Bka Practice Co Pty Ltd v Nida

Case [2021] FCCA 334

FEDERAL CIRCUIT COURT OF AUSTRALIA

BKA Practice Co Pty Ltd v Nida [2021] FCCA 334  

File number(s): MLG 712 of 2019
Judgment of: JUDGE A KELLY
Date of judgment: 25 February 2021
Catchwords: BANKRUPTCY – application for review of registrar’s decision for sequestration of bankrupt’s estate – where petitioning creditor provided legal services to bankrupt – where proceeding brought for recovery of legal fees – where default judgment obtained – where protracted proceedings to set aside default judgment – where application for judicial review dismissed – where dismissal affirmed on appeal – applicable principles – de novo review – where debtor shown to have committed an act of bankruptcy at a time when personally present in Australia – where conditions upon which creditor may petition are satisfied – where proof of matters required for making of sequestration order satisfied – where Court not satisfied by bankrupt that she was able to pay her debts – whether Court should go behind judgment – applicable principles – where Court was not satisfied by bankrupt of genuine dispute as to warrant going behind judgment or of existence of any cross-demand or set-off – where Court not otherwise satisfied by bankrupt of other sufficient cause why discretion should be exercised to dismiss petition – application for review dismissed.
Legislation:

Bankruptcy Act 1966 (Cth), ss 5, 43, 44, 52, 109

Civil Procedure Act 2010 (Vic), ss 29, 31

Federal Circuit Court of Australia Act 1999 (Cth), s 104

Federal Circuit Court Rules 2001 (Cth), r 20

Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), sch 1  
Cases cited:

Bryant v Commonwealth Bank of Australia (1996) 134 ALR 460

Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632

Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18

Nida v BKA Practice Pty Ltd [2020] VSC 158

Nida v BKA Practice Pty Ltd (No 2) [2020] VSC 770

Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132

Re Sarina, ex parte Wollondilly Shire Council (1980) 30 ALR 266

Re Sarina, Council of the Shire of Wollondilly (1980) 32 ALR 596

Sandell v Porter (1966) 115 CLR 666

Stratton v Bowles (No 2) [2015] FCA 43

Totev v Sfar (2008) 167 FCR 193
Number of paragraphs: 70
Date of hearing: 10 February 2021
Place: Melbourne
Counsel for the Applicant Mr Edward Moon
Solicitors for the Applicant Belleli King
Respondent: Ms Roona Nida (In person)

ORDERS

MLG 712 of 2019
BETWEEN:

BKA PRACTICE CO PTY LTD
Applicant
AND:

ROONA NIDA

Respondent

ORDER MADE BY:

JUDGE A KELLY

DATE OF ORDER:

25 FEBRUARY 2021

THE COURT ORDERS THAT:

1.The application for review filed on 12 January 2021 be dismissed.

2.The respondent pay the applicant’s taxed costs of the application for review, such costs to be paid pursuant to s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

REASONS FOR JUDGMENT

JUDGE A KELLY

INTRODUCTION

  1. On 12 January 2021, the respondent bankrupt, a barrister, filed an application for review of a registrar’s decision made on 3 December 2020.…

Continue reading Bka Practice Co Pty Ltd v Nida

Sign in free to access the full text

Details
AGLC
BKA Practice Co Pty Ltd v Nida [2021] FCCA 334
Case
[2021] FCCA 334
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Justice Kelly considered an application by Bka Practice Co Pty Ltd (the applicant) seeking the sequestration of the estate of Nida (the respondent) following the respondent's failure to comply with a bankruptcy notice. The dispute centred on a debt of $22,812.64, arising from a default judgment obtained by the applicant in the Magistrates' Court of Victoria. The respondent contended that the judgment was obtained by fraud, that the bankruptcy notice was defective, and that she was owed money by the applicant, thereby raising a genuine dispute or a viable cross-demand.

The court was required to determine whether the respondent had committed an act of bankruptcy while personally present or ordinarily resident in Australia, whether the petitioning creditor had established a debt exceeding the statutory minimum, and whether there was any sufficient cause to dismiss the creditors' petition. Specifically, the court had to assess the validity of the respondent's claims regarding fraud in the judgment, defects in the bankruptcy notice, and the existence of a set-off or counterclaim.

Justice Kelly found that the respondent had committed an act of bankruptcy on 31 January 2019, when her application to set aside the bankruptcy notice was dismissed. The court was satisfied that the debt was owing and immediately payable, and rejected the respondent's submissions regarding fraud, defective notice, and any entitlement to money from the petitioning creditor. The court also found no sufficient cause to dismiss the petition, noting that the respondent had not established a genuine dispute as to her liability or a viable cross-demand, set-off, or counterclaim, despite numerous attempts to challenge the judgment and the bankruptcy proceedings.

The application for sequestration was dismissed.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

For the reasons that follow, the application should be dismissed. In short, I am satisfied that the applicant has committed an act of bankruptcy and that she did so at a time when she was personally present or ordinarily resident in Australia. Despite the bankrupt’s submissions to the contrary, I am satisfied that the petitioning creditor has established by judgment that there is a debt owing to it by the bankrupt in an amount greater than the statutory minimum, being a debt for a liquidated sum which was immediately payable within a period of six months before the presentation of the creditors petition. I reject the bankrupt’s submissions: that such judgment was obtained by fraud; that the bankruptcy notice upon which reliance was placed was defective, or; that she is owed monies by the petitioning creditor. Finally, I am not satisfied by the bankrupt of any other sufficient cause why the court should exercise its discretion to dismiss the petition including the existence of any genuine dispute as to her liability for the debt relied upon in this case or of any viable cross-demand, set-off or counterclaim.BACKGROUND By way of overview, the matter has a significant procedural history in this court, the Magistrates Court of Victoria and the Supreme Court of Victoria (including an appeal of the decision of an Associate Justice). While the dates of particular proceedings in various courts have overlapped in several instances, it is convenient to separate the proceedings below.Bankruptcy proceedings On 25 September 2018, the petitioning creditor issued a bankruptcy notice against the bankrupt, which notice was served personally on 26 September 2018. The bankruptcy notice referred to a debt of $22,812.64 relating to a default judgment obtained by the applicant against the respondent in the Magistrates’ Court of Victoria on 4 September 2018 (judgment). On 18 October 2018, the bankrupt instituted a proceeding in the Federal Court of Australia seeking orders that the bankruptcy notice be set aside. This proceeding was dismissed. On 31 January 2019, a registrar dismissed the respondent’s application to set aside the bankruptcy notice and accordingly, she committed an act of bankruptcy on that day. On 14 March 2019, the applicant presented its creditors petition in this court seeking an order for the sequestration of the bankrupt’s estate pursuant to s 43 of the Bankruptcy Act 1966 (Cth), which petition was served personally upon her on that date. The act of bankruptcy relied upon was her failure to comply with the requirements of the bankruptcy notice. Since that date, the matter has been listed for hearing before a registrar of this court on 2 May 2019, 23 May 2019, 20 June 2019, 3 October 2019, 14 November 2019, 12 December 2019, 20 February 2020, 2 April 2020, 14 May 2020, 2 July 2020, 13 August 2020, 8 October 2020, and 3 December 2020 when the order was made for sequestration of the bankrupt’s estate. I note that on 20 February 2020, an order was made extending the life of the petition for a period of 24 months from the date on which it was presented; namely, 14 March 2019.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The bankruptcy notice referred to a debt of $22,812.64 relating to a default judgment obtained by the applicant against the respondent in the Magistrates’ Court of Victoria on 4 September 2018 (judgment). On 18 October 2018, the bankrupt instituted a proceeding in the Federal Court of Australia seeking orders that the bankruptcy notice be set aside. This proceeding was dismissed. On 31 January 2019, a registrar dismissed the respondent’s application to set aside the bankruptcy notice and accordingly, she committed an act of bankruptcy on that day. On 14 March 2019, the applicant presented its creditors petition in this court seeking an order for the sequestration of the bankrupt’s estate pursuant to s 43 of the Bankruptcy Act 1966 (Cth), which petition was served personally upon her on that date. The act of bankruptcy relied upon was her failure to comply with the requirements of the bankruptcy notice. Since that date, the matter has been listed for hearing before a registrar of this court on 2 May 2019, 23 May 2019, 20 June 2019, 3 October 2019, 14 November 2019, 12 December 2019, 20 February 2020, 2 April 2020, 14 May 2020, 2 July 2020, 13 August 2020, 8 October 2020, and 3 December 2020 when the order was made for sequestration of the bankrupt’s estate. I note that on 20 February 2020, an order was made extending the life of the petition for a period of 24 months from the date on which it was presented; namely, 14 March 2019. Without descending into the detail of the circumstances giving rise to each of those hearings, suffice to say that registrars of the court had been satisfied from time to time that the bankrupt had instituted proceedings either to: (a) set aside the judgment; (b) seek judicial review of certain orders made in the Magistrates Court of Victoria; (c) appeal the refusal of the application for judicial review, and; (d) most recently, to recover compensation for alleged breaches of the Civil Procedure Act 2010 (Vic) by the petitioning creditor and its counsel. Ultimately, on 3 December 2020, a registrar declined a further application for an adjournment and made an order for the sequestration of the bankrupt’s estate. The registrar did so in circumstances where the bankrupt had apparently all but exhausted the available challenges to set aside the judgment and held that the application for recovery of compensation pursuant to the Civil Procedure Act 2010 had not been brought during the pendency of the underlying civil proceeding and where no extension of time to do so had been granted. On 12 January 2021, the bankrupt filed an application for the review of the registrar’s decision. On the same date the applicant also filed a notice to creditors of her application for review. While the application for review as signed by the applicant was dated 24 December 2020, it was not filed for some weeks thereafter and, as the petitioning creditor submitted, was not served until Friday, 5 February 2021. After the close of business on 5 February 2021, the petitioning creditor was served with two affidavits sworn or affirmed (in different cases) by the bankrupt on 24 and 30 December 2020 respectively. On the face of her application, the application for review was listed for directions the following Monday, 8 February 2021.

Ratio Decidendi

Legal Principle Established

On 20 November 2020, an appeal from that decision was dismissed by Ginnane J who examined in detail each of the grounds of appeal: Nida v BKA Practice Pty Ltd (No 2) [2020] VSC 770. In particular, as relevant to the question of apprehended bias, Ginnane J found that the bankrupt “was aware of the grounds of an apprehended bias application after the first order was made on 9 May 2018 because she was represented that day, but failed to do anything about it”: [88]. His Honour was not satisfied that any special circumstances were made out as to justify an extension of time and so dismissed the appeal: [90]-[91].Sequestration order Following publication of the reasons for judgment dismissing the appeal from the refusal of the application for an extension of time in which to seek judicial review, a registrar of this court heard the application for the making of a sequestration order against the bankrupt. At that hearing on 3 December 2020, the bankrupt sought a further adjournment in order to prosecute a summons filed in the Magistrates Court proceedings on 2 December 2020 seeking compensation and costs from the petitioning creditor and its barrister as a result of alleged breaches of the Civil Procedure Act 2010 (Vic). The registrar observed that the application was bought under s 29 of the Civil Procedure Act which required that any such application be made prior to the finalisation of the civil proceeding to which it related and that an extension of time may be sought under s 31 of that Act (which had not been granted). The registrar noted that in the Magistrates Court summons, which was returnable on 8 December 2020, the bankrupt had neither quantified the amount of her claim, nor supported it by any affidavit. The registrar also identified that the bankrupt now claimed, amongst other things, that she had not been served with court documents relied upon by the petitioning creditor in support of the application to obtain the default judgement and that the petitioning creditor had falsely claimed that those documents had been served. The registrar accepted the principles upon which it may be appropriate to adjourn a petition in circumstances where a debtor had a cross-claim against the creditor which, if successful, would exceed the judgment debt and cited Stratton v Bowles (No 2) [2015] FCA 43 (Stratton). As concerned such principles, the registrar correctly recognised that the debtor must establish that he or she had a bona fide and reasonably arguable claim which was not established merely by the production of a statement of claim in a separate proceeding or by pointing to such litigation. The registrar recognised that there must be sufficient evidence or other material to show that it satisfied both criteria to justify an adjournment and that to “demonstrate that it is reasonably arguable or of sufficient substance may require prima facie verification of the key factual elements as well as demonstrating legal tenability”: Stratton, [2015] FCA 43, [42] (Beach J).