Barlow v The Law Society of the Australian Capital Territory
[2018] FCCA 2088
•30 August 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BARLOW v THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY | [2018] FCCA 2088 |
| Catchwords: BANKRUPTCY – Creditor’s petition initially stayed pending resolution of multiple challenges in the ACT Supreme Court – use of judgments in Supreme Court to confirm the validity of the debt and the extreme difficulty to the debtor to have the Court “go behind” the judgment because relevant matters have already been the subject of extended scrutiny in other Courts with no judgment of any assistance to the debtor – application to set aside bankruptcy notice dismissed. |
| Legislation: Bankruptcy Act 1966, ss.40(1)(g), 41(7) |
| Cases cited: Australian Securities and Investments Commission v Forge (2003) 133 FCR 487 Barlow v Law Society of the ACT [2018] ACTCA 16 Biztole Developments Pty Ltd v McLean (1995) 57 FCR 36 Brunninghausen v Glavanics [1998] FCA 230 Ling v Enrobook Pty Ltd (1997) 74 FCR 19; (1997) 143 ALR 396 Lowbeer v De Varda [2018] FCAFC 115 Maddestra v Penfolds Wines Pty Ltd (1993) 44 FCR 303 Maxwell Smith v S & E Hall Pty Ltd (2006) 233 ALR 81 |
| Applicant: | MICHAELA BARLOW |
| Respondent: | THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY |
| File Number: | CAG 6 of 2016 |
| Judgment of: | Judge Neville |
| Hearing dates: | 20 March 2017; 12 June 2018 |
| Date of Last Submission: | 16 June 2017 |
| Delivered at: | Canberra |
| Delivered on: | 30 August 2018 |
REPRESENTATION
| Solicitors for the Applicant: | Self represented |
| Solicitors for the Respondent: | Phelps Reid | |
ORDERS
The Applicant’s Amended Application filed 2 February 2016 be dismissed.
The Applicant is to pay the Respondent’s costs, either as agreed or taxed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAG 6 of 2016
| MICHAELA BARLOW |
Applicant
And
| THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY |
Respondent
REASONS FOR JUDGMENT
Introduction
On 14th December 2015, the Respondent issued a Bankruptcy Notice. It was served on the Applicant on 19th January 2016. The debt the subject of the Notice was $62,562.35. It arose out of contested proceedings between the parties, which have waxed and waned for many years. The details of those many proceedings are set out later in these reasons.
The primary contest, if it might be so called, relates to the Respondent not issuing an unrestricted practising certificate to the Applicant and the Applicant’s many, but unsuccessful, attempts to challenge that decision. Later in these reasons I set out in detail this history. One particular iteration of those challenges ultimately gave rise to an award of costs in the Respondent’s favour. It is the costs from those proceedings that give rise to the debt (including interest) set out in the Bankruptcy Notice. A copy of the relevant “costs certificate” is annexed to the Applicant’s Affidavit, filed 2nd February 2016.
On 2nd February 2016, the Applicant filed an Application to set aside the Bankruptcy Notice. She stated that her reason for seeking such relief was that she has “a counter-claim on foot in the [ACT] Supreme Court [SCA 1 of 2016], which exceeds the amount claimed in the Bankruptcy Notice.” The “counter-claim” by the Applicant relates to her further challenges in the ACT Supreme Court regarding the original, unsuccessful proceedings to which I have earlier referred.
The various and multiple challenges by the Applicant in the ACT Supreme Court have only very recently concluded. Accordingly, this Court is now required to deal with her original Application to set aside the December 2015 Bankruptcy Notice.
Concerningly, when the matter was last before this Court on 12th June 2018, the Applicant did not appear. Given that (a) there was no appearance by the Applicant, (b) the matter was ready to proceed, and (c) all avenues of appeal had now been exhausted by the Applicant, Orders were made which provided that, absent any Application being brought within 14 days by the Applicant, the matter would be dealt with on the basis of: (i) the material filed in the matter thus far, and (ii) any further updating written Submissions filed by the Applicant. Similar Orders had been made in earlier stages of the matter, pending the determination of the Applicant’s latest appeal. To date, there has been no relevant Application filed by Ms Barlow following the Orders of 12th June 2018.
For the reasons that follow, Ms Barlow’s Application to set aside the Bankruptcy Notice must be dismissed with costs, either as agreed or taxed.
Procedural History
The Applicant filed an Amended Application on 4th February 2016. The “Final Orders Sought” remained as per the original Application. The interim Order sought was simply that: “the time for compliance with the Bankruptcy Notice be extended up to and including …”. No date for extension of time was set out in this section of the Orders sought.
On 26th February 2016, the Registrar made Orders extending the time for compliance with the Bankruptcy Notice, which he noted [in any event] was extended automatically by virtue of s.41(7) of the Bankruptcy Act 1966 (“the Act”).
On 21st March 2016, the Applicant filed a detailed Affidavit which set out her grounds of appeal to the Supreme Court of the Australian Capital Territory (hereafter, unless otherwise specified, “the Supreme Court”).
She contended that the Bankruptcy Notice could be set aside as an abuse of process and said, at par.59 of this Affidavit, that the amount of her counter-claim totalled $800,000. She further contended (at par.60 ff) that, if the Court was not persuaded by her argument that there was a relevant “counter-claim”, the Bankruptcy Notice could or should be set aside by the Court “going behind” the judgment upon which the debt was founded. There are many and various annexures to this Affidavit, including a judgment of Magistrate Morrison (File Number AP 15/49), dated 1st December 2015, and the Applicant’s “Notice of Appeal” in the Supreme Court, filed 4th January 2016.
On 19th April 2016, the Respondent filed a Notice Stating Grounds of Opposition (“Notice of Opposition”) to the Applicant’s Application to set aside the Bankruptcy Notice. The Respondent contended that the Applicant’s “counter-claim” was “incompetent” and/or “embarrassing, hopeless and an abuse of process.” The Respondent indicated that it was in the process of seeking to have the Appeal in the Supreme Court struck out on such grounds.
The Respondent’s Notice of Opposition was supported by an Affidavit (filed the same day as the said Notice) sworn by the Respondent’s solicitor, Mr Phelps. That Affidavit summarised the history of litigation between the parties – as at the date of swearing – and the series of unsuccessful appeals conducted by the Applicant, including adverse costs Orders against her in favour of the Law Society of the ACT. I need not otherwise retail the history of litigation that is set out in Mr Phelps’ Affidavit.
On 26th April 2018, the Applicant filed an Affidavit and Submissions. The Affidavit stated that it was “… to Accompany Applicant’s Reply to Respondent’s Statement by Order of District Registrar Wall on 26 February 2016”. The Submissions were described as “Reply to Defendant’s Affidavit and Statement by Order of District Registrar Wall on 26 February 2016.”
I need only note that the Applicant again complained and challenged (a) the various proceedings between her and the Respondent, the bases for, and the results of, them, and (b) challenged (as set out in the Submissions) the legitimacy of the Bankruptcy Notice, including the “costs assessment” conducted by the Registrar in the Supreme Court, including not giving the Applicant sufficient time to respond to the costs assessment. The Applicant contended that the Bankruptcy Notice issued by the Respondent had a “collateral purpose”, namely to bring pressure on her to pay a debt, and as such was an abuse of process. She relied upon comments by Emmett J (as his Honour then was) in Brunninghausen v Glavanics, and by Jacobson J in Maxwell Smith v S & E Hall Pty Ltd.[1]
[1] Brunninghausen v Glavanics [1998] FCA 230; Maxwell Smith v S & E Hall Pty Ltd (2006) 233 ALR 81.
And again, Ms Barlow outlined the bases for her counter-claim to be litigated in the Supreme Court (e.g. abuse of process), as well as her alternative argument of “going behind the judgment.” Again, I need not provide here further detail of these arguments because they are set out in the Applicant’s Submissions.
On 27th April 2016, the Applicant filed further Submissions, described as a “summary” of her argument for setting aside the Bankruptcy Notice. She concluded these Submissions, at par.19, by contending that there was no “genuine debt owing” as “the litigation giving rise to the debt, including the inadequacies in constructing the bill of costs, should never have taken place.”
On 3rd June 2016, the Respondent’s solicitor (Mr Hijazi) filed an Affidavit, which annexed the then current judgment of the Supreme Court, which provided for the Respondent’s “strike-out” Application to be determined by way of written Submissions. A copy of the Respondent’s Submissions were also attached to this Affidavit.
On 6th June 2016, the matter first came before me. Unfortunately, the Applicant did not attend. The Court later received correspondence from Ms Barlow indicating that, for reasons unknown, she was not aware of the scheduled/listed Court date and that she sought an adjournment. This was so, notwithstanding that there is email correspondence from the Registry of this Court, dated 3rd May 2016, advising the Applicant of the listing on 6th June 2016. Indeed, the correspondence (which is referred to in notations to the Orders of that date) further shows that the Applicant replied to this correspondence thereby confirming that she received the notice of the Court event on 6th June 2016.
After noting the current state of proceedings in the Supreme Court, the Orders on that day provided that, subject to the decision of the Supreme Court, the matter before this Court would be determined on the basis of material as [then] filed and written Submissions. Directions were made for the filing of written Submissions, and the matter adjourned to “dates and times to be advised by the Court, pending the decision of the ACT Supreme Court.” The Respondent was requested to provide this Court with a copy of the decision of the Supreme Court once it was delivered.
The matter returned to this Court on 1st February 2017. On that occasion, the Court was advised of further proceedings in the Supreme Court between the parties. The Court made Orders for the filing of further but very brief Submissions regarding any “extensions of time”. On 9th February 2017, the Respondent filed a very brief submission regarding “extensions of time.” The matter was again adjourned pending the determination of matters before the Supreme Court. The Solicitor for the Respondent undertook to notify this Court of the resolution of matters in the Supreme Court.
On 20th March 2017, the matter returned to this Court. With the prospect of the matter coming to some conclusion in the Supreme Court, Orders were made for the parties to file final Submissions regarding the matters before this Court. Those Submissions were filed, by the Applicant on 10th April 2017, and by the Respondent on 2nd May 2017. The Applicant filed further Submissions in Reply on 16th June 2017. These Submissions are set out below.
On 12th June 2018, for a final time, the matter was listed in this Court. The Applicant did not appear. Orders were made for her to file any Application within 14 days, absent which the matter would be determined on the basis of the material already filed in the proceeding, including the Submissions filed by each party.
History of Proceedings in the ACT Supreme Court
In relation to the matters heard and determined in the Supreme Court, I need only note the following.
First, the latest “tranche” (if that be the appropriate description) of proceedings involving the parties took place or resumed on 3rd May 2016. The date upon which Submissions were last received was 14th June 2016.
Judgment was delivered by Penfold J on 21st February 2017. Her Honour directed that Ms Barlow’s Application to transfer the proceedings to this Court be dismissed, and for the parties to confer and thereafter to provide a draft of Orders to give effect to her Honour’s findings at [116] – [119] of her judgment. The parties would be heard on the question of costs.
The substantive part of Penfold J’s determination, relevant to the current proceeding before this Court, was as follows, at [116] – [119]:[2]
[2] Barlow v Law Society of the ACT [2017] ACTSC 35.
[116] I have concluded:
(a) that there is no power to transfer Mrs Barlow’s appeal to the Federal Circuit Court, and no ground for transferring it to the Federal Court;
(b) that Mrs Barlow’s appeal is not necessarily incompetent;
(c) that the ground of appeal specified in her notice of appeal could be described as embarrassing, in that it does not enable the respondents to know what case they are required to answer; and
(d) that there would be no utility in giving Ms Barlow leave to re-plead her ground of appeal.
117. Having considered Mrs Barlow’s “new evidence” and her arguments about the significance of that new evidence, I have also concluded that the new evidence does not establish what Mrs Barlow says it establishes, and that it does nothing to enhance her claim that the Law Society operated on an incorrect view of the law in 2004.
118. Nor does it provide any help to her in making out her argument that the costs order made in favour of the Law Society should be set aside (because the Full Court proceeding should never have been necessary, because she should not have been refused an unrestricted practising certificate in 2004).
119. On the basis of those findings, I am also satisfied, should it be relevant, that no injustice would be done by striking out Mrs Barlow’s notice of appeal and somehow disposing of the appeal.
The second [recent] proceeding in the Supreme Court, also before Penfold J, was “determined on the papers”, with a decision delivered on 29th May 2017. It is of some relevance, in my view, to set out some parts from her Honour’s reasons, as follows.
First, at [7] – [12], Penfold J set out the Submissions by the multiple Applicants then before her (various members and or office holders of the Respondent, plus its solicitor), followed by the Submissions from Ms Barlow (emphasis in original):[3]
[3] Barlow v Law Society of the ACT (No.2) [2017] ACTSC 121.
[7] The applicants’ Submissions are not particularly helpful, mainly because, as in the original application, inadequate attention was paid to the distinction between a notice of appeal and the appeal itself, and also to the consequences of the various different orders that might be made. For this reason, the Submissions did not properly address the question whether, as well as striking out the notice of appeal, or even striking out the appeal, there were other orders that would more effectively deal with the proceedings in which this particular notice of appeal is simply an interlocutory step.
[8] The Submissions can be summarised as follows:
(a) The Court should strike out the appeal.
(b) There are various examples of courts striking out notices of appeal or appeals (eg Geoffrey Douglas Skelton v Registrar of Motor Vehicles (Unreported, Supreme Court of the Australian Capital Territory, Master Connolly, 4 April 1996), Re Zero Population Growth [1990] FCA 319, Bott v Suttons Motor Australia Pty Ltd [2006] NSWCA 307, von Risefer v Permanent Trustee Co P/L [2005] QCA 109; [2005] Qd R 681 (von Risefer)).
(c) This is all that is required.
(d) In this case, the striking out of the appeal is necessary to prevent an abuse of the Court’s process. It would be an abuse of process to allow the appeal to remain on foot, when the Court has found:
(i) that the ground of appeal is embarrassing;
(ii) that there is no point in giving leave to re-plead; and
(iii) that there would be no injustice by disposing of the appeal.
(e) There is inherent jurisdiction to take steps necessary to prevent an abuse of process.
(f) Alternatively, r 5052(1)(e) gives a power “[for] an appeal to the Supreme Court”, for the Court to “make any other order that it considers appropriate”.
Mrs Barlow’s Submissions
[9] Mrs Barlow’s Submissions are entirely unhelpful. She sought the following orders:
(1) That the defendants’ strike-out application be denied.
(2) That the appellant’s matter be heard on the merits.
(3) That the defendants cease and desist from any further action in their attempts to bankrupt the applicant [sic].
(4) Costs
[10] Her Submissions focus on her complaint (discussed in my earlier judgment) that it was an error (specifically a jurisdictional error) for the Magistrate to consider the merits of her claim in deciding to strike it out. She also asserts that it was an error for me to consider those merits in dealing with the Law Society’s application in relation to her appeal.
[11] Mrs Barlow then makes a series of extreme and unsubstantiated allegations against the applicants, the most moderate of which involves describing them as “serial abusers”. She also asserts that a number of my conclusions, set out in the earlier judgment, are “unreasonable to the extent of Wenesbury [sic] unreasonableness”.
[12] Mrs Barlow concludes her Submissions with a description of her personal circumstances, and a final plea to the Court to give her the opportunity to have her case heard.
In the result, her Honour struck out Ms Barlow’s Notice of Appeal and the Appeal, and made an Order for costs against her.
The Applicant’s third attempt to have various matters determined in her favour was pursuant to two Applications to the Court of Appeal of the ACT Supreme Court.[4] She sought leave to appeal the decision of Penfold J, made on 29th May 2017 and an extension of time within which to file her Application to appeal. The matter was heard by Elkaim J, sitting as a single Judge, on 16th May 2018. His Honour delivered judgment on 18th May 2018.
[4] Barlow v Law Society of the ACT [2018] ACTCA 16.
It is apposite to set out some parts of Elkaim J’s reasons, which deal with the Law Society’s Application to have Ms Barlow declared a “vexatious litigant.” I do so because in this part of his Honour’s judgment he refers to matters directly involving the bankruptcy proceeding in this Court. Thus, at [26] – [40], which paragraphs include his Honour’s Orders, Elkaim J said:
[26] This application was made pursuant to s.67A of the Supreme Court Act 1933 (ACT). Its purpose is to have Ms Barlow declared a vexatious litigant. As the Law Society pointed out, the path to a person being declared a vexatious litigant involves two steps. Firstly, there must be the technical qualification within the terms of the above section. Secondly, assuming success on the first step, a discretion must be exercised to make the declaration.
[27] The Law Society referred to five separate proceedings which it relied upon to establish the existence of vexatious proceedings. These were as follows:
(a) The proceedings commenced in the Magistrates Court in July 2015 and decided by Magistrate Morrison on 1 December 2015 (Barlow v Law Society of the ACT [2015] ACTMC 8). These proceedings were said to lack reasonable grounds.
(b) The appeal from the decision of the Magistrate filed in January 2016 and decided by Penfold J on 21 February 2017 (Barlow v Law Society of the ACT [2017] ACTSC 35; 317 FLR 297. This proceeding was also said to lack reasonable grounds.
(c) The application to set aside a Bankruptcy Notice filed in the Federal Circuit Court on 2 February 2016. This proceeding was said to have the ulterior motive of delaying the creditor’s petition that had been filed by the Law Society.
(d) The Notice of Appeal from the decision of Penfold J. Mossop J struck out the appeal for incompetency, highlighting the unreasonableness of the proceeding (Barlow v Law Society of the ACT [2017] ACTCA 45). The appeal was also said to have the ulterior motive of delaying the bankruptcy proceedings.
(e) The application for leave to appeal which is now before me. The Law Society submits that these proceedings lack reasonable grounds and are intended to delay the bankruptcy proceedings.
[28] The Law Society referred me to the decision of Mossop AsJ (as he then was) in Vatarescu v The Commonwealth of Australia and Australian Capital Territory [2013] ACTSC 270; 285 FLR 1 to indicate the principles that need to be applied in hearing an application under s 67A. It is apparent from the judgment that, while the bar may have been slightly lowered by the specific terms of s 67A, it nevertheless remains “very high”.
[29] Travelling through s 67A, I am satisfied that the Law Society is an “aggrieved person” and that the five proceedings listed above are “proceedings” within the section. No submission was made to the contrary.
[30] I am not, however, satisfied that each of the five proceedings is a vexatious proceeding. The fact that the proceedings are bound to be lost does not, of itself, mean that they were not based on reasonable grounds. I think the test requires something more so that, as stated by Perram J in Official Trustee in Bankruptcy v Gargan (No 2) [2009] FCA 398 at [6], “the issues brought to the Court for determination are manifestly hopeless or devoid of merit”.
[31] On my observation of the various proceedings, excluding the application to set aside the Bankruptcy Notice, the current application may well fall within Perram J’s description, but this has been a developing process.
[32] Although the proceedings commenced before the Magistrate, and the appeal from them, were obviously lacking in merit, I do not think they could be described, for present purposes, as lacking reasonable grounds.
[33] As far as the application to set aside the Bankruptcy Notice is concerned, Ms Barlow accepted that there was a direct correlation between her proceedings and defeating or delaying her bankruptcy. She stated that if she is ultimately successful in this Court, the errors and injustice which ultimately led to the costs order behind the bankruptcy application would be exposed and any cause for her bankruptcy would be extinguished.
[34] Ms Barlow’s position is understandable to the extent that she feels that she has never been afforded justice and that, if she does one day succeed, all the ramifications of previous injustices will be undone. Her position of course ignores the fact that, even if she were to succeed in her current proceedings, the costs order giving rise to the bankruptcy application was in previous proceedings, which have well and truly been completed. Whatever result she might obtain from the current or any future proceedings would not affect the original costs order.
[35] Thus, while I agree that Ms Barlow has taken steps to delay the bankruptcy proceedings, I would not regard those steps as disclosing an “ulterior purpose” but rather as another indication of her misguided quest to right what she sees as previous wrongs.
[36] Accordingly, I do not think the application for a declaration that Ms Barlow is a vexatious litigant should succeed. I will add one further matter. Had I reached the stage of exercising my discretion, I would not have done so in favour of the Law Society.
[37] Whatever may be said of the detail of the various proceedings brought by Ms Barlow, I was under the distinct impression that each proceeding reflected a genuine endeavour on her part to remedy what she sees as the incorrect decision of the Law Society not to grant her an unconditional practising certificate.
[38] I would finally add that, notwithstanding what I have just said in the previous paragraph, if yet further proceedings were instituted against the Law Society seeking to agitate the same complaints arising from Exhibit A, then, for my part, and without more, I would regard any application under s 67A as likely to succeed.
Costs and orders
[39] In respect of costs, each applicant has lost its application. In my view, it is appropriate that each party pay its own costs of the two applications before me.
[40] I make the following orders:
(a) The application by Ms Barlow for an extension of time to file the application for leave to appeal is granted.
(b) The application by Ms Barlow for leave to appeal, filed on 28 November 2017, is dismissed.
(c) The application by the Law Society to declare Ms Barlow a vexatious litigant, filed on 21 December 2017, is dismissed.
(d) Each party is to pay its own costs of each application.
For my part, I simply observe that his Honour records the Law Society’s Submissions, at [27](c), but inaccurately in so far as he refers to “a creditor’s petition that had been filed by the Law Society.” So far as I am aware, there is no evidence of a creditor’s petition having been filed. Indeed, it could not have been filed before the current Application regarding the Bankruptcy Notice had been determined.
I need attend to one further aspect of the Applicant’s litigation in the ACT Supreme Court.
In the first judgment of Penfold J, delivered 21st February 2017, her Honour set out the full litigious history between the parties. Because one ground of Ms Barlow’s Submissions in this Court is that I should “go behind the judgment” that gives rise to the debt that is the subject of the Bankruptcy Notice, it is apposite to set out the numerous times that her claim(s) against the Respondent Law Society (and of various of its officers) have been the subject of scrutiny in a number of different courts.
First, at [4] – [8] of Penfold J’s judgment of 21st February 2017,[5] her Honour sets out the following history as taken from an Affidavit filed by the solicitor for the Law Society, and summarises the arguments advanced by Ms Barlow in that Court. To a not insignificant degree, they are very similar to those which are being ventilated before me:
[5] [2017] ACTSC 35.
[4] It is convenient to set out the complex background to this matter in the form of a chronology. Much of the material in the following table is taken from an affidavit made on 19 April 2016 by Mr Phelps, the seventh respondent and the solicitor on the record for the other six respondents.
| Item | Date | Event |
| 1 | 2004 | Mrs Barlow applied to the Law Society for an unrestricted practicing certificate; her application was refused. |
| 2 | 2010 | Mrs Barlow applied to the Law Society for an unrestricted practising certificate; her application was refused. |
| 3 | December 2010 | Under s 81 of the Legal Profession Act 2006 (ACT), Mrs Barlow appealed against the 2010 refusal (the Full Court appeal). The refusal of a 2011 application for an unrestricted practising certificate made after the appeal was filed was also dealt with in that appeal. |
| 4 | August 2011 | After Mrs Barlow began her appeal to the Full Court, she applied to the Law Society for an unrestricted practising certificate for 2011. |
| 5 | October 2011 | Mrs Barlow amended the notice of appeal to add an appeal from the Law Society’s refusal to issue an unrestricted practising certificate for 2011. |
| 6 | 12 April 2013 | The Full Court dismissed the appeal (Barlow v Law Society of the Australian Capital Territory [2013] ACTSC 68; (2013) 272 FLR 470 |
| 7 | 15 May 2013 | The Full Court ordered Mrs Barlow to pay the costs of the Law Society (the first costs order), other than the costs of and incidental to an interlocutory hearing on 28 November 2011 and the delivery of a related judgment on 3 February 2012. |
| 8 | 9 April 2015 | The Law Society filed a bill of costs in the Supreme Court seeking an assessment of those costs. |
| 9 | 15 April 2015 | The bill of costs was served on Mrs Barlow. |
| 10 | 22 July 2015 | By originating application, Mrs Barlow began a new proceeding in the ACT Magistrates Court, against the Law Society and the six other respondents to this appeal (the Magistrates Court proceedings). The orders sought in that proceeding were as follows: 1. An order of prohibition/injunction to stop any further proceedings in respect of the Bill of Costs which the First Defendant has served upon the Plaintiff. 2. A declaration under s261 of the Magistrates Court Act 1930 that: 2.1 s261(1)(a) the plaintiff is not indebted to the First Defendant at all 2. [sic] An order to show cause that the actions of the first six Defendants have not constituted: 2.1 Malfeasance in public office 2.2 Negligence 2.3 Breach of fiduciary duty 2.4 Breach of statutory duty 3. An order that the seven Defendants have caused loss and damage to the Plaintiff. 4. Any other orders that the Court considers appropriate. The grounds of Mrs Barlow’s application were identified as follows: The Magistrates Court has jurisdiction to hear this matter under s257 of the Magistrates Court Act 1930 as the Plaintiff submits to the rules of court in respect of the monetary limits imposed by that section of the act. In an affidavit filed later, she described her proceeding as “an action in tort”, but noted that it might have “perhaps been wrong procedurally”. In another affidavit, Mrs Barlow summarised her Magistrates Court proceeding as “an application against [the defendants] in the view that they had acted contrary to law causing me damage”. |
| 11 | 13 August 2015 | The Deputy Registrar of the Supreme Court issued a certificate of costs assessment in the Law Society’s favour in the amount of $51,314.04. |
| 12 | 3 September 2015 | The Law Society filed an interlocutory application in the Magistrates Court seeking orders striking out and summarily dismissing the Magistrates Court proceedings, under either rule 425(3) or rule 1147 of the Court Procedures Rules 2006 (ACT) (the CPRs) |
| 13 | 13 October 2015 | The Magistrates Court proceedings were heard, and directions were given for the filing of written Submissions. |
| 14 | 1 December 2015 | The Magistrate allowed the Law Society’s application, dismissed the Magistrates Court proceedings, gave judgment for the Law Society, and foreshadowed an order that Mrs Barlow pay the Law Society’s costs on a party-party basis. |
| 15 | 14 December 2015 | A bankruptcy notice was issued, addressed to Mrs Barlow, identifying the Law Society as the creditor, and claiming an amount of $62,562.35, made up of the costs assessed under the costs order and interest accrued since that assessment. |
| 16 | 15 December 2015 | The Magistrate confirmed the foreshadowed costs order against Mrs Barlow and in favour of the Law Society (the second costs order). |
| 17 | 4 January 2016 | Mrs Barlow filed in the Supreme Court a notice of appeal from the Magistrate’s orders made on 1 and 15 December 2015 (the notice of appeal). |
| 18 | 19 January 2016 | The bankruptcy notice was served on Mrs Barlow. |
| 19 | 2 February 2016 | Mrs Barlow commenced proceedings in the Federal Circuit Court of Australia applying for the bankruptcy notice to be set aside. The ground of the application was specified to be that “the applicant has a counter-claim on foot in the Supreme Court, which exceeds the amount claimed in the Bankruptcy Notice.” The notice identified the current matter (SCA 1 of 2016) as the matter in which the counter claim was made. The application also sought an interim order that “if not set aside, the time for compliance with the Bankruptcy Notice be extended up to and including completion of the [Supreme Court matter, SCA 1 of 2016].” |
| 20 | 19 April 2016 | The Law Society filed an application in proceeding seeking: Order pursuant to rule 5172 of the Court Procedures Rules 2006 (ACT) striking out the notice of appeal filed in these proceedings on 4 January 2016 by the Appellant. In the alternative, order striking out and summarily dismissing the notice of appeal. Order that the Appellant pay the Respondents’ cost of these proceedings on an indemnity basis. Any other orders that the Court considers appropriate. |
| 21 | 28 April 2016 | Mrs Barlow filed a notice of intention to respond to the application. |
| 22 | 2 May 2016 | Mrs Barlow filed an affidavit in this matter, containing a mixture of Submissions, argument and evidence. |
| 23 | 3 May 2016 | The hearing of the Law Society’s application before me began at 3:15 pm, and Mrs Barlow made an oral application for “all of these proceedings” to be transferred to the Federal Circuit Court to be determined with the bankruptcy proceedings. The hearing was adjourned at 4:50 pm, and orders were made for the filing of written Submissions. Mrs Barlow’s Submissions were to be no more than 6 pages and were to deal with matters that had been canvassed in court, being: (a) the competency of her appeal; (b) whether the appeal grounds were embarrassing or inadequately particularised; and (c) whether the appeal, if not struck out, ought to be removed to the Federal Circuit Court. |
| 24 | 13 May 2016 | Mrs Barlow filed Submissions dealing with jurisdictional error by the Magistrate and her application to have the matter removed to the Federal Circuit Court. She also sought to file three affidavits totalling over 30 pages. These were queried by staff of the Court Registry and initially objected to by the Law Society, which subsequently consented to them being received, in order to eliminate the need for a hearing of its objections. |
| 25 | 1 June 2016 | The Law Society’s Submissions were filed. |
| 26 | 14 June 2016 | Mrs Barlow’s Submissions in reply were filed. |
Summary of the course of proceedings
5. In short, since the Law Society refused her an unrestricted practising certificate in 2011, Mrs Barlow has proceeded as follows:
(a) she sought unsuccessfully in the Full Court of the Supreme Court to overturn the Law Society’s decision refusing her an unrestricted practising certificate, but has not sought to appeal the Full Court’s decision;
(b) when the Law Society took action to enforce the first costs order, she brought proceedings in the Magistrates Court seeking to block the enforcement of that costs order and raising a variety of new claims against the Law Society;
(c) after the Magistrates Court proceedings were summarily dismissed on the application of the Law Society, Mrs Barlow appealed to the Supreme Court against that decision, claiming jurisdictional error on the Magistrate’s part;
(d) after the bankruptcy notice was served on Mrs Barlow, she began proceedings in the Federal Circuit Court to have the bankruptcy notice set aside in reliance on the Supreme Court appeal, which she identified as involving a counter-claim exceeding the amount claimed in the bankruptcy notice.
(e) when this matter came on for hearing on 3 May 2016, Mrs Barlow made an oral application for the matter to be transferred to the Federal Circuit Court to be determined with the bankruptcy proceedings.
6. It seems to emerge from material filed by Mrs Barlow, and her oral Submissions before me, that she wants the first costs order against her set aside, and that she considers this should be done because she should never have had to appeal to the Full Court, in turn because the Law Society should never have refused her an unrestricted practising certificate in 2004.
7. She also wishes to obtain, in general terms:
(a) some kind of judicial recognition that the refusal of the unrestricted practising certificate was an act of bad faith on the part of the Law Society and that the Law Society’s actions have caused her loss and damage; and
(b) monetary compensation from the Law Society for the alleged loss or damage.
8. It is not so clear whether Mrs Barlow is also still hopeful of obtaining an unrestricted practising certificate in the event that she can persuade a court that she should have been issued such a certificate either in 2004 or later.
Then at [89] - [91], Penfold J set out the detail of the challenge by Ms Barlow that was conducted in the ACT Magistrates Court, which led to the appeal before her Honour, thus:
[89] The following table summarises the Magistrate’s conclusions by reference to the list of “orders” sought by Mrs Barlow, to which his Honour has added three other topics that Mrs Barlow might have intended to plead:
| Item | Declaration to the following effect sought by Mrs Barlow | Grounds on which the Magistrate concluded that no triable issue was raised |
| 1 | The interpretation of the relevant legislation at the 2002 Council meeting was wrong in law given the existence of the 1971 Regulation, the 1986 Regulation and the 1986 Explanatory Memorandum. | The principles of res judicata, issue estoppel and abuse of process. |
| 2 | The Defendants acted in conflict of interest and breach of their fiduciary to the Plaintiff placing their own interests for the model rules ahead of those of the Plaintiff, causing harm to the Plaintiff. | No reasonable cause of action. Any cause of action identified would be statute-barred under the Limitation Act 1985 (ACT). |
| 3 | The Defendants, acted in breach of statutory duty towards the Plaintiff. | The principles of res judicata, issue estoppel and abuse of process. No reasonable cause of action. Any cause of action identified would be statute-barred under the Limitation Act 1985 (ACT). |
| 4 | The Defendants acted in misfeasance in public office causing harm. | No reasonable cause of action. |
| 5 | The Defendants acted in breach of contract. | No reasonable cause of action. |
| 6 | The Defendants conspired to pervert the course of justice. | No reasonable cause of action. |
| 7 | The first and seventh Defendants failed in their duty to provide relevant evidence to the court thus leading the court into error. | The principles of res judicata, issue estoppel and abuse of process. No reasonable cause of action. Solicitor’s immunity from suit (D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1). |
| 8 | The Defendant Larry King defamed the applicant in his recommendation to the Council, wrongly claiming that she was a person who sought special attention. | No reasonable cause of action because any cause of action identified would be statute-barred under the Limitation Act 1985 (ACT). |
| 9 | The first and second Defendants serially acted as a baton towards the Plaintiff in defence of their invalid decision of 2002. | To the extent that his Honour could make sense of this claim – the principles of res judicata, issue estoppel and abuse of process. |
| 10 | The Defendant, pay the Plaintiff damages for economic loss. | Statement of damages claimed: does not assist in determining whether there is a triable cause of action. |
| 11 | The Defendant pay the Plaintiff damages for non-economic loss. | Statement of damages claimed: does not assist in determining whether there is a triable cause of action. |
| 12 | The Defendant pay the Plaintiff exemplary damages. | Statement of damages claimed: does not assist in determining whether there is a triable cause of action. |
| 13 | The Bill of Costs to be set aside with injunction that no action is taken by the Defendant to enforce that bill of costs. | The principles of res judicata, issue estoppel and abuse of process. |
| 14 | That the Defendant compensate the Plaintiff on just terms, as defined in section [51(xxxi)] of the Commonwealth of Australia Constitution Act, for having deprived the Plaintiff of her property – to practice her profession. | No reasonable cause of action. |
| Topics possibly intended to be pleaded | ||
| 15 | Negligence. | No reasonable cause of action disclosed by any of Mrs Barlow’s material. |
| 16 | Bias by “the defendant”. | No reasonable cause of action disclosed by any of Mrs Barlow’s material. |
| 17 | Breach of the Human Rights Act 2004 (ACT) by “the defendant”. | No reasonable cause of action disclosed by any of Mrs Barlow’s material. |
90. A careful reading of his Honour’s reasons suggests that, in an attempt to provide fairness to an unrepresented litigant, the Magistrate went well beyond the inquiries he would normally have been required to make in considering a strike-out application.
Conclusion
91. None of Mrs Barlow’s criticisms of the Magistrate’s approach, and none of her other Submissions, or the “evidence” she points to, gives me any reason to believe that appropriate grounds of appeal against the Magistrate’s decision could be prepared if Mrs Barlow were given leave to re-plead her notice of appeal.
The Applicant’s Submissions
The Applicant’s Submissions, filed respectively 10th April and 16th June 2017, were as follows (with original emphasis):
SIX PAGE SUBMISSION BY APPLICANT
BY ORDER OF HIS HONOUR NEVILLE J ON 20 MARCH 2017
PRECIS
1) On 20 March 2017, his Honour Neville J ordered six-page Submissions from the parties. The substance of the Submissions, by order, is to address the "discrete issue of the review of the Registrar's decision".
2) The applicant submits that it is beyond power for the court to make this order on the grounds that the time for compliance with the Bankruptcy Notice Number BN 187004 issued on 14 December 2015, extended automatically under s 41(7) of the Bankruptcy Act 1966 by Registrar Wall, has not yet expired, because while her Honour Penfold J handed down a part decision on 21 February 2017, she has not yet handed down her final decision.
THE ORDERS OF NEVILLE J EXPLAINED
3) On 31 March, the associate of Neville J, wrote to the parties in response to their seeking clarification of the judge's orders.
The written Submissions are to be filed by both parties. Those Submissions are to address Ms Barlow's application to set aside the bankruptcy notice issued on 14 December 2015, having due regard to the decision of Penfold J on 21 February 2017.
The review application began before Registrar Wall on 26 February, 2016, where the application was adjourned rather than dismissed. The review application is the only substantive application before the Court. That application is to be determined on the basis of the written Submissions filed".
4) In the course of these proceedings there have been two decisions made by a Registrar.
5) On 26 February 2016, Deputy Registrar Wall ordered, on the basis of the applicant's application to set aside the bankruptcy notice, that the matter should be adjourned for a pre-hearing. He also made additional orders, including:
1. ... time for compliance with Bankruptcy Notice Number BN 187004 issued on 14 December 2015 extends automatically under s 41(7) of the Bankruptcy Act 1966.
2. Adjourns the application until 10.00am Friday, 29 April 2016.
3. Directs the Applicant to file and serve any further evidence in chief by 16 March 2016.
4. Directs the Respondent to file any notice stating grounds of opposition and affidavit(s) in support by 4 April 2016.
5. Directs the Applicant to file and serve any evidence in reply by 12 April 2016.
6. Directs the parties to file and serve, before the listing on 29 April 2016, a brief outline of Submissions (not exceeding 3 pages) addressing the matters required by rule 3.02(2) of the Federal Circuit Court (Bankruptcy Rules) 2006.
6) On 29 April 2016, Registrar Lakenby made an order that the matter be adjourned for a hearing before a judge, with time and date to be notified.
BRIEF HISTORY OF THE PROCEEDINGS
7) On 4 February 2016, the applicant make an application to set aside a Bankruptcy Notice, issued by the defendant on 15 December 2017, but not served until February 2016.
8) The grounds for setting aside the Bankruptcy Notice were that there were proceedings on foot in the Supreme Court of the Australian Capital Territory in which the sums claimed were in excess of the Bankruptcy Notice demand.
9) On 21 March 2016 the Applicant filed an affidavit in support of her application to have the Bankruptcy Notice set aside.
10) On 26 April 2016 the Applicant filed Submissions in Reply to the Defendant's material.
11) On 26 April 2016, the Applicant filed three-page Submissions as requested by Registrar Wall.
SCA 1 of 2016 - APPEAL OF DECISION BY MORRISON J TO UPHOLD A STRIKE OUT ORDER BY THE DEFENDANTS
12) The relevant Supreme Court action SCA 1 of 2016, was an appeal of the decision of Morrison J in the Magistrates Court (AP 49 of 2015), on grounds of jurisdictional error, namely that his Honour Morrison J had taken irrelevant considerations into account and had failed to take relevant considerations into account when making his decision. His task was to make a decision on the strike out application initiated by the defendants, but instead he wrongly, made a decision on the merits of the case, even while no Submissions had been made on the merits of the case.
AP 49 of 2015 _MICHAELA BARLOW V THE LAW SOCIETY OF THE ACT AND ORS
13) The action in the Magistrates Court AP 49 of 2015 was an action in tort, claiming that the defendants had acted contrary to law in their actions towards the applicant, beginning in 2004 when they unlawfully refused an application for an Unrestricted Practising Certificate. The defendants serially, severally and in conspiracy acted to pervert the course of justice, in firstly denying the certificate, denying that they had acted unlawfully, portraying the applicant as someone who was wanting something she did not deserve, conspiring to avoid a proper hearing before the full court, not providing relevant evidence to the court - in all depriving a member of their society of the unrestricted practising certificate to which she was lawfully entitled, causing detriment both psychologically, legally and materially.
14) After the appeal of decision proceedings SCA 76 of 2010, at which Refshauge J should never have presided due to the error of hearing the matter by a single judge alone as against the matter being heard by the full court, the applicant had discovered evidence which proved that the certificate should never have been refused, the appeal of decision in the Supreme Court should never have been necessary, and the costs, being the costs that the defendant is now seeking, should never have been incurred, but that instead, the applicant should have had her own costs paid by the defendants and should have been compensated for her losses.
15) The defendants responded to the application, as might have been expected, by seeking a strike out order on various grounds. On 1 December 2016, Morrison J upheld the defendants' strike out application.
16) Immediately after Morrison J's decision, the defendants' legal representative, with no notice to the applicant, applied to the regulator to have a Bankruptcy Notice issued. The Bankruptcy Notice is dated 15 December, indicating that the application for the Bankruptcy Notice was made well before the 30 day appeal timeframe of Morrison J's decision had elapsed, indicating a presumption on the part of the defendants. The applicant has sought details from the defendants on that application to the authority, but it has been denied on the implausible ground that it was an on-line application, presumably and implausibly the defendant's not having kept a copy.
17) On 4 January 2016, applicant lodged an appeal of Morrison J's decision to the Supreme Court SCA 1 of 2017 on grounds that Morrison J had erred by falling into jurisdictional error.
18) On being served the Bankruptcy Notice in February 2016, the applicant made application to this court to have the Bankruptcy Notice set aside on grounds that she had a case on foot in the Supreme Court.
19) For this reason, Deputy Registrar Wall made an order for an extension of time, to extend automatically under s 41(7) of the Bankruptcy Act 1966. The effect of this extension was that the parties should await a decision on SCA 1 of 2016 by her Honour Penfold J before taking any further steps in the bankruptcy proceedings.
THIS COURT FALLS INTO JURISDICTIONAL ERROR
20) The applicant's understanding is that his Honour Neville J has requested these Submissions on the grounds that her Honour's decision in SCA 1 of 2017 has been handed down, and that as a consequence, this court may now proceed to hear the applicant's application to have the bankruptcy notice set aside - a hearing which was postponed by virtue of s 41(7) of the Bankruptcy Act 1966
21) The applicant respectfully contends that it is not open to this court to proceed to a hearing because her Honour's decision has not been finalised. Her Honour decided that the applicant's appeal was not necessarily incompetent, and she sought further Submissions on that point. Those further Submissions were due on 6 March 2017 and were duly made. Her Honour has yet to make a decision on those Submissions.
22) It follows that this court may not order a review of Registrar Wall's decision unless and until the extension of time under s41 (7) of the Bankruptcy Act 1966 has lapsed. It will not lapse until her Honour has made a final decision. The court falls into jurisdictional error in seeking Submissions on the stated terms. It is unreasonable to the extent of Wenesbury unreasonableness because her Honour's decision has not yet been finalised and the extension of time has not expired. It follows that any decision made by the court on these terms will be open to review by a higher court.
THE DEFENDANTS PRESSING FOR BANKRUPTCY
23) The defendant, through Mr Phelps' mis-representation to the court, and his recent, un-necessary and superfluous approaches to the court, has demonstrated a profligate enthusiasm to bankrupt the applicant, all the while being completely aware of her Honour's decision that the applicant's appeal is not necessarily incompetent.
24) While it may be understandable that the defendant wishes to be paid the $64,000 or so that it claims, it is inescapable that on a balance of harms or debts owed, justice would demand that the society's refusal of practising certificate in destroying a practitioner's career and reputation be given greater weight than any amount of dollars purportedly owed due to the unlawful actions of his client in the first place.
25) The defendant Law Society and its agents, not satisfied with refusing an unrestricted practising certificate wrongly at law in 2004, not satisfied with perverting the course of justice in its subsequent defence of that unlawful action after the event, not satisfied with causing the applicant to undergo legal proceedings to right that wrong failing to contemplate mediation, not satisfied with seeking refuge in legal procedure to defeat the applicant through its strike out applications, not satisfied with issuing a wrongly calculated Bill of Costs in the sum of about $64,000, not satisfied with causing the applicant material, psychological, financial and reputational harm and losses, now is bent on causing further irreparable harm, reinforced by its legal and financial resources, to bankrupt the applicant, causing the loss of her home and precluding her, in supreme irony, under the Society Rules from ever practising as a solicitor in any event.
26) Yet, the matter is simple. The applicant's case has yet to be heard. The defendants, in unseemly haste and illegality, are pressing for the matter to be summarily dismissed, even while her Honour Penfold J declared at 116(b) of her judgment that the applicant's appeal to the Supreme Court is not necessarily incompetent.
27) In the transcript of proceedings before her Honour Penfold J on 21 February 2017, the appellant notes her Honour's words "I can't find a power to actually dismiss in relation to an appeal". Her Honour continues: " ...it would be adequate simply to invite Submissions from both parties about the appropriate order". These words are affirmed in her Honour's judgment at paragraph 131 in which she orders that the parties make further Submissions stating:
2. The parties will be heard:
(a) about the appropriate orders to be made to give effect to the findings set out at 116 to 119...
HER HONOUR PENFOLD'S DECISION IS NOT FINAL - REGISTRAR WALL'S EXTENSION OF TIME NOT LAPSED
28) Since the Submissions lodged on 6 March 2017, no decision has been handed down by her Honour. It remains open that the applicant's appeal is not necessarily incompetent. It follows that if the applicant's appeal is not incompetent, and final judgment has not been made, then the extension of time under s41 (7) of the Bankruptcy Act 196 has not lapsed, meaning that the bankruptcy application to set aside the notice may not yet be heard. The court would fall into jurisdiction error to proceed with the hearing.
29) Critically, at paragraph 54 of her judgment, her Honour states that I am not inclined to find that Mrs Barlow’s appeal does not fall within the terms of s 274(2)(b) and is therefore incompetent...
30) Significantly, her Honour continues at paragraph 66: For these reasons I would hesitate to conclude that Mrs Barlow’s ground of appeal, which identifies recognisable (if unparticularised) grounds of appeal, does not comply with r 5101.
31) At 77 her Honour states that: In her 13 May 2016 Submissions at [8], however, (the appellant) has pointed to one matter that could amount to a particularised claim of error on the part of the Magistrate, being the claim that in considering whether to strike out her claim and dismiss the Magistrates Court proceeding, his Honour “decided the matter on its merits, instead of, as he should have done, determining only whether there existed a prima facie case”. If his Honour did indeed apply the wrong test in considering the Law Society’s action, this might be a basis on which to set his decision aside.
32) At 130 her Honour states: However, since the specific powers available in conjunction with the striking out of a notice of appeal have not been addressed by either party in their Submissions on the Law Society’s application, I propose to seek brief further Submissions about the appropriate orders to be made in consequence of the findings set out at
CONCLUSIONS
33) On 21 February 2017, her Honour Penfold J of the Supreme Court of the ACT, handed down a part judgment in which she judged that the applicant's appeal to the Supreme Court was not necessarily incompetent. Her Honour sought further Submissions. The Submissions were to address ss 116 - 119 of her 21 February 2017 judgment. The parties subsequently made the further Submissions by the due date 6 March 2017. As at this date, 10 April 2017, the parties are waiting for her Honour Penfold J's further judgment.
34) Mr Phelps, legal representative for the defendant, by order of the court, notified this court that Penfold J had delivered her 21 February 2017 judgment and represented that therefore, the bankruptcy proceedings could continue. However, Mr Phelps mis-represented the matter because he failed to add that her Honour had sought further Submissions on the question of the applicant's appeal not being necessarily incompetent, a clear indication that she had not yet finalised the matter. Mr Phelps, either negligently or deliberately, misled the court.
35) Registrar Wall's extension of time under s 41(7) of the Bankruptcy Act 1966 has not yet expired. It is an abuse of process for the defendant to press for this matter to be heard. Should this court press for a hearing to take place before the final decision of Penfold J is handed down, is to be in contempt, as that action would indicate an effective pre-empting of her Honour's decision. That would be an abuse of process. It will be a ground for appeal.
36) In conclusion, the parties are still waiting for Penfold J's final decision. For that reason it is not appropriate for the bankruptcy proceedings in this court to proceed as we are still under the Paragraph 5 condition as set out in the Bankruptcy Notice. There is legal process on foot which is relevant to the Bankruptcy Notice. Any decision of that court will be open to appeal in the event of jurisdictional error on the record.
ORDERS SOUGHT
37) The court notes that:
(a) Her Honour Penfold J has yet to deliver her final judgment in SCA 1 of 2016.
(b) The extension of time under s 41(7) of the Bankruptcy Act 1966 has not yet expired
(c) Once her Honour Penfold J has handed down her final decision, the extension of time having expired, this court will set a time for a directions hearing to discuss how the matter is to proceed.
The Court further notes that:
(d) The defendant's notice to this court of her Honour Penfold J delivery of judgment, mis- characterised it by failing to note that her Honour had called for further Submissions, and that therefore, the extension of time under s 41(7) of the Bankruptcy Act 1966 has not yet expired, while at the same time as pressing for continuance, was an act of bad faith and in contravention of the Solicitors' Rules.
TWO PAGE SUBMISSION BY APPLICANT
BY ORDER OF HIS HONOUR NEVILLE J ON 2 JUNE 2017
PRECIS
1) On 20 March 2017, his Honour Neville J ordered two-page Submissions from the parties. These are the applicant's Submissions.
2) The time for compliance with the Bankruptcy Notice Number BN 187004 issued on 14 December 2015, extended automatically under s 41(7) of the Bankruptcy Act 1966 by Registrar Wall, will not have expired because, being within the appeal timeframe, the applicant is in train to lodge an appeal to the Full Court of the Supreme Court, of Penfold J's decisions, which were handed down on 21 February 2017 and 29 May 2017.
3) The applicant intends to appeal because her Honour failed to take into account relevant considerations and took into account irrelevant considerations. She indicated bias and contempt for the applicant. Her decision was unreasonable to the extent of Wednesbury "unreasonableness".
4) It follows that this court may not order a review of Registrar Wall's decision unless and until the extension of time under s41 (7) of the Bankruptcy Act 1966 has lapsed. It will not lapse until the Full Court has made its final decision. It also follows, that any decision made by this court on these terms will be open to review by a higher court.
5) The defendant Law Society and its agents, not satisfied with refusing an unrestricted practising certificate wrongly at law in 2004, not satisfied with perverting the course of justice in its subsequent defence of that unlawful action after the event, not satisfied with causing the applicant to undergo legal proceedings to right that wrong failing to contemplate mediation, not satisfied with seeking refuge in legal procedure to defeat the applicant through its strike out applications, not satisfied with issuing a wrongly calculated Bill of Costs in the sum of about $64,000, not satisfied with causing the applicant material, psychological, financial and reputational harm and losses, now is bent on causing further irreparable harm, reinforced by its public, legal and financial resources, to bankrupt the applicant, causing the loss of her home and precluding her, in supreme irony, under the Society Rules, from ever practising as a solicitor in any event.
6) Yet, the matter is simple. The merits of the applicant's case, has yet to be heard. The defendants, in unseemly haste and illegality, are pressing for the matter to be summarily dismissed. There is irony in the fact that the applicant's application was deemed by Penfold J, to be an abuse of process, but while having facts before her, failed to see that the defendants' actions themselves have been and continue to be, an abuse of process. Such a conclusion on the part of her Honour Penfold gives rise to a reasonable apprehension of bias on her part, to the applicant's detriment. It evidences unreasoanbleness to the extent of "Wednesbury".
7) Given the applicant's intention to appeal the decision of Penfold J to the Full Court of the Supreme Court, Registrar Wall's extension of time under s 41(7) of the Bankruptcy Act 1966 has not yet expired/should be automatically extended. Should this court press for a hearing to take place before the final decision of the Full Court of the Supreme Court, it will be in contempt, as that action would indicate an effective pre-empting of the court's decision. That would be an abuse of process and the decision would itself be open to appeal.
The Respondent’s Submissions
The Respondent filed Submissions on 9th February 2017 and further Submissions on 2nd May 2017.
The Submissions dated 9th February 2017 were as follows:
SUBMISSIONS OF THE RESPONDENT
1) These Submissions are made in response to the Orders made by his Honour Judge Neville on 1 February 2017.
2) In short, the Respondent submits that no extensions of time are required.
3) The act of bankruptcy which the Respondent shall rely upon in seeking the presentation of a creditor’s petition will be the failure by the Applicant to comply with the Bankruptcy Notice, if the Notice is not set aside (Section 40(1)(g)).
4) Section 44(1)(c) of the Bankruptcy Act 1966 (Act) precludes the presentation of a creditor’s petition if the act of bankruptcy was committed more than six months before the presentation of the petition.
5) However, where a debtor has applied to set aside a bankruptcy notice, as has occurred in these proceedings, and the Court has not determined whether it is satisfied that the debtor has a counter-claim or set off, the time is deemed to have been extended until the Court so determines (Section 41(7)).
The Submissions dated 2nd May 2017 were as follows (emphasis in original):
Respondent's Submissions in relation to the Applicant's application to set aside the bankruptcy notice
1) These are the Respondent Law Society's written Submissions in relation to the Applicant's amended application dated 3 February 2016. By that application, the Applicant seeks an order that Bankruptcy Notice BN 187004 issued on 14 December 2015 be set aside on the basis that she has "a counter-claim on foot in the Supreme Court, which exceeds the amount claimed in the Bankruptcy Notice", being Supreme Court proceedings SCA 1 of 2016 (Supreme Court Proceedings).
2) The application is supported by the Applicant's affidavits sworn 29 January 2016 and 21 March 2016. The Applicant has also filed Submissions and a further affidavit dated 26 April 2017.
3) The Respondent has filed a notice of opposition dated 19 April 2016 on the basis that the Supreme Court Proceedings are liable to be struck out and do not give rise to a valid counter-claim sufficient to warrant the setting aside of the bankruptcy notice. The Respondent relies on the affidavit of Michael James Phelps sworn 19 April 2016 (Phelps Affidavit) in support of its notice of opposition. That affidavit outlines the procedural history and background of these proceedings.
4) A copy of the bankruptcy notice is at pages 83-85 of Mr Phelps' exhibit. The bankruptcy notice concerned the assessed costs of the Respondent and related parties in relation to unsuccessful proceedings commenced against them by the Applicant in the Full Court of the ACT Supreme Court. The history of those proceedings is addressed at paragraphs 7-10 of the Phelps Affidavit. The proceedings concerned the Law Society's refusal to grant the Applicant an unrestricted practising certificate in 2010 and 2011. The costs of the Full Court proceedings were assessed in August 2015 at approximately
$51,000 (see certificate of costs at page 38 of the Phelps Exhibit).5) The bankruptcy notice was issued in relation to the assessed costs and served on the Applicant on 19 January 2016 (Phelps Affidavit [17]).
6) On 4 January 2016 (not 2015, cf Phelps Affidavit [18]), the Applicant commenced the Supreme Court Proceedings, by which she purported to appeal against the decision of Magistrate Morrison dated 1 December 2015. A copy of the notice of appeal is at pages 86-89 of the Phelps Exhibit.
7) The decision of Magistrate Morrison was to summarily dismiss a second round of fresh proceedings commenced by the Applicant in July 2015 in the ACT Magistrates Court seeking various relief arising out of the bill of costs and also sought to re-agitate the Applicant's complaints regarding the Law Society's refusal to issue her with a practising certificate: Phelps Affidavit [12], and see too a copy of the originating application at pages 33-37 of the Phelps Exhibit.
8) The proceedings in the Magistrates Court were struck out and summarily dismissed by Magistrate Morrison as an abuse of process on 1 December 2015: Phelps Affidavit [14]-[15].
9) As mentioned above, the Applicant commenced the Supreme Court Proceedings to challenge the decision of Magistrate Morrison and purports to rely on her claim in those proceedings as a valid reason to set aside the bankruptcy notice in these proceedings.
10) The sole appeal ground relied on by the Applicant in the Supreme Court Proceedings was expressed in the following terms:
"The decision of his Honour Morrison J, evinces jurisdictional error in that it takes into account irrelevant considerations and that it fails to take into account relevant considerations - that it is therefore not a decision made according to law."
11) On 21 February 2017, Penfold J delivered her judgment in the Supreme Court Proceedings in Barlow v Law Society of the ACT [2017] ACTSC 35. A copy of that judgment is annexed to these Submissions for ease of reference. Her Honour's judgment concerned the application by the Law Society (and related parties) to strike out the Applicant's notice of appeal on various grounds, including on the basis that it was embarrassing.
12) At [67] ff, her Honour considered the Respondents' claim that the appeal ground relied upon by the Applicant was embarrassing. Her Honour found at
[71] that the appeal ground contained an "incoherent combination of assertions of jurisdictional error and error in dealing with relevant and irrelevant considerations" and also "gave no content to any of the errors mentioned'. As such, her Honour considered that it did "not add to the respondents' understanding of what they need to address or respond to in the appeal”.13) Her Honour then reviewed the balance of the Submissions and other material filed by the Applicant, as well as the judgment of Magistrate Morrison itself, before concluding that none of the material before her identified any arguable ground of appeal. She concluded at [91] that none of this material gave her Honour "any reason to believe that appropriate grounds of appeal against the Magistrate's decision could be prepared if [the Applicant] were given leave to re-plead her notice of appear.
14) Her Honour's conclusions are set out at [116], including, relevantly, (c) and
(d) to the effect that the notice of appeal was embarrassing and there would be no utility in giving the Applicant leave to re-plead her ground of appeal. At [119], her Honour concluded that there would be no injustice in striking out the notice of appeal and somehow disposing of the appeal.15) At [121]-[130] her Honour considered the appropriate form of order to give effect to her Honour's conclusions and said that she would invite the parties to address her further in that regard. Whilst she identified the inherent power of the Supreme Court as a potential basis for summarily dismissing the whole of the appeal, she noted at [121] that there was no equivalent in the Court Procedures Rules which permitted the court, in an appeal, to make any other order that it considers appropriate, after striking out a pleading, compared to rule 425(1) which applied to proceedings at first instance.
16) In their written Submissions filed following the delivery of her Honour's reasons, the Respondents submitted that the Court had the power to strike out the whole of the appeal pursuant to either the Court's inherent jurisdiction, or alternatively, rule 5052(1)(e) of the Court Procedures Rules 2006 (ACT) which permits the Court, for an appeal to it, to make "any other order that it considers appropriate". The Respondents submitted, by reference to caselaw, that this would have the effect of summarily disposing of the whole of those proceedings.
17) The parties are presently awaiting the decision of Penfold J as to the precise form of order to dispose of the appeal proceedings before her, but it is plain from her Honour's judgment that is the substance of what she has decided. The only extant question is the precise form of order to give effect to her Honour's decision.
18) We submit that, having regard to the substance and effect of her Honour's decision, it is plain that the Applicant no longer has any "counter-claim" to rely on to support her application to set aside the bankruptcy notice, and the application should be dismissed with costs.
19) The materials filed by the Applicant do not recognise or engage with this basic fact. In light of the decision of Penfold J, the sole ground relied on in the application to set aside the bankruptcy notice no longer exists, regardless of its merit. The application should be set aside for this reason alone.
20) For completeness, we note that at [32]-[37] of Penfold J's judgment, and in the context of considering the Applicant's application to transfer (pursuant to the cross-vesting legislation) the appeal before Penfold J to the Federal Circuit Court (to be heard together with these proceedings), her Honour considered whether the proceedings before her could amount to a "counter claim, set-off or cross demand" for the purposes of section 40(1)(g) of the Bankruptcy Act 1966 (Cth). Her Honour noted at [32] that the Applicant's reasons for wanting the two proceedings heard together seemed to be that she regarded the proceedings before Penfold J as a "counter-claim, set-off or cross demand" as described in s 40(1)(g) of the Bankruptcy Act. Her Honour concluded at [37] that the relief sought by the Applicant in the proceedings before Magistrate Morrison (in particular, the Applicant's claim for a declaration about whether or not the debt the subject of the costs order could be enforced) below could not satisfy s 40(1)(g) for the purposes of setting aside the bankruptcy notice the subject of these proceedings.
21) Whilst that question is a matter for your Honour to consider independently in these proceedings, we submit that that was undoubtedly the correct conclusion.
Consideration and Disposition
By way of relevant principle, I note the following.
First, in Biztole Developments Pty Ltd v McLean, the Full Federal Court dealt with the issue of any relevant extension of time required or necessary of a Bankruptcy Notice. At [10] and [11], the Full Court said:
[10] The requirement of s.41(7) that the affidavit be filed before the expiration of the time fixed for compliance with a bankruptcy notice is understandable in the context of a deemed extension of time that will have the effect of avoiding the occurrence of an act of bankruptcy at the expiration of the time originally fixed for compliance. It avoids the difficulty of a deemed extension after an act of bankruptcy has occurred. No such difficulty occurs if, in accordance with the ordinary meaning of the words used, the reference to the time fixed for compliance with the requirements of a bankruptcy notice is taken to include a time fixed under one of the provisions allowing for an extension of time.
[11] In our view, the filing of an affidavit by a judgment debtor to the effect that he or she has a counter-claim, set-off or cross demand such as is referred to in s.40(1)(g) will activate s.41(7) so as to extend time if it is filed with the registrar after the time originally fixed for compliance but before the expiration of any extended time for compliance fixed under s.41(6A) or s.41 (6B).
Secondly, in all of the circumstances, it is important to set out what courts have consistently said regarding the “regime” and objects of bankruptcy proceedings, including the obligations of a bankruptcy court. For example, in Australian Securities and Investments Commission v Forge in the joint judgment of Branson and Stone JJ, their Honours outlined the following matters, at [4] – [6]:[6]
[4] The Act as a whole reflects legislative recognition of the public interest, as well as private interests, in the management of personal insolvency. It seeks to achieve a balance between the public interest in creditors of an insolvent being paid rateably from the property of the insolvent and the public interest, as well as the private interest of the debtor, in the debtor not being reduced to a mendicant. It also reflects a balance between the public interest in limiting the capacity of insolvent persons to incur debts that they will not be able to satisfy and the public and private interest in eventually allowing insolvent persons to be free from the burden of past debts to start financially afresh.
[5] In the scheme of the Act the commission of an act of bankruptcy is an event of critical significance. Section 40(1) of the Act is concerned to identify the circumstances in which a debtor commits an act of bankruptcy. The commission of an act of bankruptcy is a necessary precondition to the presentation of a creditor's petition (s.44(1)(c)) and to the making of a sequestration order against the estate of a debtor on a creditor's petition (s.43(1)(a))
[6] The commission of an act of bankruptcy has, however, additional significance by reason of the doctrine of relation back which is reflected in s.115 and s.116 of the Act. Generally speaking, a bankruptcy is taken to have commenced at the time of the commission of the earliest act of bankruptcy committed by the debtor within the period of six months immediately before the date on which the sequestration order is made (s.115(1)). Where a person becomes bankrupt on a creditor's petition, the earliest relevant act of bankruptcy may have been committed before the time when the debt on which the creditor's petition was founded was incurred (s.115(3)). Subject to certain exceptions in s.116 and s.123 to s.127, all property that belonged to the bankrupt at the commencement of the bankruptcy or that was acquired by the bankrupt thereafter and before his or her discharge is available to pay the bankrupt's creditors.
[6] Australian Securities and Investments Commission v Forge (2003) 133 FCR 487. See similar comments by Emmett J at [22] – [27].
At [27] of his separate judgment in Forge, Emmett J said:[7]
… the Act gives no general discretion to set aside bankruptcy notices that are valid in form and not an abuse of process. The Act permits the issue of a bankruptcy notice and, if the notice is valid, prescribes the consequences to the bankrupt of non-compliance. The grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the notice, service of the notice or the existence of the debt upon which the judgment, and, in turn, the notice, is founded. Reference to the existence of a debt includes the existence of a counter claim, set off or cross demand equal to or exceeding the amount of the debt … Since jurisdiction to set aside a defective bankruptcy notice is not a general discretionary jurisdiction, it differs from the jurisdiction to make a sequestration order under s.52(1), which is expressly discretionary.
[7] See also the detailed discussion by the High Court in Ramsay Health Care Australia Pty Ltd v Compton (2017) 345 ALR 534 especially at [[33] – [70].
Most recently, in Lowbeer v De Varda, Full Court of the Federal Court of Australia commented on challenges to a “judgment debt” and principles relating to “oing behind it” by reference to earlier authority.[8] At [53] – [57], the Full Court outlined relevant principle as follows:
[8] Lowbeer v De Varda [2018] FCAFC 115.
General principles concerning proof of petitioning creditor's debt
[53] On the hearing of a creditor’s petition, the court has a statutory duty to be satisfied for the purposes of s 52 of the Bankruptcy Act 1966 (Cth) as to the existence of the petitioning creditor's debt. Therefore, on such an application, a judgment or order is never conclusive of the existence of a debt. Rather, the court must decide whether to accept the judgment or order as proof of the debt or to go behind the judgment or order (sometimes described as a discretion). Usually, a determination after a contested hearing will provide a practical guarantee of reliability that will mean that the court will not go behind the judgment or order. The court looks with suspicion on consent judgments and default judgments. However, all depends upon the circumstances. If the court is persuaded to go behind the judgment or order then it will investigate the debt upon which the creditor’s petition is based. For a creditor’s petition to be dismissed on the basis that in truth and reality there is no debt behind the judgment, there must first be a proper basis to exercise the discretion to go behind the judgment and then an assessment that, in truth and reality, there is no debt. These are separate questions that might be determined separately. As to these matters, see the judgment of Kiefel CJ, Keane and Nettle JJ in Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28 at [16], [37]‑[38], [65]‑[71].
[54] The test or standard to be applied in deciding whether to accept a judgment order as proof of the debt for the purposes of a petition for sequestration orders has been variously expressed.
[55] In Petrie v Redmond [1943] St R Qd 71 at 75‑76, Latham CJ (with whom Rich and McTiernan JJ agreed) said that “special circumstances” must be established. In Corney v Brien (1951) 84 CLR 343 at 347, the plurality quoted with approval a passage in In re a Debtor [1929] 1 Ch 125 at 127 in which it was said that the court may, “upon a prima-facie case being shown, go behind a judgment for the purpose of satisfying itself” that there was a real debt (see also Fullager J in Corney v Brien at 356‑357). In Ramsay Health Care at [20], the plurality quoted with apparent approval a passage from Wren v Mahony (1972) 126 CLR 212 at 224‑225 in which Barwick CJ said that the discretion to accept the judgment as proof is not well exercised where there are “substantial reasons” to go behind it, but in an earlier passage (also quoted in Ramsay Health Care at [42]), Barwick CJ referred to going behind a judgment “where reason is shown”.
[56] The plurality in Ramsay Health Care accepted the argument for the respondent that the Court should go behind a judgment where “sufficient reason is shown for questioning whether behind the judgment there is in truth and reality a debt due to the petitioning creditor”: at [37]‑[38]. Edelman J in a separate judgment supporting the result referred to authorities where courts exercising bankruptcy powers had been “extremely cautious” before going behind a common law judgment: at [108]-[109]. His Honour said that “in the absence of some evidence of fraud, collusion, or miscarriage of justice, a court exercising bankruptcy jurisdiction will rarely have substantial reasons to investigate whether the debt which merged in the judgment is truly owed”: at [111].
[57] However, there appears to be no magic in any of these formulations. As Fullager J said in Corney v Brien at 356, “[n]o precise rules exist as to what circumstances call for an exercise of the power”. That is because in each case there must be a contextual consideration as to whether, for the purposes of s 52 of the Bankruptcy Act, the debt has been proven. In all cases, it must be borne in mind, as was stated by the plurality in Ramsay Health Care at [55], that:
The scrutiny required by s 52 as to whether there is, in truth and reality, a debt owing to the petitioning creditor serves to protect the interests of third parties, particularly other creditors of the debtor. It is of critical importance to appreciate that such persons were not parties to the proceedings that resulted in the judgment debt. It has long been recognised that their interest in being paid their debts in full should not be prejudiced by the making of a sequestration order in reliance on a judgment debt which does not reflect the true indebtedness of the debtor to the petitioning creditor …
The contest between the parties, which has been ventilated unsuccessfully by the Applicant many times in the ACT Supreme Court, and elsewhere, has now run its course. The proceedings elsewhere have examined (a) the validity of the debt owed by the Applicant to the Respondent, (b) whether there are relevant grounds upon which a Court can or should “go behind” the judgment debt, (c) Ms Barlow’s claim that she has a relevant counter-claim or set-off that is greater than the debt owed by her to the Respondent, and or (d) whether there is some form of “abuse of process” being perpetrated by the Respondent (or its agents) against the Applicant. Each of these matters has been determined elsewhere adversely to the Applicant. She seeks to raise similar matters in this Court. I am unaware of any other grounds upon which she seeks to set aside the Bankruptcy Notice.
Precisely because there has been such detailed scrutiny of the Applicant’s claims in other courts, including the ACT Court of Appeal, in my view, it borders on the completely otiose for this Court to review the same material and the same grounds.
Certainly, the findings in the Supreme Court have been to the effect that (a) Ms Barlow does not have any relevant counter-claim or set-off against the ACT Law Society, (b) there are no relevant grounds articulated by Ms Barlow upon which a Court could or should “go behind” the judgment upon which the debt is founded, (c) there is no evidence of any conduct that amounts to “abuse of process” by the Respondent towards Ms Barlow, and (d) there is no legal or other basis by which the debt – based on an award of costs against her following a contested hearing – could relevantly be disputed.
Nor are there any “discretionary” considerations articulated by Ms Barlow that would bring the matter within the considerations outlined by the Full Court in Maddestra v Penfolds Wines Pty Ltd.[9] Equally, none of the matters canvassed by the Full Court in Ling v Enrobook Pty Ltd regarding what might be described as “other litigation”, actual or potential, are relevant here.[10]
[9] Maddestra v Penfolds Wines Pty Ltd (1993) 44 FCR 303.
[10] Ling v Enrobook Pty Ltd (1997) 74 FCR 19.
For these reasons, the Application (filed 2nd February 2016) to set aside the Bankruptcy Notice, issued 14th December 2015, must be dismissed with costs, either as agreed or taxed.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Neville
Date: 30 August 2018
0
20
2