Anderson v Stonnington City Council

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FEDERAL COURT OF AUSTRALIA

Anderson v Stonnington City Council [2024] FCA 1288

File number(s): VID 773 of 2023
Judgment of: BUTTON J
Date of judgment: 8 November 2024
Catchwords: BANKRUPTCY AND INSOLVENCY – application to set aside bankruptcy notice – “counter-claim, set-off or cross demand” pursuant to s 40(1)(g) of the Bankruptcy Act 1966 (Cth) – where applicant debtors claim to have tortious claims available to them against respondent creditor in relation to the imposition of a heritage overlay on their home – whether just to allow litigation of the claim before determination of bankruptcy proceedings – application dismissed
Legislation:

Bankruptcy Act 1966 (Cth) ss 40, 41

Federal Court of Australia Act 1976 (Cth) s 35A

Planning and Environment Act 1987 (Vic) ss 25, 149A, 149B

Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 148

Supreme Court (General Civil Procedure) Rules 2015 (Vic) O 10
Cases cited:

Anderson v City of Stonnington [2016] VSC 374

Anderson v City of Stonnington [2017] VSCA 229

Anderson v Stonnington CC [2018] VCAT 102

Anderson v Stonnington City Council (2020) 62 VR 147; [2020] VSCA 229

Anderson v Stonnington City Council [2019] VSC 453

Anderson v Stonnington City Council [2020] VSCA 238

Anderson v Stonnington City Council [2021] HCASL 254

Batshon v Migliorino & Associates [2003] FMCA 32

Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34

Mandeville v Better Lending Pty Ltd (2021) 139 SASR 1; [2021] SASCA 28

Massih v Esber (2008) 250 ALR 648; [2008] FCA 1452

Mazukov v University of Tasmania [2004] FCAFC 159

Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331; [2003] FCA 373

Royal v Nazloomian, in the matter of Royal [2019] FCA 555

Guss v Johnstone (2000) 171 ALR 598; [2000] HCA 26

Vogwell v Vogwell (1939) 11 ABC 83

Williamson v Bendigo and Adelaide Bank Ltd [2021] FCA 451
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 67
Date of hearing: 30 October 2024
Counsel for the Applicants: Mr A J Purton
Solicitor for the Applicants: L A Warren Lawyers
Counsel for the Respondent: Ms A Carruthers
Solicitor for the Respondent: Maddocks

ORDERS

VID 773 of 2023
BETWEEN:

JOHN RAYMOND ANDERSON

First Applicant

DEMITRA ANDERSON

Second Applicant
AND:

STONNINGTON CITY COUNCIL

Respondent

ORDER MADE BY:

BUTTON J

DATE OF ORDER:

8 NOVEMBER 2024

THE COURT ORDERS THAT:

1.The Applicants’ application for review of Registrar Ellis’s decision made on 22 March 2024 be dismissed.

2.The Applicants’ application to set aside Bankruptcy Notice 261232 issued on 14 August 2023 be dismissed.

3.The Applicants pay the Respondent’s costs of the application, to be taxed if not agreed.

4.The costs order in paragraph 3 above be stayed until 4:00pm on 15 November 2024.

5.Any submissions on costs should be filed and served by 4:00pm on 12 November 2024 (limited to two pages), with any responsive submissions by 4:00pm on 14 November 2024 (limited to two…

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Details
Case
[2024] FCA 1288
Decision Date

CaseChat Overview and Summary

The Andersons, the proprietors of property at 21 William St, South Yarra, Victoria, sought to set aside a bankruptcy notice issued by the Stonnington City Council pursuant to s 40(1)(g) of the Bankruptcy Act 1966 (Cth). The basis for the application was that the Andersons had claims against the Council relating to the imposition of a heritage overlay on their home, which they alleged was in retaliation for their previous legal actions against the Council. The legal issues for the Court to decide included whether the Andersons' claims were statute-barred, whether they could have been raised in the prior proceedings, and whether they had any prospect of success. The Council argued that the claims were statute-barred, could have been raised in the prior proceedings, and had no prospect of success. The Court found that the Andersons' claims were not statute-barred as they could not have been raised in the prior proceedings. The Court also found that the claims had some prospect of success, particularly in relation to misfeasance in public office and conspiracy. The Court ultimately dismissed the application to set aside the bankruptcy notice, finding that the Andersons had not satisfied the requirements of s 40(1)(g) of the Act. The Court ordered that the Andersons pay the Council's costs of the application, subject to taxation.

Orders

Orders of the court

1. The Applicants’ application for review of Registrar Ellis’s decision made on 22 March 2024 be dismissed.

2. The Applicants’ application to set aside Bankruptcy Notice 261232 issued on 14 August 2023 be dismissed.

3. The Applicants pay the Respondent’s costs of the application, to be taxed if not agreed.

4. The costs order in paragraph 3 above be stayed until 4:00pm on 15 November 2024.

5. Any submissions on costs should be filed and served by 4:00pm on 12 November 2024 (limited to two pages), with any responsive submissions by 4:00pm on 14 November 2024 (limited to two pages).

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

Background

Background to the litigation

Both parties filed and relied on written submissions. No witnesses were required for cross‑examination. BACKGROUND The Andersons are the registered proprietors of the land at 21 William St, South Yarra, Victoria (the Property), which they purchased on 26 April 2012. The Property, and the laneway next to it, has been the source of a great deal of litigation between the parties. It is necessary to explain that litigation and the events surrounding it in order to understand the Andersons’ claim under s 40(1)(g) of the Act.The laneway There is a laneway abutting the South side of the Property, which leads to a public path running alongside a railway line. The path alongside the railway line is known as Lovers Walk. On 9 April 2012, prior to settlement on the Property taking place, the Andersons wrote to the Council raising certain concerns they had with the laneway, namely: graffiti, security risks, and unauthorised cars parking across, and inhibiting access to, the Property’s driveway. In view of those concerns, the Andersons offered to purchase a portion of the laneway. As it happened, that offer was misdirected. The laneway was owned by Victorian Rail Track (VicTrack), not the Council. In the years that followed, the Andersons extensively lobbied the Council and VicTrack to restrict public access to the laneway. It is not necessary for the purposes of this application to delve into those efforts. It suffices to note that, having had no luck in their efforts with the Council and VicTrack (including by making a further offer to purchase the laneway, this time to VicTrack), the Andersons took matters into their own hands:(a)in November 2013, by installing a fence to close off public access to the laneway, which was later removed by the Council in December 2013; and(b)in August 2014, by re-installing a fence to close off public access to the laneway. On 18 September 2014, the Andersons commenced proceedings in the Supreme Court of Victoria and applied by summons for an interlocutory injunction seeking to restrain the removal of the fence they had erected. On 29 September 2014, the Supreme Court of Victoria dismissed the summons and ordered that the originating motion stand as a writ and that a statement of claim be filed and served. The fence was removed by the Andersons on 1 October 2014. The “laneway litigation” (as it was dubbed by the Andersons) continued for some years. The Andersons were ultimately unsuccessful at first instance (Anderson v City of Stonnington [2016] VSC 374) and on appeal (Anderson v City of Stonnington [2017] VSCA 229). Interactions between the Andersons and the Council became increasingly hostile over this period, and some correspondence from the Andersons to the Council levelled serious allegations against the Council, and one Councillor in particular. The details of these interactions were set out in the evidence tendered by the Applicants. The present relevance of those interactions is that it constitutes the background against which the Council’s later introduction of a heritage overlay over the Property took place, and which caused the Andersons to consider the Council’s actions in respect of the heritage overlay to have been undertaken as “pay back” for the Andersons’ agitation of issues concerning the laneway.Building works

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Section 40(1)(g) requires that the Court be satisfied that the recipient of the bankruptcy notice “has a counter‑claim, set‑off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained” (emphasis added). In my view, this criterion has been satisfied in respect of the various tortious claims the Andersons identified in the present proceeding, and which are the subject of the writ filed in the Supreme Court of Victoria. The costs orders which underpin the bankruptcy notice were obtained in proceedings that advanced from VCAT and, on appeal on a question of law, to the Supreme Court of Victoria’s trial division, then the Court of Appeal, and finally to the High Court. While, as the Council pointed out, the Andersons have been well aware of the grievances pursued by the writ filed in January 2024 for many years, that does not mean they could have advanced the tortious claims in those proceedings. As noted above, the proceeding was properly initiated under provisions of the Planning Act that provided for applications to be made to VCAT. Even if, as the Council noted, the Andersons were allowed to rely on new arguments in the Court of Appeal, that is in no way tantamount to the Court of Appeal somehow having opened the door for the Andersons to pursue the tortious claims in that forum. As the Court of Appeal noted, the point made by the new grounds sought to be advanced on appeal was “essentially a legal one, concerned with the meaning of s 6(3)(d)” of the Planning Act: Anderson (CA) at [55] (Maxwell P, Tate and McLeish JJA). It was also suggested by the Council that the Andersons could have brought a counterclaim in the Supreme Court of Victoria when the appeal on the question of law was initiated. Counsel was unable to identify any procedural mechanism in the Supreme Court (General Civil Procedure) Rules 2015 (Vic) by which that might occur. I note, in passing, that it does not appear that O 10 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) would lend itself to that use. The suggestion that the matter could also have been brought in the High Court was not adequately explained, and it is not apparent how it is said that the Andersons could have brought proceedings in the High Court of the kind they initiated in VCAT. Accordingly, I consider that this integer of s 40(1)(g) has been made out by the Andersons.Quantum In her first affidavit, Ms Anderson deposes that the introduction of the heritage overlay “has caused loss” to her and Mr Anderson. That loss is said to have been suffered on the basis that:(a)the Andersons are “at risk” that the building works they completed after the introduction of the overlay will need to be demolished as they were conducted without a planning permit, and those works cost $941,372; and(b)the Property has been “devalued” by the introduction of the heritage overlay.

Ratio Decidendi

Legal Principle Established

The Council submitted, in summary, that:(1)Each of the claims raised by the Andersons is statute barred, given that each of the claims has a six-year limitation period, and the causes of action accrued when the heritage overlay came into effect (on 21 May 2015) or shortly thereafter when the Andersons were instructed to cease work on the Property. (2)The Andersons’ writ against the Council does not identify the individuals for whose conduct the Council is said to be vicariously liable. This was said to prevent the Court from meaningfully assessing the claims, the vicarious liability of the Council (the creditor in the bankruptcy notice and prospective defendant in the Supreme Court of Victoria), and, relatedly, whether the claims are mutual and due in the same right. (3)The claims have no prospect of success and are not supported by a Statement of Claim or adequate admissible evidence and, in relation to each of the specific claims:(a)Misfeasance in public office — the Andersons’ allegations are opaque and lacking in foundation, and the Andersons cannot meet the essential elements of the claim, being an intention to cause harm, misuse of position, potential advantage, deliberate attempt to cause damage, or that any such conduct was in bad faith or beyond power. The Council further submitted that, contrary to the Andersons’ claims of victimisation, the decision to introduce the heritage overlay was based on the detailed Panel Report, delivered after the receipt of competing expert evidence and submissions from legal representatives. (b)Conspiracy — the Council submitted that the Andersons had not identified the alleged conspirators, let alone what is said to be the agreement and mutual intent to harm, nor how or why an act conducted by such persons was unlawful, or for the purpose of harming the Andersons.(c)Tortious interference/inducing breach of contract — in respect of this claim the Council submitted that even if a claim were to be made out (which is denied by the Council) a justification defence is nevertheless apparent and that “[s]elf evidently, builders being instructed to cease building when such works were unlawful cannot be a legitimate cause of action”. The Council also submitted that, in the absence of any specified individuals as prospective defendants, the Court cannot be satisfied of what, if any, knowledge any specific individual might have regarding any specific contract, and that the Court was not in a position to assess whether the Council could be held vicariously liable for the unspecified wrongdoers. (4)As to each of the claims, the Council submitted that no damages can be seen to flow from the impugned conduct and that any costs and losses incurred by the Andersons after the introduction of the heritage overlay were “deliberately and continually incurred by the Andersons with full knowledge that they did not have, and had not applied for, the requisite planning permit”. The Council submitted that the Andersons had failed to mitigate their loss, by way of a claim of frustration of contract, or by simply ceasing works on the Property.(5)In relation to the Andersons’ submission that their off-setting claims could not have been raised before VCAT, given its jurisdiction, the Council submitted that the Andersons have not established that they were legally unable to raise the issues, and referred to the Court of Appeal’s decision to allow the Andersons to raise new issues on appeal: Anderson (CA) at [52]­–[56]. The Council also submitted that the Andersons are prevented, by the doctrine of res judicata, from relying on arguments which rely on the proposition that the heritage overlay is unlawful and are estopped from seeking to litigate matters where it was unreasonable not to have raised them in the prior proceedings (referring to Mandeville v Better Lending Pty Ltd (2021) 139 SASR 1; [2021] SASCA 28 at [94] (Doyle, Livesey and Bleby JJA)). In oral submissions, the Council submitted that the Andersons could have brought a cross‑claim in the Supreme Court of Victoria when their appeal from VCAT went to that Court, or could have applied directly in the High Court in relation to the points they took to VCAT, then asked the High Court to remit the matter to the Federal Court. The Council cited the decision of Raphael FM in Batshon v Migliorino & Associates [2003] FMCA 32 in support of the proposition that the legislative expression “that he or she could not have set up in the action or proceeding” has been interpreted widely and does not restrict the applicant to the particular court in which the proceedings were heard (for example if the proceeding could have been transferred to another court) . CONSIDERATION