Benk v Anderson

[2017] FCCA 426

FEDERAL CIRCUIT COURT OF AUSTRALIA

BENK v ANDERSON [2017] FCCA 426

Catchwords:
BANKRUPTCY – Application to annul – bankruptcy based on two judgment debts that remained unsatisfied – no basis for concluding that the bankruptcy ought not to have been ordered – application dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), s.153B

Cases cited:

Bulic v Commonwealth Bank of Australia Ltd [2007] FCA 307
Compton v Ramsay Health Care Australia Pty Ltd [2016] FCAFC 106
Nathan v Burness(No 2) [2011] FCA 289
Re Cook (1946) 13 ABC 245
Re Ditfort; Ex parte Deputy Commissioner of Taxation (NSW) (1988) 19 FCR 347
Re Frank; Ex parte Piliszky (1987) 16 FCR 396
Re Williams (1968) 13 FLR 10
Re Scott [1975] Qd R 125
Rigg v Baker (2006) 155 FCR 531

Applicant: MICHAEL GARY BENK

Respondent: KEITH ANDERSON

File Number: MLG 2144 of 2016

Judgment of: Judge Wilson

Hearing date: 15 February 2017

Date of Last Submission: 15 February 2017

Delivered at: Melbourne

Delivered on: 9 March 2017

REPRESENTATION

Applicant in person
Counsel for the Respondent:	Mr K. Baker

Solicitors for the Respondent: M + K Lawyers Group Pty Ltd

ORDERS

1. The application filed 4 October 2016 is dismissed.

2. Within 30 days of the date of this order, the applicant pay the costs of the respondent.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2144 of 2016

MICHAEL GARY BENK

Applicant

And

KEITH ANDERSON

Respondent

REASONS FOR JUDGMENT

Introduction

1. By initiating application filed 4 October 2016, the applicant

   
   

   Michael Gary Benk (“the applicant”) sought orders for the annulment of his bankruptcy effected by sequestration order made on

   
   

   8 February 2013.[1]

   [1] Order of Federal Magistrate Connolly dated 8 February 2013 in proceeding MLG834/2012.

2. The sequestration order was based on judgment debts totalling $7,494.01 (“the judgment debt”) made up of two components,

   
   

   namely –

   a)the sum of $1,204.20 ordered by the Magistrates Court of Victoria on 14 January 2012 plus interest of $289.01; and

   b)the sum of $6,000.00 ordered by the local Court of New South Wales at Parramatta on 2 April 2012.[2]

   [2] Affidavit of Scott McKenzie Fitzgibbon affirmed 16 July 2013 filed in proceeding MLG834/2012 at p.2.

3. At no stage has the applicant paid the respondent Keith Anderson

   
   

   (“the respondent”) the whole or part of the judgment debt.

   
   

   The applicant has not applied to set aside the judgment debt in whole or in part. The applicant has not adduced any evidence of his own solvency.

4. On 2 August 2013 another judge of this Court dismissed the applicant’s application for an order setting aside the sequestration order.[3]

   [3] Order of his Honour Judge O’Dwyer dated 2 August 2013.

5. Before me, the applicant contended he had fresh evidence of fraud implicating the respondent and that he wanted orders made annulling his bankruptcy so that he could pursue other litigation against the respondent.

Synopsis

1. For the reasons that follow I dismiss this application.

Short factual narration

1. The venom that has pervaded the skirmishing between the applicant and the respondent, whether in the respondent’s personal capacity or in his capacity as owner and controller of Autron Pty Ltd (“Autron”) is of considerable intensity and longevity. While the full details do not bear directly on the outcome of this case, a recital of the more important aspects of that disputation puts this proceeding in context. Let me endeavour to shortly state it.

2. In 2007 or thereabouts, the applicant carried on business under the name and style “Technique Car Auto and Security”. In April 2007 Autron and the applicant entered into an agreement pursuant to which Autron agreed to sell and the applicant agreed to purchase cruise control products manufactured by Autron on terms set out in a supplier and programmer lease agreement made between the applicant and Autron on 10 April 2007.

3. Under the terms of that agreement, the applicant was required to pay for items Autron sold him prior to delivery of the relevant product.

   
   

   The agreement also provided that Autron was entitled to immediately terminate the agreement if the applicant defaulted in paying Autron any amount and such default continued for seven days.

4. Autron alleged that in January 2009 the applicant purchased goods from it, paying by cheque in the sum of $484.00, which cheque was dishonoured. Autron further contended that such default constituted a breach of the agreement and after that breach remained un-remedied for seven days, Autron was entitled to terminate the agreement,

   
   

   as Autron did. Autron alleged other monetary breaches. In all, Autron alleged the applicant owed it $1,527.96 plus costs.

5. Autron sued the applicant for that amount and entered default judgment against the applicant on 4 March 2009 for $1,527.96 plus interest of $12.14 and costs of $596.00 less a sum paid of $537.66 making a total sum of $1,598.44.[4] The applicant was not legally represented during that litigation.

   [4] Affidavit of Scott McKenzie Fitzgibbon affirmed 20 August 2012 at exhibit “SMF-3” in proceeding MLG834/2012.

6. The applicant applied for a rehearing.[5] On 12 October 2009

   
   

   Magistrate Braun refused to make an order setting aside the default judgment and ordered the applicant in that case to pay Autron’s costs fixed at $381.00.[6] The applicant was not legally represented on the hearing of that application either.

   [5] Affidavit of Scott McKenzie Fitzgibbon affirmed 20 August 2012 at exhibit “SMF-4” in proceeding MLG834/2012.

   [6] Ibid.

7. On 7 December 2009, the applicant commenced a separate proceeding against Autron’s solicitors, MacPherson + Kelly (“M + K”).[7]

   
   

   The applicant prepared court documents in that case himself. In that litigation the applicant sought an amount that he stated was

   
   “minimum $100,000”

   , allegedly due on account of what he called “professional misconduct”.[8] In the statement of claim (a term the applicant gave to a court document in that litigation that was not a statement of claim in any sense of the word) the applicant asserted the various persons at M + K had bullied, harassed and intimidated the applicant and that those persons had engaged in unethical behaviour. The allegations in that document were scandalous. Court documents in that case did not reveal what happened to the case involving the applicant and M + K. On any construction of the authorities,

   
   

   that litigation was squarely an abuse of process.

   [7] Affidavit of Scott McKenzie Fitzgibbon affirmed 20 August 2012 at exhibit “SMF-7” in proceeding MLG834/2012.

   [8] Ibid.

8. On 1 March 2010 the applicant filed a complaint with the

   
   

   Legal Services Commissioner (“LSC”) in respect of conduct of the respondent and Alexander James Martin.[9] In that complaint the applicant alleged each engaged in “bullying, extortion & harassment”, “obstruction of justice”, “raised voices” and other matters.[10]

   [9] Affidavit of Scott McKenzie Fitzgibbon affirmed 20 August 2012 at exhibit “SMF-8” in proceeding MLG834/2012.

   [10] Ibid.

9. On 10 January 2011 the LSC wrote to M + K stating the LSC was satisfied there was no reasonable likelihood that the Victorian Civil and Administrative Tribunal would find M + K guilty of professional misconduct or of unsatisfactory professional conduct and the LSC dismissed the applicant’s complaint.[11]

   [11] Ibid.

10. Subsequently, the applicant commenced a proceeding in the

    
    

    Local Court of New South Wales at Parramatta.[12] The affidavit material in this case revealed that the case title in the Local Court proceeding was Michael Benk v Keith Anderson. Keith Anderson, the respondent in this case, was at all relevant times Autron’s owner and controller. The cause of action in the case in the Local Court was allegedly publishing false and misleading material to obtain an advantage.

    
    

    On 2 April 2012 local Magistrate Farnan ordered the applicant to pay the respondent’s costs of that proceeding fixed in the sum of $6,000.00.

    [12] Affidavit of Scott McKenzie Fitzgibbon affirmed 20 August 2012 at exhibit “SMF-2” in proceeding MLG834/2012.

11. The applicant has not appealed against the order made by the

    
    

    Local Court of New South Wales. In the hearing before me the applicant told me he was considering an appeal in that case. To date, none has been filed.

12. Based on the amount ordered in favour of the respondent by the

    
    

    Local Court of New South Wales and by the Magistrates Court of Victoria, the respondent served a bankruptcy notice on the applicant.[13] The applicant failed to compromise the sum stated in the bankruptcy notice, whether by agreement or payment, following which the applicant was taken to have committed an act of bankruptcy.

    [13] Affidavit of Scott McKenzie Fitzgibbon sworn 10 July 2012 at exhibit “A” in proceeding MLG834/2012.

13. The respondent served a creditor’s petition[14] upon the applicant that came on for hearing before a Registrar of this Court on 23 August 2012. Registrar Burns referred the hearing of the petition to a

    
    

    Federal Magistrate.

    [14] Creditor’s petition filed 12 July 2012.

14. On 8 February 2013 Federal Magistrate Connolly made a sequestration order against the estate of the applicant.

15. The applicant applied on 6 June 2013 for orders setting aside the sequestration order made against his estate.[15] On 2 August 2013

    
    

    his Honour Judge O’Dwyer dismissed that application and ordered the applicant’s costs to be paid out of the applicant’s estate.

    [15] Interim application filed by Michael G Benk on 6 June 2013.

16. On 4 October 2016 the applicant commenced this proceeding. In it he sought orders annulling his bankruptcy relying upon s.153B of the Bankruptcy Act1966 (Cth) (“the Act”). He relied on his affidavit sworn 3 October 2016. In it the applicant made a collection of assertions that I found very difficult to understand as they were borderline incoherent. Let me trace the more important of them.

17. The applicant stated –

    4.  The Court was highly erroneous to have made the sequestration order and dismissed the Applicant’s submissions, irrespective of the supporting materials provided to the Court.

    5.  The Court had failed to see the habitual pattern of the Respondent being so obsessive of seeking bankruptcy against the Applicant …

    6.  The Court was also erroneous to fail to determine whether I was solvent at the time prior to sequestration order being made, which I was and still am. This is proven by fighting off the Respondent’s deliberate business sabotage attacks,

    
    

    the Respondent’s solicitor’s abusive, violent & illegal conduct against myself, while paying off and making outright a minimum of 5 pieces of assets, as well as salvaging business expansion plans deliberately attacked by the Respondent.[16]

    [16] Affidavit of Michael Gary Benk sworn 3 October 2016 at p.2.

18. Other equally scandalous allegations were scattered through the bankrupt’s affidavit of 3 October 2016. Two further illustrations bear reciting.

19. Paragraph 26 read as follows –

    As a result, the Court & the Administration of justice does face being brought to significant disrepute, not once, but twice.

    
    

    Which in Layman’s terms the Court bares having “egg on their face” for dismissing the true facts stated in my submissions and making orders based on the submissions made by the Respondent’s Legal Representatives.[17]

    [17] Affidavit of Michael Gary Benk sworn 3 October 2016 at p.4.

20. Paragraph 27 read as follows –

    The Court has made and kept me bankrupt based on false and misleading information for the purposes of satisfying a dismissed claim … Not only this, the Court has destroyed my dignity, forced me into further financial hardship and destroyed my life for absolutely no valid or viable reason whatsoever.[18]

    [18] Ibid.

21. Importantly for the purposes of this present application under s.153B of the Act, the applicant offered no evidence, let alone any independent evidence, of his solvency. He bore the burden of adducing that evidence as was canvassed in such cases as Bulic v Commonwealth Bank of Australia Ltd[19] and Nathan v Burness(No 2).[20]

    [19] [2007] FCA 307.

    [20] [2011] FCA 289.

22. Section 153B of the Act empowers the court to annul a sequestration order if the court is satisfied that a sequestration order ought not to have been made.

23. In assessing whether a “sequestration order ought not to have been made”, certain guiding principles have been expressed over many years by federal courts. I shall do my best to set them out as efficiently as possible –

    a)

    first, the court is entitled to consider not only the case as disclosed at the time the order was made, but as the case would have been disclosed had all the true facts been before the court on the hearing of the order. Three leading authorities have so stated. They are Re Cook[21] (Clyne J), Re Williams[22] (Gibbs J as the

    
    

    Chief Justice of the High Court then was) and Rigg v Baker[23] (“Rigg”) (French J, as the Chief Justice of the High Court then was).

    b)

    second, facts that have come into existence since the making of the sequestration order are not relevant to the question whether the sequestration order ought to have been made. Several cases at state and federal levels stand for that proposition including

    
    Re Scott

    ,[24] Re Ditfort; Ex parte Deputy Commissioner of Taxation (NSW)[25] and Rigg.

    [21] (1946) 13 ABC 245, 259.

    [22] (1968) 13 FLR 10, 23.

    [23] (2006) 155 FCR 531 at [61].

    [24] [1975] Qd R 125, 126.

    [25] (1988) 19 FCR 347, 350.

24. In this case, the sequestration order was made by Federal Magistrate Connolly on 8 February 2013. The facts as have been set out chronologically above up to 8 February 2013 could have been put before the Court in addition to the facts that were in fact put before the Court. The case as “would have been disclosed had all the true facts been put before the court” (as the authorities commencing with

    
    Re Cook

    above reveal) told of unsatisfied orders obtained by the respondent against the applicant, the absence of evidence of the applicant’s solvency and an extraordinary array of vexatious and harassing, separate and ill-considered pieces of litigation involving the applicant, the respondent and the respondent’s solicitors M + K. Between the dates on which the two judgments were entered against him and the making of the sequestration order, the applicant devoted a significant amount of time and effort towards activities that did not involve either paying the sums due to the judgment creditor or applying to set aside the judgment debts. But in so far as steps to set aside any judgment debt were concerned, the applicant did in fact apply to his Honour Judge O’Dwyer to set aside the sequestration order and his Honour dismissed that application in August 2013.

25. No evidence was put before me to the effect that the applicant took

    
    

    any steps to set aside the judgement of the Local Court of

    
    

    New South Wales. That judgment was entered almost five years ago. It is now a moot point whether the applicant would, or even could, be now heard if he made an application to set aside that judgment, it being so long after the event.

26. Section 153B of the Act speaks of whether a sequestration order “ought” not to have been made. In Rigg, the Full Court embraced the observations of Fisher J in Re Frank; Ex parte Piliszky[26] where Fisher J held that the word “ought” was of imperative significance and that a sequestration order should not be annulled unless the court was bound not to make it and even so, a residual discretion exists not to annul the sequestration order.

    [26] (1987) 16 FCR 396.

27. I am far from persuaded that the sequestration order ought not to have been made. In my judgment, ample basis existed for the making of the sequestration order. None of the judgment debts have been paid.

    
    

    The applicant failed in an attempt to set aside the sequestration order. Based on no new facts, he attempted in this litigation to do the same thing, but by a mildly different pathway by seeking to annul his bankruptcy.

28. In the course of debate with the applicant I raised with him whether,

    
    

    in reality, he was seeking to go behind either of the two judgment debts on which his bankruptcy was based. My Associate printed (in court) and handed to the applicant a copy of the Full Court’s decision on point in Compton v Ramsay Health Care Australia Pty Ltd.[27] The applicant received a copy of the case that was provided to him but he did not read it, despite being invited to do so nor did he make any submissions in respect of it.

    [27] [2016] FCAFC 106.

29. In the circumstances, the elements of s.153B of the Act have not been satisfied in the circumstances of this case. I dismiss the application made in paragraph 1 of the applicant’s initiating application.

30. In paragraph 2 the applicant sought an order removing his name from the National Personal Insolvency Index (“NPSI”). By force of the orders I have made in this case, the applicant remains a bankrupt.

    
    

    His name should remain on the NPSI. No basis exists for the making of the order sought in paragraph 2 of his initiating application.

31. In paragraph 3 of his initiating application, the applicant sought a costs order in relation to costs that he asserted he incurred in the two pieces of litigation that founded the judgment debt. His submission was remarkable because the judgment debt carried with it costs against the applicant. No basis was shown for an order being made that costs be paid in his favour. I dismiss the application made in paragraph 3 of the initiating application.

32. In paragraph 4 of his initiating application, the applicant sought an order that the respondent pay him the costs of this proceeding on an indemnity basis. Again, that application was extraordinary. I reject it. The applicant failed in this case. Costs should follow the event.

    
    

    Far from ordering the respondent to pay the applicant’s costs, I order the applicant to pay the respondent’s costs of this litigation and for the applicant to do so within 30 days.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Wilson

Date: 9 March 2017