Blue Mountains City Council v Jeray
[2013] FCCA 859
•18 July 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BLUE MOUNTAINS CITY COUNCIL v JERAY | [2013] FCCA 859 |
| Catchwords: BANKRUPTCY – Creditor’s Petition – notice stating grounds of opposition to petition filed – no appearance by debtor at final hearing of petition –sequestration order made. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.33, 40(1), 43, 44, 52, 306 |
| Jeray v Blue Mountains City Council [2013] FCA 545 Jeray v Blue Mountains City Council [2013] FCCA 297 Rotstein & Associates Pty Ltd v Slaveski [2010] FCA 493 |
| Applicant: | BLUE MOUNTAINS CITY COUNCIL |
| Respondent: | IVAN JERAY |
| File Number: | SYG 466 of 2013 |
| Judgment of: | Judge Lloyd-Jones |
| Hearing date: | 5 July 2013 |
| Delivered at: | Sydney |
| Delivered on: | 18 July 2013 |
REPRESENTATION
| Solicitors for the Applicant: | Mr N. Arias-Alvarez of Marsdens |
| The Respondent: | The Respondent did not appear at the final hearing |
ORDERS
The Notice of Motion filed by the respondent debtor on 30 April 2013 be dismissed.
The Notice Stating Grounds of Opposition to the Creditor’s Petition filed by the respondent debtor be dismissed.
A sequestration order be made against the estate of Ivan Jeray
The applicant creditor’s costs, including reserved costs if any, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
A copy of this sequestration order be given to the Official Receiver in Sydney within 2 days of today.
The sequestration order made today be stayed for a period of 21 days from today.
The applicant creditor, within 2 days of today, send by express post to the respondent debtor a sealed copy of these order, the judgment of her Honour Jagot J in Federal Court Proceedings NSD968/2013, the judgment of his Honour Edmonds J in Federal Court Proceedings NSD2166/2012 and the judgment of his Honour Robertson J in Federal Court Proceedings NSD845/2013. The applicant creditor is also to engage a process server to attempt service of these documents forthwith.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 466 of 2013
| BLUE MOUNTAINS CITY COUNCIL |
Applicant
And
| IVAN JERAY |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a creditor’s petition (the “Petition”) filed on 11 March 2013 by the applicant creditor, Blue Mountains City Council (“BMCC”) against the respondent debtor, Ivan Jeray. The Petition first came before a registrar of this Court on 16 April 2013 and was referred to this Court on that day.
Background
It is convenient to outline a history of this and related proceedings involving BMCC and Mr Jeray. Mr Jeray has been involved in a number of proceedings against BMCC in both state and federal courts. Litigation commenced as early as 2008 in the NSW Land and Environment Court and has been ongoing ever since in various jurisdictions.
The Petition that is the subject of these proceedings is based on orders made by the High Court of Australia on 14 February 2011 by his Honour Heydon J dismissing Mr Jeray’s special leave application and awarding costs to BMCC. These costs were then taxed by a registrar of the High Court and assessed in the sum of $6,028.90. Further interest of $272.42 was claimed in the bankruptcy notice founding the Petition.
On 14 September 2012 BMCC applied and had issued a bankruptcy notice (BN 5792 of 2012) (the “First BN Notice”) which it served on Mr Jeray thereafter. However, shortly after serving the First BN Notice on Mr Jeray, BMCC became aware that the First BN Notice had been issued erroneously. The error made by BMCC was that they had registered the High Court Order and Certificate of Taxation as a judgment in the Local Court of NSW in proceedings 2012/00241653 on 3 August 2012 and relied upon that judgment to have the First BN Notice issued. However, the High Court Order and Certificate of Taxation were a “final order” for the purposed of s. 40(1) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”) and, by consent, the First BN Notice was set aside on 13 November 2012. The Local Court Judgment founding the First BN Notice was also set aside. It should be noted that on 1 May 2013 Mr Jeray sought to have the application to set aside to First BN Notice reopened and this application was referred to me. On 13 May 2013 I heard Mr Jeray’s application and on 16 May 2013 I dismissed his interim application with costs – judgment being Jeray v Blue Mountains City Council [2013] FCCA 297 where a significant part of the background material is contained. On 30 May 2013 Mr Jeray filed an application for leave to appeal that decision in the Federal Court. On 13 June 2013 the application for leave to appeal was dismissed by Jagot J.
BMCC sought to have another bankruptcy notice issued relying directly upon the High Court Order and Certificate of Taxation. On 20 November 2012 another bankruptcy notice (the “Second BN Notice”) in the sum of $6,301.32 was issued against Mr Jeray and subsequently served. Mr Jeray sought to have the Second BN Notice set aside in the Federal Court by application filed on 14 December 2012 (Proceedings NSD 2216/2012). Wall DR heard and dismissed Mr Jeray’s application on 13 February 2012. Mr Jeray subsequently sought to have Wall DR’s decision reviewed by a Judge of the Federal Court. His Honour Edmonds J heard and dismissed Mr Jeray’s application on 12 April 2013. Notwithstanding, BMCC filed the Petition on 11 March 2013. The proceedings came before Wall DR on 16 April 2013 and were referred to this Court to be dealt with on 3 May 2013. On 30 April 2013 Mr Jeray filed a notice of opposition to the Petition as well as an interim application seeking to vacate the hearing of the Petition on 3 May 2013 and a stay of the proceedings to allow mediation between the parties and to allow Mr Jeray to request BMCC to write off the debt and withdraw the proceedings in a council meeting.
At the commencement of the hearing I inquired of the respondent as to whether mediation of the proceedings was possible. The representatives of BMCC indicated that it was not an option they believed would bear any fruit. Mr Jeray went on to orally apply to the Court for a referral for pro bono assistance under Part 12 of the Federal Circuit Court Rules 2001 (Cth). I advised Mr Jeray there was little prospect of success in any referral, as well as of the limited circumstances in which the Court’s discretion would be exercised and such a referral made. I indicated that I would not make such a referral and the hearing of the Petition would proceed.
During the hearing Mr Jeray made substantial submissions about BMCC’s ability to waive debts and noted that they had done so before. I indicated that there was no power vested in this Court to compel BMCC to waive his debt.
Mr Jeray also raised issues in respect of the judgment debt founding the Petition and issues of fraud. He further referred to costs orders in other jurisdictions in his favour and the possibility of offsetting the Petition against those. I indicated that the submissions made and the concerns raised by Mr Jeray would have no effect on the issue before this Court. I then advised Mr Jeray that his other avenues of relief had been exhausted and the ultimate sanction would be sequestration if the debt was not paid by him. I indicated, given that the debt was barely above the threshold of $5,000, I would refer the Petition to mediation with the scope of the mediation limited to how the debt would be paid and no other issues. The representatives of BMCC objected to this course and raised the history between the parties and the other costs orders made against Mr Jeray that had not yet been quantified. However, on the basis of the mediation being limited in scope to how the debt would be paid it was not objected to by BMCC. Mr Jeray similarly indicated he was content with this avenue. Accordingly, I made orders that the Petition go to mediation on that limited basis and foreshadowed to Mr Jeray the likely consequences of the failure of the mediation, being a sequestration order being made against him. The orders made on that day were:
THE COURT ORDERS THAT:
1. The matter is referred to a Registrar in Sydney for mediation forthwith on a date to be fixed by the Registrar pursuant to Part 27 of the Federal Circuit Court Rules 2001 (Cth).
2. If mediation is unsuccessful the matter be re-listed for a directions hearing forthwith at a time to be fixed.
3. The respondent debtor’s interim application filed on 30 April 2013 be otherwise dismissed.
4. Costs be reserved.
THE COURT NOTES THAT:
5. The scope of the mediation to be conducted is limited to the timing and method of the payment of the debt that is the subject of these proceedings and must not extend beyond that.
Mr Jeray filed an interlocutory application and application for leave to appeal in the Federal Court against the orders of this Court made on 3 May 2013 referring the matter to mediation on 17 May 2013. This application was dismissed by Griffiths J on 31 May 2013 with costs – judgment being Jeray v Blue Mountains City Council [2013] FCA 545.
The mediation of the Petition was originally scheduled to occur on 5 June 2013, however, Mr Jeray indicated he would not be attending and the mediation was adjourned to 12 June 2013. On that day the parties appeared, but the matter was unable to be resolved and referred back to this Court.
On 21 June 2013 the Petition came before Judge Raphael for hearing at 2.15pm. There was no appearance by Mr Jeray and the representatives of BMCC indicated they were seeking an adjournment of two weeks to give Mr Jeray ample notice of the hearing. Judge Raphael made orders accordingly.
Hearing of Creditor’s Petition
The matter returned before this Court on 5 July 2013 for final hearing of the Petition. Mr Arias-Alvarez appeared on behalf of BMCC and there was no appearance by Mr Jeray. A few minutes prior to the Petition’s hearing listing time Mr Jeray sent a fax to the Registry stating the following:
Dear Sir,
…
I trust this letter and my previous letter addressed to the Court, dated 20 June 2013, will be brought to the attention of all judges appointed to this matter.
Further to my letter addressed to the Court, dated 20 June 2013, I wish to inform the Court that I have requested and not yet received a copy of the judgment from Jagot J in case no. NSD968/2013. Accordingly, I again request the Court not to bankrupt me but to adjourn case no. SYG466/2013 for eight weeks to enable me to receive the judgment by post and allow me a proper opportunity to commence “Show Cause” proceedings in the High Court regarding case nos. NSD845/2013 and NSD968/2013, as these cases question the bias of Lloyd-Jones J and the validity of the creditor’s petition and bankruptcy notice BN7569 in case no. SYG466/2013.
Given the Court is aware that I am an unrepresented litigant, I also wish to inform the Court I am unable to attend court because I feel threatened and unsafe when in the presence of the applicant’s legal representatives, the Marsdens Law Group. I have informed the applicant in writing that I will no longer communicate with or accept correspondence from the Marsdens Law Group due to their corrupt and threatening conduct and should their threatening conduct towards me continue, I will contact the police.
Please note that I may require the Court to produce a copy of this letter at any future proceedings. Please also note that I cannot be contacted on the facsimile number by which this letter was sent.
…
At the commencement of the hearing on 5 July 2013 the matter was called in the precinct of the Court, but there was no appearance by or on behalf of Mr Jeray. Mr Arias-Alvarez indicated he would address the letter noted above at [12] and indicated to the Court that the proceedings Mr Jeray was referring to and seeking to appeal were decisions which had already been addressed by this Court and there would be no utility in allowing Mr Jeray any further extension of time. Mr Arias-Alvarez then indicated he was ready to proceed with the hearing of the Petition.
Mr Arias-Alvarez indicated there was an irregularity with the Petition, but in his submission not a fatal irregularity. At paragraph 4 of Part 1 of the Petition it states that the respondent debtor failed to comply on or before 6 February 2013 with the requirements of Bankruptcy Notice BN 7569 served on him on 23 November 2012, but this date was incorrect as District Registrar Wall had extended time for compliance with the Bankruptcy Notice to 13 February 2013. Mr Arias-Alvarez submitted that this defect could be cured by ss. 33 and 306 of the Bankruptcy Act, but for the abundance of caution an authorised officer of BMCC swore a supplementary affidavit verifying paragraph 4 of the Petition giving the correct date of the act of bankruptcy. Accordingly, Mr Arias-Alvarez sought the leave of the Court to amend the date of the act of bankruptcy on the Petition from 6 February 2013 to 13 February 2013.
Mr Arias-Alvarez indicated he sought to rely on the following evidence in support of the making of a sequestration order:
a)The Affidavit of Nelson Mauricio Arias-Alvarez sworn 3 May 2013;
b)The Affidavit of Robert Greenwood sworn 25 June 2013;
c)The Affidavit of Alan Dean sworn 2 July 2013;
d)The Affidavit of Emma MacFarlane sworn 4 July 2013 (in respect of search);
e)The Affidavit of Emma MacFarlane sworn 4 July 2013 (in respect of notification); and
f)The Affidavit of Robert Greenwood sworn 4 July 2013.
Mr Arias-Alvarez submitted that in relation to the debt and bankruptcy notice, on 14 February 2011 an order for costs was made against the respondent debtor in the High Court of Australia. On 29 May 2012 a Certificate of Taxation was issued by the High Court assessing the amount payable to the applicant creditor by the respondent debtor in the sum of $6,028.90. Subsequently, a bankruptcy notice was issued in relation to the Certificate of Taxation. A copy of that Bankruptcy Notice was sent by express post to the respondent debtor on 22 November 2012, of which proof of service is evidenced by the Affidavit of Service of Emma MacFarlane sworn 6 March 2013 and filed in this Court on 13 March 2013. Copies of the relevant High Court Orders and Certificate of Taxation were annexed to that Affidavit.
In respect of the act of bankruptcy on 14 December 2012, Mr Arias-Alvarez submitted the respondent debtor obtained an order extending time for compliance with the Bankruptcy Notice to 6 February 2013, initially, then to 13 February 2013, subsequently. On 13 February 2012 the respondent failed to comply with the Bankruptcy Notice which is the date of the act of bankruptcy by the respondent debtor.
Mr Arias-Alvarez submits that on 11 March 2013 BMCC presented the Petition that is before the Court today and that was made first returnable on 16 April 2013. The affidavit of service of the Bankruptcy Notice and other supporting affidavits were filed on the same day as the Petition. The Petition and consent of trustee were served on the respondent debtor on 12 April 2013. The non-compliance with the Bankruptcy Notice is set out at Part 1 of the Petition (as amended) and paragraphs 1, 2 and 3 verified by the Affidavit of Robert Greenwood sworn 25 June 2013 and filed 26 June 2013. Paragraph 4 of the Petition is verified by the Affidavit of Emma MacFarlane sworn 6 March 2013 and filed on 11 March 2013.
Mr Arias-Alvarez contended that service of the Petition was carried out on 12 April 2013 as stated in his affidavit sworn and filed on 3 May 2013. In respect of final search the Affidavit of Emma Macfarlane sworn 4 July 2013 was relied on, in respect of final debt the Affidavit of Robert Greenwood sworn 4 July 2013 was relied on and in respect of service the Affidavit of Alan Dean sworn 2 July 2013 and Affidavit of Emma MacFarlane sworn 4 July 2013 were relied on.
Mr Arias-Alvarez submitted that a sequestration order should be made against the estate of the respondent debtor.
Consideration
The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act, and subject to the jurisdiction to make sequestration orders under s.43 of the Bankruptcy Act and the conditions on which a creditor may petition under s.44 of the Bankruptcy Act being met.
Section 52(1) of the Bankruptcy Act provides as follows:
(1) At the hearing of a creditor's petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient),
(b) service of the petition; verified by an Affidavit of Service of
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
Section 43 of the Bankruptcy Act provides that the Court may make a sequestration order when:
a) a debtor has committed an act of bankruptcy; and
b) relevantly, at the time when the act of bankruptcy was committed, the debtor was personally present or ordinarily resident in Australia.
Section 44 of the Bankruptcy Act provides that a creditor’s petition is not to be presented unless:
a) the debt is more than $5,000;
b) the debt is a liquidated sum due at law and payable immediately; and
c) the act of bankruptcy on which the petition is founded was committed within six months before the presentation of the petition.
The Applicant Creditor is also obliged by the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) to put before the Court affidavits:
a)verifying the petition;
b)as to search of the records of the Court and the Federal Court as to any application in relation to the Bankruptcy Notice;
c)of service of the Bankruptcy Notice;
d)of service of documents required to be served under FCC (Bankruptcy) Rules, r.4.05;
e)of search of the National Personal Insolvency Index no earlier than the day before the hearing date for the petition; and
f)of debt on which the creditor still relies as owing.
Some of the requirements under the FCC (Bankruptcy) Rules overlap with those under the Bankruptcy Act.
The matters stated in the Petition presented on 11 March 2013 are supported by the:
a)Affidavit of Robert Greenwood sworn 25 June 2013 verifying paragraph 1-3 of the Petition; and
b)Affidavit of Emma Petrie sworn 6 March 2013 verifying paragraph 4 of the Petition.
The Petition was served on the respondent debtor noting the Notice of Appearance filed by Ivan Jeray on 16 March 2013. I am satisfied the debt on which the applicant creditor relies is still owed. I am also satisfied that the respondent debtor has committed an act of bankruptcy.
At the time the act of bankruptcy was committed the respondent debtor:
a)was personally present in Australia; and
b)ordinarily resident in Australia.
The debt owing by the respondent debtor is $6,301.32 being a sum more than $5,000. The $6,301.32 debt is a liquidated sum, payable immediately.
I am satisfied the act of bankruptcy on which the Petition is founded occurred on 13 February 2013 being within six months of the presentation of the Petition which occurred on 11 March 2013. I note that the date on the Petition is incorrectly marked as 6 February 2013, however this error is cured by s.33 and s.306 of the Bankruptcy Act.
I am satisfied that the Bankruptcy Notice BN 7569 of 2012 was served on the Respondent Debtor on 23 November 2012 attaching a copy of the order and certificate of taxation founding the Bankruptcy Notice of Heydon J dated 14 February 2011 (Affidavit of Emma MacFarlane sworn 6 March 2013).
I am satisfied that at least five days before the date fixed for the hearing of the Petition the:
a)Petition;
b)a copy of the affidavit verifying the petition;
c)a copy of the affidavit of search of court records; and
d)a copy of the affidavit of service of the bankruptcy notice:
were served on the respondent debtor (Affidavit of Nelson Mauricio Arias-Alvarez sworn 2 May 2013).
I am satisfied the National Personal Solvency Index was searched on 4 July 2013 and that:
a)details of references in that Index to the respondent debtor are before the Court;
b)there is a statement that there are no details of a debt agreement, about the debt agreement on which the applicant creditor relies, in the Index on the day when the Petition was presented;
c)there is a statement that there are no details of a debt agreement, about the debt agreement on which the applicant creditor relies, in the Index on the day when the search was made.
A copy of the relevant extract of the Index is attached to the Affidavit of Emma Macfarlane sworn 4 July 2013.
There is an Affidavit of final Debt of Robert Greenwood sworn on 4 July 2013 being a person with knowledge of the facts sworn the day before the hearing of the Petition that the debt on which the applicant creditor relies, is still owing.
Accordingly I am satisfied that the statutory requirements for the making of a sequestration order against the respondent debtor have been met. Further, I am not satisfied there would be any utility in a long adjournment of the Petition as sought by the respondent debtor. There are no grounds raised therein that warrant such an adjournment and, given the non-appearance by the applicant at the hearing of the Petition on 5 July 2013 and previously on 21 June 2013, no other grounds have been made in support.
In Rotstein & Associates Pty Ltd v Slaveski [2010] FCA 493 his Honour Bromberg J stated at [17]:
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.
In the proceedings before this Court, I note the Petition was filed on 11 March 2013, approximately four months before the date of the sequestration order. In that period, the proceedings have been adjourned on a number of occasions as well as having been referred to mediation, which was ultimately unsuccessful. I see no utility in allowing a further adjournment of the Petition, however, I am minded to grant a 21 day stay of the sequestration order to allow Mr Jeray to commence any appeal proceedings he may wish to.
Rule 13.03C(1)(d) of the Federal Circuit Court Rules 2001 (Cth) state:
13.03C Default of appearance of a party
(1) If a party to a proceedings is absent from a hearing (including a first court date), the Court may do 1 or more of the following:
…
(d) if the absent party is a party who has made an interlocutory application or a cross-claim – dismiss the interlocutory application or cross-claim;
…
Mr Jeray has on foot a notice of opposition to the Petition as well as an interim application. I note that Mr Jeray was aware of the listing of the proceedings and faxed correspondence to the Court’s Registry to indicate he would not be attending. I further note that the Petition was adjourned on 21 June 2013 by Judge Raphael due to Mr Jeray’s non-appearance. Having had regard to Mr Jeray’s interim application and notice of opposition I can see no reasonable prospect of their success and dismiss them pursuant to rule 13.03C(1)(d) of the Federal Circuit Court Rules 2001 (Cth).
Accordingly, a sequestration order should be made against the estate of the respondent debtor and the applicant’s costs paid from the estate. Further, a stay of 21 days should be granted in respect of the sequestration order to allow Mr Jeray time to lodge any appeal he so wishes.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Associate:
Date: 18 July 2013
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