Salmon v Bank of Western Australia [2009] FCA 1473

FEDERAL COURT OF AUSTRALIA

Salmon v Bank of Western Australia [2009] FCA 1473

Bankruptcy Act 1966 (Cth) s 306(1) Federal Court Rules O 52 r 15

OWEN SALMON v BANK OF WESTERN AUSTRALIA

NSD 1315 of 2009

BUCHANAN J

11 DECEMBER 2009

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

General Division NSD 1315 of 2009

BETWEEN: OWEN SALMON

Applicant

AND: BANK OF WESTERN AUSTRALIA

Respondent

JUDGE: BUCHANAN J

DATE OF ORDER: 11 DECEMBER 2009

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

General division NSD 1315 of 2009

BETWEEN: OWEN SALMON

Applicant

AND: BANK OF WESTERN AUSTRALIA

Respondent

JUDGE: BUCHANAN J

DATE: 11 DECEMBER 2009

PLACE: SYDNEY

REASONS FOR JUDGMENT BUCHANAN J: 1 On 24 July 2009 a sequestration order was made against the estate of the applicant by a registrar of the Federal Magistrates Court of Australia ("FMCA"). The creditor's petition was founded upon a failure to satisfy a judgment entered in the Supreme Court of New South Wales on 8 April 2009 in the sum of $5,361,510.72. Unsuccessful attempts at personal service of the creditor's petition resulted in orders for substituted service by a registrar of the FMCA on 25 June 2009. The registrar directed four independent methods of service of documents and/or advice that the creditor's petition would be heard on 24 July 2009. Each was complied with. A sequestration order was made in the applicant's absence on that day. 2 On 11 August 2009 the applicant filed an application to review the orders made on 24 July 2009. In support of his application for review the applicant stated that he received the relevant documents on 27 July 2009. 3 The application for review was heard by a federal magistrate on 25 August 2009 (Bank of Western Australia Limited v Salmon [2009] FMCA 1155). The FMCA accepted in the applicant's favour that, although the orders for substituted service upon the applicant had been complied with, the necessary documentation had not come to his attention until after the sequestration order had been made. That conclusion was reached on the basis of the assertions contained in the affidavit filed by the applicant in support of his application for review. The orders made by the registrar were therefore set aside and the applicant was afforded an opportunity to make submissions about the creditor's petition. The FMCA then concluded that the requirements for making a sequestration order had been met and made a further sequestration order against the estate of the applicant. 4 The application to this Court, with which this judgment deals, is an application for an extension of time in which to appeal against the sequestration order made on 25 August 2009. In that application it was stated: The applicant wishes to have the application dealt with without an oral hearing. 5 On 27 November 2009 I made directions that the applicant file written submissions in support of his application by 3 December 2009 and the respondent file written submissions by 8 December 2009. The applicant did not file any submissions; the respondent did. I must therefore evaluate the application by reference only to its terms, the contents of a short affidavit filed in support of it and the terms of a draft notice of appeal. 6 If the applicant desired to appeal to this Court against the sequestration order made by the FMCA, an appeal was required to be brought within 21 days (see Federal Court Rules O 52 r 15). An appeal was not filed within 21 days. Rather, according to the affidavit filed in support of the present application, the applicant attended at the registry of the FMCA late on the 21st day. He stated that by the time he appreciated that the appeal would need to be lodged in the registry of this Court it was after 4.00 pm. He claimed that the following day he attended the registry of this Court but he received conflicting advice about the steps to be taken and was uncertain what to do. Thereafter he sought legal assistance unsuccessfully. He has proffered a medical certificate dated 13 October 2009 certifying that he was unfit for work from 13 September 2009 to 13 November 2009. The application for leave to appeal, supported by affidavit and a draft notice of appeal, was not filed until 19 November 2009, more than two months after the required time. 7 I am not satisfied that the applicant should be given an extension of time in those circumstances. It seems quite clear that on his own version of events he appreciated the necessity to file an appeal within 21 days. The recitation of his attempts to obtain legal assistance and the presentation of a medical certificate go no further to provide any explanation, much less an acceptable one, for the two months which elapsed after he attended the registry of this Court on 16 September 2009, in circumstances when it had become necessary to address the fact that he had not filed an appeal within the time permitted under the Federal Court Rules. I would not grant him an extension of time for that reason. 8 In any event it would be futile to do so because the appeal cannot possibly succeed. The draft notice of appeal suggests that the applicant was denied natural justice and procedural fairness because he was given an insufficient opportunity to prepare a case to present to the FMCA. However, it is clear from the circumstances I have recounted that he approached the FMCA to set aside the sequestration order and should have prepared to put a case in opposition to such an order when his case was heard. His immediate success (in having the order made by the registrar set aside) did not mean that he could expect to be excused from proceeding to explain why a sequestration order should not be made. The position is that he had an opportunity to put his case but his submissions were not accepted. 9 The basis upon which the FMCA concluded that a further sequestration order should be made appears from the following passages in the judgment of the FMCA (at [3] – [5]): 3. On the basis of [his] affidavit, on which Mr Salmon was not required for cross-examination, I concluded that, while the substituted service orders had been complied with, the documentation had not, in fact, come to Mr Salmon's attention until after the sequestration order had been made and that procedural fairness required him to be given the opportunity to respond to the petition before the Court. I set aside the orders made by Registrar Hannigan and, after adjourning to enable Mr Salmon to consider the material presented in support of the petition, I heard from the parties on the hearing of the petition. I was satisfied, on the basis of the material relied on by the petitioning creditor, that the formal requirements for the making of a sequestration order had been met. 4. Although no notice of any grounds of any opposition had been filed by Mr Salmon, I heard him on the reasons why he opposed the making of the orders sought in the petition. Mr Salmon submits that the Court should look behind the judgment of the Supreme Court supporting the bankruptcy notice on the basis of fraud in connection with a loan leading to that judgment and perjury in the giving of evidence in the Supreme Court. He also asserts that he has a counter claim against Bankwest, which exceeds in value the debt claimed by the bank. 5. I do not consider that there is any reason to look behind the judgment debt. There was an opportunity before the Supreme Court to agitate both issues in relation to the loan and guarantee leading to those proceedings and to challenge in those proceedings the credibility of witnesses. No appeal has been lodged, although Mr Salmon indicated his intention to do so. He said that he had been delayed in doing so by the bankruptcy proceedings. No legal process in relation to alleged counter claim has been lodged, although Mr Salmon again indicated his intention to do so. While that may have been an issue having a significant bearing on the bankruptcy notice. I am not satisfied that it would be a sufficient reason for the Court to refrain from making a sequestration order. There is no evidence of solvency and that counter claim, if advanced, would be available to the trustee in bankruptcy to pursue of behalf of all creditors. 10 It is apparent from those passages that there is no substance in any suggestion that Mr Salmon was deprived of a fair opportunity to address the creditor's petition filed against him after, finally, he responded to it. There is no reason, either, to doubt the correctness of the conclusions of the federal magistrate that there was no reason to look behind the judgment debt. Certainly, none has been shown. 11 The draft notice of appeal also suggested some technical defects in connection with the original service of the creditor's petition. No suggested irregularity of that kind can survive the operation of s 306(1) of the Bankruptcy Act 1966 (Cth) which provides: 306(1) Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court. 12 I consider there is no prospect that the applicant could, on appeal, disturb the ultimate conclusion of the FMCA that the requirements for making a sequestration order were met and there was no reason established why such an order should not be made. In all the circumstances I am satisfied that it would be futile to grant an extension of time. For that additional reason the extension of time will be refused. 13 The application will be dismissed. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.