FEDERAL COURT OF AUSTRALIA Slaveski v Rotstein & Associates Pty Ltd [2014] FCA 1094 Citation: Slaveski v Rotstein & Associates Pty Ltd [2014] FCA 1094 Appeal from: Rotstein & Associates Pty Ltd v Slaveski [2014] FCCA 1393 Parties: LJUPCO SLAVESKI v ROTSTEIN & ASSOCIATES PTY LTD (ACN 117 539 063) File number: VID 337 of 2014 Judge: BEACH J Date of judgment: 8 October 2014 Catchwords: BANKRUPTCY – appeal against sequestration order – refusal to grant adjournment – grounds of appeal of no substance – appeal dismissed Legislation: Bankruptcy Act 1966 (Cth) s 40(1)(g), 58(1) Federal Court of Australia Act 1976 (Cth) s 25(1AA)(a) Cases cited: Sali v SPC Limited (1993) 116 ALR 625 Date of hearing: 7 October 2014 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 33 Counsel for the Appellant: The Appellant did not appear. Ms S Slaveski, appeared on behalf of the Appellant. Solicitor for the Respondent: Mr D Huang of Rotstein & Associates Pty Ltd IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 337 of 2014 ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA BETWEEN: LJUPCO SLAVESKI Appellant AND: ROTSTEIN & ASSOCIATES PTY LTD (ACN 117 539 063) Respondent JUDGE: BEACH J DATE OF ORDER: 8 OCTOBER 2014 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The Appellant's appeal against the judgment and orders of the Federal Circuit Court constituted by Judge Riethmuller on 29 May 2014 is dismissed. 2. The Respondent's reasonable costs of and incidental to this appeal are to be treated as costs in the Appellant's bankruptcy in accordance with Section 109(1)(a) of the Bankruptcy Act 1966 (Cth). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 337 of 2014 ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA BETWEEN: LJUPCO SLAVESKI Appellant AND: ROTSTEIN & ASSOCIATES PTY LTD (ACN 117 539 063) Respondent JUDGE: BEACH J DATE: 8 OCTOBER 2014 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The appellant has appealed a judgment of his Honour Judge Riethmuller of the Federal Circuit Court wherein his Honour ordered that on 29 May 2014: (1) A sequestration order be made against the estate of LJUPCO SLAVESKI. (2) The applicant's costs be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966, fixed in the sum of $16,125.00. AND THE COURT NOTES THAT: A. The date of the act of bankruptcy is 15 May 2013. 2 The hearing before his Honour proceeded in the absence of the appellant. 3 An appeal has been lodged against his Honour's judgment. The notice of appeal filed on 18 June 2014 set out 15 grounds of appeal which were expressed in the following terms: 1. Bias; 2. Denied of Human Fundamental Rights; 3. Denied Natural Justice; 4. Breach of the Administration of Justice; 5. Breach of interest of Justice; 6. Denial of Procedural Fairness; 7. Continuing in absence of the respondent; 8. Error in law; 9. Breaching all rights to a fair hearing; 10. Denied taking mental illness of the respondent; 11. Breach of continuing without a litigation guardian; 12. Denial of Dr Reports; 13. Failure to take all the evidence into consideration; 14. On a question of Law – Denial of Section 40 (1)(g) of the Bankruptcy Act 1966, 15. Breach of hearing rule; 4 The appellant is overseas and has been since September 2013. Accordingly, I granted leave to his daughter, Ms Stojne Slaveski, a law student, to represent him on the hearing of this appeal, and for that purpose, under r 1.34 of the Federal Court Rules 2011 (Cth) (the Rules) I dispensed with compliance with r 4.01(1) of the Rules. I granted such leave because I considered that Ms Slaveski had the capacity to make useful submissions on behalf of the appellant and the appellant was overseas and did not have legal representation. In putting submissions on behalf of the appellant, and in what I would perceive to be difficult circumstances for her, she handled herself effectively. 5 In submissions made by Ms Slaveski, it became clear that notwithstanding the ambit and generality of the grounds of appeal, the appellant's principal complaint was that his Honour had been in error in failing to grant him an adjournment on 29 May 2014. I will return to this shortly. 6 The appeal comes before me as a single judge exercising the appellate jurisdiction of this Court under s 25(1AA)(a) of the Federal Court of Australia Act 1976 (Cth). Background 7 The sequestration order was made on the respondent's petition. The creditor's petition filed by the respondent in the Federal Circuit Court on 23 May 2013 was based upon an act of bankruptcy which arose by reason of non-compliance with a bankruptcy notice that had been issued on 29 August 2012 (bankruptcy notice). 8 The bankruptcy notice in turn was based on a judgment of the Magistrates' Court of Victoria made on 25 July 2011, which required the appellant to pay the respondent $117,516 comprising $100,000 plus costs of $17,516, and which also ordered that the appellant's counterclaim that had also been filed in the Magistrates' Court be dismissed. 9 The respondent before me provided a chronological sequence of events which it is useful to set out (the detail was not contested by the appellant, although an explanation was sought to be advanced as to the reasons for various non-attendances at various court hearings by the appellant). 10 The chronology, as expressed by the respondent, was as follows: • 3 August 2007: The Respondent commences Magistrates' Court action against Slaveski to which the judgement debt relates (Original Proceeding). • 11 August 2009: The Appellant files counter-claim in the Original Proceeding. • 25 July 2011: Magistrates' Court of Victoria determines that Original Proceeding and orders that: (a) Slaveski is to pay Rotstein the total sum of $117,516.00 (the Debt), being $100,000.00 plus costs of $17,516.00; and (b) Slaveski's counterclaim in the Proceeding is struck out, (the Original Order). • 19 August 2011: Slaveski files appeal against the Original Order in the Supreme Court of Victoria (First Appeal). • 14 November 2011: At the hearing of the First Appeal Rotstein applied to have the First Appeal summarily dismissed (Dismissal Application). The Dismissal Application was heard by Her Honour Associate Justice Daly. • 22 June 2012: Dismissal Application is successful. Her Honour Associate Justice Daly dismisses the First Appeal with costs in favour of Rotstein (Daly Decision). • 5 July 2012: Slaveski files appeal against Daly Decision in the Supreme Court of Victoria (Second Appeal). • 29 August 2012: Bankruptcy Notice issued on behalf of Rotstein against Slaveski based on the Original Order (Bankruptcy Notice). • 31 August 2012: Bankruptcy Notice served on Slaveski by email. • 3 September 2012: Second Appeal heard by His Honour Justice Kaye. Second Appeal is dismissed by His Honour in the absence of Slaveski with costs in favour of Rotstein (Kaye Decision). • 5 September 2012: Slaveski files a summons seeking a stay of enforcement of the Initial Order (Stay Application). • 7 September 2012: Stay Application dismissed by Magistrate Lauristen with costs in favour of Rotstein. • 12 September 2012: Slaveski issues summons seeking, inter alia, that the Kaye Decision be set aside and that a re-hearing of the First Appeal be granted (Third Appeal). • 17 September 2012: Third Appeal heard by His Honour Justice Dixon. • 19 September 2012: Slaveski commences proceedings in the Federal Magistrates' Court to set aside the Bankruptcy Notice (Bankruptcy Notice Proceeding). • 26 September 2012: Third Appeal dismissed by His Honour Justice Dixon with costs in favour of Rotstein (Dixon Decision). • 2 October 2012: Slaveski seeks leave to the Court of Appeal of the Supreme Court of Victoria to appeal the Dixon Decision (Fourth Appeal). • 16 November 2012: Fourth Appeal heard by Victorian Court of Appeal. Her Honour Chief Justice Warren and His Honour President Maxwell presided. • 16 November 2012: Fourth Appeal dismissed by Her Honour Chief Justice Warren and His Honour President Maxwell with costs in favour of Rotstein (Court of Appeal Decision). • 21 December 2012: Slaveski applies for special leave to appeal the Court of Appeal decision to the High Court of Australia (First Special Leave Application). • 1 May 2013: High Court of Australia dismisses the First Special Leave Application. • 15 May 2013: Bankruptcy Notice Proceeding dismissed by Judge Burchardt with costs in favour of Rotstein (Burchardt Decision). • 15 May 2013: Act of bankruptcy committed by Slaveski (non-compliance with the Bankruptcy Notice). • 23 May 2013: Creditor's petition presented to the Court in Federal Circuit Court Case No. MLG 721/2013. • 24 May 2013: Slaveski files an appeal against the Burchardt Decision to Federal Court of Australia. • 8 November 2013: Pagone J of Federal Court of Australia dismisses Slaveski appeal against Burchardt Decision as no substantive issues of law were raised, and that the applicant failed to point to any error of law in decision (Pagone Decision). • November 2013: Slaveski seeks special leave to appeal against Pagone Decision (Second Special Leave Application). • 6 March 2014: High Court of Australia (Kiefel, Keane JJ) dismiss Slaveski's Second Special Leave Application with costs. • 29 May 2014: Sequestration Order made against Slaveski by Judge Riethmuller in MLG 721/2013 (Riethmuller Decision). • 18 June 2014: Notice of Appeal filed by Slaveski against Riethmuller Decision in this proceeding. • 23 June 2014: Slaveski files interlocutory application for stay of Riethmuller Decision (Slaveski interlocutory application) in this proceeding. • 11 July 2014: Court dismisses Slaveski's interlocutory application with costs in this proceeding. 11 I have set out this chronology to demonstrate several matters. 12 First, the appellant has pursued all reasonable avenues open to him to directly challenge the judgment of the Magistrates' Court, which was the subject of the bankruptcy notice and ultimately the creditor's petition. All such avenues were pursued through the Supreme Court of Victoria. 13 Second, the appellant has pursued all reasonable avenues open to him to challenge collaterally the Magistrates' Court judgment in the context of seeking to set aside the bankruptcy notice, culminating in Pagone J's decision on 8 November 2013 ([2013] FCA 1184) on appeal from the Federal Circuit Court in respect of the decision of Judge Burchardt on 15 May 2013 ([2013] FCCA 257). 14 The appellant has been unsuccessful with such challenges. Moreover, the High Court has dismissed his various applications for special leave to appeal relating to such challenges. 15 Third, in terms of any counterclaim or the like that the appellant has desired to pursue against the respondent, that was dismissed by the Magistrates' Court as referred to above, with the order for such dismissal withstanding the various challenges that I have referred to. Moreover, the appellant has previously had the opportunity, in the context of applying to set aside the bankruptcy notice, to substantiate to the Federal Circuit Court's satisfaction a plausible counterclaim of the type contemplated by s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act). He failed to do so. 16 Fourth, I agree with the observations of Pagone J ([2013] FCA 1184 at [9]) when he said: Nonetheless, Mr Slaveski is experienced in litigation. He is aware of the need to meet court deadlines, he is aware of the importance of matters coming on on dates when they need to come on and he can be presumed to know the importance of having somebody come to court armed with material to deal with whatever needs to be said in a proceeding whether it is in renewing an application for an adjournment or in the hearing of the appeal. Grounds of appeal 17 As I have said, the appellant's grounds of appeal are general and diffuse. 18 In support of the grounds, the appellant filed written submissions on 11 August 2014 with supporting material, including medical reports (some of which were annexed to affidavits filed in the proceedings before Judge Riethmuller, some not) and a Victorian Civil and Administrative Tribunal (VCAT) application filed on 19 June 2014 by the appellant making a claim against the respondent (the VCAT application). The VCAT application was filed after the decision of Judge Riethmuller, which is the subject of the present appeal. I will address this shortly. The appellant also sought to rely upon an affidavit of the appellant sworn 19 June 2014, an affidavit of Ms Slaveski sworn 29 August 2014 and more generally all of the affidavits and other material filed on behalf of the appellant in the Federal Circuit Court proceedings associated with the creditor's petition. I have considered all this material carefully, including perusing the Federal Circuit Court's file, and taken it all into account. 19 Before proceeding further, I should deal with one preliminary matter. 20 The appellant sought an adjournment of the present appeal based upon proceedings recently taken in relation to the VCAT application. Apparently, because the appellant has been declared a vexatious litigant, he needs the leave of the Supreme Court of Victoria to file the VCAT application. By an affidavit sworn by Ms Slaveski on 7 October 2014, Ms Slaveski explained that proceedings were instituted in the Supreme Court seeking such leave on 6 October 2014, and that such proceedings came before Dixon J, who then adjourned the relevant application to 13 October 2014 for hearing before an Associate Justice of that Court. The appellant before me sought an adjournment of the present appeal to await the outcome of that leave application in the Supreme Court. I refused the adjournment. 21 First, the VCAT application, having been filed after 29 May 2014, was of course not a matter before Judge Riethmuller. Second, the VCAT proceeding has various problematic aspects to it. It might be said to constitute an abuse of process of the type associated with an Anshun estoppel or indeed another form of estoppel, given the previous dismissal of the appellant's counterclaim in the Magistrates' Court proceeding. Third, if the new claim is an asset of the estate, then it may be for the trustee to pursue (see s 58(1) of the Bankruptcy Act, although the nature of the relief sought is unclear so it is not appropriate to discuss this further); however, asserting a right of appeal before me in relation to the making of the sequestration order falls into a different category. Fourth, I did not in any event see the utility in an adjournment of the appeal before me. If an error is to be established in how Judge Riethmuller proceeded, it has to be established on the material before him and the facts and circumstances then known. The appellant asserted that his Honour should have granted the adjournment before him to enable the VCAT application to have been filed. But if that point is good, which I do not say it is, then the error will have been established on the material before him; the actual later proceedings are largely irrelevant. And if the point is bad, because no error is established in how his Honour dealt with the adjournment application, then what has occurred subsequently in relation to the VCAT application is largely irrelevant. There was also reference made in Ms Slaveski's affidavit to the fact that there is an appeal on foot in the Supreme Court concerning the vexatious litigant order, although the matter was not entirely clear; but I do not see how any adjournment of the appeal before me is justified by such a circumstance. For all these reasons, I refused the adjournment. 22 In oral argument, it became apparent that the appellant's central argument was that his Honour erred in refusing the adjournment application. No error was otherwise asserted by the appellant concerning the respondent's affidavit material and the respondent's evidence necessary to otherwise establish the grounds of the petition. 23 In relation to the adjournment application, his Honour dealt with the matter at [9], [10] and [12] of his reasons as follows: 9. The applicant wishes to proceed today. The respondent has not appeared in these proceedings when they have been listed before me. There is no doubt that he is aware of the matter pending today. 10. The debtor has written to my associate asking for an adjournment. He does not set out a specific timeline nor any point of defence that he says he may have to the creditor's position, nor does it seem apparent what the purpose of the adjournment is, other than to delay the matter further. There is no explanation given for why he has not been able to be available today, nor if he did want to attend by electronic communication why arrangements, including an application for that, could not have been made by him before today. In the circumstances, I am not persuaded that the matter should be adjourned. … 12. With respect to the application for an adjournment, I am not persuaded in this case that the interests of justice would be served by further adjourning the matter. In the circumstances, I therefore find that the applicant has made out the case for a sequestration order and that it is appropriate to make such an order. 24 In my view, the appellant has not established any error in how his Honour dealt with the adjournment application. 25 By an email forwarded to his Honour's associate after 5.00 pm on 28 May 2014, an adjournment was requested by the appellant, but the precise scope and the precise purpose was either not stated or quite unclear. Moreover, there was no satisfactory explanation as to why this was left so late. The creditor's petition had been filed some 12 months earlier. Further, the hearing of the petition had been adjourned on various occasions, albeit apparently at the request of the respondent. Further, notifications to the parties in relation to the 29 May 2014 hearing had been sent to two email addresses relating to the appellant and his wife. As his Honour said with respect to the appellant at [9]: "[t]here is no doubt that he is aware of the matter pending today"; see also the background at [2]. 26 Ms Slaveski asserted that the appellant was not aware of the 29 May 2014 hearing until very late in the piece. His Honour did not accept that position as a matter of fact. In my view, no error has been demonstrated. 27 Second, it was asserted by Ms Slaveski that the appellant had a psychological or psychiatric condition such as to suggest that the appellant's adjournment application should have been dealt with more favourably because of his slow or lack of comprehension. It was also asserted by Ms Slaveski that his Honour had not taken into account the appellant's medical condition, even though there was such evidence before his Honour, in relation to assessing the need for an adjournment (see for example his wife's affidavit dated 28 June 2013, and as to form and what they demonstrate about the appellant's state of mind, see also his affidavits dated 26 and 30 August 2013). In my view, his Honour can be taken to have considered this material and was aware of the appellant's mental state (cf [5] and [6] of his reasons). There is nothing to suggest that he did not consider this, but his Honour also apparently formed the view, given that VCAT had declined to order that a guardian be appointed for him, that he was competent to deal with the litigation; so much may be inferred from [6] of his reasons. In any event, the adjournment request had not been put by the appellant on this basis, but given the nature of the ground perhaps unsurprisingly. 28 Third, it was asserted by Ms Slaveski that the appellant should have had a litigation guardian appointed for him and that it was inappropriate to so proceed in the absence of such a guardian. In my view, the evidence does not establish that any was applied for by or on his behalf or that his Honour erroneously proceeded in the absence of such a guardian. Again, no mention of this was made in the adjournment request, but given the nature of the ground perhaps unsurprisingly. 29 Fourth, not only did the appellant advance no purpose for the adjournment, but it would seem that it would have been futile. I enquired of Ms Slaveski what the purpose for the adjournment would have been. It was contended that legal advice would have been sought. But it is not apparent to me that any would have been sought or would have been forthcoming. The appellant's email of 28 May 2014 did not make any reference to such a basis. Further, no such legal advice had been obtained since the petition had been filed some 12 months earlier. The appellant at all times did not have legal representation in the proceeding. Then it was contended that because of his mental condition, the appellant needed time to gather his thoughts. But as to that, he had previously had adequate time, as his Honour found. Then it was said that the adjournment was necessary to file the VCAT application. The appellant did not advance any such ground in his email of 28 May 2014. Further, the VCAT application would have been at best yet another collateral challenge to or attempted circumvention of the Magistrates' Court judgment and its previous dismissal of the counterclaim. Further, in any event, it would have been bare assertion. True it is that on the creditor's petition, the appellant was still entitled to challenge the foundational debt. But I do not see how any possible filing of a VCAT application would have changed his Honour's assessment on the hearing of the petition. Further, as to the existence of the foundational debt, his Honour would also have taken into account the previous challenges which had failed. A possible course of filing yet another proceeding, this time in VCAT and arguably an abuse of process, would not have changed that landscape. Finally, it was contended that if an adjournment had been granted, the guardianship issue may have been pursued. How and by whom remained entirely unclear to me. 30 Generally, in order to ensure that I fully understood all of the appellant's grounds of appeal, I went through each ground of appeal seriatim with Ms Slaveski. They all related directly or indirectly to his Honour's failure to adjourn the hearing on 29 May 2014. There was an additional element to the bias ground relating to an alleged incident two years ago. I had no evidence before me. Ms Slaveski made various untested assertions, but even accepting her assertions, the point went nowhere. 31 In summary, in my view no error is established in how his Honour proceeded on 29 May 2014. No error is established in his Honour's conclusion at [12] that the interests of justice would not have been served by adjourning the matter. Further, his Honour no doubt would have recalled what the High Court said in Sali v SPC Limited (1993) 116 ALR 625 at 629 per Brennan, Deane and McHugh JJ: In determining whether to grant an adjournment, the judge of a busy court is entitled to consider the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties. As Deane J pointed out in Squire v Rogers ((1979) 27 ALR 330, at 337) this "may require knowledge of the working of the listing system of the particular court or judge and the importance in the proper working of that system of adherence to dates fixed for hearing". What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources. Such observations well apply to the nature and volume of proceedings that the Federal Circuit Court is required to efficiently hear and adjudicate upon. 32 The question of the adjournment was a matter for his Honour in the exercise of his discretion taking into account the facts and circumstances before him. A court will be slow to interfere with such a discretion. I cannot detect any error that would warrant such an interference. 33 The appellant's appeal will be dismissed. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach. Associate: Dated: 9 October 2014