Caroma Industries Ltd v Piepkorn [2000] FCA 319 (13 March 2000)

Last Updated: 21 March 2000

FEDERAL COURT OF AUSTRALIA

Caroma Industries Ltd v Piepkorn [2000] FCA 319

CAROMA INDUSTRIES LTD (ACN 000 189 499) v HENRIETTE PIEPKORN

S 7219 OF 1999

MANSFIELD J

13 MARCH 2000

ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 7219 OF 1999

BETWEEN:	CAROMA INDUSTRIES LTD (ACN 000 189 499) Applicant
AND:	HENRIETTE PIEPKORN Respondent

JUDGE:	MANSFIELD J
DATE:	13 MARCH 2000
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1 This is an application by Caroma Industries Ltd ("Caroma") for a sequestration order against the estate of Henriette Piepkorn ("Ms Piepkorn") made on 16 December 1999. It is based upon an act of bankruptcy committed on 15 August 1999, namely the failure to comply with the bankruptcy notice issued on 25 June 1999 and served on 25 July 1999 in respect of a debt of $2,598.17 plus interest calculated in accordance with the Third Schedule to the Rules of the Supreme Court of South Australia.

2 The material before me indicates that that act of bankruptcy was committed, that is that Ms Piepkorn did not comply with the bankruptcy notice by paying the amount of the debt or otherwise make arrangements for its payment. Caroma in the normal course would therefore be entitled to a sequestration order, subject to considering the particular grounds of opposition to the application for the sequestration order identified by Ms Piepkorn.

3 Following the service of the application upon her, she filed and served on 10 January a notice of intention to oppose the application on the ground that:

"A jurisdiction matter of a Federal jurisdiction ruled in a State jurisdiction. Invalid judgment."

(That quotation and other quotations from Ms Piepkorn's documents are set out as they appear in the documents referred to).

4 In support of that ground of opposition, Ms Piepkorn also filed and served an affidavit claiming that Caroma was wrongfully claiming money from her because their alleged entitlement was based upon an invalid judgment of the District Court of South Australia. That affidavit asserts that it was an invalid judgment for the following reasons:

"The bench gave a ruling on a jurisdictional matter of conciliation and arbitration. The judgment is invalid as the state ruled on a Federal jurisdiction matter. The court bench failed to inform its inability to hear this federal jurisdiction matter. The applicant is under a federal jurisdiction and does not have any legal claims. As State jurisdiction cannot rule on a Federal jurisdiction."

5 She subsequently filed a further affidavit on 10 February 2000 identifying the grounds of opposition as follows:

"[This matter is in the High Court of Australia.] (1) the matter of the state court: - the District Court judgment. A judgment given breaching the jurisdiction, between a state court ruling on a federal jurisdiction matter of constitution 51(xxxv). A conciliation and arbitration: - (employment contract). (2) Conciliation and Arbitration Act section 144A(5)."

6 In the course of submissions today, in an endeavour to understand more clearly the point sought to be made, I asked Ms Piepkorn a number of questions. She identified, although it is not proved by any affidavit evidence, the following matters:

(1) because Caroma's main office is outside South Australia, any claim for damages against it for breach of an employment contract must be heard by a court exercising federal jurisdiction, and

(2) because Caroma's employees were covered by a federal award in the period of her employment between 1978 and 1984, any claim for damages against it for breach of an employment contract must be heard by a court exercising federal jurisdiction.

7 Ms Piepkorn also referred to some proceedings in the High Court. The nature of those proceedings is more apparent from an affidavit filed on behalf of Caroma, in response to the second affidavit of Ms Piepkorn sworn on 9 February 2000, in which the reference to High Court proceedings is as quoted above. It appears that Ms Piepkorn has sought to institute proceedings in the High Court between herself as plaintiff and the State of South Australia as defendant. Gaudron J on 9 November 1999 refused Ms Piepkorn leave to issue the proposed writ of summons and statement of claim. On 17 November 1999, Ms Piepkorn appears to have made an application for leave to appeal from that decision to the Full Court of the High Court. She tells me today that that application will be heard in August of this year. It is unnecessary to refer to the grounds upon which that application for leave to appeal is sought, as the proceedings are proceedings between Ms Piepkorn and the State of South Australia. She told me that her ultimate objective in those proceedings is to obtain an order from the High Court that the State of South Australia pay her a sum of money. She said that it is not an application in which the relief sought is a direction from the High Court that the District Court, or this Court, or some other person or entity, do some act or exercise some jurisdiction which has not been exercised, or that the District Court, or some other person or entity refrain or refrain from doing some act or refrain from exercising some jurisdiction which has been exercised. On that basis, those proceedings, even if successful, do not seek to have the judgment of the District Court of South Australia upon which the bankruptcy notice was founded set aside.

8 I turn then to consider whether there is some proper basis upon which it can be said that the judgment which underlies the bankruptcy notice is in any sense an invalid judgment. There are circumstances in which the Court may go behind a judgment to determine if there is, in respect of a debt founding a bankruptcy notice, a genuine debt in existence: Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212; Corney v Brien [1951] HCA 31; (1951) 84 CLR 343.

9 Again there is really, with one significant reservation, not much in dispute on the material before me.

10 The judgment sum, upon which the bankruptcy notice was issued, of $2598.17 plus interest was based upon an order of a Master of the District Court in proceedings commenced on 21 April 1998 in which Ms Piepkorn was plaintiff and Caroma was defendant. On 25 August 1998 those proceedings were dismissed and Ms Piepkorn was ordered to pay the costs of those proceedings. Those costs were subsequently taxed, and an allocator for the amount of the debt was issued on 3 February 1999. The claim was expressed to be a claim for:

"Common law damages of breach of contract: - employment contract; "a business transaction"."

11 The claim referred to the facts as set out in the statement of claim. The initial statement of claim was struck out by order of a Master, and Ms Piepkorn was given leave to file and serve a fresh statement of claim. She did that on 19 June 1998. It was that fresh statement of claim that the Master determined should be struck out, and that the proceedings should be dismissed.

12 The fresh statement of claim comprises seven paragraphs. It first pleads a written contract of employment with Caroma dated 3 December 1978. Paragraphs 2 - 4 allege facts (which are not apparently in dispute) that on 9 February 1982 Ms Piepkorn suffered an injury at work in employment with Caroma, and in 1986 received an award of damages for negligence in respect of that claim. Paragraph 5 recites that on 24 February 1984 Caroma, in breach of the contract of employment, retrenched Ms Piepkorn. Paragraph 6 claims:

"The retrenchment of the plaintiff was illegal pursuant to s 144A(5) of the Arbitration Act legislated in 1997 (Commonwealth)."

There is finally a claim for damages for breach of contract in par 7.

13 Ms Piepkorn told me in submissions that the reference to "s 144A(5) of the Arbitration Act" was intended to be a reference to a proposed provision of the Workplace Relations Act 1996 (Cth), not yet enacted. There was in 1984 legislation in force in South Australia providing a remedy for an employee who had been wrongfully terminated from employment in South Australia (the Industrial Conciliation and Arbitration Act 1934 (SA), s 15(1)(e)) but that legislation is not apparently relied upon in this proceeding. In fact, as the affidavit of Caroma shows, apart from the claim for damages in the Supreme Court of South Australia in which Ms Piepkorn was successful following her work injury of 9 February 1982, Ms Piepkorn has brought several proceedings concerning her retrenchment or wrongful dismissal in the Industrial Relations Commission or in the Industrial Relations Court of South Australia, and also in the Australian Industrial Relations Commission. The material before me does not provide full details of those proceedings.

14 It is of significance, in my view, that Ms Piepkorn has not appealed from the decision of the Master of the District Court given on 25 August 1998 dismissing her claim for damages for breach of employment contract against Caroma. Indeed, she tells me that she considers that that ruling was correct. In fairness to her, I should point out that she accepts that it was correct but challenges its validity on the basis of a lack of jurisdiction on the part of the District Court to hear and determine her claim at all.

15 In my judgment, the decision of the Master to dismiss Ms Piepkorn's claim in those proceedings was not made because the District Court of South Australia lacked jurisdiction to hear and entertain the claim. There is no hint, in the reasons for decision, that that was the ground upon which that proceeding was dismissed. After referring to the history of the proceedings, to the nature of the allegations, and to the material contained in the affidavit evidence, the Master considered the principles applicable to determining claims for immediate relief under r 25.02 or under r 25 of the Rules of the Supreme Court and the District Court.

16 His Honour then said:

"I can see little point in simply striking out the statement of claim without striking out the plaintiff's summons as well. In my view the plaintiff's claim is misconceived. No reasonable cause of action has been disclosed by the plaintiff. There seems to be no point in directing the plaintiff to file and serve a further amended Statement of Claim in the hope that it may disclose a cause of action with some chance of success. The plaintiff has already been involved in numerous applications and hearings in the Industrial Relations Court and in the Supreme Court in relation to the injuries sustained by her whilst employed by Caroma Industries on 9th February 1982."

17 It may be the case, as Ms Piepkorn submits, that her statement of claim was not intended to, and did not, allege a cause of action based upon the work injury suffered on 9 February 1982 but upon the wrongful termination of 24 February 1984 which she asserts in that statement of claim occurred by reason of her injuries. However, there is nothing in the Master's reasons which indicate that he regarded the District Court as not having jurisdiction to hear and determine the claim. His reasons indicate that, having considered the claim as expressed, and having considered the additional material which was in evidence on the application, in effect Ms Piepkorn had no prospect of succeeding in that claim.

18 The appropriate avenue to challenge any such decision was by way of appeal. There has been no such appeal. Indeed, for her own reasons, Ms Piepkorn accepts that the claim in the District Court should have been dismissed. The order for costs was made at the same time.

19 I am also not persuaded that the claim as expressed was one which was not within the jurisdiction of the District Court. It was simply a claim for damages for breach of contract. The fact that Caroma is a corporate entity which has its head office in a state other than South Australia does not mean that the District Court does not have jurisdiction to hear and determine a claim for damages for breach of contract, including for breach of an employment contract. Similarly, the fact that, in relation to a claim for damages for breach of contract, it may be relevant that the applicable award was a federal award, does not have the consequence that the District Court does not have jurisdiction to hear and entertain a claim for damages for breach of an employment contract. No authority has been cited to the Court in support of either of those propositions and no statutory provision has been identified which, it is said, provides support for either of those propositions. In my view it is not shown that the District Court did not have jurisdiction to hear and entertain the claim for damages for breach of contract. The reasons for the dismissal of that claim are not themselves the subject of criticism on this hearing, but only the jurisdictional foundation upon which the claim was first entertained by the District Court.

20 Ms Piepkorn also said that she sought this application to be adjourned to a date to be fixed to sometime after August of this year because the High Court will be asked by her to hear "this whole matter". As I have noted, the application in the High Court is between Ms Piepkorn and the State of South Australia. Caroma is not a party. I do not see any reason why Caroma should be disentitled from enforcing in the normal way an order for costs in proceedings in which the District Court exercised jurisdiction because of the proceedings in the High Court instituted some considerable time later, and in which Caroma itself is not a party. It is not necessary to form any view as to the prospects of Ms Piepkorn succeeding in her application in the High Court in those circumstances.

21 Accordingly, I am not persuaded that there are any grounds upon which the notice of opposition has been made out. I am satisfied that in other respects the requirements of the Bankruptcy Act 1966 (Cth) and the Bankruptcy Rules have been complied with.

22 I make a sequestration order against the estate of Henriette Piepkorn. I order that the petitioning creditor's costs, including reserved costs, be taxed and paid in accordance with the Bankruptcy Act. I will initial the minutes which reflect those orders.

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

Associate:

Dated: 20 March 2000

Counsel for the Applicant:	Ms P A Eldridge
Solicitors for the Applicant:	Minter Ellison
Counsel for the Respondent:	The Respondent appeared in person
Date of Hearing:	13 March 2000
Date of Judgment:	13 March 2000