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Worchild v The Drink Nightclub (Qld) Pty Ltd [2006] FCA 2009; [2006] [2006] FCA 1384 (24 October 2006)
Last Updated: 27 October 2006
FEDERAL COURT OF AUSTRALIA
Worchild v The Drink Nightclub (Qld) Pty
Ltd [2006] FCA 1384
BANKRUPTCY – contested
creditor’s petition – appeal from decision of a Federal Magistrate
– whether error in ordering
that sequestration order be made against the
appellant’s estate – whether compliance with O 77 r 19
Federal Court Rules and Pt 31 Federal Magistrates Court Rules –
whether debt owing at the date of the hearing – whether appeal could raise
new grounds
not previously argued before Federal Magistrate – whether
application to set aside bankruptcy notice is not ‘spent’
until all
avenues of appeal are exhausted – whether application to set aside
bankruptcy notice finally determined – whether
creditor’s petition
appropriately verified – whether creditor’s petition contained
defects – whether there
was ‘other sufficient cause’ under
s 52(2)(b) Bankruptcy Act 1966 (Cth) – whether cause to doubt the
judgment debt
WORDS AND PHRASES
– ‘final order’, ‘final judgment’,
‘finally decided’
Held: Appeal
dismissed.
Bankruptcy Act
1966 (Cth) ss 40(1)(g), 44, 52
Federal Magistrates Act 1999 (Cth)
s 104
Federal Court Rules O 77 r 19
Federal Magistrates Court Rules Pt
31
Brittingham v Williams [1932] VLR
237 cited
Connecticut Fire Insurance Co v Kavanagh [1892] AC 473
cited
Crampton v R [2000] HCA 60; (2000) 206 CLR 161 cited
CSR Ltd trading as
CSR Building Materials v Muscat [2002] FMCA 257 cited
French v
Wilcox [2001] FCA 95 followed
Giannarelli v R [1983] HCA 41; (1983) 154 CLR 212
cited
Green v Sommerville [1979] HCA 60; (1979) 141 CLR 594 cited
Grey v
Manitoba and North Western Railway Co of Canada (1897) AC 254
applied
Gomez v MIMIA (2002) 190 ALR 543 cited
Guss v
Johnstone (2000) 171 ALR 598 distinguished
Hall v Nominal
Defendant [1966] HCA 36; (1966) 117 CLR 423 cited
In re Riddell ex parte Earl of
Strathmore (1888) 20 QBD 512 cited
Iyer v MIMIA [2000] FCA 1788
cited
Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71
cited
Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR 68
applied
NBBL v MIMIA [2006] FCA 1045 cited
O’Brien v
Komesaroff [1982] HCA 33; (1982) 150 CLR 310 cited
Petitt v Dunkley (1971) 1
NSWLR 376 distinguished
Re Agrillo, ex parte The Bankrupt (1977) 13
ALR 635 cited
Re Carmody; ex parte Glennan [2000] HCA 37
cited
Re Hanby ex parte Flemington Central Spares Pty Ltd (1966) 10
FLR 378 cited
Re Padagas ex parte Carrier Air Conditioning Pty Ltd
(1977) 16 ALR 475 cited
Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418
cited
The Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915; (2000)
109 FCR 33 cited
The Drink Nightclub & Anor v Worchild [2005] FMCA
1454 affirmed
Thompson v Metham (1999) FCA 935 cited
Water Board
v Moustakos [1988] HCA 12; (1994) 180 CLR 491 applied
Worchild v The Drink Nightclub
(Qld) Pty Ltd [2004] FCA 642 cited
Worchild v The Drink Nightclub
(Qld) Pty Ltd ACN 090 830 854, in the matter of Worchild [2005] FCA 863
cited
Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC
240 cited
Worchild v The Drink Nightclub (Qld) Pty Ltd [2006] HCA
Trans 223 cited
Worchild v University of Queensland Law Society Inc
[2005] QDC 161 cited
Worchild v University of Queensland Law Society
[2005] QCA 37 cited
Worchild v University of Queensland Law Society
[2006] HCA Trans 181 cited
Worchild v University of Queensland Law
Society [2006] FCA 1078 cited
ANDREW WORCHILD v THE DRINK
NIGHTCLUB (QLD) PTY LTD (ACN 090 830 854) AND BILL CROSS
QUD 417 OF 2005
COLLIER J
24 OCTOBER
2006
BRISBANE
|
IN THE FEDERAL COURT OF AUSTRALIA
|
|
QUEENSLAND DISTRICT REGISTRY
|
|
ON
APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
|
|
|
|
|
AND:
|
THE DRINK NIGHTCLUB (QLD) PTY LTD (ACN 090 830
854)First RespondentBILL CROSSSecond
Respondent
|
|
|
|
|
DATE OF ORDER:
|
|
|
WHERE MADE:
|
|
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The respondents have liberty to apply within seven (7) days as to
costs.
Note: Settlement
and entry of orders is dealt with in Order 36 of the Federal Court
Rules.
IN THE FEDERAL COURT OF AUSTRALIA
|
|
|
|
|
|
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
|
REASONS FOR JUDGMENT
| 1 | The matter before me is an
appeal from a decision of Rimmer FM delivered on 12 October 2005
(The Drink Nightclub & Anor v Worchild [2005] FMCA 1454). In that
case the respondents successfully presented a creditor’s petition seeking
a sequestration order against the appellant,
and were awarded costs by her
Honour. |
| 2 | The appellant seeks the following
orders from this Court: |
| 1. | The appeal be
allowed. |
| 2. | The orders of the Federal
Magistrate of 12 October 2005 be set
aside. |
| 3. | The application for a sequestration
order be remitted to the Federal Magistrates Court for
reconsideration. |
| 4. | Costs. |
| 3 | Mr
Cross is a director of The Drink Nightclub (Qld) Pty Ltd. In this judgment I
shall refer to Mr Worchild as ‘the appellant’
and The Drink
Nightclub (Qld) Pty Ltd and Mr Cross as ‘the
respondents’. |
BACKGROUND
| 4 | This matter is complicated by
the number of related claims and appeals. In
summary: |
| 1. | The genesis of this matter was
proceedings commenced by the appellant against the respondents in the Federal
Court of Australia in
November 2003. The appellant claimed contraventions of the
Trade Practices Act 1975 (Cth) in respect of the
respondents’ alleged refusal to honour a promotional card sold to the
appellant by the Queensland University
of Technology Association of Law
Students. Those proceedings were heard and summarily dismissed by Cooper J
on 24 May 2004
(Worchild v The Drink Nightclub (Qld) Pty Ltd [2004] FCA 642). His Honour ordered that the appellant pay the respondents’ costs
of and incidental to the proceedings. |
| 2. | On 20
September 2004, an estimate of the respondents’ bill of costs arising out
of the decision of Cooper J was made pursuant
to the provisions of
O 62 r 46 Federal Court Rules and allowed in the sum of
$24 000.00, for which sum a Certificate of Taxation was issued on
12 October 2004. |
| 3. | On 26 November 2004
Deputy District Registrar Baldwin in the Federal Court made an order that the
appellant pay the sum of $24 000.00
to the
respondents. |
| 4. | Bankruptcy Notice Q/N1238/2004
(‘the bankruptcy notice’) identifying the appellant as the debtor
was issued by the Official
Receiver on 15 December 2004. The bankruptcy
notice was issued in relation to the appellant’s failure to pay the
respondents
in accordance with the costs order of Deputy District Registrar
Baldwin of 26 November 2004. |
| 5. | On 21
January 2005 the respondents served the bankruptcy notice on the
appellant. |
| 6. | On 13 May 2005 before Deputy
District Registrar Baldwin in the Federal Court the appellant sought to have the
bankruptcy notice set
aside. The appellant was unsuccessful and he was ordered
to pay costs in the amount of $2500. The appellant unsuccessfully appealed
this
decision of the Deputy District Registrar (Worchild v The Drink Nightclub
(Qld) Pty Ltd ACN 090 830 854, in the matter of Worchild [2005] FCA 863 per
Dowsett J), and then again unsuccessfully to the Full Court of the Federal
Court (Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240). As
at the date of the hearing the appellant had sought special leave to appeal to
the High Court from the decision of the Full Court.
(I understand that special
leave to appeal was refused: Worchild v The Drink Nightclub (Qld) Pty Ltd
[2006] HCA Trans 223.) |
| 7. | On 3 June 2005, the
respondents filed a creditor’s petition in the Federal Magistrates Court
applying for a sequestration order
under s 43 Bankruptcy Act 1966
(Cth) (‘Bankruptcy Act’) against the estate of the appellant in
respect of the debt of $24 000.00 owing to them under the order of Deputy
District
Registrar Baldwin in the Federal Court of 26 November 2004. The
document was accompanied by an affidavit of the second respondent
sworn
31 May 2005, deposing that he had access to the books and records of the
first respondent, and that the appellant had
not paid, nor made arrangements to
the satisfaction of the respondents for the settlement of the debt claimed in
the bankruptcy notice. |
| 8. | On 20 June 2005 the
appellant filed and served a Notice of Intention to Oppose the Petition in the
Federal Magistrates Court. |
| 9. | The petition came
before District Registrar Ramsey in the Federal Magistrates Court on
24 June 2005, however the Registrar directed
that the matter be adjourned
for hearing before a Federal Magistrate at 10.15 am on 26 August 2005.
The matter then came
before
Rimmer FM. |
DECISION OF RIMMER
FM
| 5 | After setting out the facts of
the case and explaining the statutory framework, Rimmer FM noted that the
key issue was the regularity
of the creditor’s petition presented by the
respondents. Her Honour said that: |
| • | if
she were not satisfied of the matters set out in s 52 of the Bankruptcy
Act, the petition must be dismissed,
but |
| • | if she were so satisfied then it
was the debtor – the appellant in this case – who bore the onus of
establishing there
was some other sufficient cause why the sequestration order
ought not be made. |
| 6 | In relation to the first
point, s 52 Bankruptcy Act provides, so far as relevant,
that: |
‘(1) At the hearing of a creditor’s petition, the Court shall
require proof of:
(a) the matters stated in the petition (for which purpose the Court may
accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor
relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a
sequestration order against the estate of the debtor.
...
(2) If the Court is not satisfied with the proof of any of those
matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to
be made;
it may dismiss the
petition.’
| 7 | On
the evidence, her Honour was satisfied of all the matters in s 52(1), and
noted that the appellant had not in his evidence or submissions to the court put
a case that he was solvent (par 29). Accordingly
in her Honour’s view
the matter turned on the question whether there was other sufficient cause
within the meaning of s 52(2) why a sequestration order ought not to be
made, and whether her Honour should exercise her discretion to dismiss the
petition. In
deciding whether to exercise her discretion her Honour
considered: |
| • | A potential counter-claim,
set-off or cross-demand of the appellant related to the original litigation
between the parties, but which
her Honour considered continued to suffer from
all the deficits identified by Cooper J in Worchild v The Drink
Nightclub (Qld) Pty Ltd [2004] FCA 642. |
| • | A potential counter-claim, set-off
or cross-demand in the appellant in that he claimed the respondents had
committed contempt of court,
but which her Honour considered was unlikely to
have any prospects of success, and which was not a proper matter to be taken
into
account when exercising her discretion under
s 52(2). |
| • | A potential
counter-claim, set-off or cross-demand in the appellant in that he claimed that
the judgment of Cooper J had been
obtained by fraud or collusion or
mistake, but which her Honour considered was not supported by the evidence
before her nor by the
decision of Cooper J, and which was not a proper
matter to be taken into account when exercising her discretion under
s 52(2). |
| • | A claim described by her
Honour as being essentially that an act of bankruptcy had not been committed by
the appellant. Her Honour
summarised this claim of the appellant as being that
he should have been successful before Cooper J, the order for costs should
not have been made, the appellant should not be indebted to pay those costs to
the respondents, and, as a result, in not paying the
debt the appellant has not
committed an act of bankruptcy. Her Honour considered that the appellant had
committed an act of bankruptcy,
and that this was not a proper matter to be
taken into account when exercising her discretion under
s 52(2). |
| • | A claim by the appellant
that the bill of costs produced for taxation following the decision of
Cooper J included items which
did not relate to the proceedings under
Pt 4A Trade Practices Act 1975 (Cth). In her Honour’s view,
these matters should have been addressed by the appellant in the taxation
process in the Federal
Court of Australia, and there was no evidence before her
to establish that they were raised nor what the outcome was of it being
raised
at the taxation. |
| • | A claim by the
appellant that there were defects in the petition and/or bankruptcy notice. Her
Honour considered this claim in detail,
including reviewing Kleinwort Benson
Australia Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71 and The Australian Steel Company
(Operations) Pty Ltd v Lewis [2000] FCA 1915; (2000) 109 FCR 33, which are the leading
authorities in this area. Her Honour summarised this claim as
follows: |
‘In this matter the debtor contends that par 1 of the petition
states that the creditors are owed an amount due under the
order of the Federal
Court and that the bankruptcy notice fails to contain the judgment or
certificate of taxation. He says that
where in par 2 it says that the
creditor does not hold security over the property of the debtor, that this
leaves doubt as to
whether the one or the other holds security over the property
of the debtor. Further he contends that the petition refers to the
words
‘creditor’ and ‘creditors’ including reference to the
agent for the Petitioner which creates a doubt
as to who the Petitioner is and
whether or not there are two joint petitioners and whether or not the agent
holds instructions to
act on behalf of both petitioners. He says that par 4
of the Petition fails to state the date of the act of bankruptcy.’ (at
[69])
Her Honour was satisfied that the creditors’ petition was overall
compliant and in all respects clear and unequivocal, that
the appellant’s
submissions concerning the reference to ‘creditor’ and
‘creditors’ was a spurious argument
without merit, and that
par 4 was compliant with the formal requirements of the prescribed
Form.
| 8 | Accordingly, there was nothing
in the submissions made or on the evidence produced which would lead her Honour
to find that there
were defects in the bankruptcy notice or the creditor’s
petition sufficient to dismiss the petition, nor to exercise her discretion
in
favour of the appellant under s 52(2)(b) Bankruptcy
Act. |
APPEAL
| 9 | The appellant’s original
notice of appeal against the decision of Rimmer FM was filed
18 October 2005. The grounds
of appeal were as
follows: |
| 1. | Rimmer FM failed to appreciate that
the respondents failed to comply with O 77 r 19 Federal Court
Rules. |
| 2. | Rimmer FM erred in holding the debt
on which the respondents relied was still owing at the hearing date for the
petition contrary
to the weight of the
evidence. |
| 3. | Rimmer FM erred in finding that
the appellant committed an act of bankruptcy where there has yet to be a final
determination of the
application to set aside the bankruptcy notice as required
under s 43 of the Act. |
| 4. | Rimmer FM erred
in finding that the creditors’ petition was verified by a person who knew
the relevant facts, contrary to the
weight of the
evidence. |
| 5. | Rimmer FM erred in finding the
petition was not defective, contrary to the weight of the
evidence. |
| 6. | Rimmer FM erred in holding that
there was no other sufficient cause why a sequestration order not to be made
under s 52 of the Act, contrary to the weight of the
evidence. |
| 7. | Rimmer FM erred in finding that
the respondents did not hold security over the appellant’s property,
contrary to the weight
of the
evidence. |
| 8. | Rimmer FM failed to appreciate
that security for costs is required to contest a bill of costs in the Federal
Court. |
| 10 | Further, by way of supplementary
notice of appeal filed 7 December 2005 the appellant also raised the
following grounds of appeal: |
| 1. | Rimmer FM erred
in finding that the creditors’ petition did not require a copy of the
judgment and/or certificate of taxation
to be attached to the
petition. |
| 2. | Rimmer FM erred in finding that
the order attached to the bankruptcy notice was a final judgment or order of the
Federal Court. |
| 3. | Rimmer FM erred in that she
failed to appreciate no fresh affidavit verifying par 1 of the petition was
filed at the time of
the hearing. |
| 4. | Rimmer FM
erred in that she failed to investigate the claim in the circumstances where
there was sufficient cause to doubt the judgment
debt. |
| 5. | Rimmer FM failed to accept and act
upon documents put before her. |
| 6. | Rimmer FM
failed to obtain and act upon documents which she should have
considered. |
| 11 | There is some overlap between
these grounds of appeal. Written and oral submissions were made by both the
appellant and the respondents
in relation to these grounds of appeal. The issues
to which the grounds of appeal relate may be summarised as
follows: |
| 1. | Whether the respondents failed to
comply with O 77 r 19 Federal Court
Rules. |
| 2. | Whether the debt was still owing on
the date of the hearing. |
| 3. | What constitutes a
final determination of the bankruptcy notice, and a final order or final
judgment. |
| 4. | Whether the creditor’s
petition was verified by a person who knew the relevant
facts. |
| 5. | Whether there were defects in the
creditor’s petition. |
| 6. | Whether there was
other sufficient cause under s 52(2)(b) Bankruptcy
Act. |
| 7. | The relevance of issues pertaining to
security for costs. |
| 8. | Whether there was cause
to doubt the judgment debt. |
| 9. | Whether
documents were accepted, obtained and acted
upon. |
| 12 | I propose to deal with the grounds of
appeal in my judgment by references to these
issues. |
APPLICABLE RULES
‘(1) Before the hearing of a creditor’s petition, the applicant
creditor must file the affidavits required
by:
(a) subrules (2) to (4); and
(b) if subrule (5) applies – that
subrule.
(2) The applicant creditor must file an affidavit stating that documents
required to be served under rule 18A have been served, and
stating when and how
they were served.
(3) The applicant must file an affidavit of a person who has searched, or
caused a search to be made, in the National Personal Insolvency
Index no earlier
than the day before the hearing date for the
petition:
(a) setting out the details of any references in the Index to the debtor;
and
(b) stating that there were no details of a debt agreement, in relation to
the debt on which the applicant relies, in the Index on
the day when the
petition was presented; and
(c) that has attached to it a copy of the relevant extract of the
Index.
(4) The applicant must file an affidavit of a person who knows the relevant
facts :
(a) sworn as soon as practicable before the hearing date for the petition;
and
(b) stating that each debt on which the applicant relies is still
owing.
(5) If the debt stated in the petition is an amount payable to the petitioner
under a judgment that ordered the amount to be paid
into the court that gave the
judgment, the applicant must file an affidavit of a person who has searched in
the proper office of
that court, not earlier than the day before the hearing
date for the petition, stating whether the amount, or part of the amount,
has
been paid into the court in accordance with the judgment.
(6) If it is not practical for the applicant to file the original of an
affidavit mentioned in subrule (2), (3), (4) or
(5):
(a) a facsimile copy of the affidavit must be filed; and
(b) the original affidavit must be filed within 2 days after the hearing at
which the facsimile affidavit is
used.’
| 15 | Further,
so far as relevant, Pt 31 Federal Magistrates Court Rules read as
follows: |
‘Part 31 Creditors’ petitions
31.01 Application of
Part
This Part applies to a creditor’s petition seeking a sequestration
order against the estate of a debtor.
31.02 Requirements of creditor’s petition and
supporting affidavits
(1) The petition must be in accordance with Form 150.
(2) The petition must be accompanied
by:
(a) sufficient copies of the petition for service; and
(b) an affidavit of a person who knows the relevant facts verifying the
petition.
(3) The petition must not be attached to the affidavit mentioned in
paragraph (2)(b).
...
31.04 Petition founded on failure to comply with
bankruptcy notice or set up counter-claim
etc
(1) If the petition is founded on an act of bankruptcy mentioned in
paragraph 40(1)(g) of the Bankruptcy Act, the affidavit verifying the
petition must
state:
(a) that an application was made for an order setting aside the relevant
bankruptcy notice and that the application has been
finally decided; or
(b) that an application was made for an order extending the time to
comply with the bankruptcy notice and that the application
has been finally
decided; or
(c) that the Court records and the records of the Federal Court have
been searched and that no application in relation to the
bankruptcy notice has
been made.
(2) The affidavit must be accompanied by an affidavit of service of the
relevant bankruptcy notice.
(3) If an application mentioned in paragraph (1)(a) or (b) has been
made, the affidavit must also be accompanied by a copy of
the order finally
deciding the application.
...
31.06 Additional affidavits to be filed before
hearing
(1) Before the hearing of a creditor’s petition, the applicant
creditor must file the affidavits required by this rule.
(2) The applicant creditor must file an affidavit stating that the
documents required to be served under rule 31.05 have been
served, and stating
when and how they were served.
(3) The applicant must file an affidavit of a person who has searched,
or caused a search to be made, in the National Personal
Insolvency Index no
earlier than the day before the hearing date for the petition
that:
(a) sets out the details of any references in the Index to the debtor;
and
(b) states that there were no details of a debt agreement, in relation
to the debt on which the applicant relies, in the Index
on the day when the
petition was presented; and
(c) has attached to it a copy of the relevant extract of the
Index.
(4) The applicant must file an affidavit of a person who knows the
relevant facts
that:
(a) was sworn as soon as practicable before the hearing date for the
petition; and
(b) states that each debt on which the applicant relies is still
owing.
...
...’
ISSUES FOR CONSIDERATION
1. Whether the respondents failed to comply with O 77
r 19 Federal Court Rules: Original Notice of Appeal Ground 1
| 16 | The appellant submits that an
affidavit of final search must be performed no earlier than the day before the
hearing of the creditor’s
petition. The creditor’s petition in this
case was initially before District Registrar Ramsey in the Federal Magistrates
Court
on 24 June 2005, and subsequently before Rimmer FM on
26 August 2005. The appellant submits however
that: |
| • | no affidavit of final search was
conducted by the respondents on 25 August 2005,
and |
| • | no affidavit was filed which states
that there were no details of a debt agreement in relation to the debt on which
the respondents
rely on the date of the hearing, or whether any amount had been
paid into court or to the respondents in accordance with the
judgment. |
| 17 | In this respect the appellant
claims failure to comply specifically with O 77 r 19(3) and (5)
Federal Court Rules. This rule is mirrored in r 31.06(3) and (5) Federal
Magistrates Court Rules. Given that the matter was in the Federal Magistrates
Court, rather than the Federal Court, on this point it appears that the Federal
Magistrates Court Rules apply and the appellant has
incorrectly framed this
ground of appeal in terms of the Federal Court Rules. In the interests of
justice however I am prepared to allow the issue to be
advanced. |
| 18 | In relation to this ground of
appeal, the respondents submit: |
| a) | the matter
was not raised before Rimmer FM, and should therefore not be included as a
ground of appeal |
| b) | in any event, the petition
originally came before a Registrar on 24 June 2005, and an affidavit of
search of Nicole Jeanette Tovey
was filed on 23 June 2005 wherein
Ms Tovey deposed that she had undertaken a search of the National Personal
Insolvency
Index and ascertained
that |
| o | there were no references in the
Index to the debtor other than this petition,
and |
| o | there was no debt agreement in
relation to the debt on which the applicant relies in the index on the day when
the petition was presented. |
The affidavit of
Ms Tovey was therefore sworn no earlier than one day before the original
hearing date held before District Registrar
Ramsey and, notwithstanding that the
hearing date was adjourned, the validity of the affidavit remained and was
unchallenged by the
appellant before her Honour.
| c) | dealing with the actual
ground of appeal raised, at the hearing of the matter before Rimmer FM the
appellant relied upon two
affidavits of
himself. |
| 19 | In relation to the matter not being
raised previously before Rimmer FM, the appellant during the hearing
strongly disputed that
the Federal Court was bound by any principle with respect
to consideration of matters not previously raised before a Federal Magistrate
at
the primary hearing of the case. The appellant submitted that common law
doctrines in this respect have no place before the Federal
Court. |
| 20 | I do not accept this submission of
the appellant. |
| 21 | The general rule is clear. It
has been a principle of the common law for many years. Lord Hobhouse,
delivering the judgment of
the Privy Council, articulated the rule in Grey v
Manitoba and North Western Railway Co of Canada (1897) AC 254 at 267 as
follows: |
‘The questions now raised ought to have been raised on the pleadings
and evidence so that they might be properly thrashed out
in the Courts below. As
the matter stands they have not been touched by the Courts below... (Their
Lordships) confine themselves
to deciding the issues which the Courts below were
invited by the plaintiffs to decide, namely, whether there can be a judicial
sale,
and what it is that the receiver of the revenues of the division is
entitled to
receive.’
| 22 | This
articulation was adopted by the High Court in Suttor v Gundowda Pty Ltd [1950] HCA 35;
(1950) 81 CLR 418 at 438. |
| 23 | More recently, the
High Court explained in Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR
68 at 71: |
‘It is elementary that a party is bound by the conduct of his case.
Except in the most exceptional circumstances, it would be
contrary to all
principle to allow a party, after a case had been decided against him, to raise
a new argument which, whether deliberately
or by inadvertence, he failed to put
during the hearing when he had an opportunity to do
so.’
| 24 | The
principle was again applied by the High Court in Water Board v Moustakos [1988] HCA 12;
(1994) 180 CLR 491 at 497 where Mason CJ, Wilson, Brennan and
Dawson JJ said: |
‘More than once it has been held by this court that a point cannot be
raised for the first time upon appeal when it could possibly
have been met by
calling evidence below. Where all the facts have been established beyond
controversy or where the point is one of
construction or of law, then a court of
appeal may find it expedient and in the interests of justice to entertain the
point, but
otherwise the rule is strictly
applied.’
| 25 | This
principle has also been applied in many decisions of the Federal Court,
including Iyer v MIMIA [2000] FCA 1788 and Gomez v MIMIA (2002)
190 ALR 543. |
| 26 | Whether a court of appeal may
find it expedient in the interests of justice to entertain a point not
previously raised involves consideration
of issues
including: |
| • | where there is a question of
law upon the construction of a document or upon facts either admitted or proved
beyond controversy, in
contrast with the situation where a plea cannot be
disposed of without deciding questions of fact (where a court of appeal is in
a
much less advantageous position than the courts below) (Connecticut Fire
Insurance Co v Kavanagh [1892] AC 473 at 480, Mason J in
O’Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 at 319, Suttor v
Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438 and Green v Sommerville [1979] HCA 60;
(1979) 141 CLR 594 at 608) |
| • | the
importance of avoiding the repetition of similar mistakes of law in the future
(Crampton v R [2000] HCA 60; (2000) 206 CLR 161 at 236, Giannarelli v R [1983] HCA 41; (1983)
154 CLR 212) |
| • | taking into consideration
the discipline required of parties in the conduct of a case (Greenwood J in
NBBL v MIMIA [2006] FCA 1045 at
[12]) |
| • | whether it is clear that the
appellant does not seek to overturn the primary judgment because of any error in
it, but is appealing
on the basis that the primary judgment should simply be put
to one side and ignored (Gyles J in Iyer v MIMIA [2001] FCA 929 at
[61]) |
| • | whether the new grounds are
short, direct issues of which the respondent has had notice and which do not
unduly prolong the hearing
of the appeal (Gomez v MIMIA (2002) 190 ALR
543 at 549) |
| • | whether the appellant had
the benefit of legal representation at the primary hearing (Iyer v MIMIA
[2000] FCA 1788 at [24]) |
| • | the merits of
the grounds raised. This was explained by the Full Court of the Federal Court in
Iyer v MIMIA [2000] FCA 1788 at [24] in the following
terms: |
‘However, in order to determine whether it is expedient and in the
interests of justice that leave be given to argue new grounds
it is necessary to
give some consideration to the merits of the grounds raised. That does not mean
that an appellate court should
enter upon a full consideration of the grounds.
To do so would make the requirement for leave meaningless. It is sufficient to
determine
whether the grounds sought to be raised have a reasonable prospect of
success.’
| 27 | In
the case before me although the appellant was not legally represented, I
understand that he is in fact a solicitor and therefore
at somewhat less of a
disadvantage in conducting a case before a court than self-represented litigants
without legal qualifications.
No explanation was provided by the appellant as to
why this ground of appeal was not raised before her Honour – indeed that
hearing would have been a timely opportunity to do so – other than the
fact that the appellant considered that he was entitled
to raise new issues by
way of appeal before this Court. Finally, the fact that this ground of appeal is
but one of a number involving
issues which were not raised before her Honour
suggests, to paraphrase Gyles J in Iyer v MIMIA [2001] FCA 929 at 61,
that the appellant is asking this Court to permit this appeal to proceed on the
basis that the judgment below is simply put
to one side and ignored. In my view
the Court should not permit the proper process to be so
ignored. |
| 28 | In any event, a brief consideration
of this ground of appeal indicates that it is without merit. The respondents had
satisfied their
obligations by conducting a search and filing the required
affidavit the day before the nominated date for the hearing of the petition,
namely the date on which the matter came before District Registrar Ramsey and
was adjourned to be heard before a Federal Magistrate.
This is clear
because: |
| • | section 104 Federal
Magistrates Act 1999 (Cth) contemplates registrars of the court hearing,
continuing to hear, or not hearing, applications which come before
them |
| • | section 104(4) also contemplates a
registrar making arrangements in appropriate circumstances for a matter
being heard by the registrar to instead be heard by a federal
magistrate |
| • | accordingly when the
respondents’ petition came before District Registrar Ramsey in the Federal
Magistrates Court on 24 June
2005 the proceedings constituted a
‘hearing’, notwithstanding that the decision of the registrar was to
make arrangements
for the matter to instead be heard by a Federal
Magistrate. |
| 29 | To find otherwise would in my
view impose unnecessary additional burdens on creditors in such
circumstances. |
| 30 | Further, at the subsequent
hearing before Rimmer FM the appellant was at liberty to raise issues
relevant to the contents of
the National Personal Insolvency Index so far as
applied to him, including for example details of any debt agreement in relation
to the debt on which the creditor relies. The purpose of O 77 r 19(3)
Federal Court Rules (and r 31.06(3) Federal
Magistrates Court Rules) would
seem to be to provide the court with evidence that there is no debt agreement in
force which would
preclude a creditor from proceeding further with a
creditor’s petition, and to provide evidence of any other proceedings in
bankruptcy which might have a bearing on the making of a sequestration order
(French v Wilcox [2001] FCA 95 at [34] per Lee and Carr JJ). In this
case the appellant did not raise any issues of this nature before her Honour and
accordingly her
Honour was entitled to make the findings she did. A similar
issue was raised in French v Wilcox where an affidavit under O 77
r 19(3) was sworn on 21 July 2000 and, after the matter came before
the court on that
date, the hearing of the creditor’s petition was
adjourned to 30 August 2000 when the primary judge made a sequestration
order. On appeal Lee and Carr JJ
said: |
‘Likewise, his Honour had an index search sworn on 21 July 2000. In the
absence of any suggestion from the appellant that any
proceedings in bankruptcy
had taken place between 21 July 2000 and 30 August 2000, he was, in our opinion,
entitled to assume that
no such proceedings (including the making of any debt
agreement) had taken place.’ (at
[37])
2. Whether the debt was still owing on the
date of the hearing: Original Notice of Appeal Ground 2 and Supplementary Notice
of Appeal
Ground 3
| 31 | These grounds of appeal are
referable to O 77 r 19(4) Federal Court Rules, mirrored in
r 31.06(4) Federal Magistrates Court Rules. As pointed out by Lee and
Carr JJ in French v Wilcox [2001] FCA 95 at
[35]. |
‘The evident purpose of rule 19(4) is to provide a means of proving
what is required by s 52(1)(c) of the Act, ie the fact that
the debt or debts on
which the petitioning creditor relies is or are still
owing.’
| 32 | In
written submissions, the appellant claims that the respondents failed to file an
affidavit of final debt sworn as soon as practicable
before the hearing date
stating that the debt relied upon is still owing and the amount of the debt. In
the absence of that affidavit,
there was no material before the Court to justify
a finding of a final debt or the making of a sequestration
order. |
| 33 | The appellant also submits that the
respondents must provide an affidavit particularising the debt due not only at
the date of presentation
of the petition but also at the date of the hearing,
and cites a number of cases including Re Agrillo, ex parte The Bankrupt
(1977) 13 ALR 635, Re Padagas ex parte Carrier Air Conditioning Pty Ltd
(1977) 16 ALR 475 and CSR Ltd trading as CSR Building Materials v Muscat
[2002] FMCA 257. |
| 34 | The respondents submitted
that at the hearing of the matter before Rimmer FM the appellant relied
upon two affidavits of himself
and there was no reference whatsoever to advance
any other position than the debt relied upon was still owed at the date of the
hearing.
The respondents submitted that the only relevant affidavit was that of
the second respondent sworn 23 June 2005 which stated
that the sum of
$24 000.00 owing by the appellant was still wholly due and
unsatisfied. |
| 35 | In the judgment of
Rimmer FM, her Honour noted that, within the meaning of s 44(1)
Bankruptcy Act, the relevant debt must be payable not only at the date of
presentation of the petition, but also at the date of hearing. Her Honour
referred to Agrillo, Padagas and CSR cited earlier in this
judgment as authority for this
proposition. |
| 36 | It is clear that the
petitioning creditor’s debt must answer the description contained in
s 44(1)(a),(b) Bankruptcy Act both at the date of the presentation of the
petition and at the date of the hearing. In this case however her Honour noted
that the
court had received affidavit evidence in proof of the matters stated in
the creditor’s petition (at [21]), that the debt was
still outstanding at
the date of the hearing before her Honour, and that there was no dispute about
the fact that the debtor had
not paid the creditor the amount outstanding (at
[22]). |
| 37 | The circumstances of this case bear
interesting similarities to those in French v Wilcox. In the absence of
any real indication that the debt had been paid when the matter was before her
Honour on 26 August 2005,
it was open to her Honour to infer that the debt
was still owing. |
| 38 | The appellant has not
brought any evidence before me which would in any way negate that finding. I
reject the submission by the appellant
that there was no material before
Rimmer FM to justify a finding of a final debt or the making of a
sequestration order. |
3. What
constitutes a final determination of the bankruptcy notice, and a final order or
final judgment: Original Notice of Appeal
Ground 3 and Supplementary Notice of
Appeal Ground 2
| 39 | Both grounds of appeal raise
issues of finality of decision. It is convenient to consider these grounds
together. |
Original Notice of Appeal
Ground 3
| 40 | In the original notice of
appeal, the appellant claimed as his third ground of appeal that there had yet
to be a final determination
of the application to set aside the bankruptcy
notice as required under s 43 of the Bankruptcy Act. Specifically, the
appellant submits that in an affidavit of 3 June 2005 filed by
Mr Bisson, a solicitor acting for the
respondents, in accordance with
r 31.04 of the Federal Magistrates Rules, Mr Bisson deposed that an
application was made
for an order setting aside the bankruptcy notice and that
the application had been finally decided by Deputy District Registrar Baldwin
on
13 May 2005. However, the appellant submitted that no affidavit was filed
before the creditor’s petition was heard
by Rimmer FM to the effect
that the decision of Deputy District Registrar Baldwin had been appealed to
Dowsett J, and an
appeal from the decision of Dowsett J was pending
before the Full Court. (The decision of Dowsett J was subsequently upheld:
Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240.) The
appellant submits further that as at the date of the hearing before me there was
an application for special leave to appeal the
decision of the Full Court to the
High Court of Australia. |
| 41 | In summary, the
appellant submits that the application to set aside the bankruptcy notice is not
spent and will only be spent when
leave to appeal is refused by the High Court,
and orders are settled. Accordingly, the respondents could not produce an
affidavit
verifying par 4 of the creditors’ petition as required by
r 31.04 of the Federal Magistrates Court Rules 2001 (as
they were prior to
amendment) until an order is settled. As authority for this proposition, the
appellant relies on Guss v Johnstone (2000) 171 ALR
598. |
| 42 | In Guss a bankruptcy notice was
issued in respect of a judgment of the Magistrates Court which was eventually
appealed (unsuccessfully) to
the Full Court of the Supreme Court of Victoria.
The debtor filed an affidavit pursuant to s 41(7) of the Bankruptcy Act,
with the result that time for compliance with the notice was extended until the
Federal Court determined whether it was satisfied
that the appellant had a
counter-claim, set-off or cross demand such as referred to in s 40(1)(g) of
the Act. Sundberg J held that he was not satisfied that the appellant had
such a counter-claim, set-off or cross demand;
the debtor did not comply with
the requirements of the bankruptcy notice, and as a result the debtor committed
an act of bankruptcy.
The debtor appealed unsuccessfully to the Full Court of
the Federal Court, and then to the High
Court. |
| 43 | Rimmer FM considered this issue
in the course of her decision. Her Honour noted that the appellant applied to
have the bankruptcy
notice set aside; the application was heard on 13 May
2005 by Deputy District Registrar Baldwin and dismissed; the appellant
was then
served with the creditor’s petition; as of the date of the hearing of the
matter by Rimmer FM the appellant had
not paid the debt owing to the
respondents, and clearly he had committed an act of
bankruptcy. |
| 44 | Turning to the submissions of
the appellant, it is difficult to see how the appellant is assisted by his
reliance on Guss. The only relevance of Guss is that the debtor in
that case, like the debtor in the case before me, also sought to raise issues as
to the validity of the debt
upon which the bankruptcy notice was founded. In
that case, as has also been the case here as evidenced by the history of
litigation
involving the appellant and the respondents, the debtor was
unsuccessful. |
| 45 | In my view it is incorrect for
the appellant to assert that the issue is not ‘finally decided’
until all avenues of appeal
in the matter are exhausted. This is for at least
two reasons. |
| 46 | First, the plain reading of
r 31.04 is that, once a bankruptcy notice is issued by the Official
Receiver, it is open to the debtor
to make an application to have the bankruptcy
notice set aside by a court. In this case, the courts having jurisdiction under
the
Bankruptcy Act are the Federal Court of Australia and the Federal
Magistrates Court (s 27 Bankruptcy Act). The application by the appellant
to have the bankruptcy notice set aside was heard in the Federal Court before
Deputy District
Registrar Baldwin. In relation to matters before the Federal
Court, it is open to either a Judge or a Registrar of the Federal Court
of
Australia to deal with an application to set aside a bankruptcy notice (this is
clear from s 35A(1)(h) Federal Court of Australia Act 1976 (Cth) and
O 77 r 7 and Sch 3 Federal Court Rules). ‘Decided’ in
this context bears the plain meaning of the court having entertained an
application, and making an order
on the basis of that application. In this case,
the appellant’s application to have the bankruptcy notice set aside was
decided by Deputy District Registrar Baldwin on 13 May 2005 when the
application was dismissed. |
| 47 | The second issue
is that it is very clear that the application to set aside the bankruptcy notice
was finally decided by the Deputy District Registrar on 13 May 2005.
In the context of r 31.04 Federal Magistrates Court Rules, the concept of
finality is referable to whether the decision in relation to the application to
set aside the bankruptcy notice finally
determined the rights of the applicant
or the respondent in favour of either of them. A similar test applies in a
number of contexts,
for
example: |
| • | interpreting the meaning of
‘final judgment or final order’ in s 40(1)(g) Bankruptcy Act
(see, for example, the test
articulated by Lord Esher MR in In re Riddell ex
parte Earl of Strathmore (1888) 20 QBD 512 at 516);
and |
| • | distinguishing a ‘final
judgment’ from an ‘interlocutory judgment’ (see, for example,
Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423 per Taylor J at 440 and
Windeyer J at 443). |
| 48 | Where an order is made
either allowing or dismissing an application to set aside a bankruptcy notice,
the decision does finally determine
the rights of the parties in relation to the
validity of the bankruptcy notice either in favour of the applicant or the
respondent.
The terms of r 31.04 indeed imply that the decision on the
application is ‘final’. The fact that the decision is
capable of
being appealed, ultimately to the High Court of Australia, does not in any way
derogate from its
‘finality’. |
| 49 | This ground of
appeal fails. |
Supplementary Notice of
Appeal Ground 2
| 50 | In the supplementary notice
of appeal, the appellant claimed in his second ground of appeal that
Rimmer FM erred in finding that
the order attached to the bankruptcy notice
was a final judgment or order of the Federal
Court. |
| 51 | In his written submissions, the
appellant submitted: |
‘The Court erred in holding that the order of the Federal Court was a
final judgment or order with (sic) the meaning of the
act. Where an application
for leave to appeal is not brought within 7 days does not render the judgment a
final judgment or order
within the meaning of the Act: Re Carmody: Ex parte
Glennan [2000] HCA 37 at 19, 20 and 26. The Federal Court rules provide that
extensions of time for an application for leave to appeal is brought out of
time.’
| 52 | In
this case the act of bankruptcy upon which the sequestration order was founded
was the failure of the appellant to comply with
a bankruptcy notice in respect
of a debt the subject of a final judgment or final order within the meaning of
s 40(1)(g) Bankruptcy Act. That debt arose from the failure of the
appellant to pay the respondent the sum of $24 000.00 in accordance with a
costs order
made by Deputy District Registrar Baldwin in the Federal Court on
26 November 2004. |
| 53 | In my view this
submission of the appellant is
misconceived. |
| 54 | Principally, it appears that
the issue of whether the order of the Deputy District Registrar was in the
nature of a final order has
already been raised by the appellant in other
litigation, and dealt with by the Full Court in that context: Worchild v The
Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240. In particular I note
par 10 of the joint judgment of Kiefel, Jacobson and Greenwood JJ
where their Honours said: |
‘10 In our view the order of 26 November 2004 is a final order within
the meaning of the Bankruptcy Act, one in which the respondents’ rights
were ascertained and given effect to. Unlike a mere Certificate of Taxation, an
order
made under O 62 r 45(3) of the Federal Court Rules directs the
payment of money. This was a feature absent in Re Walker; Ex parte Noble
Einsiedel Pty Ltd [1992] FCA 327, a decision of Northrop J of 16 April 1992 at p
4. A purpose of the rule is to permit enforcement and execution under the order.
The latter is an important element in determining whether an order is final or
not: Pepper v McNiece [1941] HCA 27; (1941) 64 CLR 642 at 657. In Re Draper; Ex parte
Australian Society of Accountants, an unreported decision of 3 February 1989,
von Doussa J held that an order made under the rule was final, within the
meaning of s 40(1)(g) of the Bankruptcy Act. In his Honour’s view, if
there be any doubt about that, it is removed by the provisions of
s 40(3)(b) of the Bankruptcy Act, as the orders are ones which can be
enforced as final judgments. See also Re Luckins; Ex parte Columbia Pictures
Industries &
Anor (1996) 67 FCR 549, a decision of Beaumont J at
p 559.’
| 55 | This
is enough to dispose of this submission. I note the respondents’
submission that this is the fifth occasion on which the
appellant has sought to
litigate this issue. The meaning of ‘final judgment or final order’
has been the subject of extensive
judicial comment. It is unnecessary to examine
this issue further, other than to emphasise the general principle that a
decision
of a superior court which can otherwise be considered a final judgment
or final order will not lose this characteristic simply because
it is liable to
be set aside (Gibbs J in Re Hanby ex parte Flemington Central Spares Pty
Ltd (1966) 10 FLR 378 at 380) or appealed to an appellate court (cf
O 52 r 17 Federal Court Rules). To that extent, the appellant’s
argument is misguided to the extent that he submits that an order is not final
until all
avenues of appeal have been exhausted. I note the submissions of the
appellant with respect to Re Carmody; ex parte Glennan [2000] HCA 37.
However this case concerned (inter alia) the jurisdiction of the Full
Court of the Federal Court to hear and determine, out of time, an appeal from an
interlocutory decision
of a primary judge interpreting the Taxation
Administration Act 1953 (Cth), and I do not find the case helpful in the
present context. |
| 56 | This ground of appeal
fails. |
4. Whether the
creditor’s petition was verified by a person who knew the relevant facts:
Original Notice of Appeal Ground 4
| 57 | The appellant submits that
the learned Federal Magistrate erred in finding that the creditor’s
petition was verified by a person
who knew the relevant facts, contrary to the
weight of the evidence. The relevant affidavit is that of the second respondent
filed
3 June 2005, which is the same date that the creditor’s
petition in this matter was filed. |
| 58 | The
affidavit, which is headed ‘AFFIDAVIT VERIFYING PARAGRAPHS 1, 2 & 3 OF
PETITION (rule 31.02)’ describes the applicant
as The Drink Nightclub
(Qld) Pty Ltd and Bill Cross, and describes the respondent as Andrew Worchild.
The body of the affidavit is
as follows: |
‘I, Bill Cross c/- Hynes Lawyers Gold Coast, Level 6, Gateway Building,
40 Appel Street Surfers Paradise in the State of
Queensland state on
oath:-
1. I am the Sole Director of The Drink Nightclub (Qld) Pty Ltd, and as such
have access to the books and records of the Applicant.
I am duly authorised to
make this affidavit on behalf of the Applicant Creditors.
2. The statements contained in paragraphs 1, 2 and 3 of the petition signed
and dated 17 31 May 2005 are within my own knowledge true.
3. The abovenamed respondent has not paid, nor made any arrangement to the
Applicants satisfaction for settlement of the debt claimed
in the bankruptcy
notice herein issued on the Application of the Applicant to in paragraph 4 of
the
petition.’
| 59 | The
amendment to the date in par 2 of the affidavit is
initialled. |
| 60 | In his written submissions, the
appellant submits inter
alia: |
| • | the petition should be a
separate document and must not be attached to the affidavit
(r 31.02(3)) |
| • | the affidavit does
not identify the petition that it refers to or annexe a copy of the petition to
the affidavit, and because of this
it is possible that the affidavit may in fact
refer to another petition or bankruptcy
notice |
| • | the bill of costs was not
prepared by the second respondent and ‘he had no knowledge of the contents
of the material in circumstances
where he has now filed an affidavit verifying
that monies are due for the perusal of documents that he deposed did not exist
during
the part 4a
proceedings’ |
| • | he has given notice
of overstatement of the debt to the
respondents. |
| 61 | The respondents submit in reply
that this was not an issue raised before the learned Federal Magistrate and
accordingly the Court
ought not to entertain it on
appeal. |
| 62 | I accept the submissions of the
respondents on this issue. In accordance with the legal principles explained
earlier in this judgment,
there are no exceptional circumstances which warrant
the Court allowing the appellant to raise any of these arguments on appeal when
he had an opportunity to do so before her Honour, and no submissions have been
made supporting the notion that it is in the interests
of justice that this
issue be entertained on appeal. In any event I also
note: |
| • | In the circumstances it is absurd
for the appellant to suggest there was any potential confusion as to which
petition or bankruptcy
notice Mr Cross’ affidavit
referred. |
| • | To the extent that the
appellant claims that one of the creditors in question cannot depose as to the
amount of costs contained in
a court order in that creditor’s favour, the
submission is also absurd. It is difficult to imagine a deponent who would be
in
a better position to verify the relevant facts in a creditor’s petition,
than the creditor himself. Further, no ‘evidence’
was referred to by
the appellant, the weight of which should cause the Court to find that her
Honour erred. |
| 63 | This ground of appeal
fails. |
5. Whether there were
defects in the creditor’s petition: Original Notice of Appeal Grounds 5
and 7, and Supplementary Notice
of Appeal Ground 1
| 64 | The appellant submitted in
the fifth ground of the original notice of appeal that Rimmer FM erred in
finding that the petition
was not defective, contrary to the weight of evidence.
In the seventh ground of the original notice of appeal, the appellant submitted
that the learned Federal Magistrate erred in finding that the creditors did not
hold security over the debtor’s property contrary
to the weight of the
evidence. Further, the appellant submitted in the first ground of the
supplementary notice of appeal that Rimmer FM
erred in finding that the
creditors’ petition did not require a copy of the judgment and/or
certificate of taxation to be attached
to the
petition. |
| 65 | Dealing with the appellant’s
submissions as follows: |
1. The appellant submits
that ‘paragraph 1 of the Petition states that the applicant Creditors are
owed an amount due under
an order of the Federal Court. Paragraph 4 refers to a
judgment referred to in the bankruptcy notice. The bankruptcy notice fails
to
contain the judgment or certificate of taxation’.
| 66 | Rimmer FM in her judgment
considered this issue. Her Honour said at
par 70: |
‘I am satisfied that this creditor’s petition is overall
compliant. It is in all respects clear and unequivocal. In relation
to paragraph
1 the petition is compliant and the Bankruptcy Notice contains the order made on
25 November 2004. Similar arguments
were put by the debtor in his application to
have the Bankruptcy Notice set aside and that application has been determined
and dismissed
with an order being made against the debtor for costs. No
application for review of the Registrar’s decision was made by the
debtor.
No new substantive issues have been raised by the debtor. Whilst I accept that
at any time prior to the making of the sequestration
order the debtor can raise
issues of formal defects in the Bankruptcy Notice, he cannot continue to raise
the same or similar issues
when that issue has been heard and determined both at
first instance by a Registrar and then on review to the Federal
Court.’
| 67 | The
nature of the ‘weight of evidence’ against her Honour’s
finding in relation to par 1 of the petition is
unclear. As I have already
noted, none of the facts to which par 1 refers appeared to be in dispute
before her Honour. Indeed,
I note this same issue has been raised by the
appellant before the Full Court in other proceedings, and the Full Court found
that
it was not necessary that a certificate of taxation be attached to the
bankruptcy notice, and that the relevant order of Deputy District
Registrar
Baldwin was – as required by the Bankruptcy Act – attached to the
bankruptcy notice (Worchild v The Drink Nightclub (Qld) Pty Ltd [2005]
FCAFC 240 at 8, 9). The appellant has sought to rely on the decision of the Full
Court (see TS ll 38-42) however he appears to have misread
the judgment of
their Honours. No error in the reasoning of Rimmer FM is demonstrated by
this submission. |
| 68 | Further, the appellant
claimed in ground 1 of the supplementary notice of appeal that Rimmer FM
erred in finding that the creditor’s petition did not require a
copy of the judgment and/or certificate of taxation to be attached to the
petition. In his submissions on this
point, I note that the appellant, in
relying on Thompson v Metham [1999] FCA 935, actually addressed the issue
whether a copy of the judgment and/or a copy of the certificate of taxation
ought be attached to the
bankruptcy notice. However in any event this
ground of appeal fails for the reason that her Honour made no such finding as
claimed by the appellant.
Indeed, after considering the appellant’s
submission at par 69 of her judgment, her Honour went on to
state: |
‘In relation to paragraph 1 the petition is compliant and the
Bankruptcy Notice contains the order made on 25 November 2004. Similar
arguments were put by the debtor in his application to have the Bankruptcy
Notice set aside and that application has been
determined and dismissed with an
order being made against the debtor for costs.’ (emphasis
added)
2. The appellant submits that paragraph 2 of the petition ‘states that
the applicant creditor does not hold security of the
property of the debtor this
leaves doubt as to whether the one or the other holds security over the property
of the debtor’.
| 69 | This issue was dealt with by
her Honour at par 71 of her judgment where her Honour
said: |
‘Paragraph 2 of the petition to (sic) also clear and unequivocal. It is
a requirement of the standard form for such a statement
to be made in those
terns as to the holding of any security over any property of the debtor by the
creditors. There is no uncertainty
raised to a reasonable person with the
knowledge of the debtor. There is no defect in the making of this
statement.’
| 70 | There
is no ‘weight of evidence’ indicating that the respondents do hold
such security, or even raising doubt as to whether
they hold such security,
contrary to her Honour’s finding. In my view, no error in her
Honour’s judgment is demonstrated
by this submission of the
appellant. |
| 71 | This also answers the seventh
ground of appeal in the original notice of appeal, which accordingly
fails. |
3. The appellant submits that the
‘petition refers to creditor and creditors including reference to the
agent for the Petitioner.
This creates doubt as to who the Petitioner is and
whether or not there is two joint petitioners and whether or not the agent holds
instruction to act on behalf of both petitioners’.
| 72 | In the judgment of
Rimmer FM, her Honour dealt with this issue at par 73 as
follows: |
‘Following his Honour’s reasoning with which I agree the fact
that an ‘s is left off the word creditor on one occasion
does not create
any confusion and is not a matter which would properly give rise to a
substantive defect in the notice as required
to set the Petition aside. I am
satisfied that the debtor is fully aware that there are two creditors, one a
company and one the
director of that company. He is also well aware that the
solicitors Hynes Lawyers act for both of the creditors. This is a spurious
argument without
merit.’
| 73 | I
note that the Full Court in Worchild v The Drink Nightclub (Qld) Pty Ltd
[2005] FCAFC 240 at par 5 explained to the appellant that there was no
uncertainty as to the amount he should pay to satisfy the relevant debt,
nor to
whom he should make payment. It is concerning that the appellant continues to
raise this putative ‘doubt’ as to
the identity of the petitioners as
an issue. |
| 74 | There is no ‘weight of
evidence’ against her Honour’s finding. In my view, no error in her
Honour’s judgment
is demonstrated by this submission of the
appellant. |
4. The appellant submits that
‘paragraph 4 of the Petition fails to state the date of act of
bankruptcy’.
| 75 | In respect of this point, her
Honour at par 74 of her judgment held that she was satisfied that the
petition was compliant with
the formal requirements of the prescribed
Form. |
| 76 | I find no error in the finding of her
Honour in relation to this issue. |
| 77 | The fifth
ground of appeal in the appellant’s original notice of appeal
fails. |
6. Whether there was other
sufficient cause under s 52(2)(b) Bankruptcy Act: Original Notice of Appeal
Ground 6
‘If the Court is not satisfied with the proof of any of those matters,
or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be
made:
it may dismiss the
petition.’
| 79 | Her
Honour carefully considered the leading authorities including Cain v Whyte [1933] HCA 6;
(1933) 48 CLR 639 and issues relevant to the exercise of her discretion,
which in the case before her Honour appeared to have been
identified by the
appellant as: |
| • | whether the appellant had
a counter-claim against the respondents concerning the discount
card |
| • | whether the appellant had a
counter-claim against the respondents for an alleged contempt of
court |
| • | whether the judgment of Cooper J
was obtained by fraud and or collusion and or
mistake |
| • | whether the respondents had
acted in abuse of process |
| • | whether the
appellant had actually committed an act of
bankruptcy. |
| 80 | After exhaustive consideration
of these issues, her Honour concluded there was nothing in the submissions or on
the evidence produced
which would lead her to exercise her discretion in favour
of the debtor under s 52(2)(b) of the Bankruptcy
Act. |
| 81 | The appellant is not appealing in
relation to the exercise of Rimmer FM’s discretion under
s 52(2)(b) for the reasons found in her Honour’s judgment. In his
written submissions before me the appellant raised one new issue relevant
to
s 52(2)(b), namely: |
‘The applicant is prosecuting a claim against the Law societies to
recover the costs and damages in relation to the cost
order.’
| 82 | At
the hearing before me, the appellant explained that he commenced proceedings
against the respondents on the basis of representations
made by the Student Law
Societies concerning the student discount card, and that he had commenced
proceedings against the Student
Law Societies on the basis of representations
made by the second respondent. The essence of his submission was that, if the
sequestration
order were to be upheld, those proceedings would be stayed (TS
p 6 ll 18-19). |
| 83 | The respondents
have drawn my attention to the decision of McGill DCJ of the District Court
of Queensland in Worchild v University of Queensland Law Society Inc
[2005] QDC 161. I note that his Honour’s decision was delivered on
10 June 2005. In this case it appears that the appellant was prosecuting
the claim against the Law Societies to which he adverted in ground 6 of the
original notice of appeal. His Honour found against the
appellant, and the
appellant unsuccessfully appealed the decision of Gill DCJ to the
Queensland Court of Appeal. The decision
of the Court of Appeal was delivered on
5 October 2005 (Worchild v. University of Queensland Law Society
[2005] QCA 37). I understand the appellant sought special leave to appeal to
the High Court from this decision, and it was refused (Worchild v University
of Queensland Law Society [2006] HCA Trans
181). |
| 84 | Two issues are therefore
clear: |
| • | as the hearing before
Rimmer FM took place on 26 October 2005, there appears to be no reason
why the appellant could not
have raised the issue of the proceedings against the
Law Societies in the State Courts, including the prospect of an appeal by him
to
the High Court, before her Honour as an issue relevant to the exercise of her
discretion under s 52(2)(b) |
| • | in any
event the appellant had been unsuccessful in prosecuting that claim in the State
Courts, and the appellant was presumably aware
of this at the time of the
hearing before Rimmer FM. |
| 85 | Further, I
understand that subsequent to the decision of Rimmer FM the appellant
commenced fresh proceedings in the Federal Court
against the Student Law
Societies. These proceedings, or the prospect of commencing them, were not
raised before her Honour. In any
event, the proceedings were recently dismissed
by Spender J (Worchild v University of Queensland Law Society [2006] FCA 1078). |
| 86 | On the basis of the principles I
explained earlier, I do not consider there are exceptional circumstances which
entitle the appellant
to raise this new issue on appeal. Accordingly this ground
of appeal fails. |
7. The relevance
of issues pertaining to security for costs: Original Notice of Appeal Ground
8
| 87 | The appellant claimed that
Rimmer FM failed to appreciate that security for costs is required to
contest a bill of costs in the
Federal Court. In particular, the appellant
submitted that: |
| • | in order to contest a
bill of costs in the Federal Court one needs to file security for
costs |
| • | if a party cannot provide
security for costs because of impecuniosity, then ostensibly the provision is a
statutory abrogation of
the right to a hearing, a denial of natural justice or a
right to be heard. |
| 88 | This ground of appeal
fails for the following reasons: |
| 1. | This issue
was raised by the appellant in related litigation before the Full Court, and
dismissed by the Full Court (Worchild v The Drink Nightclub (Qld) Pty Ltd
[2005] FCAFC 240 at [19]). |
| 2. | It is incorrect
to claim that the learned Federal Magistrate ‘failed to appreciate’
that security for costs was required
to contest a bill of costs in the Federal
Court: it does not appear that the issue was actually raised before her
Honour. |
| 3. | On the basis of the principles I
explained earlier, I do not consider there are exceptional circumstances which
entitle the appellant
to raise this new issue on
appeal. |
8. Whether there was cause
to doubt the judgment debt: Supplementary Notice of Appeal Ground 4
| 89 | This ground of appeal is
founded in a claim that Rimmer FM failed to investigate the
appellant’s allegations in circumstances
where there was sufficient cause
to doubt the judgment debt. |
| 90 | In my view this
ground of appeal, and the appellant’s submissions in support, are
misconceived. At the hearing, the appellant
submitted that there was a
‘real and relevant issue of fact’, namely that there were grounds
for the learned Federal
Magistrate to ‘go behind the judgment in
circumstances where there was no other material before the court’ (TS
p 10
ll 1-2). |
| 91 | The appellant has
submitted, in essence, that the absence of reasons given by the learned Federal
Magistrate for refusing to go behind
the judgment gave rise to an error of law.
He has cited as authority Petitt v Dunkley (1971) 1 NSWLR 376, a decision
of the New South Wales Court of Appeal. However, with respect, Petitt is
in no way comparable to the case which was before her Honour, or the case before
me. In the present case there is a history of
litigation demonstrating that
there is a judgment debt upon which the bankruptcy notice, and subsequently the
creditor’s petition,
are founded. It was clear to her Honour, as it is
clear to me, that the appellant has had numerous opportunities in Court, across
both Federal and State jurisdictions, through multiple actions, and through
multiple levels of appeal, to establish flaws in either
the judgment debt or the
process which has resulted in the judgment debt being enforceable against him.
He has been consistently
unsuccessful. While as a general rule it is desirable
to give reasons for a decision, to paraphrase Cussen ACJ in Brittingham
v Williams [1932] VLR 237 at 239, a case may ‘be so conducted that the
reason or reasons for the decision is or are obvious to any intelligent
person’. In my view, this is such a case with respect to this ground of
appeal. |
| 92 | I can find no error in the judgment
of Rimmer FM on this issue. This ground of appeal must
fail. |
9. Whether documents were
accepted, obtained and acted upon: Supplementary Notice of Appeal Grounds 5 and
6
| 93 | The fifth ground of appeal in
the supplementary notice of appeal was that the learned Federal Magistrate
‘failed to accept and
act upon documents put before her’. This is
similar to the sixth ground of appeal, namely that the learned Federal
Magistrate
‘failed to obtain and act upon documents which she should have
considered’. |
| 94 | The appellant has not
addressed the Court in relation to these grounds of appeal, either in the form
of written or oral submissions.
In my view, in the absence of submissions or any
evidence to this effect, these grounds of appeal must
fail. |
ORDERS
1. The appeal be dismissed.
2. The respondents have liberty to apply within seven (7) days as to
costs.
I certify that the preceding ninety-four (94)
numbered paragraphs are a true copy of the Reasons for Judgment herein of the
Honourable
Justice Collier. |
Associate:
Dated: 24
October 2006
Counsel for the
Appellant: |
The Appellant appeared in
person |
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Solicitor for the Respondent:
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Date of Hearing:
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Date of Judgment:
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