FEDERAL COURT OF AUSTRALIA Boumelhem v Commonwealth Bank of Australia [2008] FCA 1121 Bankruptcy Act 1966 (Cth) s 37(2)(a), s 52(3) Federal Court of Australia Act 1976 (Cth) s 32AA(1) Federal Court Rules O 52 r 15, O 52 r 17 Commonwealth Bank of Australia v Boumelhem [2008] FMCA 789 Commonwealth Bank of Australia v Boumelhem [2008] FMCA 800 De Robillard v Carver (2007) 159 FCR 38 Rangott v Marshall (2004) 139 FCR 14 AMIN BOUMELHEM and JAMAL BOUMELHEM v COMMONWEATLH BANK OF AUSTRALIA NSD 1049 OF 2008 BUCHANAN J 31 JULY 2008 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1049 OF 2008 BETWEEN: AMIN BOUMELHEM First Applicant JAMAL BOUMELHEM Second Applicant AND: COMMONWEATLH BANK OF AUSTRALIA Respondent JUDGE: BUCHANAN J DATE OF ORDER: 30 JULY 2008 WHERE MADE: SYDNEY THE COURT ORDERS THAT: The application is dismissed with costs. 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 1049 OF 2008 BETWEEN: AMIN BOUMELHEM First Applicant JAMAL BOUMELHEM Second Applicant AND: COMMONWEATLH BANK OF AUSTRALIA Respondent JUDGE: BUCHANAN J DATE: 31 JULY 2008 PLACE: SYDNEY REASONS FOR JUDGMENT BUCHANAN J: 1 On 30 July 2008 I dismissed this application with costs. What follows are my reasons for doing so. 2 The application before the Court was filed on 10 July 2008. It sought, relevantly, two orders. The first was an order that bankruptcy proceedings against each of the applicants be stayed until such time as an appeal from a judgment of the District Court of New South Wales, given in proceedings to which they were parties, was heard and determined by the New South Wales Court of Appeal. The second order sought, in anticipation, that the operation of any sequestration order which might be made in the bankruptcy proceedings be similarly stayed. The application was referred to me as Duty Judge by a Registrar. 3 Mr Bilinsky appeared for the applicants. He had only recently been instructed and sought an adjournment for about a week. This was the second adjournment sought by the applicants. The applicants' earlier solicitors had obtained an adjournment from a Registrar when the matter first came before the Court on 23 July 2008. Mr Aspinall, who appeared for the respondent, opposed any further adjournment, submitted that the application was in any event misconceived and asked that it be dismissed with indemnity costs. 4 When I indicated to Mr Bilinsky that I would not, for reasons discussed hereunder, grant any further adjournment he did not, as a result of more recent developments, seek to put any submissions in support of the orders sought by the application. I then made the order referred to above. 5 The proceedings against the applicants, to which the orders sought were directed, were heard by the Federal Magistrates Court of Australia (Raphael FM) which published a number of judgments (Commonwealth Bank of Australia v Boumelhem [2007] FMCA 730 (22 May 2007); (Commonwealth Bank of Australia v Boumelhem [2007] FMCA 731 (22 May 2007); Commonwealth Bank of Australia v Boumelhem [2008] FMCA 789 (13 June 2008); Commonwealth Bank of Australia v Boumelhem [2008] FMCA 800 (13 June 2008); and, Commonwealth Bank of Australia v Boumelhem (No 2) [2008] FMCA 995 (11 July 2008)). 6 In the last of those decisions the FMCA recorded that a bankruptcy petition was presented on 7 December 2006 based upon a judgment obtained in the Supreme Court of New South Wales on 9 December 2004. The debt was secured by a property owned by the applicants. The property was sold. The money claimed in the bankruptcy notice represented the balance owing after the sale of the property. 7 The applicants brought proceedings in the District Court of New South Wales arguing that the property was sold under value. The proceedings in the District Court were commenced on 19 June 2007. The FMCA granted an adjournment of the bankruptcy petition so that the proceedings in the District Court could be completed. On 14 May 2008 those proceedings were decided against the applicants. The matter resumed before the FMCA on 13 June 2008. The applicants sought a further adjournment to permit an appeal to the NSW Court of Appeal. That application was rejected for reasons which were explained in the two judgments delivered on 13 June 2008. At [16] the FMCA then said: 'I am of the view that on balance this is not a case where a further adjournment should be granted. However, I understand that others may have views which differ from mine and a more sophisticated insight into her Honour's judgment; so I will grant an adjournment for a further period of 28 days in order that the debtors may take what decision they wish as to my decision. If they wish to seek another opinion about it from a higher authority they may seek relief there without endangering their client's position.' 8 The reference to a 'higher authority' seems to be a reference to the possibility of making an approach to this Court although it is not clear to me exactly what the learned Federal Magistrate had in mind. The applicants, however, filed the present application on 10 July 2008, the day before proceedings were to resume in the FMCA. The application was not an appeal but an attempt to obtain orders relating to the conduct of proceedings in the FMCA. Section 32AA(1) of the Federal Court of Australia Act 1976 (Cth) provides: '(1) Proceedings must not be instituted in the Court in respect of a matter if: (a) the Federal Magistrates Court has jurisdiction in that matter; and (b) proceedings in respect of an associated matter are pending in the Federal Magistrates Court.' 9 The application to this Court therefore appears statute barred. There are other difficulties also. 10 On 11 July 2008 the matter resumed before Raphael FM who refused any further adjournment and, being satisfied that the provisions of s 52 of the Bankruptcy Act 1966 (Cth) ('the Act') had been complied with, made a sequestration order against the applicants, noting the date of the act of bankruptcy as 11 October 2006. There is no utility, therefore, in further considering any application for a stay of the proceedings. The proceedings have been determined. The anticipatory attempt to seek a stay of any sequestration order which might be made should also not be entertained. The Court does not have power in its ordinary jurisdiction to suspend the operation of a sequestration order (s 37(2)(a) of the Act). The Court may stay proceedings on a sequestration order for a period not exceeding 21 days (s 52(3) of the Act) but that is not the order which was sought and in any event it would not serve the purpose of putting matters into limbo until any appeal in the NSW Court of Appeal was finalised. 11 The decision of the Federal Magistrates Court and the sequestration order each made on 11 July 2008 may be the subject of an appeal to this Court which would, if upheld, be fully effective (see Rangott v Marshall (2004) 139 FCR 14 and De Robillard v Carver (2007) 159 FCR 38 at [137]-[150]). Under O 52 r 15 of the Federal Court Rules, the applicants have 21 days in which to file an appeal from the orders made on 11 July 2008 but an appeal does not operate as a stay unless the Court or a Judge so directs (see O 52 r 17). At the hearing before me Mr Bilinsky referred to notices of appeal which the applicants proposed to file. Those notices did not indicate that a stay of the sequestration order would be sought. I will not say anything about the prospects of success of any such application if such an order is sought but the existence of the facility under O 52 r 17, and a body of principle to guide the exercise of discretion under that rule, is another reason why no order should be made in the application with which I am dealing, even had it been competent. 12 As the application seems statute-barred and no argument was advanced to the contrary and as the orders sought were moot, the application was dismissed. Although Mr Aspinall sought indemnity costs he did not advance any further, more specific, submissions about that issue. I indicated that I would order costs but not indemnity costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate: Dated: 31 July 2008 Solicitor for the First and Second Applicants: Horowitz & Bilinsky Solicitors Counsel for the Respondent: Mr Aspinall Solicitor for the Respondent: Henry Davis York Date of Hearing: 30 July 2008 Date of Judgment: 31 July 2008