Nathan v Capital Finance Australia Ltd [2006] FCA 1623

FEDERAL COURT OF AUSTRALIA

Nathan v Capital Finance Australia Ltd [2006] FCA 1623 KAILAI NATHAN v CAPITAL FINANCE AUSTRALIA LTD VID945 OF 2006

JESSUP J

27 OCTOBER 2006

MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VID945 OF 2006

BETWEEN: KAILAI NATHAN

Applicant

AND: CAPITAL FINANCE AUSTRALIA LTD

Respondent

JUDGE: JESSUP J DATE OF ORDER: 27 OCTOBER 2006

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The appellant's application for an extension of time to file a Notice of Appeal be dismissed. 2. The respondent pay the appellant's costs of the directions hearing on 8 September 2006. 3. Otherwise, the appellant pay the respondent's costs of the proceeding.

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 VID945 OF 2006

BETWEEN: KAILAI NATHAN

Applicant

AND: CAPITAL FINANCE AUSTRALIA LTD

Respondent

JUDGE: JESSUP J

DATE: 27 OCTOBER 2006

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 On 28 July 2006 the Federal Magistrates Court dismissed a petition by the present respondent for the bankruptcy of the present applicant upon a ground which related to the validity of the petition: Capital Finance Australia Ltd v Nathan (No 2) [2006] FMCA 1051. On 24 August 2006 the successful party before the Federal Magistrates Court, the applicant, applied in this court for an extension of time to file and serve a Notice of Appeal from the Federal Magistrate's judgment. The question which has come before me this morning is whether that application should be granted. 2 The application for an extension of time, and a draft Notice of Appeal, were filed a few days after the expiration of the time limited by the Rules of Court for the lodgement of an appeal from the Federal Magistrates Court in circumstances such as those obtaining. In an affidavit which has not been challenged by the respondent, the applicant stated that he was informed by a member of the staff in the Registry of the court that the time for appealing was 28 days, rather than 21 days as provided by the Rules of Court. He submits that he was out of time by a few days only, that he was acting in good faith with a genuine intention to challenge the judgment of the Federal Magistrate, and that he was acting in accordance with what he believed to be the applicable rules based upon information given to him in the Registry. 3 In a normal case one would be sympathetic with a prospective appellant who was a few days out of time due to circumstances of the kind to which I have referred. However, this is an unusual case in that the applicant was successful in the Federal Magistrates Court and seeks to challenge the judgment which provided the basis of that success. 4 In his reasons for judgment of 28 July 2006, the Federal Magistrate recorded that the applicant had taken out finance with the respondent for the purchase of a Mercedes Benz E280 motor vehicle. The respondent obtained a County Court judgment against the applicant in relation to those financing arrangements in the sum of $70,181.44, and on 1 June 2005 issued bankruptcy notice number VN1034/05. The respondent asserted that that bankruptcy notice was served upon the appellant in circumstances which would have provided a foundation for the presentation of a petition in due course. The applicant asserted before the Federal Magistrate, and asserts before me today, that he was never served with that bankruptcy notice. He says that he was served with a different bankruptcy notice which related to a different debtor and a different creditor, but it seems to me that nothing turns on that circumstance. 5 The question whether the applicant was served with the correct bankruptcy notice was dealt with by the Federal Magistrate as a preliminary point, and on 16 December 2005 he ruled that bankruptcy notice VN1034/05 was sent by pre-paid post to the applicant, being a mode of service permitted pursuant to regulation 16.01 of the Bankruptcy Regulations: Capital Finance Australia Limited v Nathan [2005] FMCA 1974. The proceedings in which that ruling was given were commenced by a petition on behalf of the respondent filed in the Federal Magistrates Court on 2 July 2005. 6 After giving his ruling on 16 December 2005 the Federal Magistrate proceeded to hear the applicant's other objections to the bankruptcy notice and to the petition and the other matters which arose on the petition. He disposed of those objections and of those matters in his judgment of 28 July 2006 to which I have referred. Substantially, that judgment dealt with the applicant's objections to the process by which the respondent sought to make him bankrupt. Those objections were dealt with by the Federal Magistrate under a series of subheadings, as follows: (a) whether the respondent was served with the bankruptcy notice; (b) whether the bankruptcy notice could be relied upon in circumstances where another notice had been issued earlier; (c) whether the creditor's petition was defective as it did not refer to any security held over the motor vehicle by the applicant; (d) whether the bankruptcy notice and the creditor's petition were defective because they were signed in the name of the firm of solicitors issuing the notice; (e) whether the petition was defective for failing to set out the number of the bankruptcy notice; (f) whether the petition was defective for referring to the wrong motor vehicle; (g) whether there was in fact money owing to the applicant as referred to in the County Court judgment; (h) whether the respondent had a set-off or counter claim. With the exception of that referred to in subheading (c), each of those matters was decided adversely to the applicant. As to the matter referred to in subheading (c) the Federal Magistrate held that the petition was defective in a way which could not, or at least would not, be rectified at the time. In the result, his Honour dismissed the petition by his judgment on 28 July 2006. 7 The applicant's draft Notice of Appeal proposes that part of the judgment given by the Federal Magistrate should be set aside. The parts referred to are those dealt with under subheadings (a), (f) and (g) of the reasons referred to. The notice is supported by 12 grounds, each of which in one way or another challenges a finding or ruling by the Federal Magistrate in relation to one of two matters: first, the service of the bankruptcy notice number VN1034/05 and, secondly, the validity, regularity or efficacy of the petition. 8 I cannot see any ground which would seek to challenge the matter dealt with under subheading (g) of the Federal Magistrate's reasons, namely, the question whether there was in fact any money owing as referred to in the County Court judgment. As to so much of the applicant's proposed grounds as would support the appeal by challenging the validity, regularity or efficacy of the petition, it is clear that the order made by the Federal Magistrate dismissed the petition, and that no finding or ruling by him in relation to the petition could be used against the applicant on a future occasion. Any further proceedings which might expose the applicant to bankruptcy would be required to be based upon a fresh petition in relation to which the Federal Magistrate's rulings and findings would be irrelevant. 9 To the extent that the grounds attack the bankruptcy notice, the matter in my view is covered by s 44(1)(c) of the Bankruptcy Act 1966 (Cth) which provides that: A creditor's petition shall not be presented against a debtor unless the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition. Mr Maiden, who represented the respondent this morning, has pointed out to me, and I accept, that even if the service of the bankruptcy notice was valid as found by the Federal Magistrate, it occurred, by the operation of s 160 of the Evidence Act 1995 (Cth), on 5 July 2005. Whether or not that is the precise date upon which service would be taken to have been effective, manifestly it would have happened on or about that date. It follows that the bankruptcy notice is now long out of time, and indeed was long out of time at the time when the Federal Magistrate gave his judgment on 28 July 2006. It follows that, even if everything that the applicant has said about the bankruptcy notice, and about service of the bankruptcy notice, is correct, then not only does it pose no threat to him in the proceedings commenced by the petition which the Federal Magistrate dismissed, but it could pose no threat to him in any other proceedings commenced by the respondent. I have not been told of any other petition in relation to which any other party has sought to rely upon this bankruptcy notice. In the circumstances I am satisfied that the particular rulings and findings which the Federal Magistrate made adversely to the applicant with respect to the validity and the service of the bankruptcy notice could not be to his disadvantage on any future occasion that it is possible to contemplate. 10 In those circumstances, I turn to the provision of the Rules of Court which must govern the disposition of the present motion. Under O 52 r 15(2) the court or a Judge may for special reasons at any time give leave to file and serve a notice of appeal notwithstanding that no notice has been filed within the time limited by sub rule (1). The approach which I must take was stated by the Full Court in Jess v Scott (1986) 70 ALR 185, 193. What is needed to justify an extension of time is indicated in r 15(2) by the words, "for special reasons." That is to say, there must be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of 21 days. In that context the expression, special reasons, is intended to distinguish the case from the usual course according to which the time is 21 days. But it may be so distinguished, not necessarily will be, for the rule gives a discretion wherever the Court sees a ground which justifies departure from the general rule in a particular case. Such a ground is a special reason because it takes the case out of the ordinary. I do not think that the use of the expression for special reasons implies something narrower than this. 11 For present purposes it is sufficient for me to express the view, which I do, that the special nature of the reasons referred to in r 15(2) should normally be such as would make it unjust for a prospective appellant to be shut out from an appeal because of his or her failure to file a Notice of Appeal within the time limited by sub rule (1). That may not be a complete statement of the relevant criterion, but it will suffice for present purposes. The nature of the judgment under appeal, and of the errors said to be disclosed by it, will usually be relevant to the question of injustice, as of course will the prospective appellant's apparent prospects of success so far as it is possible to gauge them. 12 In the present case, for the reasons that I have already given, I take the view that the points sought to be raised by the applicant against the judgment of the Federal Magistrate given on 28 July 2006 are entirely moot. Their resolution in his favour would not change the legal position which he now occupies, or might, in any future proceedings which is presently possible to conceive, occupy. I am completely at a loss to appreciate how the applicant might suffer any injustice if time were not extended as he now seeks. He succeeded before the Federal Magistrate, and I am unable to perceive any respect in which the findings and rulings of the Federal Magistrate could have any practical adverse impact against him in any way which is justiciable in a court of law. 13 My attention has been drawn to a judgment by Spender J in Martinsen v The Secretary of the Department of Family and Community Services (2004) 80 ALD 598. At [18] of that judgment his Honour said: There is, in my view, no utility to be served in extending the time for an appeal. The primary reason is that the decision of the AAT was not adverse to the applicant, did not result in the cessation of payment of Austudy to him, and any appeal has no prospect of success. At least so far as his Honour refers to the matter of utility and to the circumstance that the primary judgment was not adverse, I regard the sentiment behind this passage in his Honour's judgment as in harmony with the views I have expressed above. 14 For the above reasons I shall dismiss the application for an extension of time to appeal. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.