Schepis, in the matter of Schepis v Esanda Finance Corporation Limited [2001] FCA 144 (27 February 2001)

Last Updated: 27 February 2001

FEDERAL COURT OF AUSTRALIA

Schepis, in the matter of Schepis v Esanda Finance Corporation Limited [2001] FCA 144

BANKRUPTCY - bankruptcy notice - setting aside - whether Local Court judgment that founded notice was stayed by filing of appeal to Supreme Court - whether Supreme Court or Local Court ordered stay of judgment.

Federal Court of Australia Act 1976 (Cth), s 35A(5).

Bankruptcy Act 1966 (Cth), s 40(1)(g).

Local Courts (Civil Claims) Act 1970 (NSW), ss 12, 32, 69.

Justices Act 1902 (NSW), ss 104, 106, 107.

Supreme Court Rules (NSW), Pt 51B, rr 7, 8.

Re Johnson; Ex parte Johnson v Tonkin (1994) 53 FCR 70, cited.

Schepis v Esanda Finance Corporation Ltd [2000] NSWSC 41, cited.

IN THE MATTER OF ANTHONY SCHEPIS & ANOR

ANTHONY SCHEPIS & ANOR v ESANDA FINANCE CORPORATION LIMITED

N 7946 of 2000

SACKVILLE J

SYDNEY

27 FEBRUARY 2001

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 7946 OF 2000

IN THE MATTER OF ANTHONY SCHEPIS AND MICHELE SCHEPIS

BETWEEN:	ANTHONY SCHEPIS and MICHELE SCHEPIS APPLICANTS
AND:	ESANDA FINANCE CORPORATION LIMITED RESPONDENT
JUDGE:	SACKVILLE J
DATE OF ORDER:	27 FEBRUARY 2001
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The decision of the Registrar dismissing the applicants' application to set aside the bankruptcy notice issued on 23 May 2000 be confirmed.

2. The applicants pay the respondent's 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	N 7946 OF 2000

IN THE MATTER OF ANTHONY SCHEPIS AND MICHAEL SCHEPIS

BETWEEN:	ANTHONY SCHEPIS and MICHELE SCHEPIS APPLICANTS
AND:	ESANDA FINANCE CORPORATION LIMITED RESPONDENT

JUDGE:	SACKVILLE J
DATE:	27 FEBRUARY 2001
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE ISSUE

1 This is an application to review a decision of a Registrar of the Court, made on 10 October 2000. The Registrar dismissed an application to set aside a bankruptcy notice issued against the applicants on 23 May 2000 and served on them on 29 July 2000. The application to review the Registrar's decision is made pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth).

2 The bankruptcy notice was issued on the application of the respondent ("the creditor"). It was founded on a judgment of the Local Court at Sydney, given on 9 July 1999, by which the creditor obtained judgment against the applicants in the sum of $48,574.13. (Presumably the judgment included a component of interest, and thus did not exceed the Local Court's jurisdictional limit of $40,000 before interest: Local Courts (Civil Claims) Act 1970 (NSW) ("Local Courts Act"), ss 12(1), (6).) There is no dispute that the Local Court order was a final and not interlocutory judgment.

3 The applicants contend that the Local Court order cannot be described as a "judgment or order the execution of which has not been stayed" (Bankruptcy Act 1966 (Cth), s 40(1)(g)). According to Mr Roche, who appeared for the applicants, this is because the Local Court order was subject to a stay of execution on the day the bankruptcy notice was served (that is, 29 July 2000). Mr Roche submitted that, in these circumstances, the bankruptcy notice was liable to be set aside. He relied on the following observation of Spender J in Re Johnson; Ex parte Johnson v Tonkin (1994) 53 FCR 70, at 77:

"it is a necessary requirement of the [Bankruptcy] Act that a judgment or order founding a bankruptcy notice be one which is not stayed (within the wide meaning given to that phrase) both at the time of issue of the bankruptcy notice and at the time of service". (Emphasis added.)

4 Mr Newton, who appeared for the creditor, did not dispute that, if the Local Court order was subject to a stay of execution on 29 July 2000, the bankruptcy notice should be set aside. He disputed, however, that any such stay was in force at that time.

THE COURSE OF EVENTS

5 The course of events relevant to this application is as follows:

* On 6 August 1999, the applicants filed a summons in the Common Law Division of the Supreme Court of New South Wales seeking to set aside the order of the Local Court. The summons did not identify any specific error of law said to have been committed by the Local Court. Nor, so far as the evidence reveals, was the summons accompanied by a document specifying the alleged error of law. The significance of this omission will appear in due course.

* On 29 October 1999, the applicants filed an amended summons in the Supreme Court seeking leave to appeal from the decision of the Local Court. Neither counsel was able to shed light on why the amended summons, which was not in evidence, sought leave to appeal to the Supreme Court, as distinct from pursuing an appeal as of right. A possible explanation may be that the grounds of appeal were thought to raise only mixed questions of law and fact: see Justices Act 1902 (NSW) ("Justices Act"), s 104(1)(b).

* On 14 February 2000, Brownie AJ, in a reserved judgment, dismissed the amended summons: Schepis v Esanda Finance Corporation Ltd [2000] NSWSC 41.

* On or about 7 July 2000, the applicants filed a summons seeking leave to appeal to the Court of Appeal from the orders made by Brownie AJ. It would seem that leave was required because the summons was filed out of time.

* On 23 October 2000, the Court of Appeal dismissed the summons for leave to appeal.

THE LEGISLATION

6 Section 69 of the Local Courts Act provides as follows:

"Appeal

(1) Subject to subsection (2), all judgments and orders of a court exercising jurisdiction under this Act shall be final and conclusive.

(2) A party to proceedings under this Act who is dissatisfied with the judgment or order of the court as being erroneous in point of law, may appeal to the Supreme Court therefrom.

...

(3) The provisions of Part 5 of the Justices Act 1902, apply, to the extent to which they are applicable, to appeals under subsection (2) in the same way as they apply to appeals to the Supreme Court under those provisions."

7 Section 32(1) of the Local Courts Act empowers a court to order, on such terms as it thinks fit, that any proceedings in any action or matter before that court be stayed at any stage of the proceedings. The power includes power to order a stay of enforcement of a judgment: s 32(2).

8 Division 2 of Part 5 of the Justices Act governs appeals to the Supreme Court, inter alia, from orders made by Local Courts in the exercise of their criminal jurisdiction: see s 102. Section 104 of the Justices Act provides as follows:

"(1) Appeals by defendants

A person against whom any conviction or order was made, or sentence was imposed, by a Magistrate in summary proceedings may appeal under this Division to the Supreme Court on any of the following grounds:

(a) a ground that involves a question of law alone,

(b) a ground that involves a question of mixed law and fact, but only with the leave of the Supreme Court,

(c) ....

This subsection does not apply in respect of an order that is made in relation to committal proceedings or an interlocutory order.

...

(4) Appeals in relation to interlocutory orders

A defendant or an informant may appeal under this Division to the Supreme Court against any interlocutory order that is made by a Magistrate in summary proceedings, on a ground that involves a question of law alone, but only with the leave of the Supreme Court.

(5) Appeals by parties to civil proceedings

A party to any proceedings under the Local Courts (Civil Claims) Act 1970 may appeal under this Division to the Supreme Court as provided for by section 69 of that Act."

9 Sections 106 and 107 (also within Division 2 of Part 5) are in the following terms:

"106. How appeal to be made and conducted

(1) An appeal is to be made and conducted in accordance with the rules.

(2) An appeal is to be made within such period after the date that the relevant conviction or order is made, or the sentence imposed, as may be prescribed by the rules.

107. Stay of execution of conviction, order or sentence pending appeal

(1) The execution of a sentence imposed as a consequence of a conviction, or of any other order, is stayed when a notice of appeal is given in accordance with this Division.

...

(3) The stay of execution continues until the appeal is finally determined, subject to any order or direction of the Supreme Court....

...

(5) An application for leave to appeal does not result in a stay of execution under this section."

10 Both Mr Roche and Mr Newton accepted that the "rules" referred to in s 106(1) of the Justices Act are contained in the Supreme Court Rules ("SCR"), Part 51B (which is concerned with "Appeals to the Court under Part 5 of the Justices Act"). Part 51B r 7 provides that an appeal to the Court is to be instituted by filing a summons that "claims the decision which the party instituting the appeal seeks in place of the decision of the tribunal below". Part 51B r 8 requires the plaintiff to file and serve with or subscribe to the summons instituting the appeal a brief but specific statement

"(a) of the grounds relied upon in support of the appeal and, in particular, the grounds upon which it is contended that there is any error of law."

THE FIRST CONTENTION

11 The applicants' first contention is that the filing of the summons in the Supreme Court on 6 August 1999 operated, by force of s 107(1) of the Justices Act, to stay execution of the Local Court order made on 9 July 1999. Both parties approached this contention on the basis that s 69(3) of the Local Courts Act attracts s 107(1) of the Justices Act if a summons seeking to set aside an order of the Local Court is filed in accordance with the requirements of the SCR. I am prepared to assume, without deciding, that this approach is correct.

12 The applicant's contention encounters the difficulty that the summons filed on 6 August 1999, as Mr Roche conceded, did not comply with SCR, Part 51B r 8. Specifically, it did not contain or attach a statement of the grounds relied on in support of the appeal. It would seem to follow that the appeal was not "made...in accordance with the rules", as required by s 106(1) of the Justices Act. It would also seem to follow that the "notice of appeal" (which, in the circumstances of this case, refers to the summons required by SCR, Part 51B r 7) was not "given in accordance with this Division" and that the automatic stay provided for by s 107(1) of the Justices Act was not enlivened. In any event, Mr Roche did not advance any arguments in opposition to this line of reasoning.

13 There is a further difficulty with the applicants' contention. Even if the Local Court order was stayed by virtue of s 107(1) of the Justices Act, the stay was operative only until "the appeal [was] finally determined", subject to any contrary order or direction of the Supreme Court: see s 107(3). Mr Newton submitted that the appeal was "finally determined" when Brownie AJ delivered judgment dismissing the amended summons on 14 February 2000. Mr Roche did not dispute the correctness of this submission. It follows that if any stay of execution had taken effect by virtue of s 107(1) of the Justices Act, it had expired by the time the bankruptcy notice was served on 29 July 2000.

14 I should refer to one further matter. The evidence shows that a copy of the summons filed in the Supreme Court on 6 August 1999 was received by the Local Court on 9 September 1999. A case inquiry report from the Local Court records an entry on 9 September 1999 as follows:

"Stay of proceedings pending appeal".

15 Mr Roche did not specifically rely on this entry to support the applicants' contention. Accordingly, its significance was not the subject of debate. I am inclined to think, however, that this entry in the Local Court's records cannot give the summons any greater operation in effecting a stay of the Local Court order than it would have on proper construction of s 107(1) of the Justices Act. It is not necessary to resolve this question. Even if the entry in the Local Court records was effective to stay the order made on 9 July 1999, any such stay would have expired when Brownie AJ dismissed the amended summons on 14 February 2000.

THE SECOND CONTENTION

16 Mr Roche submitted that, in consequence of the summons filed in the Court of Appeal on 28 July 2000 seeking leave to appeal from the orders made by Brownie AJ, an order was made staying execution of the Local Court orders. As I understand the submission, it was based on a letter annexed to an affidavit sworn by an officer at the Local Court at Sydney. The letter is dated 22 January 2001 and bears a stamped signature of a Registrar of the Court. It is addressed to the applicants' solicitors and simply says that

"There was a stay effective in this matter from the 09.09.99, and 28.07.00".

17 Apart from this letter, there is nothing in the evidence to indicate that either the Supreme Court or the Local Court granted a stay on or about 28 July 2000. On the contrary, a case inquiry record of the Local Court, generated on 3 August 2000, makes no reference to any such stay having been granted. The Registrar's letter itself does not explain how the stay came about. The officer's affidavit states, however, that a copy of the applicants' summary of argument in support of the summons for leave to appeal to the Court of Appeal was received by the Local Court on 28 July 2000.

18 It was not suggested that the Registrar's letter has any special evidentiary status. In the absence of other evidence suggesting that the Supreme Court or the Local Court made an order staying execution of the original Local Court order, the inference I draw is that an officer of the Local Court assumed that the filing of the summons in the Court of Appeal effected a stay of the Local Court orders. The filing of the summons seeking leave to appeal to the Court of Appeal did not, however, have that effect. Mr Roche did not suggest otherwise.

19 The conclusion I reach is that no stay of execution of the Local Court orders was made or took effect on or about 28 July 2000. The applicants' second contention therefore fails.

THE THIRD CONTENTION

20 As somewhat of an afterthought, Mr Roche suggested that the filing on 29 October 1999 of the amended summons seeking leave to appeal to the Supreme Court from the decision of the Local Court effected a stay of the orders of the Local Court by virtue of s 107(1) of the Justices Act. But this submission encounters the same difficulty as the applicants' first submission. Even if the filing of the summons did result in a stay, the stay expired when Brownie AJ dismissed the summons on 14 February 2000.

21 A further possible difficulty in the path of this contention is that the summons sought leave to appeal from the order of the Local Court. It may be that s 107(3) of the Justices Act prevents such a summons operating as a stay. It is not, however, necessary to resolve that question.

CONCLUSION

22 The decision of the Registrar dismissing the applicants' application to set aside the bankruptcy notice issued on 23 May 2000 should be confirmed. The applicants must pay the creditor's costs.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice SACKVILLE .

Associate:

Dated: 27 February 2001

Counsel for the Applicant:	Mr I D Roche
Solicitor for the Applicant:	Hancocks Solicitors
Counsel for the Respondent:	Mr P Newton
Solicitor for the Respondent:	Kemp Strang
Date of Hearing:	22 February 2001
Date of Judgment:	27 February 2001