Baycorp Collections PDL (Australia) Pty Ltd v Ghosh
[2016] FCCA 131
•9 February 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LTD v GHOSH | [2016] FCCA 131 |
| Catchwords: PRACTICE AND PROCEDURE – Application for adjournment of creditor’s petition – whether applicant has given adequate explanation for not being in a position to attend the hearing of creditor’s petition – whether there would be any utility in granting the adjournment – adjournment refused. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.33(1)(a), 40(1)(g), 47, 52(1), 52(1)(b) Civil Procedure Act 2005 (NSW), s.134 |
| Ahern v The Deputy Commissioner of Taxation (QLD) (1987) 76 ALR 137 Rotstein & Associates v Slaveski [2010] FCA 493 |
| Applicant: | BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED |
| Respondent: | RATNA GHOSH |
| File Number: | SYG 235 of 2015 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 17 December 2015 |
| Delivered at: | Sydney |
| Orders pronounced on: Reasons published on: | 29 January 2016 9 February 2016 |
REPRESENTATION
| Counsel for the Applicant: Solicitors for the Applicant: | Mr A Kaufmann Baycorp Legal |
| Counsel for the Supporting Creditor: | Mr M W E Maconachie |
| Solicitors for the Supporting Creditor: | Ms R Tang |
| Counsel for the Respondent: | Mr W Soon |
ORDERS
The application to adjourn the creditor’s petition is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 235 of 2015
| BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED |
Applicant
And
| RATNA GHOSH |
Respondent
REASONS FOR JUDGMENT
Introduction
On 29 January 2016 I made an order dismissing an application by the respondent, Dr Gosh, to adjourn the hearing of the creditor’s petition, noting that I would publish my reasons on a later date. These are my reasons.
Immediate background
On 2 December 2015 there came before me for directions a creditor’s petition filed by Baycorp PDL (Australia) Pty Limited (Baycorp) seeking a sequestration order against the estate of the respondent, Dr Ratna Ghosh. On that day I set down the creditor’s petition for hearing at 10.15 am on 17 December 2015.
At 1.43 pm on 14 December 2015 Dr Ghosh sent an email to my associate in which Dr Ghosh said she was seeking an adjournment of the hearing listed on 17 December 2015. Dr Ghosh stated she “tendered full payment to Baycorp both in instalments or as a lump sum, but they have refused to accept payment as below, as well as after the last hearing” and that she “contacted supporting creditors but received no reply”. Dr Ghosh also stated that she would be unable to attend Court “this week due to” a “gynaecological emergency (I will supply a confidential medical certificate to the Court only on request)”. At 2.50 pm on 14 December 2015, at my direction, the Registry sent an email to Dr Ghosh and Baycorp stating that I would deal with any application for an adjournment of the creditor’s petition at the hearing on 17 December 2015.
At the hearing on 17 December 2015, Dr Ghosh did not appear, but she instructed counsel to appear for the limited purpose of applying for an adjournment. Counsel for Dr Ghosh applied for an adjournment. At the conclusion of submissions, I indicated I would reserve my decision on the adjournment application, but would hear the creditor’s petition and reserve my decision on that application as well. Counsel for Dr Ghosh then formally withdrew from the proceeding. After I heard the creditor’s petition I listed the matter at 9.30 am on 29 January 2016 for judgment on Dr Ghosh’s application for an adjournment and, if I were to refuse that application, for judgment on the creditor’s petition.
I should here note that counsel for the supporting creditor indicated he had “a conceptual difficulty” with the manner in which I had decided to proceed. I agree that it may appear odd that I should reserve my decision on an application to adjourn the creditor’s petition, yet proceed to hear the creditor’s petition Dr Ghosh applied to have adjourned. My decision, however, was based on what I believed was the best way of achieving justice for both parties. My initial impression was that the medical grounds on which Dr Ghosh sought the adjournment were weak. That meant that the merits of the grounds on which Dr Ghosh opposed the creditor’s petition would assume great significance to whether I should grant an adjournment.
As will appear from these reasons, the procedural history of the matter, and the evidence that has been filed, is not straightforward. In those circumstances, I wished to give myself time to make a more considered assessment of whether Dr Ghosh has reasonable prospects of resisting the creditor’s petition. On the other hand, Baycorp did not submit it would be prejudiced by the course I proposed. It is true Baycorp adduced its material, and counsel for Baycorp made submissions in support of the making of a sequestration order. If I decide not to grant the adjournment, however, that effort will not be wasted. On the other hand, if I decide to grant the adjournment, the half hour it took Baycorp to present its case will have been wasted. That, however, would be a minor prejudice, which is far outweighed by the need to unhurriedly consider whether Dr Ghosh has reasonably arguable grounds of opposition to the creditor’s petition and, hence, an arguable case for not being made bankrupt.
Procedural background
Baycorp filed its creditor’s petition on 2 February 2015. The act of bankruptcy on which it relies is Dr Ghosh’s not complying with a bankruptcy notice issued on 28 October 2014. The bankruptcy notice demanded payment of $11,265.01. That is the sum of one order and two judgments made or entered against Dr Ghosh, and interest on the amounts of that order and those judgments. The order was for the payment to Baycorp of $7,865.55 made by this Court on 1 October 2014 (Bankruptcy Costs Order). The two judgments were for $1,700 and $1,650 that were entered in the Local Court of New South Wales at Parramatta on 5 and 26 September 2014 respectively.
The creditor’s petition came before a Registrar of this Court on 3 March 2015. On that day, the matter was adjourned to 31 March 2015. The purpose of the adjournment appears to have been to permit the Credit and Investments Ombudsman (CIO) an opportunity to investigate a complaint Dr Ghosh made about Baycorp. I infer that the CIO completed its investigation by 31 March 2015 because, on that day, the Registrar made an order granting Baycorp leave to amend the return time and date on the creditor’s petition, and further ordered that the creditor’s petition be re-listed for hearing at 2 pm on 12 May 2015. On that day, the matter was again adjourned, this time to 2 pm on 2 September 2015.
On 10 June 2015 a Registrar made an order for substituted service of the creditor’s petition. On 2 September 2015 a Registrar vacated the orders for substituted service made on 10 June 2015 and instead made another order for substituted service. In addition, the Registrar ordered that Dr Ghosh file and serve a Notice Stating Grounds of Opposition and affidavits in support by 4.30 pm on 6 October 2015, and that the creditor’s petition be adjourned to 12 October 2015. The Registrar also dealt with an interim application filed by Mr Miller that he be substituted as a creditor. The Registrar made an order for substituted service of the interim application on Dr Ghosh and also stood over that application to 12 October 2015.
The creditor’s petition came before Registrar Ng on 12 October 2015. Dr Ghosh appeared by telephone. Dr Ghosh stated that she had not been served with the creditor’s petition. The Registrar noted the Court had received an instalment order and Dr Ghosh said there were stay orders against both Baycorp and Mr Miller. Dr Ghosh also said she had appeals against Baycorp and Mr Miller in the Supreme Court which were still active. Towards the end of the hearing, Dr Ghosh said she was prepared to accept service of the creditor’s petition at the Supreme Court. At the conclusion of the hearing, Registrar Ng directed that Dr Ghosh file and serve her Notice of Grounds of Opposition and supporting affidavits by 18 November 2015, and listed the matter for directions before me on 2 December 2015.
On 19 November 2015 Dr Ghosh filed a “Notice stating grounds of opposition to application, and to interim application or petition” (Grounds of Opposition). That document raised grounds that included the following:
1.I have NOT been served the creditor’s petition.
2.I was unable to open attachments on emails to me as it read “The contents of this message cannot be found.” due to virus infection of my computer, of which I warned the Federal Circuit Court
3.I have NOT been served personally as per the rules, as per Court Orders, or by any other means
4.I have NOT been served by any party
5.My litigation against all parties is not finalised
6.All of Baycorp’s costs orders are STAYED pending Appeal to the Supreme Court of Sydney. The Appeal is likely to be heard in April or May 2016
7. I have also applied to the Federal Circuit Court of Brisbane to pay Baycorp’s costs orders by instalment
8.All of the Channel Nine creditors (Ninemsn Pty Ltd, NBN Ltd and Katie Gregory) costs orders have either NOT been assessed, and therefore cannot be enforced, or are pending review, which gives an automatic STAY
9.The Supreme Court granted an Order to pay Mr Rodney Miller’s costs by instalment on 4 September 2015, which gives an automatic STAY
10.I have been granted Costs Orders against Mr Rodney Miller on 16 September 2014 by Judge Olsson of the Sydney District Court which predate and exceed the value of his costs orders against me, and which he has NOT paid me to date
11.I have traced the malware and spyware virus attacks and continuous hacking into all of my devices through my modem, back to Mr Rodney Miller, who advertises himself as a “HACKER” on Facebook. This is under current NSW Police Investigation, Event no: E114378502
12.I am not aware of any other creditors, as I have NOT been served by any party.
Dr Ghosh also filed an affidavit in which she deposes she was unable to file an exhaustive affidavit or notice of opposition “as I have not been served [with] the Creditor’s petition”. Dr Ghosh further deposed she had already supplied the Court with “copies of Stay Orders from the Supreme Court against Baycorp’s cost orders”. Dr Ghosh annexed to her affidavit consent orders made by the Supreme Court of New South Wales on 4 November 2015. One of the orders was that the stay ordered by Button J on 18 May 2015 be extended to 5 pm on 19 November 2015. The stay granted by Button J on 18 May 2015 related to the “order for costs entered on 5 September 2014 and the order for costs entered on 26 September 2014 against the plaintiff, Dr Ghosh, in favour of the defendant, Baycorp Collections PDL (Aust) Pty Limited”.
The application for an adjournment
The only ground on which Mr Soon, who appeared on behalf of Dr Ghosh, applied for an adjournment is the medical condition of Dr Ghosh. Mr Soon tendered a document purportedly issued by “After Hours Medical Service” which is as follows:
MEDICAL CERTIFICATE
THIS IS TO CERTIFY THAT ON 15/12/15
I EXAMINED Ms Ratna Ghosh
WHO IN MY OPINION IS SUFFERING FROM a medical Condition
AND WILL BE UNFIT FOR WORK
FROM 16/12/15 to 21/12/15 INCLUSIVE
OTHER COMMENTS (if necessary)
Under the words “OTHER COMMENTS (if necessary)” there is some handwriting which appears to describe a medication and dosage of that medication.
Counsel for Baycorp objected to the tender of the certificate because Baycorp received late notice of the certificate and, in any event, is incapable of constituting evidence of any medical condition that could arguably excuse Dr Ghosh from attending the hearing on 17 December 2015. Counsel for the supporting creditor, to whom I granted leave to appear, also submitted I should not admit the certificate. Counsel relied on the decision of Young CJ in Eq in Foster v Harvey.[1]
[1] [2006] NSWSC 1112
In Foster v Harvey, a matter had come before Young CJ in Eq for hearing. The defendant did not appear but, in advance of the hearing, had sent to his Honour’s associate a letter stating her mental health had suffered substantially due to matters she set out in the letter and that she was, therefore, unfit “to be subject to a formal hearing of this matter”. The defendant attached a medical certificate which stated the defendant was suffering from “major depression”, and would be “unfit for work up to” a date that included the date of the hearing.
Young CJ in Eq decided to continue with the hearing notwithstanding the defendant’s having provided the medical certificate. His Honour did so because the defendant did not put her application for an adjournment in a proper form so that the medical evidence could be tested by cross-examination. His Honour’s decision, however, must be seen in the context in which it was made. The defendant had previously provided medical certificates in support of the matter not being set down for hearing and that, when the matter was set down for hearing, the defendant was informed that if the defendant wished to apply to vacate the hearing dates, it had to be made by notice of motion and supporting affidavit evidence.
Foster v Harvey is not relevant to the admissibility of the medical certificate counsel for Dr Ghosh tendered. Dr Ghosh has not in these proceedings previously relied on her medical condition as a ground for adjourning a hearing, or as a ground for not setting down the creditor’s petition for hearing. Nor has the Court previously informed Dr Ghosh that, if she proposed to apply for an adjournment based on her medical condition, she needed to do so in the proper form. The objection to the admissibility of the medical certificate based on relevance, therefore, turns on the application of the meaning of relevance in s.55(1) of the Evidence Act 1995 (Cth).
That subsection provides that evidence that is relevant in a proceeding is evidence that, “if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding”. The medical certificate tendered by counsel for Dr Ghosh is relevant according to this definition. If I were to accept the opinion expressed in the medical certificate, it would render more probable than not an issue that is relevant to Dr Ghosh’s application for an adjournment, namely, her ability to attend the hearing on 17 December 2015. It is true that the factual and medical premises on which that opinion is based are not disclosed in the certificate; and the certificate does not disclose the medical condition from which Dr Ghosh suffers. These are matters, however, that go to weight.
Principles governing adjournments of creditor’s petitions
The Court has power to adjourn any proceedings under the Act before it on such terms as it thinks fit.[2] That includes proceedings based on a creditor’s petition.
[2] Bankruptcy Act 1966 (Cth), s.33(1)(a)
A useful discussion of the manner in which the power to grant adjournments should be exercised is the following passage from the reasons for judgment of Bromberg J in Rotstein & Associates v Slaveski:[3]
It is evident that s 33(1)(a) gives the Court a wide discretion in relation to the grant of an adjournment. As Sweeney J (with whom Franki J agreed) stated in Field v Commercial Banking Co of Sydney Ltd (1978) 37 FLR 341 at 349, it would be unwise to attempt to draw up an exhaustive catalogue of the circumstances to which the Court should pay regard in considering an application for an adjournment of a creditor’s petition. However, the Court’s discretion should be exercised with a mind to the policy objectives of the Bankruptcy Act. Relevantly to the issues before me, those objectives include the public interest in stopping individuals who are unable to meet their debts from continued insolvent trading and assisting creditors who are unable to recover debts owed to them: See Rozenbes v Kronhill (1956) 95 CLR 407 at 414.
[3] [2010] FCA 493 at [17]. See also Endresz v Australian Securities and Investments Commission (No 2) [2015] FCAFC 33 at [59]: “There is no exhaustive catalogue of the circumstances under which the Court should grant an adjournment of a petition. The general context of each individual case needs to be considered.” citing Field v Commercial Banking Co of Sydney Ltd [1978] FCA 46; [1978] 37 FLR 341 at 349-50 per C.A. Sweeney J
Other factors that have been held to be relevant include whether the debtor’s assets would be in jeopardy if an adjournment is granted,[4] and whether the debtor has filed an appeal based on genuine and arguable grounds against the judgment on which the application for a sequestration order is based.[5]
[4] Deputy Commissioner of Taxation v Mei Mei Yan (aka Quinnie Wong) [1998] FCA 783 (Emmett J)
[5] Ahern v The Deputy Commissioner of Taxation (QLD) (1987) 76 ALR 137 (Davies, Lockhart and Neaves JJ) at 148
In the circumstances of the case before me, there are at least two considerations that are relevant to whether I should grant the application for an adjournment. The first is whether Dr Ghosh has given a reasonable explanation for her not being in a position to attend the hearing. And the second is whether there would be any utility in granting the adjournment. That requires me to consider whether Dr Ghosh has reasonably arguable prospects of defeating Baycorp’s application for a sequestration order based on the grounds Dr Ghosh has raised in her Grounds of Opposition.
Reasonable explanation?
Whether or not Dr Ghosh has given a reasonable explanation for her not being in a position to attend the hearing depends on whether I should accept the opinion expressed in the medical certificate and, if so, what weight I should give it. I do not accept the opinion expressed in the medical certificate. The certificate does not identify the medical condition from which Dr Ghosh suffers; nor does it identify the symptoms on the basis of which the opinion has been based, or the examination the author of the certificate undertook of Dr Ghosh. I take into account the email Dr Ghosh sent to the Court on 14 December 2015 where she described her medical condition to be “a gynaecological emergency”, and where she offered to “supply a confidential medical certificate to the Court only on request”. The medical certificate counsel for Dr Ghosh tendered, however, does not refer to any gynaecological issue. Further, it is not irrelevant that Dr Ghosh is herself a medical practitioner. It is reasonable to expect that, at the very least, Dr Ghosh would have the ability to identify, and the vocabulary to articulate with some degree of particularity the symptoms Dr Ghosh claims prevented her from being in a position to participate at the hearing on 17 December 2015. That Dr Ghosh provided no further details of those symptoms is a basis for inferring, and I do infer, that Dr Ghosh did not suffer from symptoms that prevented her from participating at the hearing on 17 December 2015.
Reasonable case for resisting sequestration order – service of creditor’s petition
I now consider whether Dr Ghosh has a reasonably arguable case for resisting the making of a sequestration order. If she does, that would weigh heavily in my exercising the discretion in favour of granting an adjournment. I first turn to consider Dr Ghosh’s claims she was not served with the creditor’s petition; but before I do so, it would be useful to identify the relevant principles concerning service of creditor’s petitions.
I begin with s.52(1)(b) of the Bankruptcy Act 1966 (Cth) (Act), which requires that there be proof of “service of the petition” before the Court may make a sequestration order. Also relevant is r.4.05(a) of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (Bankruptcy Rules) which provides that, unless the Court otherwise orders, the applicant creditor must serve on the respondent debtor a creditor’s petition at least five days before the hearing of a creditor’s petition. Neither the Act nor the Bankruptcy Rules, however, define the words “service” or “serve”. The meaning of “served” was considered by the High Court in Capper v Thorpe:[6]
Where a statutory provision, such as s 6, requires a document to be “served”, the statutory command is ordinarily perceived as requiring the contents of the document to be delivered to the person to be served (Ex parte Portingell [1892] 1 QB 15 at 17). However, unless the statute says so, a document may be “served” although it is not personally served (In re McGrath; Ex parte Official Receiver (1890) 24 QBD 466 at 467). Thus, it may be served by posting it to the person required to be served (In re McGrath; Ex parte The Official Receiver (1890) 24 QBD 466 at 467; cf In re 88 Berkeley Road, NW 9 [1971] 1 Ch 648). In many statutory contexts, a document may also be “served” when it is brought to the notice of the person who has to be served (Holloway v Coster [1897] 1 QB 346; In re Harris [1931] 1 Ch 138; In re A Debtor [1939] 1 Ch 251). At all events, it will be “served” in such contexts if the efforts of the person who is required to serve the document have resulted in the person to be served becoming aware of the contents of the document. Thus, in Ex parte Portingell, the English Court of Appeal held that a notice of objection had been “served on” the applicant for renewal of a licence when it was handed to a boy of fourteen on the licensed premises and the magistrates inferred that “the notice had in fact come to the hands of the applicant” (Ex parte Portingell [1892] 1 QB 15 at 16).
[6] (1998) 194 CLR 342 at [21]
Thus, considered alone, neither s.52(1)(b) of the Act nor r.4.05 of the Bankruptcy Rules requires that the creditor’s petition be served personally on the respondent.[7] These provisions, however, must be read with r.1.03(2) of the Bankruptcy Rules which provides that the other rules of the Court apply, so far as they are not inconsistent with the Bankruptcy Rules, to a proceeding to which the Act applies. The “other rules of the Court” is a reference to the Federal Circuit Court Rules 2001 (Cth) (FCC Rules). These contain rules that regulate the service of court documents. Sub rule 6.06(1) provides that “[s]ervice by hand is required for an application starting a proceeding”. Sub rule 6.06(2) provides exceptions, one of which is the Court directing that an application be served in some other way. Also relevant is r.6.14 of the FCC Rules which empowers the Court to dispense with service or to substitute another way of serving a document if, for any reason, it is impracticable to serve the document in a way required by the FCC Rules.
[7] Contrast r.15 of the Bankruptcy Rules 1968 (Cth) that was considered in Re Florance; Ex parte Turimetta Properties Pty Ltd (No 2) (1976) 36 FLR 256 which provided: “service of a creditor's petition shall be effected on a debtor by delivering to the debtor personally an official copy of the petition and a copy of the affidavit or of each affidavit verifying the petition”.
I now turn to the evidence on which Baycorp relies for the service of the creditor’s petition. First, Baycorp relies on the affidavit of Mr David Wilkinson made on 18 September 2015. Mr Wilkinson, who is a solicitor, deposes that on 18 September 2015 he served on Dr Ghosh the creditor’s petition and other documents by handing the creditor’s petition and other documents to Dr Ghosh in an envelope addressed to “Dr Ratna Ghosh”.
Second, Baycorp relies on the transcript of the hearing before Registrar Ng on 12 October 2015.[8] According to the transcript, counsel for Baycorp referred to an email from Dr Ghosh to Mr Wilkinson in which she stated “Sorry, I lost the parcel you handed me while dining at the travel lodge”.[9] Counsel submitted that constituted an acknowledgement by Dr Ghosh that she was served with the creditor’s petition.[10] Dr Ghosh, however, responded that she “never said it was a creditor’s petition, because I never saw the contents of the parcel”.[11]
[8] Affidavit of D Williams 25.11.15, annexure “DW1”
[9] Affidavit of D Williams 25.11.15, annexure “DW1” T14.30
[10] Affidavit of D Williams 25.11.15, annexure “DW1” T15.10
[11] Affidavit of D Williams 25.11.15, annexure “DW1” T15.10
Third, during the hearing before Registrar Ng on 12 October 2015, the following exchanges took place:[12]
[12] Affidavit of D Williams 25.11.15, annexure “DW1” T16.35-T17.5; T23.10-T24.5
THE REGISTRAR: . . . . Now, at the moment, it sounds as if you claim that you never received the creditor’s petition but there’s an email response from you saying that you lost the parcel. Do you agree with that?
DR GHOSH: Yes, Registrar, but I wasn’t aware that the parcel was the creditor’s petition because I was there for my Supreme Court appeal.
THE REGISTRAR: How did you happen to lose the parcel, Dr Ghosh?
DR GHOSH: Well, in fact, the case had finished. I was across the road, dining at the travel lodge when David Wilkinson jumped out at me and he handled [sic] me something. Now, because I was dining and I was distracted, I left it there when I left the premises and I didn’t realise it was related to the bankruptcy. But nonetheless, I put it in my facts [sic] cover sheet. I’m willing to accept service in person from Baycorp, who I will be meeting in the Supreme Court again this Friday on 16 October, so I am willing to accept service in person from Baycorp on Friday, 16 October at the Supreme Court.
. . . .
MR KAUFMAN:[13] . . . Mr Wilkinson is happy to attend. He can provide copies by email, if that’s more convenient. I’m just concerned that Dr Ghosh’s ankle injury may continue until Friday unforeseeably, and she may not be able to attend.
[13] Counsel for Baycorp
DR GHOSH: If it continues, I will send a lawyer. I have been using Mr Soon of Frederick Jordan Chambers, barrister of – and I will give him permission to accept on my behalf.
THE REGISTRAR: Well, I’ve heard that now on the record, Dr Ghosh.
DR GHOSH: Yes. Yes.
THE REGISTRAR: So this is transcribed.
DR GHOSH: Yes.
THE REGISTRAR: So you’ve told me in court, which is transcribed by the electronic system, that you will either attend court this Friday, the Supreme Court.
DR GHOSH: Yes.
THE REGISTRAR: What time is this hearing?
MR KAUFMAN: Directions are listed for 9 am.
THE REGISTRAR: 9 am, Doctor?
DR GHOSH: Yes.
THE REGISTRAR: So either you will attend – is that correct?
DR GHOSH: Or I will send Mr Soon of Frederick Jordan Chambers, because he’s the barrister I’ve been using.
THE REGISTRAR: Well, Dr Ghosh, I think you better be here, because I don’t want any more dramas like this.
DR GHOSH: Okay. Okay. I will come in person. Yes.
THE REGISTRAR: Because if you have agreed to it, I will deem that you have been served this week on Friday.
DR GHOSH: Okay. Okay.
Fourth, Mr Wilkinson has deposed that on 29 October 2015, at the Supreme Court of New South Wales, he asked Dr Ghosh whether she would accept copies of the creditor’s petition. Dr Ghosh said she would accept the documents if Mr Wilkinson agreed to consent orders and would not accept the creditor’s petition because she said her barrister advised “it would be contempt of court to serve documents”.[14] After consent orders were made, Dr Ghosh again refused to accept the creditor’s petition.
[14] Affidavit of D Williams 25.11.15, [4]
The onus will be on Baycorp to prove on the balance of probabilities that the creditor’s petition was served on Dr Ghosh. Is there a reasonable prospect that Baycorp will not be able to discharge that onus? Given there is evidence that Dr Ghosh accepts that on 18 September 2015 Mr Wilkinson served Dr Ghosh “with a parcel”, and Mr Wilkinson has deposed that he delivered to Dr Ghosh in an envelope documents that included the creditor’s petition, Dr Ghosh’s case that she was not served with a creditor’s petition will depend on the Court not accepting the evidence of Mr Wilkinson contained in his affidavit made on 18 September 2015 that he included the creditor’s petition in the envelope he gave to Dr Ghosh.
Apart from baldly asserting she was not served with the creditor’s petition, Dr Ghosh has included nothing in her affidavit that could reasonably call into question the accuracy and veracity of the evidence Mr Wilkinson has given in his affidavit about the documents he served on Dr Ghosh. Further, Dr Ghosh has not put on any evidence that she was incorrect in acknowledging that she had received a parcel from Mr Wilkinson on 18 September 2015; and she informed Registrar Ng on 12 October 2015 that she did not know what was in the parcel Mr Wilkinson handed to her on 18 September 2015. Dr Ghosh, therefore, would have no reasonable grounds for challenging Mr Wilkinson in cross-examination about the accuracy and veracity of his affidavit. In those circumstances, Dr Ghosh would have no reasonable prospects of persuading the Court it should not accept the evidence of Mr Wilkinson that he served Dr Ghosh with the creditor’s petition. There is no reasonable prospect, therefore, that the Court will not find that Baycorp has proved service of the creditor’s petition, as required by s.52(1)(b) of the Act.
Reasonable case for resisting sequestration order – litigation against all parties is not finalised
There is evidence that Dr Ghosh is a plaintiff in proceedings in the Supreme Court, and that those proceedings relate, in whole or in part, to the two judgments that were entered in the Local Court that form part of the amount claimed in the bankruptcy notice. I infer that the proceedings, at least in part, seek to set aside the two Local Court judgments. Dr Ghosh’s evidence does not, however, identify the grounds on which she has challenged the Local Court judgments. It is therefore not possible to determine whether there is any merit in Dr Ghosh’s challenge and, therefore, whether she would have arguable grounds for contending the Court should go behind those judgments. By itself, therefore, that there is continuing litigation between Dr Ghosh and Baycorp does not give rise to a reasonably arguable ground of opposition to Baycorp’s application for a sequestration order.
In any event, the only continuing litigation between Dr Ghosh and Baycorp of which there is evidence relates to the two Local Court judgments. There is no evidence that Dr Ghosh has taken any steps to challenge the Bankruptcy Costs Order. In Katter v Melhem (No 2) Wigney J said:[15]
[T]he Court should not go behind a judgment where the grounds upon which the judgment is challenged are such that, if accepted, they would only support a finding that the amount of the debt be reduced and would not support a finding that there was, in truth, no debt at all.
[15] Katter v Melhem (No 2) [2014] FCA 1176 at [77]
Thus, even if there are reasonable grounds for the Court going behind the two Local Court judgments, there is nothing in the material that could suggest Dr Ghosh has reasonable grounds for persuading the Court to go behind the Bankruptcy Costs Order. Given the Bankruptcy Costs Order requires the payment of more than $5,000, there would still remain an unchallenged debt that could found a bankruptcy notice, and an act of bankruptcy based on the debtor’s not complying with the bankruptcy notice.
Reasonable case for resisting sequestration order - all of Baycorp’s costs orders are stayed pending appeal to the Supreme Court of New South Wales.
There is attached to Dr Ghosh’s affidavit a consent order made on 4 November 2015 that provides for the continuation of a stay of the enforcement of the Local Court judgments entered on 5 September and 26 September 2014. The stay, however, was expressed to operate until 19 November 2014. There is no evidence the stay was extended beyond that day. Further, the consent order refers to the stay having been granted on 18 May 2015. There is no evidence that the stay was granted earlier. In particular, there is no evidence that the stay was in place as at the day on which the bankruptcy notice was issued on 28 October 2014. Thus, to the extent the evidence discloses there was a stay of execution of the Local Court judgments, there is no arguable case that the stay by itself raises any arguable answer to the making of a sequestration order. Even if it did, however, the stay does not apply to the Bankruptcy Costs Order.
Reasonable case for resisting sequestration order - application to Federal Circuit Court of Brisbane to pay Baycorp’s costs orders by instalment
There is no evidence Dr Ghosh has applied for an order that the Bankruptcy Costs Order be paid by instalments. For that reason alone, Dr Ghosh allegations there is an application before the Court to pay the Bankruptcy Costs Order by instalments is not arguable.
Reasonable case for resisting sequestration order –other grounds
The remaining grounds stated in the Grounds of Opposition do not relate to Baycorp’s claims as creditor. I do not, therefore, propose to say anything about those grounds.
Other matters
In her email to the Court sent on 14 December 2015, Dr Ghosh referred to a number of other matters. First, Dr Ghosh sought an adjournment to allow her to pay her creditors. She stated she has “tendered full payment to Baycorp both in instalments or as a lump sum, but they have refused to accept payment as below”. With her email Dr Ghosh included an email sent by Mr Wilkinson on behalf of Baycorp to Dr Ghosh rejecting an offer made by Dr Ghosh to pay by instalments. This ground for obtaining an adjournment was not advanced by Mr Soon before me. In any event, I would not have accepted it as an arguable ground because, although it appears Baycorp did reject an offer to accept payment by instalments, it was not obliged to accept Dr Ghosh’s offer; and there is no evidence that Dr Ghosh tendered payment of the amount demanded in the bankruptcy notice.
Second, Dr Ghosh sought an adjournment until February 2016 pursuant to s.194 of the Legal Profession Uniform Law (NSW) (the Law) to “allow 30 days for me to pay the bills from the date I receive them”. Subsection 194(1) of the Law provides that a law practice must not commence proceedings to recover legal costs from a person unless a bill has been given for the legal costs, and the bill complies with the requirements of the Law and Uniform Rules. It is not arguable that s.194 applies to costs which a court orders a party to pay. Each court has its rules for the types of costs orders that may be made, and the assessment of those costs.
Third, Dr Ghosh stated that the bankruptcy notice was not served within six months of issue. That statement is not reasonably arguable. The bankruptcy notice was served by email on 28 October 2015, being the date of issue of the bankruptcy notice.
Fourth, Dr Ghosh stated the bankruptcy notice was issued contrary to s.134 of the Civil Procedure Act 2005 (NSW) (CPA). Even if it is assumed the CPA, a State Act, was capable of affecting the validity of a bankruptcy notice that had been validly issued under the Act, it is not arguable that s.134 of the CPA would apply to the bankruptcy notice that was issued against Dr Ghosh. Section 134 of the CPA deals with judgments or orders which are judgments or orders that are older than twelve years. The order and judgments on which the bankruptcy notice is founded are not over twelve years old.
Fifth, Dr Ghosh stated that “all judgments including Baycorp’s are not final, being on Appeal to the Supreme Court”. This does not raise an arguable ground for an adjournment or for resisting the creditor’s petition. That there is an appeal against a judgment or order of a court does not mean the judgment or order under appeal is not a final order or judgment. Further, as I have already noted, there is no evidence of the grounds on which Dr Ghosh has appealed the Local Court judgments; and there is no evidence Dr Ghosh has appealed the Bankruptcy Costs Order.
Sixth, Dr Ghosh stated that the application for a sequestration order that resulted in the Court making the Bankruptcy Costs Order was based on a default judgment for legal costs which Baycorp was not entitled to claim because, for a variety of asserted reasons, Baycorp was not entitled to claim the amount. Even assuming these matters are true, as Dr Ghosh herself states in her email, she paid the amount of the default judgment after Baycorp applied for a sequestration order based on that judgment; and there is no evidence Dr Ghosh has taken any action to set aside the default judgment on the basis of which Baycorp filed the creditor’s petition which resulted in the Court making orders on 1 October 2014 that included the Bankruptcy Costs Order.
Finally, Dr Ghosh stated there is an order issued by the “Credit Ombudsman all year not to serve me and not proceed with enforcement against me, and therefore will not be able to claim costs for their attendance at these proceedings”. There is no evidence of any such order or prohibition in relation to any of the steps Baycorp has taken to obtain the order and judgments on the basis of which the bankruptcy notice was issued.
Conclusions on arguable case for resisting creditor’s petition and adjournment application
For these reasons, Dr Ghosh has no reasonably arguable grounds of opposition to the making of a sequestration order, and therefore has no reasonable prospects of resisting the creditor’s petition, assuming Baycorp will be able to prove the matters it is required to prove under s.52(1) of the Act. It follows there would be no utility in granting an adjournment of Dr Ghosh’s application for an adjournment.
Conclusion
I am not satisfied Dr Ghosh provided a reasonable explanation for her not attending the hearing of the creditor’s petition on 17 December 2015. I am also not satisfied Dr Ghosh has any reasonable grounds for resisting the making of a sequestration order against her estate. And I am otherwise not satisfied it would be in the interests of justice to grant to Dr Ghosh the adjournment she seeks. For these reasons, her application for an adjournment is refused.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 9 February 2016
Key Legal Topics
Areas of Law
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Civil Procedure
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Commercial Law
Legal Concepts
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Abuse of Process
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Stay of Proceedings
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Res Judicata
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