Shaw, Lily v Crichton, John & Anor [1998] FCA 1146

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE – APPEAL – application for a stay of sequestration orders pending application for special leave to appeal to High Court of Australia – rule of stringency – consideration of balance of convenience Bryant v Commonwealth Bank of Australia (1996) 70 ALJR 306, referred to

LILY SHAW v JOHN CRICHTON AND NEIL CRICHTON

NG 927 of 1997

MADGWICK J

3 SEPTEMBER 1998

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 927 of 1997

BETWEEN: LILY SHAW

Applicant

AND: JOHN CRICHTON AND NEIL CRICHTON

RespondentS

JUDGE(S): MADGWICK

DATE OF ORDER: 3 SEPTEMBER 1998

WHERE MADE: SYDNEY

SHORT MINUTES OF ORDER

THE COURT ORDERS THAT: 1. The application for a stay of the orders made by Branson J on 23 October 1997 is refused. 2. The applicant is to pay the costs of the respondents and of the Official Trustee in Bankruptcy.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 927 of 1997

BETWEEN: LILY SHAW

Applicant

AND: JOHN CRICHTON AND NEIL CRICHTON

Respondents

JUDGE(S): MADGWICK

DATE: 3 SEPTEMBER 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT (revised from transcript) HIS HONOUR: In this matter I must refuse the application for a stay of proceedings pending the hearing of an application to the High Court for special leave to appeal. The matter has a very long background. The foundation debt for the creditor's petition which resulted in Branson J making a sequestration order in October last year was a sum of about $10,000. That was the amount of costs ordered against the present applicant and her husband when they unsuccessfully sought special leave to appeal to the High Court from a decision of the New South Wales Court of Appeal, which had affirmed a decision at first instance of Bryson J in a probate suit. Bryson J had refused to grant probate to the applicant and her husband of a will of the late Ranza Eugenie Crichton which they had propounded. The applicant then appealed against Branson J's orders to the Full Court, which observed that the case before Bryson J had been decided entirely on the facts and his Honour's assessment of the debtors' lack of credibility in relevant respects. There were also observations on the onus of proof in that probate case and the Full Court expressed the view that: "The true position is that unless it is established that the deceased is of sound mind when the will was made there will be no grant of probate." Before the Full Court the debtors argued that it should now be held that the onus of proof is on the person who opposes a grant of probate to make the case why probate should not be granted. It is argued that justice, and what is referred to as "natural law", require that a Court now so hold. In the light of that submission the Full Court held that, having regard to the credibility aspects which had disturbed Bryson J, even had the onus of proof been as the debtors say it should be, the result of the proceeding would have been the same. The original proceedings before Bryson J were primarily the forum in which the onus of proof question could and should have been agitated. The applicant's son, Mr Shaw, who presents the applicant's argument intelligently, if I may say so, points nevertheless to the undoubted discretion of a Court exercising bankruptcy jurisdiction to go behind a debt, and says that it is unjust that a bankruptcy should follow a judgment ultimately founded on a wrong application of the law, even though the law as applied is apparently that which has been applied in courts for 150 years. He says that the High Court is the appropriate forum to declare a change in the law in order to ensure that the law is just, as he submits, in relation to the onus of proof in probate cases. He points also to the very distressing, usual social consequences of a person becoming bankrupt and points out that the consequence of the lack of a stay is that his parents will be physically ejected by an officer of the Supreme Court (at the behest of the Official Trustee in Bankruptcy) within the very near future, and that this is a matter of grave hardship to his parents. There can be little doubt that that is right. On the other hand, there is material before me which suggests that the Official Trustee in Bankruptcy might well regard the applicant and her husband as jointly indebted to the respondents to this application in the sum of approximately $400,000 (excluding interest). The applicant's husband, Mr George Thomas Shaw, has also been ordered to pay a further sum of over $200,000 exclusive of interest to the respondents. In addition there are creditors secured by mortgages and the applicants are not making payments pursuant to those mortgages. In consequence, such equity as the applicant and her husband have in the real estate that constitutes their house at South Coogee is being eroded. The applicant does not here suggest any protection or safeguarding of the interests of creditors. So the question of hardship, potential loss and harm is not all one way. In any case, as Kirby J recently pointed out in Gold v Proprietors - Units Plan No 52 (1997) 72 ALJR 142 at 144-5, in the High Court the rule of stringency - that is to say, that a stay will not usually be granted pending the hearing of an application for the special leave to appeal -continues largely to be maintained, and it has particular force where no grant of special leave to appeal has yet been secured. Referring to his Honour's own judgment in Bryant v Commonwealth Bank of Australia (1996) 70 ALJR 306 at 308-9, his Honour explained the reason for this: "Ordinarily, the case will have proceeded through at least two tiers of the judicial process." and, as indeed has happened here: "The would-be appellant's arguments will have been rejected by the court whose orders are the subject of the special leave application." Only a relatively small proportion of applications for special leave succeed. Something more than legal or factual error must usually be shown. In particular it is usual for the High Court, even where an important question of law is involved, to be satisfied that the case is an appropriate vehicle for its determination. The Court does not assess this in a vacuum but needs to look at the actual rights of the parties before it. There seems to be no reason why the onus of proof point could not have been fully agitated in the initial proceedings before Bryson J and it certainly comes now at the heel of the hunt. In addition, questions of loss to the parties and the balance of convenience are involved. Leaving all other matters aside and, even though it is somewhat invidious for me to pass on what the High Court might do, it seems to me that the point sought to be raised is not attended by sufficient doubt as to be likely to achieve special leave to appeal in the High Court. Even if the legal point is attended by sufficient doubt, it hardly seems likely to me that, in a case that ultimately turned on credibility, the High Court would regard it as an appropriate vehicle for argument of the point.

In these circumstances I will refuse a stay. The applicant is to pay the costs of the respondents and of the Official Trustee in Bankruptcy. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick

Associate: Dated: 3 September 1998 Representative for the Applicant: T Shaw

Counsel for the Respondent: M Condon

Solicitor for the Respondent: Phillip Bushby International

Date of Hearing: 3 September 1998

Date of Judgment: 3 September 1998