FEDERAL COURT OF AUSTRALIA Watts v Bendigo and Adelaide Bank Limited (No 4) [2011] FCA 310 Citation: Watts v Bendigo and Adelaide Bank Limited (No 4) [2011] FCA 310 Appeal from: Bendigo and Adelaide Bank Limited v Watts & Anor [2010] FMCA 623 Parties: BHOJI WATTS and GAMBHIR WATTS v BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178) File number(s): NSD 1126 of 2010 Judge: YATES J Date of judgment: 31 March 2011 Catchwords: PRACTICE AND PROCEDURE – application to stay proceedings pending appeal to High Court Legislation: Bankruptcy Act 1966 (Cth) s 44(1)(c) Judiciary Act 1903 (Cth) s 35A Cases cited: Jennings Construction Limited v Burgundy Royale Investments Proprietary Limited (No. 1) (1986) 161 CLR 681 Morris v R (1987) 163 CLR 454 Murdaca v Accounts Control Management Services Pty Ltd [2007] FCA 964 Watts v Bendigo and Adelaide Bank Limited [2010] FCA 1013 Date of hearing: 31 March 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 26 Counsel for the Applicants: The applicants appeared in person Solicitor for the Respondent: Ms H van Ravels of Gadens Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1126 of 2010 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: BHOJI WATTS First Applicant GAMBHIR WATTS Second Applicant AND: BENDIGO AND ADELAIDE BANK LIMITED ACN 068 049 178 Respondent JUDGE: YATES J DATE OF ORDER: 31 MARCH 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicants' notice of motion dated 21 March 2011 be dismissed. 2. The applicants pay the respondent's costs of and incidental to the notice of motion. 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 Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1126 of 2010 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: BHOJI WATTS First Applicant GAMBHIR WATTS Second Applicant AND: BENDIGO AND ADELAIDE BANK LIMITED Respondent JUDGE: YATES J DATE: 31 MARCH 2011 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 By notice of motion dated 21 March 2011, the applicants seek the following orders: 1. The operation of Katzmann J's [order] delivered on 9 March 2011 and all proceedings pursuant to it is stayed until the disposal of the appeal by the High Court of Australia S105/2011 in the above matter. 2. Stay ordered by Yates J on 14 September 2010 of all proceedings under the sequestration order made by the Federal Magistrates Court in proceeding SYG101/2010 is extended until final judgment is given in the appeal before the High Court (in the matter number S105/2011). 2 On 9 March 2011 Katzmann J dismissed the applicants' appeal from a judgment of the Federal Magistrates Court of Australia given on 11 August 2010 in which a sequestration order was made against the estates of the applicants. 3 One issue in the appeal was whether the petition dated 20 January 2010 (on which the sequestration order was made) was presented outside the time prescribed by section 44(1)(c) of the Bankruptcy Act 1966 (Cth). If so, the sequestration order should not have been made on that petition. The resolution of that issue turned on the proper construction of orders made by Jagot J on 8 May 2009. 4 Those orders included the following orders: (1) Pending further or other order: (a) extend the time to comply with Bankruptcy Notice NN4517/08 until 19 May 2009 and, if a notice of appeal against the decision in Watts v Adelaide Bank Limited (2009) FCA 420 is filed on or before that date, extend the time for compliance with the said bankruptcy notice until the first return date of the notice of appeal at which time a further application for an extension of time may be made; (b) otherwise, if a notice of appeal is not filed on or before 19 May 2009, extend the time to comply with the said Bankruptcy Notice until 26 May 2009. 5 Those orders related to an appeal by the applicants against the dismissal by Buchanan J on 29 April 2009 of their application to set aside the bankruptcy notice referred to in the order. The applicants filed a notice of appeal on 13 May 2009 in relation to the dismissal by Buchanan J, but did not comply with the bankruptcy notice or seek any further extension of time within which to comply. 6 The question thus raised in those circumstances was the proper meaning of "the first return date of the notice of appeal" in order 1(a) of the orders made by Jagot J on 8 May 2009, which identified the period within which compliance with the bankruptcy notice was required. 7 On appeal to this Court, as well as before the Federal Magistrates Court, the applicants contended that that date was 10 June 2009, when the notice of appeal from Buchanan J's judgment was listed for a conference with a registrar of this Court for the settlement of the appeal papers. Alternatively, in the appeal before Katzmann J, the applicants contended that the date was 17 June 2009 when Moore J made an order by consent (in chambers), referring the parties to a registrar for a conference pursuant to order 10 rule 1(2)(h) and order 10 rule 1(2)(i) of the Federal Court Rules. 8 Katzmann J rejected both of those contentions and held (as did the Federal Magistrates Court) that, on the proper construction of Jagot J's order, "the first return date of the notice of appeal" was 29 July 2009, being the date of the callover of the appeal before Moore J. It followed that the petition on which the sequestration order was made was not presented out of time. Katzmann J dismissed the other grounds of appeal. 9 On 18 March 2011 the applicants applied for special leave to appeal from the whole of the judgment given by Katzmann J on 9 March 2011. That application remains to be determined. The single ground raised by the application is the question of construction to which I have referred. 10 There is precedent for this Court granting an order staying proceedings under a sequestration order until the hearing or earlier determination of an application to the High Court for special leave to appeal. In Murdaca v Accounts Control Management Services Pty Ltd [2007] FCA 964, such a stay was granted by Branson J. Her Honour reasoned that such an application is, or at least is akin to, an application for a stay to preserve the subject matter of litigation, pending the application for special leave to appeal being determined. 11 In considering the application before her, Branson J referred to the observations of Brennan J in Jennings Construction Limited v Burgundy Royale Investments Proprietary Limited (No. 1) (1986) 161 CLR 681 at 685 where his Honour said: In exercising the extraordinary jurisdiction to stay, the following factors are material to the exercise of this Court's discretion. In each case when the Court is satisfied a stay is required to preserve the subject matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies. 12 In Murdaca, Branson J considered that those observations provided valuable guidance as to the proper approach to be taken in an application for a stay made to this Court in the present circumstances. Her Honour considered the reference to the prospect of a grant of special leave being "substantial", to be intended to convey no more than that there should be a real, as opposed to a remote or insubstantial, possibility of special leave being granted. 13 Section 35A of the Judiciary Act 1903 (Cth) provides that, when considering whether to grant an application for special leave to appeal, the High Court must have regard to whether the proceeding, in which the judgment to which the application relates, involves a question of law that is of public importance (whether because of its general application or otherwise) or in respect of which a decision of the High Court, as the final appellate court, is required to resolve differences of opinion between different courts, or within the one court, as to the state of the law; and also whether the interests of the administration of justice, either generally or in a particular case, require consideration by the High Court of the judgment to which the application relates. 14 In Morris v R (1987) 163 CLR 454 Dawson J at 475 observed that, in many applications for special leave, insufficient attention is given to the distinction between leave to appeal and special leave to appeal. Leave to appeal may be given where an applicant makes out a prima facie case of error, but that is not enough to attract special leave to appeal, which should only be given where, in addition, there is some special feature of the case which warrants the attention of the High Court. His Honour also observed that, in exercising its wide discretion to grant special leave to appeal, it is proper that the High Court should be influenced by the function which it performs as the final appellate court in the judicial hierarchy. 15 The applicants' trustee in bankruptcy has not appeared this morning, although I have been informed by Mr Watts that notice of the present application was sent by him to the trustee, and that the trustee is aware of the present hearing. 16 Ms van Ravels has appeared this morning on behalf of Bendigo and Adelaide Bank Limited, which is named as the respondent to the notice of motion. Ms van Ravels informed me that Bendigo and Adelaide Bank Limited neither consents to nor opposes the granting of the stay that is sought, but that the bank's attitude to the application is one largely influenced by cost considerations, particularly in light of the cost that has been incurred in and in relation to the present proceeding involving the bankruptcy of the applicants. 17 In my respectful view, the prospects of special leave being granted in the present matter are remote. No question of law of public importance is involved, nor one in respect of which the High Court would be called upon to adjudicate differences of opinion between or within courts. Similarly, in my respectful view, the interests of the administration of justice do not indicate that this is a matter which is likely to require consideration by the High Court. 18 All that is involved is the question of the construction of particular orders made in a particular factual context. No doubt that question is one of considerable importance to the applicants, but its importance does not extend beyond them so as to relevantly constitute a matter of public importance, or one where the interests of the administration of justice require consideration by the High Court. 19 The applicants have placed some reliance on my own observations in Watts v Bendigo and Adelaide Bank Limited [2010] FCA 1013, when dealing with an application to stay proceedings under the sequestration order at a time when the appeal from the Federal Magistrates Court of Australia was pending in this Court. 20 In dealing with the question of construction to which I have referred, I expressed the following view at [26]: In my view it cannot be said that the first ground of appeal is devoid of any reasonable prospect of success. Although the Federal Magistrates Court provided a number of reasons supporting the conclusion which it favoured concerning the construction of the orders made on 8 May 2009, the identification of those orders of "the first return date of the notice of appeal" is not uncontroversial. After all, the relevant notice of appeal itself identified when the appeal proceeding was to first come before the court. That date was 10 June 2009 when the appeal papers were to be settled. No other date was specified in the notice of appeal for bringing the parties to the appeal before the court. 21 I also expressed the following view at [28] of my reasons: I am not required to express any final view on the correctness of the construction favoured by the Federal Magistrates Court. It is sufficient for me to form the view that, in relation to that matter, there exists an arguable ground of appeal. I am satisfied that ground 1 of the notice of appeal raises an arguable ground of appeal. In my view, it does not necessarily follow that the further words in the orders made on 8 May 2009 have the controlling significance that the Federal Magistrates Court placed on them. 22 Those views, conditional as they were, plainly related to a stage when the applicants' appeal was pending in this Court. The appeal on that matter has now been finally and fully considered in the judgment given by Katzmann J. 23 On the hearing of the present application, no particular error in her Honour's reasoning was pointed out to me, the applicants' position being that her Honour simply came to an incorrect view as to the proper meaning of the words "the first return date of the notice of appeal" in order 1(a) made by Jagot J on 8 May 2009. I am not persuaded on this application that the construction placed upon those words by Katzmann J was one that was not open to her Honour; or indeed, that her Honour's conclusion is tainted by error. 24 In an affidavit sworn in support of the application before me, Mr Watts deposed to his belief that, if a stay of the sequestration order is not granted, then the appeal to the High Court, if successful, may be nugatory. He also expressed the strong belief that, if proceedings under the sequestration order are not stayed until final judgment on the appeal to the High Court, the applicants will suffer injustice and be put to great financial and emotional hardship as well as detriment to their relationship, which will adversely affect their family members. As I have said, I accept that the present matter is one of considerable importance to the applicants. However, I have no other material before me which informs me of any particular loss that the applicants would suffer beyond the administration of the bankrupt estates continuing. 25 In the course of delivering these reasons (after making the above observation on the state of the evidence), Mr Watts rose to inform me that his livelihood as an accountant and as a director of certain companies will be adversely affected if a stay is not granted. I accept that these consequences may follow. Nevertheless, I am not persuaded that this is an appropriate matter in which a stay should be ordered, and I refuse to make the orders sought on the notice of motion. 26 The orders of the court will be: 1. The applicants' notice of motion, dated 21 March 2011, be dismissed. 2. The applicants pay the respondent's costs of and incidental to the notice of motion. I certify that the preceding twenty (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate: Dated: 4 April 2011