ACW v Du Bray (No 2)

Case [2020] FCA 994

FEDERAL COURT OF AUSTRALIA

ACW v Du Bray (No 2) [2020] FCA 994

File number: NSD 430 of 2019
Judge: WIGNEY J
Date of judgment: 16 July 2020
Catchwords: BANKRUPTCY AND INSOLVENCY – creditor’s petition for a sequestration order against the respondent debtor – where indebtedness was said to arise from a series of court orders spanning several years of litigation, including orders registering judgments delivered by courts in New Zealand – where respondent debtor opposed the creditor’s petition and the making of a sequestration order – where respondent debtor opposed the creditor’s petition on the ground that it was not properly verified in accordance with s 47(1) of the Bankruptcy Act 1966 (Cth) – where respondent debtor opposed the creditor’s petition on the ground that the Court could not be satisfied that debts were owing – where respondent debtor requested the Court to “go behind” the main judgment ordering costs against him on the ground that he had been debarred from actively participating in the proceeding – where respondent debtor claimed the main judgment was tainted by bias – relevant principles in determining the Court’s discretion to “go behind” a judgment to investigate whether a debt is owing – principles of the apprehension of bias – where grounds of opposition were found to have no merit – where creditor’s petition was held to have been properly verified as required by s 47(1) of the Bankruptcy Act 1966 (Cth) – where respondent debtor failed to establish any reason for Court to go behind any judgment or court orders – where respondent debtor was found to have not demonstrated any other sufficient cause as to why sequestration order should not be made – where sequestration order met the requirements of s 52 of the Bankruptcy Act 1966 (Cth)
Legislation:

Bankruptcy Act 1966 (Cth) ss 41(5), 47, 47(1), 52, 52(1), 52(1)(a), 52(1)(c), 52(2), 52(2)(b), 156A

Bankruptcy Rules 1968 (Cth) r 132

Evidence Act 1995 (Cth) s 136

Federal Court of Australia Act 1976 (Cth) s 37AF

Trans-Tasman Proceedings Act 2010 (Cth) ss 68, 72(1), 72(1)(b)

Federal Court (Bankruptcy) Rules 2016 (Cth)

High Court Rules 2016 (NZ) r 7.48

Property (Relationships) Act 1976 (NZ)
Cases cited:

ACW v Du Bray [2019] FCA 1075

Corney v Brien (1951) 84 CLR 343

Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632; [2017] FCAFC 8

Cumins v Deputy Commissioner of Taxation (2008) 172 FCR 425

Daly v Watson (1994) 50 FCR 544

Doggett v Commonwealth Bank of Australia [2019] FCAFC 19

DOQ17 v Australian Financial Security Authority (No 2) (2018) 363 ALR 681; [2018] FCA 1270

Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337

Emerson v Wreckair Pty Ltd (1992) 33 FCR 581

Hamod v State of New South Wales (No 11) [2008] NSWSC 967

Knaggs v Director of Public Prosecutions (NSW) (2007) 170 A Crim R 366; [2007] NSWCA 83

Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70

Makhoul v Barnes (1995) 60 FCR 572

Olivieri v Stafford (1989)…

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AGLC
ACW v Du Bray (No 2) [2020] FCA 994
Case
[2020] FCA 994
Decision Date

CaseChat Overview and Summary

A creditor petitioned the Federal Court of Australia for a sequestration order against the debtor, Lee Francis Du Bray. The indebtedness arose from a series of court orders spanning several years of litigation, including orders registering judgments delivered by courts in New Zealand. The debtor opposed the creditor’s petition and the making of a sequestration order on various grounds. The debtor claimed the Court could not be satisfied that debts were owing, that the creditor's petition was not properly verified, and requested the Court to "go behind" the main judgment ordering costs against him on the ground that he had been debarred from actively participating in the proceeding and that the main judgment was tainted by bias. The court was required to determine whether the creditor's petition was properly verified, whether the Court could be satisfied that debts were owing, whether the Court should "go behind" the main judgment, and whether any other sufficient cause existed as to why a sequestration order should not be made.

The court held that the creditor's petition was properly verified as required by the Bankruptcy Act 1966 (Cth). The debtor failed to establish any reason for the Court to go behind any judgment or court orders. The debtor did not demonstrate any other sufficient cause as to why a sequestration order should not be made. The sequestration order met the requirements of the Bankruptcy Act 1966 (Cth). The court found that the grounds of opposition were without merit.

The court made a sequestration order against the estate of Lee Francis Du Bray. The costs of the applicant were to be assessed by a Registrar of the Federal Court of Australia and be paid from the bankrupt estate of Lee Francis Du Bray in accordance with the Bankruptcy Act 1966 (Cth). The date of bankruptcy was 13 September 2018, and a consent to act as trustee signed by David Henry Sampson had been filed under s 156A of the Bankruptcy Act 1966 (Cth).

Orders

Orders of the court

1. A sequestration order under the Bankruptcy Act 1966 (Cth) be made against the estate of Lee Francis Du Bray.

2. The costs of the applicant be assessed by a Registrar of the Federal Court of Australia and be paid from the bankrupt estate of Lee Francis Du Bray in accordance with the Bankruptcy Act 1966 (Cth).

THE COURT NOTES THAT:

1. The date of bankruptcy was 13 September 2018.

2. A consent to act as trustee signed by David Henry Sampson has been filed under s 156A of the Bankruptcy Act 1966 (Cth).

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Before addressing Mr Du Bray’s grounds of opposition to the creditor’s petition, it is necessary to address some issues that arose in relation to the evidence adduced by Mr Du Bray in opposition to the creditor’s petition. EVIDENCE Mr Du Bray sought to rely on three affidavits in opposition to the creditor’s petition: an affidavit affirmed by him; an affidavit sworn by Mr Vella which annexed a report prepared by him dated 3 March 2015; and an affidavit affirmed by Mr Andrew Chen. Before addressing the contents of those affidavits, it is necessary to say something about Mr Du Bray’s compliance with the orders made by the Court in relation to the filing of evidence to be relied on by him in opposition to the creditor’s petition. It would be fair to say that once judgment was handed down in Du Bray (No 1) and leave was granted to amend the creditor’s petition, the applicant pressed for an early hearing of the creditor’s petition. The hearing of the petition was, however, initially delayed because Mr Du Bray applied for leave to appeal the judgment in Du Bray (No 1). That application was in due course dismissed and the matter was promptly listed for a case management hearing on 29 October 2019. At that case management hearing, Mr Du Bray was ordered to file and serve his notice of grounds of opposition to the creditor’s petition and any evidence upon which he proposed to rely in relation to the grounds of opposition by 19 November 2019. Mr Du Bray filed and served his notice of grounds of opposition on 19 November 2019 as was required. He did not, however, file or serve any evidence. That resulted in the adjournment of the next case management hearing from 26 November 2019 to 5 December 2019. On the day prior to that case management hearing, Mr Du Bray filed and served his affidavit. That affidavit referred and exhibited a folder of documents which was said to be a confidential exhibit. At the case management hearing on 5 December 2019, the applicant again pressed for an early hearing of the creditor’s petition. She also foreshadowed an application to strike out or summarily dismiss Mr Du Bray’s notice which stated his grounds of opposition to the creditor’s petition on the basis that it was an abuse of process because it sought to relitigate his unsuccessful application to set aside the registration of two of the New Zealand High Court judgments. The Court listed the creditor’s petition for hearing on 3 March 2020. The applicant was ordered to file and serve her written submissions by 3 February 2020, Mr Du Bray was ordered to file and serve his written submissions by 17 February 2020 and the applicant was ordered to file and serve her written submissions in reply by 24 February 2020. Mr Du Bray, who was represented by counsel, said nothing at the case management hearing about filing or seeking to rely on any further evidence. No orders were made which permitted the filing of any further evidence. As events transpired, the applicant did not seek to strike out Mr Du Bray’s notice of opposition to the creditor’s petition. The creditor’s petition was heard on 3 March 2020.

Decision

Reasons for decision

The trial judge delivered her judgment in the matter on 27 October 2015 (the substantive judgment). Her Honour’s reasons were detailed and lengthy, running to almost 75 pages and 198 paragraphs. It is unnecessary at this point to consider her Honour’s findings and reasons in any detail. It will be necessary to revisit some findings later in the context of Mr Du Bray’s arguments. The trial judge also made detailed and lengthy orders concerning, amongst other things, the classification and valuation of the relationship property and its division between, relevantly, the applicant and Mr Du Bray. The net effect of those orders was that Mr Du Bray was required to pay the applicant the total net sums of AU$3,795,746 and NZ$1,285,789 plus interest. Her Honour also made various costs orders which were later fixed at NZ$510,339.89. The final orders were sealed on 26 November 2015.Mr Du Bray’s unsuccessful appeal Mr Du Bray was required, under the applicable rules of court, to file any appeal from the substantive judgment by 15 February 2016. He did not file any appeal by that date. He did, however, file an application for leave to appeal on 24 March 2016. It will be necessary to say something further about his draft grounds of appeal later in the context of some of the arguments Mr Du Bray raised in this proceeding for going behind the trial judge’s judgment. On 16 June 2016, the Court of Appeal of New Zealand granted an extension of time for Mr Du Bray to appeal on strict conditions. Those conditions included that, no later than 12 August 2016, Mr Du Bray was required to pay the applicant all outstanding costs orders and interest thereon totalling NZ$230,786.46; pay the registrar of the court the costs of NZ$524,441.92 (including accrued interest) on the substantive judgment; file and serve the case on appeal; pay the filing fees; pay the registrar of the court NZ$6,600 for security for costs; and pay the applicant NZ$2,500 in respect of costs on the application for leave to appeal. The court ordered that if those conditions were not fully satisfied by 12 August 2016, the appeal would be dismissed. It is worth noting some observations made by the Court of Appeal in its judgment granting an extension of time. The court noted that the case before it was “one of the most egregious cases of repeated abuse of the court’s processes encountered in this Court’s collective experience”. It involved, in the court’s assessment, a “cynical attempt to deny the [applicant] her proper share of relationship property and, by a process of attrition, to force her to give up her attempts to secure justice”. Referring to the outstanding costs orders against Mr Du Bray, the court noted that Mr Du Bray had been “in serious contempt of court for a lengthy period” and that the position he found himself in at that point was “solely the result of his own contumacious conduct”. He therefore could not expect the courts of New Zealand to “hear him while he remains in contempt”.

Ratio Decidendi

Legal Principle Established

Somewhat extraordinarily, Mr Du Bray did not comply with the terms upon which the extension of time to appeal was granted. Mr Du Bray’s appeal was accordingly dismissed on 29 August 2016.REGISTRATION OF NEW ZEALAND JUDGMENTS IN THIS COURT In May 2015, a registrar in this Court registered four New Zealand judgments pursuant to s 68 of the T-TP Act: a judgment of the Court of Appeal of New Zealand delivered on 15 December 2014 for costs in the sum of NZ$31,850.08 (registered on 7 May 2015 for the sum of AU$31,159.19); a judgment of the Supreme Court of New Zealand handed down on 13 April 2015 for costs of NZ$53,756.75 (registered on 13 May 2015 for the sum of AU$47,351.34); a judgment of the Court of Appeal of New Zealand handed down on 22 January 2015 for costs of NZ$17,303.66 (registered on 13 May 2015 for the sum of AU$17,342.47); and a judgment of the Court of Appeal of New Zealand handed down on 15 December 2014 for costs of NZ$15,970.00 (registered on 13 May 2015 for the sum of AU$15,154.64). Mr Du Bray did not apply to have the registration of any of those four judgments set aside. Mr Du Bray’s indebtedness in respect of each of them formed part of the total debt the subject of the bankruptcy notice which was subsequently issued and served on Mr Du Bray. On 16 December 2015, a registrar of this Court registered two further New Zealand judgments under the T-TP Act: a judgment of the High Court of New Zealand delivered on 26 November 2015 for costs totalling NZ$23,658.79 (registered for the sum of AU$22,826.20) arising from proceedings relating to the freezing orders made against Mr Du Bray and others; and the final orders arising from the substantive judgment for the sums of AU$3,795,746.00 and NZ$1,883,483.70 (the later sum being registered for AU$1,755,180.04). In February 2016, Mr Du Bray applied to have the registration of the two judgments registered on 16 December 2015 set aside pursuant to s 72(1) of the T-TP Act. He advanced three grounds in support of that application: first, that enforcement of the judgments would be contrary to public policy in Australia; second, that the judgments were given in a proceeding in rem, the subject of which was moveable property not situated in New Zealand; and third, that the substantive judgment was registered in contravention of s 72(1)(b) of the T-TP Act because it was not a “registerable judgment” since it was partly an order that, if contravened, would make Mr Du Bray liable to conviction for contempt in New Zealand. It is unnecessary, for the purposes of this proceeding, to consider the second and third of the grounds advanced by Mr Du Bray for setting aside the registration of the judgments. It suffices to say that both of those grounds were ultimately rejected by the Court. It is, however, relevant to consider the arguments advanced by Mr Du Bray in support of the public policy ground. That is because, at least to a certain extent, they mirror some of the arguments advanced by Mr Du Bray in support of his contention that this Court should go behind the substantive judgment.