ABA Australian Bar Association Ltd v Minus (No.3)

[2019] FCCA 177

FEDERAL CIRCUIT COURT OF AUSTRALIA

ABA AUSTRALIAN BAR ASSOCIATION LTD & ORS v MINUS (No.3) [2019] FCCA 177

Catchwords:
BANKRUPTCY – Application in a case to set aside sequestration order made in absence of respondent – whether sufficiently arguable case that the sequestration order ought not to have been made – application in a case dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 33, 43, 52, 58 153B

Federal Court Rules 2011 (Cth), r.40.21

Federal Circuit Court Rules 2001 (Cth), r.16.05

Cases cited:

ABA Australian Bar Association & Ors v Minus [2018] FCCA 3836

First Applicant: ABA AUSTRALIAN BAR ASSOCIATION
(ACN 605 949 148)

Second Applicant: PHILIP SELTH IN A REPRESENTATIVE CAPACITY FOR MEMBERS OF THE AUSTRALIAN BAR ASSOCIATION
(ABN 12 205 148 843) (UNINCORPORATED)

Third Applicant: THE NEW SOUTH WALES BAR ASSOCIATION (ACN 000 033 652)

Respondent: DEREK MICHAEL MINUS

File Number: SYG 2914 of 2018

Judgment of: Judge Street

Hearing date: 25 January 2019

Date of Last Submission: 25 January 2019

Delivered at: Sydney

Delivered on: 25 January 2019

REPRESENTATION

Counsel for the Applicant: Mr R Davies

Solicitors for the Applicant: Webb Henderson

The Respondent appeared in person.

ORDERS

1. The Court extends time for the Respondent to file the affidavit evidence of the Respondent up to today.

2. Grant leave to the Respondent to file in Court the Respondent’s affidavit.

3. The balance of the application in a case is dismissed.

Date of order: 25 January 2019

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2914 of 2018

ABA AUSTRALIAN BAR ASSOCIATION
(ACN 605 949 148)

First Applicant

PHILIP SELTH IN A REPRESENTATIVE CAPACITY FOR MEMBERS OF THE AUSTRALIAN BAR ASSOCIATION
(ABN 12 205 148 843) (UNINCORPORATED)

Second Applicant

THE NEW SOUTH WALES BAR ASSOCIATION
(ACN 000 033 652)

Third Applicant

And

DEREK MICHAEL MINUS

Respondent

REASONS FOR JUDGMENT

1. This is an application under r 16.05 of the Federal Circuit Court Rules 2001 (Cth) to set aside an order made in the absence of the respondent on 20 December 2018. On that occasion, the Court made a sequestration order against the respondent. The Court delivered reasons in support of the making of a sequestration order on that occasion: see ABA Australian Bar Association & Ors v Minus [2018] FCCA 3836) The Court found on that occasion that the requirements of s 43 of the Bankruptcy Act1966 (Cth) (“the Bankruptcy Act”) were made out, that the requirements under s 52 of the Bankruptcy Act were made out, and the Court was not satisfied that the respondent is able to pay his debts and was not satisfied that other sufficient cause was made out why a sequestration order ought not to be made.

2. The application in a case was filed on 4 January 2019 supported by an affidavit dated 4 January 2019, explaining circumstances as to why the respondent had failed to attend that hearing.  The respondent indicated that he was unable to be present in Court on 20 December 2018 because he was walking and camping with his son for his 21^st birthday. The respondent identified that the excursion had been arranged months earlier, that there was no readily available alternative and that he was not able to access a telephone or internet reception.

3. The affidavit in support identified that there had been an appeal lodged in respect of a decision of another judge of this Court and asking the Court to go behind the judgment the subject of the bankruptcy proceedings. The application in a case also sought in the alternative an annulment of the sequestration order under s 153B of the Bankruptcy Act. 

4. The application in a case was listed for hearing on 23 January 2019 and on that occasion, the respondent appeared and indicated that there were appeals that were in the process of being lodged and, whilst the respondent appears to have misunderstood the effect of s 58 of the Bankruptcy Act, the respondent indicated that he wanted an opportunity to put on further evidence as to why there would be utility in setting aside the orders made on 20 December 2018.

5. The Court has a power of adjournment under s 33 of the Bankruptcy Act. The Court adjourned the matter part heard for hearing today. The Court made orders in relation to the filing and service of affidavit evidence by the respondent, and in that regard the Court extended time today for the filing of the respondent’s affidavit seeking to expand on the grounds in support of the application in a case.

6. At the hearing on 23 January 2019, the Court explained to the respondent that it would be considering the utility of setting aside the order and in that regard, whether the applicant had a reasonably arguable case to go behind the Certificates of Taxation and/or the judgment, and/or a reasonably arguable case as to solvency or other sufficient cause why a sequestration order ought not to be made.

7. The respondent’s affidavit makes an assertion that he is solvent and able to pay his debts as they fall due. However, no financial information has been provided to support the bare assertion and the respondent to his credit, has acknowledged that he is not in a position where if given a short adjournment, he would be able to obtain funds to pay out the amounts in the certificates of taxation and the trustee’s costs.

8. The respondent has indicated that his financial affairs are tied up in litigation. The respondent referred to the sale of his chambers as a practitioner and referred to a potential claim that he has on foot in relation to work being done for a Commonwealth body, which is the subject of a mediation to take place on 6 February 2019. The respondent’s evidence falls short of establishing an arguable case that the respondent is solvent, notwithstanding the assertion to the contrary.  The Court is not satisfied that there is an arguable case that the respondent is able to pay his debts as they fall due.

9. The Court notes that no statement of affairs has been provided to the trustee, but does not regard that as determinative on this issue in circumstances where the respondent has explained the combination of issues that he has been endeavouring to attend to which appear to have distracted him from complying with that statutory obligation.  Nonetheless, it is clear from what occurred on 23 January 2019 that the respondent was on notice of the ability to put on evidence in relation to solvency, and the evidence filed does not identify an arguable case that the respondent is in fact solvent.

10. The respondent’s affidavit also seeks to take issue with the liability the subject of the Certificates of Taxation. In that regard, the respondent has candidly acknowledged that the underlying order made by the learned Greenwood J giving rise to the Certificates of Taxation is not the subject of direct appellant challenge. The respondent contended that there had been an indirect challenge by reason of proceedings taken in the Federal Circuit Court concerning intellectual property. Whilst the proceedings may be related, they do not give rise to there being on foot proceedings seeking to set aside the orders made by the learned Greenwood J. The kernel of the argument advanced by the respondent is that the respondent has now filed applications for an extension of time seeking to appeal from the Certificates of Taxation and to agitate the quantification of the same.

11. The respective Certificates of Taxation arose from a process that has been identified in the affidavit of Mr Tom Bridges. That affidavit identifies steps having been taken to serve the respondent with a bill of costs in respect of the orders that gave rise to the certificates of costs. The affidavit refers to a costs estimate having been sent to Mr Minus and that the respondent did not file a notice of objection to the cost estimates and that no application for an extension of time in that regard was made. The affidavit identified the Certificate of Taxation issued on 12 March 2018 in respect of the proceedings NSD 975 of 2014 and the Certificate of Taxation issued on 13 March in respect of the proceedings NSD 1019 of 2014 and refers to forwarding those certificates to the respondent on 21 March 2018.

12. The affidavit identifies that on 5 June 2018 the respondent foreshadowed seeking an application for leave to challenge the certificates.  The email asserted that the respondent would be lodging a request for leave to appeal in the respective matters. No such steps were taken until January this year. The respondent has submitted that the grounds upon which challenge is made to the certificates are grounds that should be taken, on their face, as identifying an arguable case. Those grounds are identified in paragraphs 3 to 6 of the interlocutory application filed in matter NSD 975 of 2014 annexed to the respondent’s affidavit.

13. The respondent submits that the grounds on their face, disclose a sufficiently arguable case to give rise to utility in the setting aside of the order. The respondent also relies upon the affidavits filed in support of the interlocutory applications in which the circumstances of the respondent are expanded upon, including the timing of particular communications. Whilst the affidavit of the respondent identifies an assertion of not receiving the letter from the applicants’ solicitor within the 21 day period mandated by r 40.21 of the Federal Court Rules 2011 (Cth), the affidavit falls well short of supporting the contentions advanced in grounds 3 to 6.

14. The Court does not accept the assertion that it is to be confined to the assessment of the assertions in the application filed in determining whether or not there would be utility in setting aside the order.  The Court is entitled to take into account the whole of the evidence it has before it.  The evidence of Mr Bridges clearly identifies that grounds 3 to 6 in the respective interlocutory applications, on their face, have little if any prospect of success.

15. The steps taken in June in foreshadowing an appeal are of further concern in considering whether there is any reasonably arguable case or any real prospect of the applicant having the certificates of taxation set aside and the subject of review.  The Court does not regard the filing of the appeals in that regard either to make out other sufficient cause or a reasonably arguable case of other sufficient cause so as to give rise to utility in setting aside the sequestration order made.

16. The respondent has also relied upon the combination of circumstances and the impact on his professional career and the show cause event consequence for his practising certificate of the sequestration order which is the subject of current consideration.  The circumstances giving rise to the sequestration order in the present case are not, on their face, of a kind that would give rise to any reason why the respondent would be unable to continue to practise as a barrister.

17. No other factors have been identified to lend some other gravity to the consequence of a sequestration order in the circumstances of the present case. The Court does accept, that the consequence of the sequestration order may well impact on the respondent’s professional career and the pursuit of the areas of activity in which he has been engaged, including in relation to the control and conduct of the company which he appears to have been using for the purpose of providing services to the Commonwealth. Whilst the Court accepts that there is a consequence in that regard, the Court does not regard those matters as giving rise to sufficient utility to warrant the setting aside of the sequestration order.

18. The Court is not satisfied that there is an arguable case that the order ought not to have been made if looked at through the lens of s 153B of the Bankruptcy Act. The respondent has contended that the consequences for him, taken together with the other matters which the Court has referred to, in combination, give rise to there being other sufficient cause or an arguable case of other sufficient cause.

19. Whilst the Court was not impressed by the respondent’s explanation for the failure to attend Court, the affidavit was consistent with the respondent’s duties as an officer of the Court and did not suggest that the respondent was unaware of the hearing date.  The choice of family commitment over attending Court, does reflect a deliberate decision not to attend Court.  However, the Court does not regard that matter, in terms of the deliberate decision not to attend, as itself giving rise to reasons why the Court would not set aside the order if it were satisfied that there was utility in doing so.

20. The Court is not satisfied that there is an arguable case that the sequestration order ought not to have been made. The Court is not satisfied that there is an arguable case that the requirements of s 43 and s 52 of the Bankruptcy Act were not made out.  The Court is not satisfied that there is an arguable case that the respondent is solvent.  The Court is not satisfied that there is an arguable case that a sufficient cause could be made out as to why a sequestration order ought not to be made.

21. In the course of argument, the Court raised with the respondent the ability to obtain funds if given a short adjournment. The respondent candidly acknowledged that that would not put the respondent in a position, whether through family members or otherwise, where the respondent would be able to say to the Court that the judgment debts and the costs of the trustee could be met. The Court was not satisfied that there was any proper basis, taking into account s 33 of the Bankruptcy Act, in the interests of the administration of justice, to further adjourn the matter. The bankruptcy proceedings are ones which should be dealt with promptly, particularly given the significance of a sequestration order.

22. Whilst the Court was impressed at the candour and frankness of the respondent in the submissions advanced, that was entirely consistent with the respondent adhering to his duty as a practitioner of the Court, nonetheless, the Court is not satisfied that this is an appropriate matter in which there would be any utility in setting aside the order made on 20 December 2018, for the above reasons. Further, the Court is not satisfied that there is any sufficiently arguable case that the sequestration order ought not to have been made under s 153B of the Bankruptcy Act. 

23. Accordingly, the application in a case is dismissed.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 11 March 2019