 52 Rule 5(2) of the Federal Court Rules. In the application for leave to appeal filed 4 May 2006 an order has also been sought that compliance with Order 52 Rule 5(2) be dispensed with in accordance with Order 52 Rule 5(3). Such an order has not been opposed by the respondent. 42 For a grant of leave to appeal to be made, it is necessary for the appellant, as the applicant for such a grant, to establish that the decision of the Federal Magistrate on the application to set aside the orders made earlier in the day on 16 February 2006 was attended with sufficient doubt as to warrant its reconsideration and that substantial injustice would result if leave were refused. 43 Where an absent party later complains about orders made in her absence, it does not follow, as a matter of right, that the orders will be set aside. Normally, the absent party will be bound by the orders made against her in her absence if, with notice of the proceedings, she has disregarded the opportunity to appear and participate in the trial of the proceedings. But, in this case it could not be said that there was a total disregard of that opportunity. 44 The relevant principles in relation to the setting aside of orders made in a party's absence have been conveniently summarised in the judgment of Leggatt LJ in Shocked v Goldschmidt [1998] 1 All ER 372 at 381 as follows: '… (1) Where a party with notice of proceedings has disregarded the opportunity of appearing at and participating in the trial, he will normally be bound by the decision. (2) Where judgment has been given after a trial it is the explanation for the absence of the absent party that is most important: unless the absence was not deliberate but was due to accident or mistake, the court will be unlikely to allow a rehearing. (3) Where the setting aside of judgment would entail a complete retrial on matters of fact which have already been investigated by the court the application will not be granted unless there are very strong reasons for doing so. (4) The court will not consider setting aside judgment regularly obtained unless the party applying enjoys real prospects of success. (5) Delay in applying to set aside is relevant, particularly if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it. (6) In considering justice between parties, the conduct of the person applying to set aside the judgment has to be considered: where he has failed to comply with orders of the court, the court will be less ready to exercise its discretion in his favour. (7) A material consideration is whether the successful party would be prejudiced by the judgment being set aside, especially if he cannot be protected against the financial consequences. (8) There is a public interest in there being an end to litigation and in not having the time of the court occupied by two trials, particularly if neither is short.' Roch and Morritt LJJ agreed with the reasons for judgment of Leggatt LJ. 45 It seems clear that the appellant did not relevantly disregard the opportunity to appear at and participate in the hearing listed for 9.30 am on 16 February 2006. The arrival of Mr Vo, albeit late, suggests that the appellant's absence was anything but deliberate. It does not appear that there was an extensive trial before the Federal Magistrate on 16 February 2006 before Mr Vo arrived. There was plainly no relevant delay on the part of the appellant in seeking to set aside the orders made earlier in the day on 16 February 2006 and there would appear to be no real prejudice to the respondent if the orders made earlier in the day on 16 February 2006 were to be set aside. The conduct of the appellant in failing to comply with orders of the Federal Magistrate in relation to the provision of particulars of her grounds of opposition to the trustee's application and the filing of affidavits warrants criticism, but does not, in my view, compel a conclusion that the application to set aside the earlier orders should have been refused. It is but one of the matters to which the Federal Magistrate was entitled to have and should have had regard in the exercise of his discretion. 46 The substantial consideration, in the circumstances of this case, seems to me to be whether the appellant would enjoy 'real prospects of success' were the orders made in her absence on 16 February 2006 to be set aside. 47 Whilst the Federal Magistrate appears to have conducted something of a mini trial by reference to the appellant's affidavit of '15 December 2005' and the corroborative documents upon which she sought to rely being annexures 'A', 'B' and 'C' to that affidavit, the fact remains that notwithstanding the Federal Magistrate's findings in respect of the corroborative evidence, her untested evidence as recorded in the affidavit was, as the Federal Magistrate found, to suggest that she had 'advanced $37,000 of the $67,000 purchase price, the balance being a mortgage to the Commonwealth Bank of Australia, which she says she made all the payments for'. 48 It seems to me that, if at a hearing of the trustee's application, the facts deposed to by the appellant were accepted, then it may well be inappropriate for there to be a sale of the property with an equal division of the proceeds of sale as contemplated by the orders made by the Federal Magistrate (see generally Calverley v Green (1985) 155 CLR 242, Muschinski v Dodds (1985) 160 CLR 583, Baumgartner v Baumgartner (1987) 164 CLR 137 and Parsons v McBain (2001) 109 FCR 120). 49 The Federal Magistrate's decision to refrain from setting aside his earlier orders seems to me to be attended by sufficient doubt to warrant a grant of leave to appeal from it, given the substantial injustice which would result if a sale of the property were to proceed at this stage. Once sold, the property could hardly be recovered. 50 This brings me to a consideration of the appeal itself. In accordance with s 25(1A) of the Federal Court Act the Chief Justice has considered it appropriate for the appellate jurisdiction of the Court in relation to this appeal to be exercised by a single Judge. Accordingly, it falls to me to determine whether or not the exercise by the learned Federal Magistrate of his discretion to set aside the orders made by him earlier in the day on 16 February 2006, miscarried. 51 Whilst counsel for the respondent submitted that leave to appeal should be refused because of the non compliance by the appellant with the orders of the Court, the repeated conduct of Mr Vo in arriving late for hearings and the finding by the Federal Magistrate, after rejecting the appellant's corroborative evidence, that 'I cannot be satisfied that the respondent [referring to the appellant] has any arguable case that should prevent the sale of this property', the respondent elected not to put any submissions in opposition to the appeal being allowed, once leave to appeal had been granted. In this regard it should be noted that the application for leave to appeal and the appeal were dealt with sequentially rather than at the same time. At the commencement of the hearing of the leave application counsel for the respondent indicated that the respondent would be opposing both the leave application and the appeal. However, after considering the evidence given on the leave application, the respondent resiled from this position. There can be no doubt that, at the conclusion of the hearing of the leave application, the appellant's conduct in failing to comply with earlier court orders seemed far less significant than may have appeared at the outset. 52 I am satisfied that after the Federal Magistrate made his orders on 6 December 2005, the appellant attempted to file an appearance in the Federal Magistrates Court on 7 December 2005 in the manner described above. I am also satisfied that whilst the learned Federal Magistrate, quite reasonably, was critical of the appellant's affidavit of '15 December 2005' having only 'surfaced' on 16 February 2006, that affidavit was in fact sworn on 15 February 2006, the completion of its preparation having been delayed from a starting date of 15 December 2005 coupled with an inadvertent but unintentional failure by Mr Vo to cause the date on the front of the affidavit to be brought into harmony with the date indicated on the relevant annexure notes as the date of swearing, namely 15 February 2006. Whilst Mr Vo failed to correct the Federal Magistrate's quite reasonable misunderstanding that the affidavit was in fact sworn on 15 December 2005, it also seems clear, as counsel for the appellant submitted, that Mr Vo was constrained in his ability to put his submissions to the Federal Magistrate on 16 February 2006 by the constant interjections to which reference has been made earlier. It is also important to note that the suggestion that the appellant's claim of a 100% interest in the property was not made at the 'heel of the hunt' on 15-16 February 2006 as the Federal Magistrate surmised in the course of the hearing on 16 February 2006. Clearly, such a claim had been propounded in a document provided to the Court on the appellant's behalf at the outset on 6 December 2005. The issue was not raised as a last ditch attempt to avoid the sale of the property after a failed application by the appellant's husband to have the sequestration order set aside and the lapsing of caveats which had been filed on the appellant's behalf in respect of her claimed interest in the property. 53 In my opinion, the Federal Magistrate's exercise of his discretion in respect of setting aside his earlier orders, miscarried. The untested affidavit of the appellant of '15 December 2005' provided a sufficient basis for those orders to be set aside. The very text of the affidavit is inconsistent with a conclusion that the appellant was without an arguable case to prevent the sale of the property. 54 The parties are agreed that, should the appeal be allowed, not only should the Court set aside orders 1 to 5 inclusive and 8 of the orders made by the Federal Magistrate on 16 February 2006 as later entered on 3 March 2006, but also order 6 which was made after Mr Vo arrived at the Federal Magistrates Court on 16 February 2006 and order 7 which was amended after Mr Vo appeared. 55 In my opinion the Court should dispense with compliance with Order 52 Rule 5(2) of the Federal Court Rules, grant leave to the appellant to appeal from the decision of the Federal Magistrate refusing to set aside the orders made by him on 16 February 2006 in the appellant's absence, the orders made by him on 16 February 2006 should be set aside and the respondent's application filed 16 November 2005 should be remitted to the Federal Magistrates Court for hearing. The respondent's motion filed 18 May 2006 should be dismissed. 56 It remains for me to consider what, if any, orders should be made in respect of costs. Four matters need to be considered, firstly the costs of the leave application, secondly the costs of the appeal, thirdly the costs of the respondent's motion and fourthly the costs thrown away in the court below as a result of the course which the matter has taken. Counsel for the appellant has submitted that I should leave the determination of the last mentioned costs for the Federal Magistrate who may hear the respondent's application hereafter. I do not propose to accede to that request given that I have an ample understanding of the appellant's earlier defaults without which the respondent's application could have been disposed of one way or another on 16 February 2006. In the result, there is a need for the matter, to, in effect, now start all over again. 57 In relation to the costs of the application for leave to appeal which occupied more than 90% of the hearing time before me on Tuesday 6 June 2006, I consider that there should be no order as to costs. The appellant submitted that leave was not required, even though a formal application for leave was made. In this regard the appellant failed. In relation to the question of whether or not the judgment of the Federal Magistrate was attended with sufficient doubt to warrant its reconsideration there was much to be said at the commencement of the hearing, for the view that the appellant's several defaults and, arguably, deception of the Court, would have fully justified the Federal Magistrate's decision. However, when Mr Vo drew attention, in the course of his evidence, to the matters referred to above, it became clear that the Federal Magistrate had misunderstood the conduct of the appellant in certain respects. In these circumstances, even though the respondent's opposition to the grant of leave to appeal failed, the proper order as to costs would be that there be no order as to costs. 58 In relation to the costs of the appeal, a similar order, should, in my opinion, be made especially in the light of the fact that when the Court embarked upon the hearing of the appeal the respondent indicated that he did not wish to be heard in opposition to the making of the orders sought by the appellant. 59 As to the costs of the respondent's motion, no new issues arose under it and it occupied no hearing time. In respect of it there should be no order as to costs. 60 In relation to the costs thrown away in the Federal Magistrates Court, it seems clear to me, that not only should the appellant have been ordered to pay, as she has, the costs of the hearing on 17 January 2006, she should also be ordered to pay the cost of the hearings in the Federal Magistrates Court on 6 December 2005 and 16 February 2006. The value of the hearing on 6 December 2005 was totally eroded by the default of the appellant in complying with the directions that were then given in relation to disclosing her case and providing evidence in support of it. Had the appellant filed and served her affidavit nominally dated 15 December 2005, but in fact sworn on 15 February 2006, in a timely fashion and had Mr Vo been punctual in attending the hearing on 16 February 2006, that hearing may have allowed the respondent's application to be finally heard and disposed of. Whilst satisfactory explanations have been provided in respect of some of the appellant's conduct, what remains in terms of non compliance with the Federal Magistrate's orders and the appellant's solicitor's lack of promptitude warrant the severest criticism. Counsel for the respondent has asked that these costs be ordered on an indemnity basis. Whilst an alleged lack of financial resources may have prevented the appellant's affidavit, the preparation of which commenced on 15 December 2005, from being finalised prior to 15 February 2006, I consider that it would be grossly unfair for the bankrupt's creditors to be prejudiced by the unsatisfactory conduct on the appellant's behalf. In these circumstances the costs of the hearings on 6 December 2005 and 16 February 2006 should be awarded on an indemnity basis. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. Associate: Dated: 8 June 2006 Counsel for the Appellant: P R Glissan Solicitor for the Appellant: Australasia Legal & Migration Services Counsel for the Respondent: B J Skinner Solicitor for the Respondent: Thomson Playford Date of Hearing: 6 June 2006 Date of Judgment: 8 June 2006