Boyce v McElligott (No.2)
[2012] FMCA 909
•25 June 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BOYCE & ORS v McELLIGOTT (NO.2) | [2012] FMCA 909 |
| BANKRUPTCY – Creditor’s petition. |
| Bankruptcy Act 1966, ss.2, 52, 52(3) |
| Wren v Mahony (1972) 126 CLR 212 |
| First Applicant: | PETER GERRARD BOYCE |
| Second Applicant: | ALAN WILLIAM CLARKE |
| Third Applicant: | SIMONE ELIZABETH PEARCE |
| Fourth Applicant: | GEOFFREY JOHN BARR |
| Respondent: | LORAIN RONDA McELLIGOTT |
| File Number: | BRG 420 of 2012 |
| Judgment of: | Jarrett FM |
| Hearing date: | 25 June 2012 |
| Date of Last Submission: | 25 June 2012 |
| Delivered at: | Brisbane |
| Delivered on: | 25 June 2012 |
REPRESENTATION
| Counsel for the Applicants: | Mr M Jones |
| Solicitors for the Applicants: | Butler McDermott Lawyers |
| The Respondent appeared in person |
ORDERS
A sequestration order be made against the estate of Lorain Ronda McElligott.
The applicant creditors’ costs be taxed and paid from the estate of the respondent debtor in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.
The Court notes that the date of the act of bankruptcy is 16 April 2012.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 420 of 2012
| PETER GERRARD BOYCE |
First Applicant
| ALAN WILLIAM CLARKE |
Second Applicant
| SIMONE ELIZABETH PEARCE |
Third Applicant
| GEOFFREY JOHN BARR |
Applicant
And
| LORAIN RONDA McELLIGOTT |
Respondent
REASONS FOR JUDGMENT
Ex tempore
This is an application for a sequestration order in respect of the estate of the respondent, Lorain Ronda McElligott. The applicants are the partners of a law firm that trade under the name Butler McDermott. To say that there is a history of litigation between these parties is an understatement. The litigation has taken many forms in many fora but, ultimately, has reached its crescendo here.
It commenced many years ago when the applicant and a company through which she operated a property development business, Westwood Enterprises (Qld) Pty Ltd engaged the services of Mr Boyce for certain legal work. There was work done. There were accounts rendered for that work and ultimately the solicitors came to the view that they were owed a certain amount by the company. They chose to attempt to recover that sum using a statutory demand issued under the Corporations Act2001.
Ms McElligott was aware of the issue of the demand but took no steps in respect of it. It was defective because a prescribed warning notice which was to be included with the notice was not included. Her failure or the company’s failure to comply with the demand in the way in which it needed to do so under the Corporations Act 2001 led the solicitors to apply for the winding up of the company in the Supreme Court of Queensland.
On the first occasion that application came before the Court it was adjourned at the request of the respondent. Ultimately, it came on for hearing and determination before Daubney J. His Honour made the winding up order. The hearing did not take very long – the respondent complains that it was only five minutes – but it is apparent that there were attempts by her to raise what she saw as a genuine dispute about whether the debt was truly owed by the company to the solicitors.
One thing led to another and there were two applications for the termination of the winding up. Those applications were determined by P. Lyons J in the Supreme Court. One application made by the respondent’s mother and the other by her. Each was unsuccessful. But in the course of those hearings the dispute which the respondent before me wishes to agitate against the solicitors was referred to although there were no, it seems, determinations about it. The time for determinations about it had passed.
Eventually, the matter came before the Court of Appeal and the Court of Appeal was asked to reconsider the winding up order. The application before the Court of Appeal was an application to extend the time within which to appeal the making of the winding up order. It failed and the respondent before me was ordered to pay the applicant’s costs of and incidental to the application. By and by, those costs were the subject of assessment and a fixed sum became due from the respondent to the applicants.
There was an application to stay the order made by the Court of Appeal in respect of costs. That was determined by Atkinson J. Her Honour determined that she had no jurisdiction to make the orders that the respondent wanted staying the enforcement of those orders. More importantly, her Honour decided that even if she had that jurisdiction she would not exercise it. No occasion arose for doing so.
Before the application to stay enforcement of the Court of Appeal judgment was made the respondent brought an application to extend time within which to bring an application for special leave to appeal the decision of the Court of Appeal to the High Court of Australia. In her application for special leave to appeal, or at least her proposed application, she makes complaint about the way in which the primary judge, Daubney J, conducted the winding up hearing.
The first complaint was that the learned judge did not properly qualify the ability and/or preparedness of the applicant to represent the company prior to granting her leave to do so. The gravamen of that ground was that despite being asked to let Ms McElligott represent the company his Honour was wrong to do so because he should have known that she was not up to the task.
The second complaint was that having granted her leave to represent the company he failed in his duties to her as a self-represented litigant and she should have received much more assistance from his Honour than she did.
The third complaint was that the hearing only took no more than five minutes.
The fourth was that his Honour was not alive to the omission of the prescribed warning statement on the statutory demand and that omission must necessarily have affected the outcome of the winding up application.
The fifth was said to be failing to recognise the applicant’s request to represent the company and lack of preparedness was as a direct result of “not having had the benefit of the prescribed warning statement with regards to its significance and the nature of statutory demands”.
The sixth:
Failing to be familiar with the intent and letter of the law as regards the 2007 amendment.
There are some other complaints about failing to give a fair hearing and allowing himself to be misled by the legal representative of the other party.
In the application for special leave it was said that the Court of Appeal erred because one of the very questions it was asked to determine (whether the omission of the prescribed warning statement was significant) was decided against the applicant by the Court of Appeal. The second ground is that:
Concluding that the absence of the warning statement has been held not to require the setting aside of a statutory demand.
Then there is the repetition of some of the grounds raised against the primary judge.
That application in the High Court failed. Atkinson J, in her decision on the respondent’s stay application in respect of the Court of Appeal’s costs order, formed the view that it was most likely bound to fail and that was one of the factors which informed her when she decided that, even if she had jurisdiction, she would not stay enforcement of the costs order.
Not content with that, the respondent has now brought another application to the High Court, again out of time, in respect of which there will need to be an extension of time. In that application the complaint seems to be directed specifically against the costs order and the grounds upon which the respondent relies all seem to be, having regard to section 2, paragraph (1) through to (5) of the application for special leave, factual matters which were the subject of determination by the various Courts through which this matter has passed.
To say that the second application for an extension of time within which to bring an application for special leave to appeal to the High Court has little prospect of success seems to me to understate the position.
The gravamen of the respondent’s opposition to this application is that there is a genuine dispute between she and Mr Boyce about whether the company owed Mr Boyce and his firm money for the legal work that it did. Implied in her submissions and in her affidavits, and perhaps she says it expressly, is that the amounts charged are too much, unnecessary and she has not been given, or the company has not been given, appropriate credits for payments that have been made from time to time.
The bankruptcy notice in this matter was issued at the request of the petitioning creditors and used as its foundation the costs order made by the Court of Appeal. There was an application to set aside that bankruptcy notice determined by me. The basis of the argument raised by the respondent then is the same as the argument she raises now. I dismissed the application to set aside the bankruptcy notice. The bankruptcy notice has not been complied with and an act of bankruptcy has been committed as of 16 April, 2012.
A petitioning creditor who proves an act of bankruptcy is prima facie entitled to the making of a sequestration order and subject to the formalities of s.2 of the Bankruptcy Act1966 being complied with, a sequestration order ought ordinarily be made. The respondent can seek to demonstrate that there are reasons for which a sequestration order ought not be made. One of them is to demonstrate that there is no genuine debt owed by the respondent debtor to the petitioning creditor and the authorities like Wren v Mahony (1972) 126 CLR 212 – and there are many others – demonstrate that a Court exercising bankruptcy jurisdiction has the power to “go behind” a judgment to determine whether a debt is truly owed.
In this case, the allegations made by the respondent about Mr Boyce’s conduct, the allegations of fraud about which I make no findings whatsoever, the allegations of misrepresentation and the allegations that he has used, somehow, these proceedings for his own ends are now the subject of an application to the Federal Court of Australia. Last Thursday the respondent filed an application and statement of claim wherein she seeks some relief, although it is ill-defined, against Mr Boyce. Interestingly, however, no relief is sought against Mr Clarke, Ms Pearce or Mr Barr who are the other members of the relevant firm and who have the benefit of the judgment from the Court of Appeal.
Ms McElligott is not a lawyer and for that reason one need not consider the statement of claim that has been filed in the Federal Court as one might consider a statement of claim that has been drawn and settled by Counsel. But even taking a benevolent approach to the document it is nothing more than a narrative of facts, argument, speculation and conclusion constructed by her, not doubt on a genuine basis, but which, in my view, does very little to reveal any cause of action at all against Mr Boyce.
There may be good reason for the respondent to think that she has a cause of action against Mr Boyce and, indeed, a cause of action might exist. But having regard to the documents that have been filed it is difficult to see one. But if a genuine claim exists and if the claim is one which is likely to sound in some form of compensation or damages then that is something which, no doubt, if I make a sequestration order, her trustee in bankruptcy will seriously consider as he or she is bound to do.
To go behind the judgment of a Court of Appeal would be to determine that the costs order made by the Court of Appeal was wrongly made, that there was no reason to make the costs order or a different order as to costs ought to have been made. I am aware that the costs order is the subject of an application to extend time within which to bring an application for special leave to appeal to the High Court. But it seems to me that there is nothing in any of the arguments that have been raised which would suggest that the Court of Appeal’s costs order is wrong. The appeal to the Court of Appeal was unsuccessful. This was ordinary commercial litigation. The ordinary rule is that costs follow the event. The Court of Appeal made such an order and there is nothing to suggest that the order is likely to be set aside, discharged or varied because, for all intents and purposes, the Court of Appeal is the final Court of Appeal in this State subject to applications for special leave.
For all of those reasons I am not satisfied I ought to go behind the judgment of the Court of Appeal. I am satisfied of the formal requirements set out in s.52 of the Bankruptcy Act1966. I am satisfied that I ought to make an order sequestrating the estate of the respondent, Lorain Ronda McElligott, and I so order.
[Recorded – not transcribed]
The application for stay is refused. I see no basis upon which I would grant a stay either generally or under s.52(3) of the Bankruptcy Act1966. The reason for which a stay was requested was so that proceedings could be commenced in the High Court. If it is to be an appeal from the decision which I have just given then there is no basis upon which one might appeal my decision in the High Court. It would have to go to the Federal Court. But assuming that it would go to the Federal Court, once an appeal has been lodged an application for stay might be considered at that point.
It is conceivable that there might be an application in the High Court for a writ of prohibition. Perhaps that is what the respondent thought to refer to as an injunction. But again, it remains to be seen whether that is done. In those circumstances, and having regard to the reasons that I have already delivered, there being very little doubt attendant upon the entitlement of the petitioning creditors to a sequestration order, the stay is refused.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Jarrett FM delivered on 26 June, 2012.
Date: 26 September 2012