Dimitriou v Pineview Property Holdings Pty Ltd

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judge: MARKOVIC J
• Judgment Date: 10 December 2019
• Neutral Citation: [2019] FCA 2123
• Date: 10 December 2019

FEDERAL COURT OF AUSTRALIA

Dimitriou v Pineview Property Holdings Pty Ltd [2019] FCA 2123

File number:	NSD 1600 of 2019
Judge:	MARKOVIC J
Date of judgment:	10 December 2019
Catchwords:	PRACTICE AND PROCEDURE – application for stay of proceedings – where respondent conceded that appellant had arguable ground of appeal – whether balance of convenience favours stay – application dismissed ; PRACTICE AND PROCEDURE – application for security for costs of appeal proceeding – application allowed
Legislation:	Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules 2011 (Cth) rr 36.08, 36.09
Cases cited:	Endresz v Australian Securities and Investments Commission [2014] FCA 1139 Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd [2019] FCA 1734
Date of hearing:	10 December 2019
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Category:	Catchwords
Number of paragraphs:	37
Counsel for the Appellant:	Ms M Castle
Counsel for the Respondent:	Mr D Allen
Solicitor for the Appellant:	Adelsteins Solicitors
Solicitor for the Respondent:	Kekatos Lawyers

ORDERS

		NSD 1600 of 2019
BETWEEN:	GEORGE DIMITRIOU Appellant
AND:	PINEVIEW PROPERTY HOLDINGS PTY LTD ACN 155 051 157 Respondent

JUDGE:	MARKOVIC J
DATE OF ORDER:	10 december 2019

THE COURT ORDERS THAT:

1. By 7 January 2020 the appellant is to provide the respondent security for its costs for the appeal in the sum $45,000, failing which the proceeding is to be stayed.

2. The security referred to in Order 1 is to be provided by payment into Court, provision of an irrevocable bank guarantee from an Australian trading bank or by payment into an interest bearing deposit account to be established by the Court.

3. The appellant’s application for a stay of the appeal made in paras 2, 3 and 4 of its amended notice of appeal filed on 27 November 2019 is dismissed.

4. The appellant is to pay the respondent’s costs of the application for a stay of the appeal and of the application for security for the respondent’s costs.

5. The respondent’s interlocutory application filed on 21 November 2019 is otherwise dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

MARKOVIC J:

1. There are two applications before me. The first filed by the appellant, Mr Dimitriou, is an application for a stay “of all proceedings under a sequestration order of the whole of [his estate] made on 30 August 2019” and “an order to stay the execution of the sequestration of the whole of [his estate] made on 30 August 2019 … until the appeal is heard and determined”. That application is made under r 36.08 of the Federal Court Rules 2011 (Cth) (Rules). The second application is made by the respondent, Pineview Property Holdings Pty Ltd (Pineview). Relevantly, Pineview seeks an order pursuant to r 36.09 of the Rules that Mr Dimitriou provide security for its costs of the appeal in the sum of $96,800.

2. I will deal with each of those applications in turn.

Application for a stay

3. Given the way in which the argument proceeded before me, it is useful to commence with a consideration of the relevant rule and the applicable legal principles.

4. Rule 36.08 of the Rules provides:

(1) An appeal does not:

(a) operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or

(b) invalidate any proceedings already taken.

(2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined.

(3) An application may be made under subrule (2) even though the court from which the appeal is brought has previously refused an application of a similar kind.

(Notes omitted.)

5. The principles governing when a stay can be granted by the Court were comprehensively and helpfully set out in the written submissions of counsel appearing for Mr Dimitriou. In summary, those principles can be shortly stated. First, as recognised in a number of cases, in light of the provisions and operation of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), it is inapposite to speak of a stay of a sequestration order. In Endresz v Australian Securities and Investments Commission [2014] FCA 1139 (Endresz), Beach J recognised that to be so. His Honour noted at [8] that:

It is apparent from the provisions and operation of the Bankruptcy Act 1966 (Cth) (the Act) that it is inapposite to talk of a stay of a sequestration order as such. When a sequestration order is made, it takes immediate and automatic effect by force of the Act. There is an immediate vesting of property in the trustee in bankruptcy. Moreover, after-acquired property of the bankrupt vests as soon as it is acquired. See, generally, Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757 at [3] per Yates J. It is conceptually incoherent to contemplate a judicial stay order as being available to countermand automatic legislative operation where no question of invalidity is involved.

6. At [9] Beach J noted that, conceptually, “one can only consider whether there should be a stay of any proceedings or action under a sequestration order, rather than a stay of the order itself”, and referred to the language of ss 52(3) and 37(2)(a) of the Bankruptcy Act in support of that proposition. I pause here to note that counsel for Mr Dimitriou accepted this to be the case and indicated that Mr Dimitriou sought a stay of proceedings under the sequestration order, rather than a stay of the order itself.

7. The principles applicable to the grant of a stay are well settled. They too were set out in Endresz, where his Honour said at [14]-[16]:

14 Rule 36.08 confers a broad discretion. Generally, there must be demonstrated “a reason or an appropriate case” to warrant the exercise of discretion in favour of granting a stay (see Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66).

15 More specifically, two questions must be considered.

16 First, is there an arguable point on the proposed appeal (see Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 (Nolten) at [24] per Kenny J) or is there some “rational prospect of success” in relation to any of the grounds of appeal (see Burns v AMP Finance Ltd [2005] FCA 761 (Burns) at [5] per Emmett J)? Second, does the balance of convenience favour the grant of a stay (see Nolten at [24] and [46])?

8. For the purposes of this application and its application for security for costs, Pineview conceded that Mr Dimitriou has an arguable ground of appeal. Thus, the argument before me proceeded on the question of whether the balance of convenience favoured the grant of a stay.

9. Mr Dimitriou submitted that it did for a number of reasons. First, the hearing of the appeal has been brought on very quickly. I note that the appeal is listed for hearing on 3 February 2020, the first day of the February appeal period. Secondly, Mr Dimitriou’s trustee in bankruptcy, Ms Louise Thomson, is awaiting the outcome of this application to determine whether to proceed with the administration of Mr Dimitriou’s estate or wait. Counsel for Mr Dimitriou submitted that, if a stay is not granted, the trustee will be obliged to proceed without delay to administer the estate.

10. Pineview submitted that the balance of convenience does not favour a stay and noted there was no evidence from the trustee as to her attitude.

11. It is the case that there is no evidence before me as to the attitude of Mr Dimitriou’s trustee in relation to the application for a stay. I was informed from the bar table that the trustee had, in turn, been informed about this application, but beyond that it was not clear to me, based on the evidence relied on by Mr Dimitriou, what her attitude was and what...