Andrejic v Primelife Corporation - [2001] FMCA 39

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ANDREJIC v PRIMELIFE CORPORATION

[2001] FMCA 39

BANKRUPTCY – bankruptcy notice – setting aside – set off or counter
claim – need for evidence.

Bankruptcy Act 1966

Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346

Applicant:

ZLATKO ANDREJIC

Respondent:

PRIMELIFE CORPORATION LIMITED

ACN 010622901

File No:

MZ 179 of 2001

Delivered on:

8 October 2001

Delivered at:

Melbourne

Hearing Dates:

30 April & 21 May 2001

Judgment of:

Phipps FM

REPRESENTATION

Counsel for the Applicant:

Applicant in person

Counsel for the Respondent:

Mr S P Gardiner

ORDERS

THAT the application filed 28 March 2001 to set aside Bankruptcy Notice No. VN 417 of 2001 is dismissed.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MZ 179 of 2001

ZLATKO ANDREJIC

Applicant

And

PRIMELIFE CORPORATION LIMITED

ACN 010622901

Respondent

REASONS FOR JUDGMENT

On 17 August 2000, the respondent PRIMELIFE CORPORATION LIMITED (“Primelife”) obtained an order for costs in the Supreme Court of Victoria against the applicant ZLATKO ANDREJIC. Those costs were taxed by the Taxing Master of the Supreme Court on
8 November 2000 and allowed at $12,867.95.
On 6 March 2001 on the application of Primelife the Official Receiver issued a Bankruptcy Notice for the amount of $13,377.71 being the legal costs of $12,857.95 and interest of $509.76 claimed pursuant to the interest provisions governing the judgments in the Supreme Court of Victoria.
The applicant has applied pursuant to section 41(7) of the Bankruptcy Act 1966 (“the Act”) to:
a)Set aside the Bankruptcy Notice;
b)Extend time for compliance with the Bankruptcy Notice up to 21 days after and including the date of final judgment or settlement in the Supreme Court Proceeding No. 6668 of 1999.
The application came before a Registrar on 19 April 2001 and on that date was adjourned to 30 April 2001 when it was referred for hearing to a Federal Magistrate. That hearing was almost concluded when it became apparent that there might be a relevant counter-claim by the applicant which was referred to only obliquely in the affidavits he had already filed. Accordingly, the application was adjourned until 21 May 2001 and directions were given for the filing of further affidavits.
On 21 May 2001, a further application by the applicant for an adjournment was made, when I informed him that his material still did not show a counter-claim. That application was refused. These reasons are the reasons for the refusal for the application for adjournment and the reasons for dismissing the application.
In Proceeding No. 6478 of 2000 in the Supreme Court of Victoria, Primelife was plaintiff and a company Newpark Pty Ltd and the applicant were defendants. It was an application pursuant to section 1094 of the Corporations Law for an order that transfer of a share held by the respondent in Newpark Pty Ltd to Primelife be registered.
Primelife had entered into an arrangement with a company Buffalo Corporation Pty Ltd and various others which included a loan of money by Primelife Corporation and the giving of various securities for that loan. Proceeding No. 6668 of 1999 referred to in the application to this Court, was litigation between Buffalo Corporation Pty Ltd and others and Primelife Corporation concerning the agreements and arrangements between them. The share, the subject matter of Proceeding No. 6478 was part of those securities.
A share in another company, Confellow Enterprises Pty Ltd, was similarly the subject matter of security.
A provision in an instrument entitled “Mortgage of Securities” between Newpark as mortgagor and Primelife as mortgagee made Primelife attorney of the applicant, enabling Primelife to transfer the applicant’s share in Newpark to Primelife and require him to procure the registration of the transfer.
In Proceeding No. 6478 Primelife applied pursuant to section 1094 of the Corporations Law for an order that a transfer of the applicant’s share in Newpark be registered. Section 1094 provides:
i)Where a relevant authority in relation to a company refuses or fails to register, or refuses or fails to give its consent or approval to the registration of, a transfer or transmission of shares in, debentures of, or an interest made available by, the company, the transferee or transmittee may apply to the Court for an order under this section;
ii)Where, on an application made under subsection (1), the Court is satisfied that the refusal or failure was without just cause, the Court may:
a.Order that the transfer or transmission be registered;
b.Make such other order as it thinks just and reasonable including, in the case of a transfer or transmission of shares, an order providing for the purchase of the shares by a specified member of the company or by the company and, in the case of a purchase by the company, providing for the reduction accordingly of the capital of the company.
iii)In this section:
Relevant authority, in relation to a company, means:
a.A person who has, two or more persons who together have, or a body that has, authority to register a transfer or transmission of shares in, debentures of, or interest made available by, the company; or
b.A person, two or more persons, or a body, whose consent or approval is required before a transfer or transmission of shares in, debentures of, or interest made available by, the company is registered.
The explanation for this can be found in what appears under “other matters” in the order of Senior Master Mahoney made in the Supreme Court of Victoria on 18 August 2000. He said this:
“The Court held that the validity and enforceability of the instrument entitled ‘Mortgage of Securities’ and between the second-named defendant as mortgagor and the plaintiff as mortgagee is not an issue in the Proceeding No. 6668 of 1999 in this Court. In consequence the provisions of the instrument operated to entitle the plaintiff as attorney of the second-named defendant to execute as transferor the transfer of his share in the first-named defendant and oblige him to procure registration of the transfer. The Court is satisfied that his and the third-named defendant’s refusal to register the transfer was without just cause.”
The order in Proceeding No. 6478 was made on 23 August 2000.
The issue in 6478 was the same as in 6477, the Confellow Enterprises application. What occurred in Proceeding No. 6478 is again explained by what appears under “other matters” in the orders made by Senior Master Mahoney in that proceeding.
An order was made in in No. 6478 on 18 August 2000 adjourning it until 23 August 2000. This appeared under “other matters”:
The sole director of the first-named defendant, the second-named defendant, has resigned, the Court was informed by his solicitor. In the circumstances, it is necessary for that shareholder of the first-named defendant to be able to vote and the plaintiff as transferee of the other share, if able to vote, to “meet” and appoint a new director or directors. The question of the registration of the transfer can then be pursued with that director or those directors.
It can be seen from this quotation that on 18 August the applicant (that is Zlatko Andrejic) was represented by a solicitor before the Supreme Court.
In the order made by Senior Master Mahoney on 23 August, the costs order which founds the Bankruptcy Notice, this appears in “other matters”:
In the events which have occurred, an order for registration of the share transfer is no longer required or sought. The plaintiff’s solicitor via counsel for the plaintiff undertook to file as soon as practicable, the original affidavit of Gideon Rathner made this day, and on the basis of that undertaking, a faxed copy of the affidavit was read.
The order the Court made on that day was this:
The Court orders that:
1.The plaintiff has leave to discontinue the proceeding and it is deemed discontinued forthwith.
2.The second-named defendant pay the plaintiff’s costs of the proceeding, including its costs reserved on 18 August 2000.
At the hearing on 30 April 2001, the plaintiff relied on an application for leave to appeal out of time from Senior Master Mahoney’s order of 23 August and what was apparently proposed amendments to pleadings in No. 6668 of 1999 which would have changed those pleadings so that there was an attack on the validity of the mortgage of securities that the Senior Master had referred to. What was submitted by the applicant was that ultimately the Senior Master’s order would be shown to be wrong and be overturned.
The flaw in that argument was that whatever might happen in Proceeding No. 6668 in the future, it could not affect the Senior Master’s order. The applicant is not a party in Proceeding No. 6668. The Senior Master, on examining that proceeding in August of 2000, determined that it did not include an attack on the validity of the mortgage of securities. Therefore, at that time, the applicant was obliged to register the transfer of shares. Since he resigned and made such an order futile, he was liable for costs of the proceeding. If the pleadings in No. 6668 were amended and a successful attack was made on the mortgage of securities, that could not affect Master Mahoney’s order. Master Mahoney’s cost order was made in the circumstances which existed at that time. The applicant put forward nothing which showed that the Master’s order was wrong and could ever be attacked.
By the time of the hearing on 21 May 2001, the applicant had withdrawn his application for leave to appeal against the Senior Master’s order.
In his affidavit sworn 28 March 2001 in support of the application to set aside the bankruptcy notice, the applicant stated that he had a counter-claim, set-off or cross-demand equal or in excess of the amount of judgment debt. He said that these were in relation to a Supreme Court of Victoria Proceeding No. 2081 of 2000 between the applicant and the respondent, and in the County Court of Victoria Proceeding No. 3016 of 2000 in relation to a WorkCover matter between the applicant and the respondent. He gave no detail of that claim. Virtually at the end of the hearing on 30 April, the applicant stated that the Supreme Court claim was a claim for wrongful dismissal from his employment with the respondent. It was not immediately apparent to me that such a counter-claim was something which could have been pursued in Proceeding No. 6478, which I have said was an application under section 1094 of the Corporations Law for an order that transmission of that transfer of a share be registered. Since the applicant had given no details in his affidavit of the counter-claim which he stated was for wrongful dismissal from his employment with the applicant, there was, on the material which then existed, no way of determining whether it gave him a right to have the bankruptcy notice set aside.
Accordingly, I adjourned the application to 21 May 2001 and gave the applicant leave to file further material.
The applicant did this by an affidavit sworn 8 May 2001 and filed
9 May 2001. To this affidavit he exhibited a proposed further amended statement of claim in Proceeding No. 2081 of 2000 in the Supreme Court of Victoria which was a proceeding where Primelife was the plaintiff and the applicant was one of the defendants. Also exhibited was a proposed amended defence to further amended statement of claim and an amended counter-claim, and a reply defence to counter-claim.
While the amended counter-claim was only a proposed amended counter-claim, it was possible from a reading of it to see what the existing counter-claim was from the proceeding. The applicant alleged that he had been employed by the respondent which included an allegation that he was entitled to performance bonuses, including the payment of $100,000 on 1 May 1999. He alleged the wrongful termination of his employment contract and therefore claimed damages.
He also claimed to have a workers’ compensation claim. This was contained in a writ in the County Court of Victoria, copy which was exhibited to his affidavit. This was Proceeding No. 3016 of 2000. The injuries alleged in that proceeding were as follows:
“Stress, anxiety, depression
Post-traumatic stress disorder
Adjustment disorder and depression
Production, aggravation, exacerbation, recurrence and/or deterioration of
Stress, anxiety, depression
Adjustment disorder and depression
Post-traumatic stress disorder
Pain, distress and anxiety.”
In his affidavit of 8 May 2000, the applicant said in relation to the Supreme Court proceedings as follows:
“The evidence in support of the proposed claims is very voluminous and is not included in Exhibit ‘ZA7’, but will be provided at the hearing. Further, this will avoid the respondent requesting that information to be confidential.”
The applicant’s new material was met with the submission by the respondent that to assert a claim is insufficient. There must be placed before the Court enough for the Court to come to the conclusion that there was a prima facie case. Re Brink ex parte Commercial Banking Co of Sydney Limited (1980) 30ALR 433 which followed Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346 was relied upon.
The submission is correct. For the counter-claim or set-off relying upon breach of the contract of employment, all the applicant had was proposed amended pleadings. In the course of the hearing I considered whether it might be possible to have the applicant give some moral evidence. However, he stated that he did not have the written part of the contract of employment with him. If he had, that might at least have given some basis for determining whether or not there was a prima facie claim.
I considered whether I should grant another adjournment but decided not to. The applicant had stated in his affidavit of 8 May 2001 after exhibiting the pleadings and proposed amendments in Proceeding 2081 of 2000 that the evidence in support of the proposed claims is very voluminous and is not included, but will be provided at the hearing. He said further this will avoid the respondent requesting that information to be confidential.
Despite stating that he would produce the evidence at the hearing, the applicant did not have available the document or documents which, at the very least, were essential to show the nature of the counter-claim.
The correspondence between the applicant and the respondent’s solicitors subsequent to the applicant’s final affidavit being served was exhibited. It showed the solicitors state taking objection to the applicant stating that he would produce further evidence at the hearing. The applicant’s response was that the respondent already had the material and he stated again that it would be produced at the hearing.
There is a point at which further adjournments cannot be allowed to enable a litigant to produce necessary material, even an unrepresented litigant. The application had been before the Court on three occasions. On the first occasion it was before the Registrar. An adjournment then to fix it for hearing gives an opportunity for a litigant to examine its material and add to it if necessary. On the second occasion the application was fixed for hearing with the intention that it would be disposed of at the conclusion of that day’s hearing. It was only very late that it became apparent that the applicant had a possible counter-claim. The applicant then failed to produce the necessary material. It appears from his affidavit and correspondence with the solicitors that he understood the need to produce the evidence in support of his claims. Therefore he understood that to produce pleadings or proposed pleadings in the Supreme Court proceedings was not sufficient. Yet, he came to Court without the most obvious part of the evidence that he needed.
In addition to that, while a further adjournment could have been made with an order for costs, there must be considerable doubt whether that order for costs could be met by the applicant. If those costs could not be met by the applicant, then the respondent would not be in a position where any disadvantage to it had been compensated for by an order for costs.
Accordingly, I determined that the application should not be again adjourned. The applicant has not produced evidence to support his alleged counter-claim. The application is dismissed.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Phipps FM

Associate: Kwong S

Date: 28 October 2003