Brady v Official Trustee in Bankruptcy (No. 5)
[2002] FMCA 100
•31 May 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BRADY v OFFICIAL TRUSTEE IN BANKRUPTCY (No. 5) | [2002] FMCA 100 |
| PRACTICE AND PROCEDURE – Application for review of decision of Registrar refusing to file application to set aside judgment – matter completed at first instance and on appeal – application alleged to be on grounds not considered previously – application found to be abuse of process. |
Federal Magistrates Act 1999 (Cth) s.104(2)
Bankruptcy Act 1966 (Cth) s.176
Federal Magistrates Court Rules 2001 Part 1, r.1.05(3)(b), Part 2 r.2.06(1)(a), Part 20
Federal Court Rules O.35R7(2), (3)
Smallacombe v Lockeyer Investments Co Pty Limited (1993) 42 FCR 92
Colgate Palmolive Co v Cussens Pty Limited (1993) 46 FCR 225
Hanave Pty Limited v FLOT Pty Limited [1998] FCA 1429
Dr Martens Australia Pty Limited v Figgins Holdings Pty Limited (No 2) [2002] FCA 602
Stephenson v Garnett (1898) 1QB 677
Walter v Gardiner (1992-1993) 177 CLR 378
| Applicant: | PETER JOHN BRADY |
| Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY |
| File No: | WZ 7 of 2001 |
| Delivered on: | 31 May 2002 |
| Delivered at: | Perth |
| Hearing Date: | 27 May 2002 |
| Judgment of: | Raphael FM |
REPRESENTATION
| For the Applicant: | Mr P Brady in person |
| Solicitors for the Respondent: | Mr T Carey of AGS |
ORDERS
Application dismissed
Applicant to pay the respondent’s costs pursuant to Part 21.10 of the Federal Magistrates Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
WZ 7 of 2001
| PETER JOHN BRADY |
Applicant
And
| OFFICIAL TRUSTEE IN BANKRUPTCY |
Respondent
REASONS FOR JUDGMENT
The applicant, PETER JOHN BRADY, seeks review of the decision of Registrar Jan to refuse to permit the filing of an application seeking to set aside the judgment of Federal Magistrate McInnis in proceedings between these parties numbered WZ 7 of 2001. The application for review is made pursuant to Part 20 of the Rules of the Federal Magistrates Court and under s.104(2) of the Federal Magistrates Act 1999 (Cth).
This application represents another round in a lengthy, and still ongoing, dispute between these parties. The proceedings started in March 1999 when Mr Brady filed an application and statement of claim in the Federal Court seeking orders under s.176 of the Bankruptcy Act 1966 (Cth). The genus of that application was a loan made by Mr Brady to two persons, later bankrupts, for use in the development of a goldmine in Norseman District in Western Australia. The loan was secured by a trader’s bill of sale over certain chattels which included the mining lease itself. The respondent did not recognise the applicant’s security and sold the chattels at what the applicant considered to be a significant undervalue. Eventually the dispute was transferred to the Federal Magistrates Court where on
1 May 2001 a four-day hearing commenced before McInnis FM. The applicant was there represented by senior and junior Counsel.
On 22 August 2001 the Federal Magistrate delivered judgment awarding the applicant damages of $17,550.00, interest and costs. The respondent advised the Federal Magistrate that it had issued offers of compromise in the form of Calderbank letters to the applicant some considerable time prior to the hearing of the case. His Honour called for written submissions to be made to him and on 21 September 2001 gave judgment on costs. The judgment accepted that the respondent had made to the applicant an offer in excess of the amount which he received following the hearing and gave to the respondent its costs from 14 March 2000 to 23 August 2000 on a party and party basis and from 24 August 2000 upon a solicitor and own client basis.
The judgment for costs was given on 21 September 2001 and prior thereto, on 12 September, the applicant filed a Notice of Appeal from the decision of FM McInnis. Following the decision of the Federal Magistrate upon costs the applicant filed a second Notice of Appeal on 10 October. On 12 November 2001 the applicant sent a document to the Registry entitled “Motion to set aside the judgment”. Correspondence followed between the applicant and the registry staff until 17 January 2002 on which date the applicant sent a letter in the following form addressed to the Deputy Registrar:
“Re Set Aside Motion WZ 7/01
I apologise for not responding yesterday.
I do desire and do believe the above should be heard particularly due to after discovered evidence.
However in acknowledgment of the desire for court efficiency and because the new evidence will be available to appeal 433/01
I request and/or give this authority for the “Set aside motion” to be discontinued.
Yours faithfully
PJ Brady”
The “set aside motion” was not proceeded with.
On 12 February 2002 Mr Brady’s appeals against the decisions of McInnis FM were heard by Carr J. His Honour handed down his decision dismissing both appeals on 28 March 2002. On 30 April 2002 Mr Brady sought to revive the Notice of Motion. This was done by letter dated 29 April 2002. The letter was received by Registrar Jan and responded to in the following form:
“Dear Mr Brady
Re Peter John Brady v Official Receiver File No WZ 7 of 2001
I refer to your letter of 29 April 2002 requesting “your early attention would be appreciated…”.
The contents of your letter are not clear and it would seem that you are intending to revive the “motion” lodged in November 2001 which was withdrawn by you.
If your intent is that the documents received recently are to be treated as a fresh motion then I must exercise my discretion under Rule 2.06(1)(a) to refuse to accept them for filing as this particular action has been completed and your appeal(s) against the judgment(s) of Federal Magistrate McInnis to the Federal Court have been unsuccessful. Accordingly, I return the documents to you.”
Mr Brady replied on 4 May as follows:
“Set aside motion FMC WZ 7/01
I APOLOGISE FOR THE URGENCY OF THIS FAX
I am being threatened with severe punitive action by the respondents which could well be averted by the above.
To recap just a little
On Monday last I sent you a fax advising of my intentions and followed up with three copies of the “set aside” motion which
You would have received on Tuesday last 1/5/02
Imperatively it is essential I avoid the scenario that followed the original lodgment in November last year.
If it is required that I must support the application please let me know as soon as possible. There are many facets not readily observable which I submit support the prompt hearing of this motion.
May I say again the matter is urgent due to proposed actions of the respondent.
Yours faithfully
P J Brady”
Mr Brady wrote a further letter to the Registrar dated 7 May but received on the 6th. This letter makes the point that Mr Brady was seeking a revival of the Notice of Motion because in his facsimile of
17 January 2002 he was “temporarily conceding”. The letter also states:
“Generally I believe it is most significant that the basis of the set aside motion is completely different to the appeal.”
That letter was responded to by the Registrar on 6 May 2002 who said inter alia:
“It seems to me that the purpose of your “set aside” motion is to take a second bite at the cherry and achieve a result which you were not able to do so in the appeal proceedings. Judgment(s) has been entered in WZ 7 of 2001 and appeal proceedings in relation to this matter have been completed. Any interlocutory proceedings to attempt to set aside the judgment(s) are tantamount to an abuse of process. It could also be classified as frivolous. For example, you appear to be complaining that the Magistrate was incorrect in stating you had appeared in person because you were in Norseman that day. The statement had nothing to do with whether or not you were present in court that day. The statement was to record that you were acting for yourself (“in person”). Accordingly, I reaffirm my decision under Rule 2.06(1)(a) to refuse to accept the fresh “motion” papers for filing.
As this affects the respondent, I intend to provide it with copies of my recent letters. It is now inappropriate for me to be corresponding with you on this issue and it would be appreciated if you do not correspond any further on this issue. May I suggest again that you seek proper legal advice.”
On 13 May 2002 the applicant lodged this application for review.
Although not given notice by Mr Brady, the respondents attended on the hearing of the application and I was assisted by submissions from Mr Carey. Mr Carey submitted that the application was out of time because the time for review set out in Part 20 Rule 20.01(1)(c) is seven days. It is my view that there were two decisions of the Registrar. The first was made on 1 May and communicated by letter to Mr Brady on that day. However, the decision was then “reaffirmed” in the letter dated 6 May 2002. The use of the phrase “reaffirm” signifies that the Registrar reconsidered whether or not he should file the application in the light of Mr Brady’s representations and decided yet again not to do so. It is that decision which Mr Brady seeks to have reviewed and in my view the application is within time.
A review of the Registrar’s decision must proceed by way of a hearing de novo (see Rule 20.03(a)). This was pointed out to Mr Brady and the matter did proceed on that basis.
Mr Brady submits there are three grounds upon which he believes the orders of Federal Magistrate McInnis should be set aside. The first is that he is described in the cover sheet to the Judgment as being “in person”. He states that when Federal Magistrate McInnis handed down his judgment he was not in the court but was in Norseman. I understand this to be a reference to the handing down of the Judgment in relation to costs, but in any event I agree with the Registrar’s comment that this reference is to the representation of Mr Brady at the hearing and not his physical presence. Mr Brady, in the hearing before me, conceded that this was not a strong point, a concession well made.
The second ground of the application was that:
“The orders or proposed orders given by His Honour Magistrate J McInnis on 21 September 2001 be set aside by virtue of Federal Court Order 35 Rule 7 Sub-Rule (2)(b) being derived from Federal Magistrate’s Court Rules Schedule 3 Rule 1.05 Part 2 the order being obtained by fraud.”
The motion itself is a hybrid application and affidavit of some five pages. Apart from this reference to fraud set out above there is no particularisation of the allegation. Allegations of fraud are very serious matters and are not treated lightly by the court. The court would expect that for such an application it should be supplied, at the very least, with an affidavit, which clearly sets out the basis of the allegation and the evidence supporting it. A mere assertion is not enough. In the course of his submissions before me Mr Brady said that he accepted that his fraud claim was “weak” and was “not really pressed”.
The third ground of the notice will not, to my mind, be strengthened by my setting it out at length in these reasons. That is because it was more clearly articulated by Mr Brady in his own submissions. The basis seems to be that at no time before the decision of Federal Magistrate McInnis did Mr Brady provide the court with evidence of the amount of money which he had expended in terms of costs on the case before the letter of offer was made. Mr Brady sees this as important because he believes that if that evidence was admitted it would show that the offer made in the offers of compromise were less than what he believes he recovered from Federal Magistrate McInnis. This comes about because Federal Magistrate McInnis when interpreting the offer made a calculation of approximately $2,950.00 for those costs. If Mr Brady could establish that the figure was very much more than that then he may well be correct in arguing that the Calderbank letter did not produce what the respondents said it produced as a payment to him by way of damages. It was to avoid this type of problem that the Federal Court in cases such as Smallacombe v Lockeyer Investments Co Pty Limited (1993) 42 FCR 97, Colgate Palmolive Co v Cussens Pty Limited (1993) 46 FCR 225, Hanave Pty Limited v FLOT Pty Limited [1998] FCA 1429 and comprehensively in Dr Martens Australia Pty Limited v Figgins Holdings Pty Limited (No 2) [2002] FCA 602 were reluctant to award indemnity costs in cases where “Calderbank” letters were written on the basis of an all inclusive offer. This is not to say that Federal Magistrate McInnis did not have the discretion to do what he did. That has been accepted by Carr J in the appeal.
Mr Brady submits that this evidence was not placed before Federal Magistrate McInnis because he did not respond to the Federal Magistrate’s r equest for submissions on the question of costs. He does, however, accept that he raised this matter with Carr J on the appeal and sought to file the evidence. His Honour dealt with the matter [122] and [123]:
“[122] At the hearing of the appeal the appellant sought to put into evidence some evidence of the costs and expenses he had incurred. In particular, he sought to rely on a photocopy of a letter dated 7 May 1999 to his then solicitor which listed some of those expenses.
[123] For the same reasons as I have given earlier in relation to the appellant’s attempt to adduce further evidence in the appeal, I decided that the evidence was not admissible.”
I have looked at the file. I find that Mr Brady did make submissions on costs to McInnis FM. These did not include the “evidence” of this expenditure prior to the letter of offer although there was no reason why it could not have done so.
Federal Magistrates Court Rule 2.06 is in the following form:
2.06Registrar may refuse to accept document
(1) A Registrar may refuse to accept the document for filing if:
(a)The document appears on its face to be an abuse of process or frivolous, scandalous or vexatious…
When he came before me Mr Brady sought to argue that abuse of process was exclusively defined by Butterworths Australian Legal Dictionary and that definition was in the following form:
“The unjust or unfair use of a procedure or process of the court. Abuse of process includes instituting or maintaining proceedings that will clearly fail, proceedings unjustifiably oppressive or vexatious in relation to the defendant, and generally any process that gives rise to unfairness.”
Mr Brady maintained that there was no authority which indicated that “having two bites of the cherry” constituted an abuse of process.
In Stephenson v Garnett (1898) 1QB 677 the English Court of Appeal dealt with a case in which a Judge in the County Court set aside a deed which had been entered into between the parties to litigation in respect of the plaintiff’s costs because he found it to have been obtained by misrepresentation. No sooner was that done than the affected defendant commenced proceedings in the High Court for a declaration that he had been released from the judgment debt and costs. Their Honours unanimously ordered that the statement of claim be struck out. Collins LJ said:
“The Judge heard the evidence and adjudicated upon the question raised. The very same question which is raised in this action was decided by the Judge and that lets in the inherent jurisdiction of the High Court, as appears from the cases which have been cited to us, to stay the action as frivolous and vexatious and an abuse of the process of the Court.”
Of course, in Mr Brady’s case no evidence has been heard, but the reason for that is that Mr Brady did not put it before Federal Magistrate McInnis and Carr J, in the exercise of his discretion, did not permit it to be raised as new evidence on the appeal. It is not for me to go behind that decision.
The High Court of Australia considered a similar type of case in Walton v Gardiner (1992–1993) 177 CLR 378 and at 393 Mason CJ, Deane J and Dawson J said:
“Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.”
Mr Brady brings this application under Federal Magistrate Court Rules 16.05(ii) which states:
“(ii) The court may vary or set aside its judgment order
after it has been entered if:
(a) The order is made in the absence of a party; or
(b) The order is obtained by fraud.”
Mr Brady also relies on O.35R7 of the Federal Court Rules. He says that these Rules are imported into Federal Magistrates Court Rules by virtue of FMC R.1.05(3)(b) and Part 2 of Schedule 3 to those Rules. Federal Court O.35R7(3) is in the following form:
“[Clerical mistake] A clerical mistake in a judgment or order, or an order arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the court.”
This rule does not appear in the Federal Magistrates Court Rules which otherwise mirror O.35R7(2) of the Federal Court Rules but may be taken to be incorporated by R.1.05(3)(b). I do not believe that this avails the applicant. The rule is quite clearly a slip rule. It is not intended to allow a judgment to be set aside because of the omission by one of the parties to provide with the court with sufficient evidence of a matter central to its decision. This is particularly the case after such evidence was called for and time allowed to provide it.
The applicant himself has indicated that he places little reliance upon his allegation of fraud or his claim that the judgment was given against him “in his absence”. He was not absent at the trial, he took part in it and he was represented by senior and junior Counsel. He was not absent when the question of costs and the existence of the Calderbank letters were raised. He chose to absent himself thereafter but that was his decision. It will not assist him in this application.
I dismiss the application for review. I do not permit the filing of the applicant’s motion. I order that the applicant pay the respondent’s costs pursuant to Part 20.10 of the Federal Magistrates Court Rules.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
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