Bradley-Meerwald v National Exchange Pty Ltd
[2007] FMCA 1876
•9 November 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BRADLEY-MEERWALD v NATIONAL EXCHANGE PTY LTD | [2007] FMCA 1876 |
| BANKRUPTCY – Annulment of sequestration order – principles – whether sequestration order ought not to have been made – discretionary factors. PRACTICE AND PROCEDURE – Non-compliance with orders to file and serve respondent – no appearance at hearing by respondent – natural justice hearing rule – respondent denied opportunity to be heard – dismissal for non-compliance and denial of natural justice. |
| Bankruptcy Act 1966 (Cth), s.153B(1) Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.7.04 Federal Magistrates Court Rules 2001 (Cth), r.13.03(2)(b) |
Cumins v Deputy Commissioner of Taxation for the Commonwealth of Australia [2007] WASCA 30
Kioa v West (1985) 159 CLR 550
Legge v Mackinlays [2007] FMCA 223
Mahmoud v The Owners’ Corporation Strata Plan No. 811 (No.3) [2006] FMCA 1742
R v University of Cambridge (1723) 1 Strange 557; (1723) 98 ER 698
Re Papps; Ex Parte Tapp (1997) 78 FCR 524
Ridge v Baldwin [1964] AC 40
University of Ceylon v Fernando [1960] 1WLR 223
| Applicant: | PATRICK TREVOR BRADLEY-MEERWALD |
| Respondent: | NATIONAL EXCHANGE PTY LTD |
| File number: | PEG 107 of 2007 |
| Judgment of: | Lucev FM |
| Hearing date: | 9 November 2007 |
| Date of last submission: | 9 November 2007 |
| Delivered at: | Perth |
| Delivered on: | 16 November 2007 |
REPRESENTATION
| Applicant: | Patrick Trevor Bradley-Meerwald in person |
| Respondent: | No appearance |
ORDERS
That the application be dismissed under r.13.03(2)(b) of the Federal Magistrates Court Rules 2001 (Cth) by reason of the Applicant’s failure to file and serve an affidavit evidencing compliance with order 2 of the orders made by the Court on 2 July 2007 on or before 4:00 pm 17 September 2007, as ordered by order 1 of the Court’s orders of 20 August 2007.
That the application otherwise be dismissed in any event.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 107 of 2007
| PATRICK TREVOR BRADLEY-MEERWALD |
Applicant
And
| NATIONAL EXCHANGE PTY LTD |
Respondent
REASONS FOR JUDGMENT
Application
This application was originally brought against David Tweed of National Exchange Pty Ltd. By order of the Court the name of the respondent was changed to read “National Exchange Pty Ltd”.[1]
[1] Order 1 of the Court’s orders of 2 July 2007.
The application sought an order annulling the applicant’s bankruptcy.[2]
[2] Bankruptcy Act 1966 (Cth), s.153B(1) (“Bankruptcy Act”).
Issues
The issues to be determined in this matter are as follows:
a)whether the applicant has complied with order 1 of the Court’s orders of 20 August 2007, and what follows if there has not been compliance with that order;
b)in particular, whether the non-compliance with order 1 of the Court’s orders of 20 August 2007 had the consequence that the respondent has not been served with any of the documents in relation to this matter, and has therefore been denied the opportunity to be heard; and
c)whether the applicant has met the requirements for the annulment of a sequestration order.
Orders
On 2 July 2007 the Court made the following orders:
(1)The name of the Respondent be amended to read “National Exchange Pty Ltd”.
(2)The Applicant within 21 days serve upon National Exchange Pty Ltd:
(a) a Form 11 notice;
(b) a copy of the Application filed in the Federal Magistrates Court on 23 May 2007;
(c) a copy of the Affidavit of Patrick Trevor Bradley-Meerwald filed in the Federal Magistrates Court on 23 May 2007; and
(d) a copy of this Order.
(3)The matter be adjourned to a further directions hearing on 20 August at 10.15 am.
On 20 August 2007 the Court made the following orders:
(1)The Applicant file and serve an affidavit evidencing compliance with Order 2 of the Orders made by the Court on 2 July 2007 on or before 4.00 pm on 17 September 2007.
(2)The Applicant file and serve on the Respondent any further affidavit(s) he intends to rely on at hearing on or before 4.00 pm on 17 September 2007.
(3)The Respondent file and serve a Response and any affidavit(s) it intends to rely on at hearing on or before 4.00 pm on 2 October 2007.
(4)The Applicant file and serve on the Official Receiver for and on behalf of the Official Trustee in Bankruptcy, a copy of this order and the Court’s order of 2 July 2007, on or before 4.00 pm 17 September 2007.
(5)On or before 4.00 pm on 2 November 2007 the Official Receiver for and on behalf of the Official Trustee in Bankruptcy file and serve an updated report under rule 7.04 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
(6)The Application be listed for hearing at 10.15 am on 9 November 2007.
Evidence
The applicant filed two affidavits in this matter. The first sworn on 23 May 2007 says as follows:
“seek an annulment from bankruptcy on the advice preventing a court order to confiscate my car due to a civil action brought about by David Tweed + National Exchange Pty Ltd.
Whose offer and conditions to buy shares in my name for a dollar more than the purchase price on the basis of one payment per annum spread over fifteen years with conditions that I revert the total shares over to him within four weeks in effect $100,487.37 for one payment of $8,413.00 without guarantees.
I totally rejected his offer and conditions in writing, suspecting him of being a confidence trixter. Confirmed later by published press and ASX broker reports. I owe no-one any money nor have I wronged any person.”[3]
(Copy typed from original without amendment.)
[3] Applicant’s Affidavit, sworn 23 May 2007.
Attached to the applicant’s affidavit sworn 23 May 2007 is a copy of a letter in similar terms to the affidavit addressed to the District Court of Western Australia, an undated extract from a newspaper with an article related to David Tweed (the article appears to be from the Inside Cover section of The West Australian), and a letter from a firm of solicitors enclosing copies of newspaper articles and broker reports concerning David Tweed.
In a further affidavit sworn on 13 September 2007 the applicant attaches a letter addressed to this Court, undated, in the following terms:
“I seek an annulment from Bankruptcy brought about by David Tweed and National Exchange Pty,Ltd.,making me an offer to buy shares held by me for a dollar more than the purchase price,on the basis of one payment per annum spread over fifteen years,with the condition that I turn over all shares to him within four weeks on receipt of his first payment.In essence $100,487.37 for one payment of $8,413.00.with this spread over Fifteen Year’s.This whole scheme aroused my suspicions as a Scam and one of a confidence trixter.I totally rejected and duly replied de nouncing this fiasco.This then prompted him to bring a court action ,stating that I signed a legal document, something that I’m totally unaware of.I have sinse been made aware of Broker and Press reports alerting the public of his unscrupulous methods in trying to swindle unsuspecting people of their investments and using his knowledge as a former lawyer,to bend the law to his advantage.I’am bewildered at the way all this has escalated and how the Law has permitted this to continue.
I know I’ve always endeavoured to walk the fine line, and obey the law,now at seventynine years of life’s experience to be duped by a Con of this nature is humiliating and degrading. I would like to walk free of worry.”[4]
(Copy typed from original without amendment.)
[4] Applicant’s Affidavit, sworn 13 September 2007
The application indicates that the annulment of bankruptcy sought is one dating from 14 December 2006 being bankruptcy number WA1377-6-0.
The applicant did not attach any formal documents relating to the bankruptcy to his affidavits.
An affidavit of Heljo Cameron, an officer in the Perth office of the Official Receiver, who acts for and on behalf of the Official Trustee in Bankruptcy in the bankrupt state of the applicant, sworn 21 June 2007, has been filed. Attached to that affidavit is a report[5] prepared under r.7.04 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).[6]
[5] “Official Trustee’s Report”.
[6] “FMC Bankruptcy Rules”.
The Official Trustee’s Report says, by way of background:
“The Bankrupt has advised that in 2004 he received an offer from National Exchange Pty Ltd (“the Company”) to purchase his AXA shares in instalments. He added that he wrote to the Company refusing their offer, but they kept pursuing him until he no longer had the means to pay his legal fees. The Company took out a judgment against the Bankrupt, arising from a breach of contract, which was issued in Victoria. This claim was not defended (it appears that a defence would have had to have been lodged through the Victorian Courts). However the Bankrupt maintains that as he did not sign a contract with National Exchange to sell his shares to them, no funds are owing to the Company. As he didn’t defend the judgment however and couldn’t pay the judgment sum, he declared himself bankrupt on advice from his solicitor. The date of the judgment is 22 February 2006.”[7]
[7] Official Trustee’s Report, para.1.
It also appears from the Official Trustee’s Report that shares held by the applicant in AXA and Macquarie Bank were sold prior to the date of bankruptcy, the latter possibly in contravention of an order made by the District Court of Western Australia. An investigation by the Official Trustee into that matter is continuing.[8]
[8] Official Trustee’s Report, para.1.3.
There is no evidence that the applicant filed and served an affidavit evidencing compliance with order 2 of the orders made by the Court on 2 July 2007 on or before 4:00 pm on 17 September 2007, or subsequently.
The applicant told the Court under oath that he had “sent everything I had to … [the respondent]”[9]. He went on however to say he could not swear to, or could not remember, whether he had sent the documents set out in order 2 of the orders made by the Court on 2 July 2007 and could not remember whether an affidavit had been filed with the Court about what he says he had sent to the respondent.[10]
[9] Transcript, p. 2.
[10] Transcript, p. 2.
There is no affidavit on the Court file from the applicant dealing with service on the respondent in accordance with the Court’s orders.
The Court further notes that the applicant was also required to file and serve on the Official Receiver a copy of the Court’s orders of 2 July and 20 August 2007. There was no evidence that the applicant did this, and the Official Receiver did not file and serve an updated report under r.7.04 of the FMC Bankruptcy Rules as required by order 5 of the Court’s orders of 20 August 2007.
The Court can only conclude that the applicant did not file and serve an affidavit in compliance with order 1 of the Court’s orders of 20 August 2007, and there is therefore no evidence of compliance with order 2 of the orders made by the Court on 2 July 2007, namely that the relevant documents be served on the respondent.
Unsurprisingly, the respondent did not appear at any of the Court hearings in this matter.
Non-compliance and a denial of an opportunity to be heard.
The Court will first deal with the first two of the issues referred to above[11]
[11] See para. 3(a) and (b) above.
Rule 13.03(2)(b) of the FMC Rules provides that this Court may, of its own motion, end a proceeding where a party fails to take step required by an order of the Court. In this case, the Court made orders on 2 July 2007 and 20 August 2007 requiring the applicant to serve the documents on the respondent and to file an affidavit evidencing that service. On the evidence, the Court considers that neither step, service nor the filing of an affidavit evidencing service, has been taken. There is no explanation as to why those steps have not been taken by the applicant. In those circumstances, the Court has little choice but to dismiss the application for non-compliance with the Court’s orders.
The dismissal for non-compliance is reinforced by the effect of the non-compliance. The respondent did not appear in these proceedings. As the Court has indicated above that is not surprising in circumstances where there is no evidence that the application, affidavits and other relevant documents were ever served on the respondent. The Court is satisfied that the respondent has been denied the opportunity to be heard in these proceedings by reason of the applicant’s failure to serve the respondent as ordered. The right to be given an opportunity to be heard runs deep in the Australian legal system and its ancestors.[12] In Kioa v West Mason J said:
“It is a fundamental rule of the common law doctrine of natural justice expressed in traditional terms that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it”.[13]
[12] R v University of Cambridge (1723) 1 Strange 557 at 567 per Fortescue J; (1723) 98 ER 698 at 704 per Fortescue J: “[T]he objection for want of notice can never be got over.” In University of Ceylon v Fernando [1960] 1WLR 223 at 232 the Privy Council spoke of natural justice requiring a knowledge of the nature of the issues and an opportunity given to state a case. In Ridge v Baldwin [1964] AC 40 at 132 Lord Hodson spoke of the right to be heard.
[13] (1985) 159 CLR 550 at 582 perMason J.
The respondent, were it here, would be entitled to say that it has a legitimate expectation that further administration and investigation of the applicant’s bankrupt estate by the Official Trustee might result in the recovery of assets or funds for the benefit of that estate, and therefore some return to it as the only creditor of that estate.[14]
[14] Official Trustee’s Report, para. 4. The respondent has lodged a proof of debt for $114,923.00: Official Trustee’s Report, para.4.
It would be a fundamental breach of the natural justice hearing rule for this Court to now make orders against the respondent. Further, where there have already been two orders not complied with concerning filing and serving of documents on the respondent and the filing of an affidavit to evidence service on the respondent, the Court considers it to be unfair that the applicant be given a further opportunity to remedy his failures.
The Court considers that the denial of natural justice, by reason of the failure to afford the respondent an opportunity to be heard, arising from the failure of the applicant to comply with the Court’s orders concerning service, is also an appropriate reason to dismiss the application.
Annulment of sequestration order – principles
The Court may annul a bankruptcy if it is satisfied the sequestration order ought not to have been made.[15]
[15] Bankruptcy Act, s.153B(1).
The onus is upon the bankrupt (the applicant) to show that the sequestration order ought not to have been made.[16]
[16] Legge v Mackinlays [2007] FMCA 223 at para. 26 per Lucev FM (“Legge”) citing Re Papps; Ex Parte Tapp (1997) 78 FCR 524 at 531 per O’Loughlin J.
The principles in relation to whether a sequestration order ought not to have been made have been summarised as follows:
“(a)the Court considers the case not only as disclosed at the time the sequestration order was made, but as it would be had all the true facts been before the Court;
(b)the true facts include those known at hearing of the annulment application to have existed at the time the sequestration order was made;
(c)an order should not be annulled unless the Court was in the circumstances bound not to make it;
(d)a bankrupt whose assets exceed debts at the date of the sequestration order will ordinarily be entitled to an annulment of bankruptcy, subject to the giving of undertakings to pay the costs of:
(i) the petitioning creditor, and
(ii) the administration by the Official Trustee,
and provided the assets are realisable, sufficient to pay the debt, within a relatively short time; and
(e)even if the Court is satisfied that a sequestration order ought not to have been made, it has a residual discretion not to annul the order.”[17]
[17] Mahmoud v The Owners’ Corporation Strata Plan No. 811 (No.3) [2006] FMCA 1742 at para. 55 per Lucev FM (wherein there is an extensive citation of the relevant authorities of the Federal Court and of this Court); Legge at para. 30 per Lucev FM.
In this case, it is not possible to come to a conclusion that the sequestration order ought not to have been made. The reasons for judgment giving rise to the judgment debt are not in evidence. Nor is there any evidence of the circumstances behind the making of the judgment, other than what is contained in the report of the Official Trustee. The applicant’s evidence does not advance the matter. He says that there was no agreement entered into, but does not deal with or rebut how it was that a court found that there was a breach of contract. The claim giving rise to the judgment was not defended, and there has been no application to set the judgment aside. Rather, the applicant declared himself bankrupt, seemingly on advice from his solicitor.[18]
[18] Official Trustee’s Report, para.1.
The applicant therefore seeks an annulment of bankruptcy where his voluntary declaration led to the bankruptcy, that bankruptcy being based on his inability to pay the judgment debt which he has never sought to set aside. Although the applicant claims he did not enter into a contract with the respondent, he fails to explain how it is that a court arrived at that view, and has not brought into evidence the relevant judgment. Rather, by a series of accusations supported by press clippings and broker’s reports which are not admissible as evidence, the applicant asserts that David Tweed, whose connection with the respondent is not explained in any admissible evidence, tricked him into entering into an agreement, and has somehow persuaded a court that such an agreement was entered into. There is no, or no, sufficient, admissible evidence to enable this Court to make findings in relation to the applicant’s accusation, and in particular, the Court is unable to determine what the true facts of the case were which might have been put before the Court at the time the sequestration order was made. There is nothing in evidence before the Court which would indicate that the sequestration order ought not to have been made.
In any event, the Court has a residual discretion as to whether a bankruptcy ought to be annulled.
In this case there are discretionary factors which indicate that the Court ought not exercise its discretion to annul the sequestration order. Those discretionary factors are:
a)that the sequestration order that was granted on the applicant’s own petition;
b)it was more than six months after the order was granted on the applicant’s own petition that an application was made to this Court to annul the bankruptcy;
c)no application has ever been made to set aside the judgment giving rise to the judgment debt; and
d)an application to set aside the judgment would now most likely be dismissed, the delay being so long that any application for an extension of time in which to apply to set aside the judgment would not be granted because of the respondent’s vested right to obtain the benefit of the judgment undisturbed.[19]
[19] See for example, Cumins v Deputy Commissioner of Taxation for the Commonwealth of Australia [2007] WASCA 30 at paras. 29-30 per Pullin JA.
Conclusion
The applicant:
a)did not comply with orders of this Court as to filing and service of relevant documents on the respondent and consequently, the respondent has been denied an opportunity to be heard in these proceedings; and
b)voluntarily declared bankruptcy, and has been unable to establish any circumstance indicating that the sequestration order ought not to have been made.
Therefore the application must be dismissed:
a)under r. 13.03(2)(b) of the FMC Rules for non-compliance with the orders of this Court;
b)in any event, because of the applicant’s failure to establish that the sequestration order ought not be made; and
c)on discretionary grounds.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: M Hewitt
Date: 16 November 2007
0
5
3