Brennan v McGuire
[2015] FCCA 665
•26 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BRENNAN v MCGUIRE | [2015] FCCA 665 |
| Catchwords: BANKRUPTCY – Review of Registrar’s decision – relevance of earlier decision in Federal Court regarding a set-off of mutual costs orders – non-compliance with Federal Court orders – abuse of process considerations regarding the issue of a bankruptcy notice to exert pressure on the debtor – waiver of privilege by disclosure to the Court of communications between the parties – bankruptcy notice set aside. |
| Legislation: Bankruptcy Act 1966, ss.40(g), 41(5), 41(7), 306 Evidence Act 1995, s.122 |
| Bonds Industries Limited v Sing [1999] FCA 1055 Brennan v McGuire [2010] FCA 1443 Brunninghausen v Glavanics [1998] FCA 230 Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 Croker v Commonwealth of Australia [2010] FCA 1031 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 Re Glew; Glew v Harrowell (2003)198 ALR 331 Guss v Johnstone (2000) 171 ALR 598 Killoran v Duncan [1999] FCA 1574 Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 Kyriackou v Shield Mercantile Pty Ltd (2004) 138 FCR 324 Re Lentini; ex parte Lentini v CSR Ltd (1991) 29 FCR 363 Mann v Carnell (1999) 201 CLR 1 Martin v Commonwealth Bank of Australia (2001) 217 ALR 634 Massih v Esber (2008) 250 ALR 648 Maxwell Smith v S & E Hall Pty Ltd (2006) 233 ALR 81 Seovic Civil Engineering Pty Ltd v Groeneveld (1999) 87 FCR 120 Skouloudis v St George Bank Ltd (2008) 173 FCR 236 Re St Leon: ex parte National Australia Bank Limited (1994) 54 FCR 371 Totev v Sfar (2008) 167 FCR 193 Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337 Re Wimbourne; Ex parte The Debtor (1979) 24 ALR 494 |
| Applicant: | ROBERT GEORGE BRENNAN |
| Respondent: | GLENYS FREYA MCGUIRE |
| File Number: | CAG 53 of 2013 |
| Judgment of: | Judge Neville |
| Hearing date: | 21 October 2013 |
| Dates of Last Submissions: | 26 November 2014 & 6 March 2015 |
| Delivered at: | Canberra |
| Delivered on: | 26 March 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Self represented |
| Solicitors for the Respondent: | Self represented |
ORDERS
The Application for Review, filed on 26th September 2013, be dismissed.
The Court confirms and declares that the bankruptcy notice, BN 158197, issued on 24th April 2013, is invalid.
The Applicant (Mr Brennan) pay the Respondent’s (Ms McGuire) costs fixed in the sum of $3,422.00.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAG 53 of 2013
| ROBERT GEORGE BRENNAN |
Applicant
And
| GLENYS FREYA MCGUIRE |
Respondent
REASONS FOR JUDGMENT
Introduction
The current matter is an Application for Review (filed 26th September 2013) by the creditor, Mr Brennan, of the decision of the Registrar to set aside a bankruptcy notice (BN 158197, issued 24th April 2013) that was directed to his former domestic partner, Ms McGuire. Briefly stated, the background to the bankruptcy notice, and the matter more generally, is as follows.
On 24th April 2013, at the petition of the creditor, Mr Brennan, the Official Receiver issued a bankruptcy notice in relation to a claimed sum of $19,746.00 against Ms McGuire. The sum claimed was pursuant to a costs order (among other orders) made by Rares J in the Federal Court of Australia on 10th June and amended on 1st September 2011. The proceedings before his Honour related to property settlement under the Domestic Relationships Act 1994 (ACT).
In many respects, his Honour’s judgment, which gives rise to the current proceeding, makes rather doleful reading.[1] While I cannot (and do not) in the current proceedings adopt any of the findings made by his Honour in those proceedings, particularly his not infrequent criticism of Mr Brennan’s conduct (on the one hand),[2] and the usually thorough account of matters by Ms McGuire (on the other), the detailed observations made by Rares J cautioned me to take an even more circumspect approach in the consideration of the evidence and claims made by the parties in the Application for Review brought by Mr Brennan. Certainly, his Honour’s typically meticulous judgment provided very helpful background to the orders he made which are the basis for the current contest.
[1] See Brennan v McGuire [2010] FCA 1443.
[2] For example, at [122] Rares J said of Mr Brennan’s evidence: “I do not accept his evidence about financial matters where it is uncorroborated.” And earlier at [31] his Honour commented on Mr Brennan taking all of the family and company financial records with him when he left the relationship in 2006, thus depriving Ms McGuire of access to relevant documentation for the purposes, inter alia, of the property proceedings between the parties, while at [64], Rares J referred to Mr Brennan’s use of a power of attorney to access funds from his parents and the estate of one of them. Rares J concluded, at [65], that his conduct was “dishonest and reflected badly on Mr Brennan’s overall credibility and integrity.”
The terms of the costs order are important: they provided for certain costs in favour of Mr Brennan (after a certain point in the proceedings), but also in favour of Ms McGuire (up to a certain point in the same proceedings). Although set out in full later in these reasons, his Honour’s order specifically permitted or provided for the costs of the parties to be set off, one against the other, to arrive at a net figure in relation to costs.
As explained later, that set-off has never occurred. In my view, among a number of flaws with the bankruptcy notice, this failure to abide by and comply with the orders of Rares J, of which the creditor, Mr Brennan, was obviously aware, is the most fundamental. Of itself, it is sufficient to set aside the bankruptcy notice. Subject to the discussion which follows, in my view, issuing a bankruptcy notice, without having first complied with the orders of the Federal Court in relation to setting off the mutual costs orders, and knowing the Respondent debtor’s intention to rely on those orders in relation to a set-off of the costs of each party, constituted an abuse of process.
The certificate of taxation (in matter NSD 1147 of 2010), which issued on 19th December 2011 and which is attached to the bankruptcy notice, states that Mr Brennan’s costs totalled $19,416.00. The discrepancy (of $330.00) between the amount in the certificate of taxation and the bankruptcy notice ($19,746.00) is not explained.
The amount set out in the bankruptcy notice lists or claims nothing in relation to legal fees, interest accrued since the date of the order, and in relation to any payments made by the debtor, Ms McGuire. While not a fatal flaw, this absence of claim(s), particularly in relation to interest, makes the discrepancy between the different amounts in the bankruptcy notice and in the certificate of taxation rather more curious.
On 8th September 2013, the Registrar made an order in the following terms: “The Bankruptcy Notice NN158197/2013 be set aside on the ground it is invalid.”
As already noted, the Applicant creditor seeks a review of the Registrar’s decision. Judging from the history of orders made by Rares J arising out of the litigation between the same parties (and which has involved relatives of the parties in related proceedings), it is almost trite to observe that the matter has a back-drop of a very significant litigious history. Fortunately the minutiae of that history need not be detailed here.
The principal ground upon which the Registrar set aside the bankruptcy notice was that the creditor had omitted to provide in that notice his full residential address. The Registrar held that the creditor’s post office box details (and email address) did not relevantly satisfy the requirements of the Bankruptcy Act 1966 (“the Act”), and that this was a defect that could not be cured by the operation of s.306 of the Act. The Registrar further held that Mr Brennan was required to provide his street address in the bankruptcy notice.
In his Application for Review, filed on 26th September 2013, the creditor, Mr Brennan, seeks the following orders:
1) The Court reverses the Order to ‘set aside the Bankruptcy Notice on the ground it is invalid’ made by Registrar Wall on 5 September 2013, and allows the Bankruptcy action against the respondent to stand;
2) The Court orders that the addresses for service of the applicant are: (hard copy) GPO Box 533 Canberra ACT 2601, and (electronic) [email protected];
3) The Court orders that the Applicant and Respondent (without others acting for her either under Power of Attorney or as a ‘McKenzie friend’) attend mediation by the court, to resolve the outstanding Costs Orders against the Respondent Anors, and to make sense of any purported payments made by the Respondent.
It is sufficient to observe, at this stage, that there are a number of questions or issues regarding the form of the orders sought, as well as their utility. I make only two comments for the present.
First, in correspondence provided to the Court by Mr Brennan (with attachments), dated 11th September 2014, in a letter sent to Ms McGuire (of that same date) he stated that his postal address for the purposes of receiving any further/future payments from her is GPO Box 1852 Canberra ACT 2601.[3] In the same correspondence he stated to the Respondent: “I reiterate this is my address for service.” Accepting that the letter was written almost exactly one year after the Application for Review was filed, nonetheless, Mr Brennan has not amended his order sought regarding his postal address. There is, therefore, a discrepancy between his postal addresses provided to the Respondent.
[3] Mr Brennan filed a Notice of Address for Service on 18th October 2013 which recorded this new GPO address.
Secondly, it would appear that in the proceedings in the Federal Court Rares J ordered that the parties attend mediation.[4] Detailed matters were set out by his Honour to be addressed in mediation. However, given that the parties remain embroiled in litigation some years after his Honour’s order, the order now sought by Mr Brennan for mediation might be considered to be somewhat futile.
[4] See, for example, his Honour’s orders dated 2nd September 2010, 24th February and 27th May 2011, and 11th May 2012.
For the reasons that follow, the review application by Mr Brennan should be dismissed with costs.
These reasons proceed as follows: (a) procedure for a review application, (b) the orders of Rares J; (c) evidence and submissions of the parties, (d) consideration of issues and disposition.
Procedure for a Review Application
The Full Court decisions in Martin v Commonwealth Bank of Australia and Totev v Sfar confirm that a review application regarding the decision of a Registrar is not an appeal from that decision but a hearing de novo.[5] From those decisions, the following principles should be taken to apply to the current review application and the hearing de novo.
[5] Martin v Commonwealth Bank of Australia (2001) 217 ALR 634; Totev v Sfar (2008) 167 FCR 193.
In Totev v Sfar, Emmett J set out in some detail the requirements and distinctions that apply to or which otherwise constitute a hearing de novo. For example, at [6] – [7], his Honour said (emphasis in original) (all references to “Federal Magistrates Court” and the Act and Rules then applicable should now be read or understood as referring to the Federal Circuit Court of Australia):[6]
[6] Section 104(2) of the Federal Magistrates Act provides that a party to a proceeding in which a registrar has exercised any of the powers of the Federal Magistrates Court under s 102(2), or under a delegation under s 103(1), may apply to the Federal Magistrates Court for a review of that exercise of power. Under s 104(3), the Federal Magistrates Court may, on an application under s 104(2), or on its own initiative, review an exercise of power by a registrar under s 102(2) or under a delegation under s 103(1) and may make any order or orders it thinks fit in relation to the matter in respect of which the power was exercised.
[7] Rule 20.03 of the General Rules provides that the review of an exercise of power by a registrar must proceed by way of a hearing de novo. On the review, the Court may receive as evidence any affidavit or exhibit tendered before the registrar and may receive further evidence and may receive, as evidence, any transcript of the proceeding before the registrar.
[6] See also the comments by Cowdroy J in Totev v Sfar at FCR [88] – [99].
Then at [10] – [14], his Honour relevantly said:
[10] For a delegation of power to a registrar of the Federal Magistrates Court to be valid, the powers and functions of the registrar must be subject to review by a judge of the Federal Magistrates Court on questions of both fact and law. If the review of the exercise of the power by the registrar is by way of hearing de novo, the delegation will be valid (Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84 at 95). Indeed, on one view, nothing less than a hearing de novo would be sufficient. That is to say, there must be a complete rehearing of the facts and the law as they exist when the judge reviews the order made by the registrar; otherwise, the registrar, and not the judges of the Court, would be exercising the original jurisdiction of the Court (Harris v Caladine at 164).
[11] It may be arguable that subjecting the exercise of powers or functions by a registrar to an appeal would be sufficient (Harris v Caladine at 95). However, that is not the safeguard that has been adopted in relation to the delegation of powers and functions to registrars of the Federal Magistrates Court. It is clear from r 20.03 of the General Rules that the review of a registrar’s sequestration order is to be by way of a hearing de novo.
[12] A hearing de novo is different from an appeal stricto sensu and is different from an appeal by way of rehearing. In the case of an appeal stricto sensu, the question would be whether, upon the material before the registrar, the conclusion reached by the registrar was correct. In an appeal by way of rehearing, the appellate court would rehear the matter as at the date of the appeal, but on the evidence called before the registrar, subject to a power to receive further evidence where appropriate: the rights of the parties would be determined by reference to the circumstances, including the law, as they existed at the time of rehearing (Harris v Caladine at 125). In each case any question concerning the exercise of discretion would be subject to the restrictions imposed on an appellate court in reviewing the exercise of a discretion (see House v The King [1936] HCA 40; (1936) 55 CLR 499.
[13] In the case of a hearing de novo, however, the judge reviewing the order begins afresh and exercises for himself or herself any discretion exercised by the registrar. The parties commence the proceeding again, subject to any rules concerning the use of evidence adduced before the registrar. The hearing de novo involves the exercise of the original jurisdiction and the petitioner, in the case of a bankruptcy petition, must start again, call witnesses and make out the petitioner’s case (Harris v Caladine at 124).
[14] Because the hearing of an application for review of a sequestration order is a hearing de novo, it would not be sufficient for the reviewing judge to be satisfied that the registrar made no error and simply to dismiss the application for review. The judge who hears the review application must hear the petition afresh and must be satisfied as to the matters referred to in s 52 of the Bankruptcy Act. Thus, the reviewing judge must herself or himself be satisfied with the proof of:
• the matters stated in the petition;
• the service of the petition; and
• the fact that the debt or debts on which the petitioning creditor relies is or are still owing.
The reviewing judge must also exercise afresh the discretions conferred by s 52(2).
Although the comments of the Full Court in Totev v Sfar were in the context of a review of a sequestration order made by a registrar, they must be taken to apply equally to a review of a registrar’s order in relation to a bankruptcy notice and those sections of the Bankruptcy Act that apply to such notices (e.g. s.41).
The Orders of Rares J
On 24th February 2011, in Federal Court of Australia proceedings NSD 1147 of 2010, among a wide range of orders, Rares J made the following order (Order 6): “Mr Brennan pay 50% of Ms McGuire’s costs of the proceedings as taxed.”
Then on 10th June 2011, his Honour made further orders as follows:
1) The orders made on 24 February 2011 and entered on 2 March 2011 be varied by:
(c) In Order 6, adding after “proceedings”:
“up to 17 February 2011 and that thereafter Ms McGuire pay Mr Brennan’s costs as taxed other than the costs of attending to the obligations he had to perform to settle on 31 March 2011, and the taxed costs payable by each may be set off against the other to produce a net amount owed by one of them.”
Mr Brennan’s Evidence & Submissions
The Applicant, Mr Brennan, affirmed two affidavits in support of his Application for Review: filed respectively 26th September 2013 and 28th April 2014. He also filed written submissions on 29th October 2013 and 28th April 2014, as well as additional material on 4th March 2015 following some questions posed by the Court to the parties via email.
Mr Brennan’s Affidavit Evidence: The Applicant deposed that the GPO Box 533 address had been accepted as his address for service by the Insolvency and Trustee Service of Australia (“ITSA”), the Australian Electoral Commission, and by bodies such as the ACT Civil and Administrative Tribunal (in which Tribunal the parties here have been engaged in further dispute, although Ms McGuire says that she was so engaged but not in any personal capacity).
Mr Brennan also said that he uses a GPO address to ensure his safety; he says that he has been assaulted by Ms McGuire’s son, and that he has had his privacy intruded upon. Such matters, he said, led to him leaving the ACT and living at an undisclosed address. He said that there were domestic violence proceedings between the parties, which included his new [domestic] partner.
His further evidence (from his first affidavit) was that in May 2013 certain sums of money were deposited into his St George Bank account. Those sums totalled $1178.67. He stated (par.10): “I do not know what prompted Ms McGuire to make these deposits. I am concerned by Ms McGuire taking these unsolicited actions with [sic] prior payment method agreement between us. On Saturday 25 May I closed the bank account in question.” Particularly in the light of later comments, I assume that Mr Brennan intended to say that he did not wish any payments to be made by Ms McGuire “without” a prior payment method being agreed between the parties.
He further deposed that two additional deposits, each of $1000, were made. He said (par.11): “This ad hoc depositing of money, without any written payment agreement between us is frustrating and distressing.”
By way of comment only: as difficult as it might be for Mr Brennan to receive funds from Ms McGuire, it might strike others more generally as being somewhat strange that a person who claims to be owed money objects to some of that money actually being paid. This would particularly be the case where there are no orders that specify the time and or method of payment.
In any event, the Applicant said that he wrote to the Respondent debtor requesting that if she intended to make any payment to do so (a) by way of bank cheque and (b) sent to the GPO box number specified, and set out in the bankruptcy notice.
Mr Brennan said that Ms McGuire owed him “$19,746 in Court awarded costs. This amount would be less $3,178.67, if she can prove that she in fact paid these monies.” He then deposed to other awards of costs in his favour against relatives of Ms McGuire, saying that he did not know to which costs order the payments made related.
In his second, April 2014 affidavit, Mr Brennan deposed as follows.
First he said that Ms McGuire had made payments which totalled $6416.67. He said that these payments concerned another, related matter heard by Rares J in the Federal Court, and which involved a party known as “Kaufline”. He gave the matter number as NSD 1147 of 2010. However, that is the matter number of the proceedings that involve only the current parties, with no person (or party) by the name of “Kaufline” mentioned. Accordingly, this part of his affidavit is at least misconceived, if not simply incorrect. In the absence of proper evidence it may otherwise be open to the Court to find that the $6416.67 was paid by Ms McGuire in relation to the debt specified in the bankruptcy notice.
Secondly, Mr Brennan set out the circumstances regarding a payment received by his former solicitors, Phelps Reid, of $5117.11. This payment was made into that firm’s trust account on 22nd November 2013. Inquiries by that firm suggested that that deposit was in relation to another debt owing to Mr Brennan but which involved certain [named] members of the Kaufline family who are related to Ms McGuire. He said that the moneys received “remain unallocated.” He deposed (par.12): “In my opinion, if this payment was made by the Applicant, it is mischievous, and an abuse of process.”
Again by way of comment only: payment of an outstanding debt, I suggest, does not readily or easily come within any relevant category of “abuse of process” particularly where there has been no order regarding the method or timing of payment. The earlier comment also stands regarding the curiosity of someone being infuriated by receiving payment (albeit part payment) of outstanding costs.
I need not refer to Mr Brennan’s regular reference to costs outstanding in other proceedings. They are essentially irrelevant to the current matter. He deposed however that, with interest, the current amount owing by Ms McGuire was (as at April 2014): principal $19,746.00; interest $4,745.56.
Next he said (par.16): “I believe that the Court’s delay in adjudicating this matter is unreasonable and preventing me from pursuing actions necessary to recover the debt.”
The final part of Mr Brennan’s April 2014 affidavit deals with Ms McGuire’s “bill of costs.”
In short compass he deposed that in December 2013 and March 2014, Ms McGuire had advised him that a bill of costs was being prepared. He said that he had grave concerns about the veracity of any such bill, and that its claims would be “fraudulent.” At par.20 of his April 2014 affidavit, Mr Brennan said, without specifying the basis upon which he made the statement:
I have grave concerns that Ms McGuire’s claims for costs will be fraudulent …
He also said (par.21) that Ms McGuire’s refusal to pay his taxed costs was unreasonable and was an abuse of process. Finally, (at par.22) he said that if any bill of costs eventuated by her he would settle it “in a timely way.”
By way of comment, I have significant difficulty in accepting Mr Brennan’s evidence regarding his concerns about “the veracity” or more specifically his assertion that her claim for costs “will be fraudulent” in circumstances where there were existing orders by Rares J awarding her costs against Mr Brennan. There can be no doubt that his Honour’s orders had been made, and that both parties were aware of them. For one party to dispute the preparation of a bill of costs that relied upon that order was inappropriate. Such a claim should not have been made.
Mr Brennan’s Submissions: In his primary submissions, Mr Brennan firstly refuted Ms McGuire’s claim that she was capable of paying her debts when they fell due (and therefore was not a bankrupt).
Mr Brennan referred to the specific claims made by Ms McGuire (noted in detail later in these reasons) for not being able to have her awarded costs taxed, namely because of files being kept by her former solicitors. He attached part of a letter forwarded to the NSW Administrative Decisions Tribunal. Unfortunately, this letter adds little to the evidence before me. More particularly, as noted below, Ms McGuire provided the decision of the NSW Administrative Decisions Tribunal (“the Tribunal”) in its entirety; it clearly and decisively supports her claim and conversely rebuts the contention made by Mr Brennan regarding the actions of her former solicitors.
Unfortunately, Mr Brennan does not explain how he came by a copy of the letter from Ms McGuire’s former solicitors. In any event, one inference that might be drawn from it being provided to the Court in the current proceeding without context and without reference to the judgment of the Tribunal, is that it is an attempt to sully Ms McGuire and her evidence. However, because of the decision made by the Tribunal in NSW was provided to the Court, which upholds Ms McGuire’s claim against her former solicitor, respectfully, (and accepting that Mr Brennan is a self-represented litigant) the provision of the solicitor’s letter, without explanation as to its origin and context, and without reference to the Tribunal’s decision, is both ill-fated and reflects poorly on Mr Brennan regarding his judgment and his attempt to portray Ms McGuire in an adverse light. The copy of the unsourced letter should never have been provided to the Court by Mr Brennan.
Next he refers again to his GPO address, which (he says) is accepted by the Federal Court and by ITSA. He confirmed that in October 2013 he changed his GPO address to GPO Box 1852 Canberra ACT 2601. I have noted this already.
And again he outlined his protective action (and the reasons for it) in relation to keeping his residential address from Ms McGuire. I need not repeat these matters since they have been previously noted.
In relation to payments by Ms McGuire, Mr Brennan confirmed that he wrote to her in July and August 2013 asking her to make payments to the GPO Box number set out in the bankruptcy notice. Unfortunately, when one goes to the annexures to which he refers (annexures 9 and 10) to these submissions (filed 29th October 2013), they are in fact letters to Mr Kaufline and not to Ms McGuire, and therefore of no relevance to the current Application.
Mr Brennan said (pars.15 – 19), that he was treating certain payments made as referable to respondents in other proceedings, and (I infer) that he was therefore continuing to seek payment from Ms McGuire for the amount set out in the bankruptcy notice, less any payments made that could (in his view) be confirmed as relating to the current proceeding.
Next Mr Brennan complained about not being “aware” of Ms McGuire’s application to set aside the bankruptcy notice, and that he was not “given a chance to defend the Bankruptcy Notice.” He said that he considered he was denied natural justice and as such [the proceeding before the Registrar] was an abuse of process. He also complained about not receiving a copy of the Registrar’s decision until five days “after the appeal had to be lodged.”
I simply observe here that, in my view, Mr Brennan should have had some opportunity, either in writing or otherwise, to put submissions in relation to Ms McGuire’s application to set aside the bankruptcy notice. However, because the matter before me is a hearing de novo, and because he has provided both written submissions and affidavits, there is nothing of substance in relation to his procedural fairness claim for present purposes.
He then set out in table form, with comments, the payments he has received from Ms McGuire, which total $6416.67. Mr Brennan said (again) that the “random payments … have caused me personal distress and made management of my business and personal financial affairs difficult and time consuming.” He confirmed also (par.25) that Ms McGuire had made four requests/demands for a nominated bank account to which she could make “random and irregular deposits of money.”
Finally, he set out the amount he said was owed by Ms McGuire, which did not take account of monies paid by her because he was treating such funds as referable to others against whom costs orders had been made in his favour. He said that the amount [then] outstanding was $25,258.97, including interest. There followed his orders sought, thus:
a) The Applicant [MsMcGuire] to make one payment in full and final settlement of her debt.
b) This payment is made into the Phelps Reid Trust Account [details supplied]
c) An injunction preventing the Applicant from continuing to make random deposits into various of my bank accounts and credit card accounts including closed accounts.
d) Failing a. and b. above, the Bankruptcy Notice is reinstated so that I can recover the monies owed to me by the Applicant.
In his supplementary submissions, filed 28th April 2014, as with his affidavit material, Mr Brennan makes reference to awards of costs in related proceedings as well as those made that give rise to the current proceeding. His very brief submissions confirm (par.2), contrary to his affidavit evidence, that “no monies have been paid by the Applicant.” He also said that the Applicant had not proved that she had made any payments to his former solicitors (Phelps Reid).
Mr Brennan then (again and finally) set out his orders sought, namely: “(a) Ms McGuire owes the Respondent in the amount of $39,168.96; (b) The Bankruptcy Notice revoked by Registrar Wall is immediately reinstated so that the Respondent can pursue the Applicant for monies owing; (c) Ms McGuire is restrained from paying any more monies into the Phelps Reid Trust Account.”
Leaving aside the change in designation of the parties (stated in the submissions and in some other documents with Mr Brennan as “the Respondent” when he is in fact the Applicant in the Application for Review), to state the obvious, the orders sought in his submissions differ somewhat from those sought in his Application, not least where he originally sought to have the matter referred to mediation with a view to resolving the long-running contest(s) between the parties.
Ms McGuire’s Evidence & Submissions
Ms McGuire filed two affidavits (on 2nd September 2013 and 2nd May 2014), as well as written submissions, filed 8th September 2013 and 1st May 2014 – the latter are attached to her May 2014 affidavit. She also provided additional material on 6th March 2015 following some clarifying questions from the Court.
Ms McGuire’s Affidavit Evidence: In her first affidavit (September 2013), Ms McGuire deposed as follows.
First she recorded that her “application” was pursuant to clause 5 of the Bankruptcy Notice which refers to an application to set aside a bankruptcy notice on grounds that include there being a “counter-claim, set-off or cross demand, equal to or exceeding the amount claimed in the Bankruptcy Notice” and which “could not have been set up” in the action or proceeding in which the judgment or order in respect of which the Bankruptcy Notice “has been issued or obtained.”
Secondly, she referred to the orders by Rares J in relation to costs made in matter no.NSD 1147 of 2010, which (as noted earlier) refers to the parties being able to set off their respective costs until a net amount is determined as being owed by one party to the other. She confirmed that this “set-off” has not occurred. Further, she said that the amount claimed by Mr Brennan took no account of sums she had paid (which she then set out).
Thirdly, she said that the orders of Rares J gave her “a Court-mandated legal entitlement to set off any money I owe the Respondent against any money the Respondent owes me. The set off has not yet been determined. It is therefore unclear whether I owe the Respondent money, or whether the Respondent owes me money.”
Fourthly, Ms McGuire outlined at some length the reasons why her bill of costs had not been taxed. At pars.10 – 34, she set out the proceedings that involved one of her former solicitors, which were conducted by the NSW Law Society in the Administrative Decisions Tribunal.[7] In those same paragraphs she also noted her inability to obtain her file from a different firm of Sydney lawyers.
[7] Council of the Law Society of New South Wales v Prosilis [2013] NSWADT 151, which decision is annexure GM5 to Ms McGuire’s affidavit, filed 2nd September 2013.
Ms McGuire confirmed further, and provided copies of the relevant order, that she took action in the ACT Magistrates Court against the first-named solicitors who formerly acted for her, again to secure her file for the purposes (among other things) of having a bill of costs taxed. A copy of that order from the Magistrates Court, in her favour, is annexure GM8 to her affidavit. Her former solicitor was found guilty of professional misconduct. She has a claim that is being dealt with by LawCover.
In the absence of her files from both of her former lawyers, Ms McGuire said that it was impossible to have her bill of costs taxed as ordered by Rares J in February and June 2011.
Next Ms McGuire set out the record of her correspondence with Mr Brennan’s former lawyers, Phelps Reid, in which she informed them of the delays regarding the taxed bill of costs and the reasons for it. Copies of relevant correspondence are attached to her affidavit. Also attached is correspondence with Mr Brennan informing him of the reasons for the delay.[8]
[8] Among other annexures, see GM14 & 15.
From par.41 and following, Ms McGuire set out (with reference to annexed documents where relevant) (a) her attempts to resolve outstanding costs issue with Mr Brennan (she says that there was no response to such overtures or offers), (b) her offer to establish a separate trust account into which would be paid funds pending a final accounting of all outstanding claims (she says there was no reply either from Phelps Reid or from Mr Brennan), and (c) her attempt to discuss and finalise all matters (including those involving other family members) with Mr Brennan during the course of proceedings before the ACT Civil and Administrative Tribunal in October 2012.
Ms McGuire set out, at pars.51 – 52, the payments she has made to Mr Brennan.
She said that rather than engage with her to resolve matters, Mr Brennan had instead pursued the course in bankruptcy.
Ms McGuire’s next affidavit, filed 2nd May 2014, essentially is in the form of a rebuttal of Mr Brennan’s submissions.
As at the date of this affidavit, her bill of costs had still not been finalised. Again she annexed copies of correspondence in which she has kept Mr Brennan and his [former] lawyers informed of events regarding the taxation of her bill of costs. This included an email from Phelps Reid, dated 24th October 2013, which provided her with details of that firm’s trust account.
On 31st October 2013, Ms McGuire wrote to Mr Brennan seeking his agreement that payments might be made to the Phelps Reid Trust Account (annexure 5). Assuming there was a response, no copy of it was provided.
On 22nd November 2013, Ms McGuire confirmed that she had deposited into that trust account the sum of $5,117.11. A copy of the transfer for this amount is part of annexure 5.
It is unnecessary to traverse comments by Ms McGuire regarding Mr Brennan’s conduct that was the subject of adverse comment by Rares J in the proceedings before his Honour.
Ms McGuire set out issues regarding service of documents on her, which I need not elaborate; nor do I need again to record from her affidavit (pars.22 – 25) the various attempts she has made to resolve the set-off regarding costs.
Unfortunately, and accepting that Ms McGuire is also a self-represented litigant, Ms McGuire’s submissions are not as helpful or clear as are her affidavits and the documents she annexes to them. In part, this is because two sets of submissions, both dated 8th September 2013, were filed by Ms McGuire. Doing the best I can with them, I note the following.
First, I take no account of the large amount of detail proffered by Ms McGuire regarding various domestic violence orders taken out against Mr Brennan and other claims of victimisation and persecution made by one or other party. Nor do I take account of any of the matters referred to by her that relate directly to matters that were before Rares J. Both of these general areas of complaint occupy the bulk of Ms McGuire’s submissions and are of no relevance to the current Application.
The only substantive matters from her submissions, in my view, are that (a) the bankruptcy notice did not strictly comply with the requirements of the Act because the “required address” of the creditor was not specified, and (b) a GPO box or an email address is not sufficient for the purposes of the Act. I need not again refer to her list of attempts to resolve the matter, or to her reference to and reliance upon the Orders of Rares J regarding the set-off of costs.
Before concluding this part of my reasons, I need to note some other matters that arise out of the correspondence and other documents provided to the Court by the parties.
Other Matters
First, as already noted, the estimate of Ms McGuire’s taxed cost in relation to those ordered by Rares J finally emerged under a letter from the Deputy District Registrar of the Federal Court, dated 18th July 2014, which was sent to both parties.
On 29th July 2013, Mr Brennan wrote to the Court advising that he had not been served with the Bill of Costs and its annexures by Ms McGuire. He sought from and was provided a copy of said bill of costs and its annexures by the Federal Court. He also said that he was taking “legal advice on how best to engage with the dubious claims made in Ms McGuire’s Bill of Costs.”
On 8th August 2014, Mr Brennan wrote to the Court to advise that he would not (my emphasis) be objecting to the estimate of costs. Unhelpfully if not pejoratively, the email from him is headed: “Objection to dubious costs.”
On 30th September 2014, a certificate of taxation issued in Ms McGuire’s favour in the sum of $26,500.00.
Secondly, on 11th September 2014 and 26th November 2014, and again on 4th March 2015, Mr Brennan wrote to the Court and in each instance attached correspondence he had sent to Ms McGuire (on those same dates). Although headed “Without prejudice”, the fact that he (as the author of them) has provided them to the Court, and although not annexed to any affidavit, in my view, (a) no privilege attaches to this correspondence because it has been waived, and (b) the matters contained in these letters is of relevance to the current proceeding.[9]
[9] In relation to implied waiver of privilege, see the discussion by the High Court in Mann v Carnell (1999) 201 CLR 1 at [29] and [34] – [35], and Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 at [32], and by the Full Court of the Federal Court of Australia in Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 at [68]. See also s.122 Evidence Act 1995 (Cth).
For current purposes, the matters of relevance from the correspondence to which I have referred are limited to the following:
a) In each of the letters to Ms McGuire, Mr Brennan confirms receipt of funds from her. He said that the payments [now] total $12,900.33. He also confirmed or acknowledged that Ms McGuire’s taxed costs totalled $26,500.00;
b) Allowing the relevant off-set regarding the costs claimed by each of the parties, he said that this resulted in a net amount owing to him (as per the 11th September letter) of $13,630.20, but later amended (as per the 26th November letter) to a net amount due to him of $14,360.46, and further amended (as per the letter dated 4th March 2015) to a net amount owed of $15,129.51.
c) In both letters he outlined the break-down of costs he claimed as outstanding by Ms McGuire, as well as by Mr Kaufline (arising from separate proceedings). He also claimed costs of $1745.00 arising from “ITSA and Court application costs.”
d) The amount claimed as against Ms McGuire directly (before any set-off) is the same in both letters, namely $24,629.99. I have noted earlier that Mr Brennan had claimed a larger sum as owing by Ms McGuire as a result of accrued interest.
e) Finally, he confirmed in all letters: “I will continue cost recovery actions against you, Wayne Kaufline, and Ben McGuire until full and final payment has been made.” Such an ultimatum or declaration hardly fits with his original order sought for the parties to be ordered to attend mediation.
Consideration & Disposition
At the outset, I remind myself of the comments of Weinberg J in Kyriackou v Shield Mercantile Pty Ltd.[10] At [36] - [38] his Honour said (emphasis added):
[36] The purpose of a bankruptcy notice is to convey to the debtor the amount claimed by the creditor, and to give the debtor the opportunity to pay or secure that amount. It is important that a bankruptcy notice be prepared with great care. The courts require strict compliance with the Act and Regulations. The reason for this is that a bankruptcy notice sets in train the entire process leading to bankruptcy, a process that has been described as “quasi -penal".
[37] Formal errors in a bankruptcy notice do not result in its invalidity unless they have caused substantial injustice. However, substantive errors will generally lead to the notice being regarded as invalid and of no effect. If a bankruptcy notice is invalid, any bankruptcy proceedings based upon that notice will be dismissed.
[38] One of the purposes that a bankruptcy notice must serve is to identify with clarity both who the creditor is, and who the debtor. It must also convey to the debtor how the debt that is alleged to be owing is said to have arisen. These are matters of substance, and not matters of form.
[10] Kyriackou v Shield Mercantile Pty Ltd (2004) 138 FCR 324.
Together with others to be noted shortly, these statements of principle are essential to the determination of the present Application.
In Walsh v Deputy Commissioner of Taxation, the High Court confirmed that the amount that must be correctly stated in the bankruptcy notice is the amount due and payable as at the date the notice issued.[11]
[11] Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337.
In the same case, the High Court (Gibbs CJ, Mason, Brennan, Deane and Dawson JJ agreeing) said (CLR at p.339), albeit obiter:
There is no doubt that a bankruptcy notice will be invalid if the sum specified in the notice as the amount due to the creditor exceeds the amount for which the creditor is entitled to issue execution, provided that the debtor gives timely notice under s.41(5) of the Bankruptcy Act 1966 (Cth), as amended, that he disputes the validity of the notice on that ground.
A final, primary principle to note is the oft-quoted comments by the High Court in Kleinwort Benson Australia Ltd v Crowl.[12] In that case, Mason CJ, Wilson, Brennan and Gaudron JJ said (at CLR pp.79 – 80; internal citations omitted):
The authorities show that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice… In such cases the notice is a nullity whether or not the debtor in fact is misled.
[12] Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71.
In the light of the authorities to which I have referred, and the evidence and submissions of the parties, in my view, the following issues require determination:
a) Has there been an effective notice given by the debtor under s.41(5) of the Act? If so, what is the effect of such a notice?
b) Is there a counter claim, set-off or cross demand for the purposes of either s.40(1)(g) or s.41(7) of the Act?
c) Is the amount claimed in the bankruptcy notice an overstatement such as would mislead the debtor?
d) Considering the orders of Rares J, does the bankruptcy notice constitute an abuse of process?
e) Are there any defects, other than possible overstatement and including the address of the creditor, which would render the bankruptcy notice invalid?
f) If the debtor succeeds in relation to any of the above matters, what is the appropriate relief?
Has there been an effective notice given by the debtor under s.41(5) of the Act? If so, what is the effect of such a notice?
The bankruptcy notice was issued by the Official Receiver on 24th April 2013. An order was made by a Registrar of the Federal Court on 18th July amending particulars of service, which was deemed to be served on Ms McGuire on 13th August 2013.
Ms McGuire filed an Application to set aside the bankruptcy notice on 2nd September 2013. A detailed affidavit in support was filed at the same time. Accordingly, the Application was filed within the time prescribed by Note 5 (i.e. within 21 days of 13th August 2013).
Section 41(5) of the Act is in the following terms (emphasis added):
A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement.
The provenance (historical and other) of this section is set out in detail by Edmonds J in Skouloudis v St George Bank Ltd.[13] Leaving to one side the legislative history his Honour helpfully relates, by reference to the Full Court decision in Seovic Civil Engineering Pty Ltd v Groeneveld and the High Court decision in Walsh to which I have already referred, Edmonds J confirmed, at [23] that an overstatement in a bankruptcy notice of the amount in fact due renders the notice invalid, whether or not the overstatement could reasonably mislead the debtor, if a notice complying with s.41(5) has been duly given.[14]
[13] Skouloudis v St George Bank Ltd (2008) 173 FCR 236.
[14] Seovic Civil Engineering Pty Ltd v Groeneveld (1999) 87 FCR 120.
His Honour also held, at [25], that once the relevant notice is given under s.41(5) (as here), the invalidity of the bankruptcy notice runs from the time of its issue. In his Honour’s words:
It is important, in my view, that the section uses the word ‘unless’ and not ‘until’. In other words, invalidity of the bankruptcy notice does not only run from the time of the giving of the s 41(5) notice; once a s 41(5) notice is given, invalidity is visited upon the bankruptcy notice from the time of its issue.
In my view, having regard to (a) the orders of Rares J, (b) their application, and (c) Mr Brennan’s knowledge that Ms McGuire was relying upon the application of the set-off to which his Honour referred, the Applicant creditor could not have known, at the time the bankruptcy notice issued, what the actual amount owing was, or who owed the final, net sum outstanding.
And in accordance with the authorities mentioned, and having regard to the Application and supporting affidavit having been filed within the prescribed time, s.41(5) operates to invalidate the bankruptcy notice that Mr Brennan caused to be issued against Ms McGuire as from the date of its issue.
Although such a finding in relation to the operation of s.41(5) is sufficient to dispose of the current Application, it is important to deal with other matters that arise as a result of the Application.
Is there a counter claim, set-off or cross demand pursuant to s.41(7) of the Act?
Section 40(1)(g) provides (emphasis added):
s.40(1) A debtor commits an act of bankruptcy in each of the following cases:
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia—within the time specified in the notice; or
(ii) where the notice was served elsewhere—within the time fixed for the purpose by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter‑claim, set‑off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
Section 41(7) of the Act provides:
Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter‑claim, set‑off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter‑claim, set‑off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.
There are multiple cases that deal with relevant principle in relation to these inter-related sub-sections. It is sufficient to note only two: Massih v Esber (Flick J) and Croker v Commonwealth of Australia (Foster J).[15] At [17] – [18] in Massih v Esber, Flick J said (emphasis added):
[15] Massih v Esber (2008) 250 ALR 648; Croker v Commonwealth of Australia [2010] FCA 1031.
To “satisfy” the Court it is not necessary for the debtor to prove, as on a final hearing, the asserted entitlement to recover as against the creditor. That which is to be established is whether the Court is “satisfied” that the debtor “has a claim deserving to be finally determined.” Re Glew; Glew v Harrowell[2003] FCA 373 at [11], [2003] FCA 373; 198 ALR 331 at 334. Lindgren J there observed:
[9] There are authorities suggesting that Glew and Tresidder must satisfy me of the following interrelated and sometimes overlapping matters:
• that they have a “prima facie case", even if they do not adduce evidence which would be admissible on a final hearing making out that case...
• that they have “a fair chance of success" or are “fairly entitled to litigate” the claim... and
• that they are advancing a “genuine” or “bona fide” claim... It may be that the first and second formulations are intended to cover the same ground. In [Re Brink; Ex parte Commercial Banking Co of Sydney Ltd [1980] FCA 78; (1980) 44 FLR 135] Lockhart J treated (at ALR 438–9; FLR 141) the reference to a " prima facie case" ... as a reference to “a fair chance of success".
This was subsequently characterised by His Honour as a “relatively low thresh-hold” at [64]. The judgment to be made “involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim.” Guss v Johnstone [2000] HCA 26 at [40], [2000] HCA 26; 171 ALR 598 at 606 per Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ.
[18] A debtor cannot “satisfy” the Court, for example, by showing no more than the fact that a claim is made and how the claim may be made out: Re Duncan, Ex parte Modlin [1917] NSWStRp 77; (1917) 17 SR (NSW) 152 per Street J. It is not sufficient that a debtor believes he has a genuine claim; what is required is that the Court must be satisfied that it is just that the claim should be determined before the bankruptcy proceedings are allowed to continue: Dekkan v Evans [2008] FCA 1004 at [54] per Jacobson J. See also: Dekkan v Macquarie Leasing Pty Ltd (No 2) [2008] FCA 1431 per Buchanan J; Cirillo v Consolidated Press Property Pty Ltd [2007] FCA 139. Mere production of a statement of claim, without more, is not sufficient: Re Cox (1934) 7 ABC 98. Nor is a “shadowy” claim that could not fairly be litigated: Re Rivett; Ex parte Edward Fay Ltd (1932) 5 ABC 182 at 188.
From the above statements of principle, I emphasise again and in particular the comments by the High Court in Guss v Johnstone, at [40] (emphasis added):[16]
The state of satisfaction referred to in s.40(1)(g) and s.41(7) involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim.
[16] Guss v Johnstone (2000) 171 ALR 598.
In my view, the judgment of Rares J in Brennan v McGuire,[17] together with the consequential orders made by his Honour, establishes clearly the legal and factual merit of Ms McGuire’s claim. It also patently establishes the injustice of allowing the bankruptcy to proceed. His Honour’s orders plainly permit if not provide for there to be a “set-off” between the respective costs of the parties in accordance with the authorities to which I have referred.
[17] Brennan v McGuire [2010] FCA 1443.
In my view, the terms of ss.40(1)(g) and 41(7) have been clearly satisfied. The orders of the Federal Court are before this Court; Ms McGuire has set out in detail the circumstances for the delay in obtaining a certificate of taxation of her costs. It follows, in my view, that the filing by Mr Brennan for a bankruptcy notice to be issued by the Official Receiver, in the face of the orders of Rares J was, at least, significantly premature if not otherwise inappropriate. At the time the bankruptcy notice issued, Mr Brennan could not have known with any relevant accuracy the final or net amount owed under the orders of Rares J; at the same time he also could not have known who owed the net amount after the set-off permitted by his Honour had been effected.
Ms McGuire’s compliance with ss.40(1)(g) and 41(7) require that the bankruptcy notice issued against her should be set aside.
Is the amount claimed in the bankruptcy notice an overstatement such as would mislead the debtor?
As already observed, there is a small discrepancy in the amount set out in the bankruptcy notice ($19,746.00) and in Mr Brennan’s certificate of taxed costs ($19,416.00). However, the circumstances in this regard could not be said, in my view, to mislead the debtor.
However, for the reasons already given, at the time the bankruptcy notice issued, Mr Brennan could not have known the amount actually due and payable under the orders of Rares J, or by whom. And he (and his [former or sometimes] lawyers, was clearly aware of Ms McGuire’s intention to rely upon his Honour’s orders, particularly in relation to set-off. In these circumstances, the amount claimed under the bankruptcy notice was clearly misleading.
Considering the orders of Rares J, does the bankruptcy notice constitute an abuse of process?
There is no question that the Court has power to set aside a bankruptcy notice as an abuse of process.[18] Nor can there be doubt about the following proposition stated by Emmett J in Brunninghausen v Glavanics (at p.5):[19]
If it is apparent that the purpose of the bankruptcy notice is to put pressure on a debtor to pay a debt rather than to invoke the Court's jurisdiction in relation to insolvency, then the filing of a bankruptcy notice is an abuse of process.
[18] See, for example, Re Lentini; ex parte Lentini v CSR Ltd (1991) 29 FCR 363.
[19] Brunninghausen v Glavanics [1998] FCA 230.
In a matter which also involved a bankruptcy notice that arose out of a bill of costs, in Maxwell Smith v S & E Hall Pty Ltd, Jacobson J said, at [43] and [44]:[20]
[43] If it is apparent to the Court that the purpose of a bankruptcy notice is to put pressure on a debtor to pay a debt, rather than to invoke the Court’s insolvency jurisdiction, the issuing of the bankruptcy notice will be an abuse of process; Brunninghausen v Glavanics [1998] FCA 230; see also Re Sarina; Ex parte Wollondilly Shire Council [1980] FCA 66; (1980) 43 FLR 163 at 166.
[44] However, it is not an abuse of process if a creditor genuinely intends to pursue the matter if there is default in complying with the notice and there is no evidence of collateral purpose or undue pressure; Slack v Bottoms English Solicitors [2002] FCA 1445 at [15] – [21].
[20] Maxwell Smith v S & E Hall Pty Ltd (2006) 233 ALR 81.
From the evidence before his Honour, he set aside the bankruptcy notice as an abuse of process. At [45] and following, his Honour found that its object was to put pressure on the debtors in that case to pay the debt rather than genuinely to invoke the Court’s bankruptcy jurisdiction.
Also by way of statement of principle, it cannot be disputed that the time to determine whether there has been an abuse of process is at the date when the bankruptcy notice issued.[21]
[21] Killoran v Duncan [1993] FCA 1574 at [13].
In my view, the facts that lead to the same result as in Maxwell Smith in the current matter are (a) the clear orders for costs in favour of Ms McGuire made by Rares J in 2011, (b) the terms of those orders clearly envisaged that there would be a set-off of the costs awarded in each party’s favour, which would lead to a net amount owing to one party or the other, (c) the clear and consistent correspondence from Ms McGuire to both Mr Brennan and his lawyers which set out the reasons for the delay in her costs being taxed, and (d) the correspondence from Ms McGuire just noted which records her reliance upon the orders of Rares J in relation to the operation of a set-off to determine a net figure in relation to costs and who ultimately should/will bear them. Notwithstanding these indisputable facts, Mr Brennan chose to invoke the bankruptcy jurisdiction of the Court. Such a course, in such circumstances, must lead to a conclusion that the purpose was to bring pressure to bear on Ms McGuire to pay the amount claimed by him, notwithstanding the clear, but at the time of the bankruptcy notice unquantified, costs order in her favour against him.
Should it be necessary to record again, at the time the bankruptcy notice issued, Ms McGuire was unable to specify or quantify the amount of her costs, pursuant to the orders of Rares J, for the reasons previously outlined, including the professional misconduct proceedings involving her former solicitor. Further, as already noted, she kept Mr Brennan’s [former] solicitors, and Mr Brennan himself, apprised of why the bill of costs was not able to be taxed. Notwithstanding this information, and the orders in her favour made by Rares J, Mr Brennan proceeded with his bankruptcy notice against Ms McGuire, in addition to which he (a) consistently questioned her costs as “dubious”, and contended in sworn evidence that her “claims for costs will be fraudulent”,[22] even up until the time that a certificate of taxation issued in her favour and he accepted the amount stated in it, seemingly still with reluctance.
Are there any defects, other than possible overstatement (including the address of the creditor), which would render the bankruptcy notice invalid?
[22] See Mr Brennan’s affidavit, filed 28th April 2014, par.20.
In view of the Court’s determination that the bankruptcy notice should be set aside on the grounds discussed earlier, it is sufficient for current purposes to deal more summarily with this aspect of the matter.
In his reasons for decision, after a detailed consideration of a range of long-standing authorities, the Registrar determined that the failure by Mr Brennan to provide a street address in the bankruptcy notice was a failure that could not be remedied by s.306 of the Act. It was, in his view, a substantive, rather than a formal or procedural, defect.
The bankruptcy notice in the current matter lists Mr Brennan’s GPO Box address as well as an email address. There is evidence that Ms McGuire has not infrequently corresponded with him at this address. And Mr Brennan outlined his reasons for not wishing to disclose his residential address, such as disquiet and concern about physical and other contests with Ms McGuire and or members of her family – which matters are denied by her.
The following cases, summarily stated, outline the basal principles regarding , matters of “address”.
In Re St Leon: ex parte National Australia Bank Limited, Lindgren J held that the statement of address in a bankruptcy notice is a matter that is made essential under the Act.[23] His Honour said, at p. 378 (emphasis added):
The two “limbs” in the passage quoted from Kleinwort Benson distinguish between that which the Act requires on the one hand, and the way in which a particular bankruptcy notice is “filled in” on the other hand. The distinction may not always be clear, but I regard a total failure to state an address for the judgment creditor as a non-compliance with para 41 (1) (a), as distinct, for example, from an ambiguous or unclear statement of an address. The latter would be an instance of a notice in accordance with the prescribed form which could nonetheless reasonably mislead the debtor.
[23] Re St Leon: ex parte National Australia Bank Limited (1994) 54 FCR 371.
Earlier in the same case, at p.377 in the course of noting submissions, his Honour quoted from the judgment of Lockhart J in Re Wimbourne; ex parte The Debtor (emphasis added):[24]
[24] Re Wimbourne; Ex parte The Debtor (1979) 24 ALR 494 at pp. 498 – 499.
A 'formal defect or any irregularity' is one that could not
reasonably mislead the debtor. If the defect is of such a kind as
could reasonably mislead the debtor upon whom it was served the defect is fatal to the notice: see Re a Debtor; Ex parte TheDebtor v Bowmaker Ltd (1951) Ch 313 and Pillai v Comptroller of Income Tax (1970) AC 1124 at 1135.
The test is not whether the debtor was in fact misled. It is
sufficient that he could be misled. … It is well
established that to determine whether the debtor served with the bankruptcy notice could be misled the court may look at facts extraneous to the notice itself.
In Bonds Industries Limited v Sing, Emmett J said, at [13] (emphasis added):[25]
A judgment creditor in a bankruptcy notice must give an address or addresses where he may be found. The address stated must be one at which the debtor may, during the currency of the notice, make payment of the amount claimed in the notice or, one where he may make arrangements to secure or compound the debt. The test for adequacy of such an address must satisfy the demands of common sense in the highly ordered and busy world in which we live, tempered by a consideration of the implications of a bankruptcy notice and the serious consequences that can flow from non-compliance with its requirements. The address given should be one at which, during the relevant period, it is reasonably practicable for the debtor to make payment or to offer to secure or compound…
[25] Bonds Industries Limited v Sing [1999] FCA 1055.
In Croker v Commonwealth of Australia, Foster J said, at [24] – [25]:[26]
Insofar as payment of the judgment debt is concerned, the Bankruptcy Notice required the applicant to pay to the respondent the amount of the debt referred to in the Bankruptcy Notice within 21 days after service of that Notice upon him. The Bankruptcy Notice stipulated that payment of the debt could be made to the respondent at the offices of its lawyers in Sydney. It did not require that the judgment debt be paid by using the mechanism for payment which was stipulated in par 4 of the Bankruptcy Notice. That method of payment was a permitted (but not mandatory) method. Payment may have been made otherwise than by the method described in par 4 of the Bankruptcy Notice. The Bankruptcy Notice was in accordance with Form 1 prescribed by the Regulations and thus complied with s 41(2) of the Act.
The issue of substance raised by Ground 3 is whether the Bankruptcy Notice was apt to mislead the applicant in relation to what was required by the Bankruptcy Notice should he wish to pay the debt relied upon in the Notice. In my view, the Bankruptcy Notice was not apt to mislead and did not, in fact, mislead the applicant as far as the method and place of payment was concerned….
[26] Croker v Commonwealth of Australia [2010] FCA 1031.
Having regard to Emmett J’s comments in Bonds Industries in relation to (a) “the demands of common sense … in the busy world in which we live,” tempered by (b) “a consideration of the implications of a bankruptcy notice and the serious consequences that can flow from non-compliance with its requirements”, and (c) the address given should be one at which, during the relevant period, it is reasonably practicable for the debtor to make payment or to offer to secure or compound, in my view, these criteria were satisfied with the address set out in the bankruptcy notice. Accordingly, the address in the bankruptcy notice was not apt to mislead the debtor, Ms McGuire, as to what was required under the bankruptcy notice.
Conclusion
For the reasons given, the Applicant, Mr Brennan, has not made out grounds that warrant the Bankruptcy Notice to remain on foot. Indeed, for the reasons given, but different to those of the Registrar, Ms McGuire has clearly made out a number of grounds upon which the Bankruptcy should be set aside.
Mr Brennan’s Application should be dismissed with costs. And at least to save a further contest over costs, (a) accepting that both parties are self-represented, and (b) noting the Court’s broad discretion in relation to costs, I propose to fix an amount for costs by reference to the Rules of this Court at $3,422.[27]
[27] Concerning the Court’s discretion in relation to costs, see s.79(3) Federal Circuit Court of Australia Act 1999, which provides: “Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit Court of Australia or Judge. For relevant sums, see Schedule 1, Part 1 of the Federal Circuit Court Rules 2001.
For the sake of completeness, the Court also confirms the Registrar’s order and declares the relevant bankruptcy notice to be invalid.
I venture two further observations.
First, as noted earlier in these proceedings, in my view, whatever the ultimate result of the current proceeding, it would be a futile exercise to order the parties to attend mediation. It was ordered many times by Rares J, obviously to nil effect. If the parties wish to engage in mediation, they can do so as arranged by them privately and at their own cost. Further, Mr Brennan has stated in writing repeatedly his determination to pursue Ms McGuire (and others) for sums owed to him. In the larger scheme of things, it would appear that those sums, while not small, also are not substantial. Moreover, in the light of this decision, Mr Brennan’s calculations of the amount owed by Ms McGuire would need to be recalculated. Without making any ruling on it, such calculation would very likely run (or be back-dated) as from the date of the orders of Rares J, as would any interest calculation on the taxed costs of Ms McGuire. Given (a) the sum set out in the bankruptcy notice, and (b) the amount set out in Ms McGuire’s certificate of taxation which clearly exceeds the amount in the bankruptcy notice, quite conceivably, re-calculated amounts of interest could result in Mr Brennan owing Ms McGuire money. All of this leads to my second comment.
Given the size of the claims which he proposes to continue to pursue (subject to the re-calculation of interest), and given now that Ms McGuire has a further costs order in her favour as a result of the dismissal of the current Application as well as the likely doubts over the net costs result which may even be in Ms McGuire’s favour, viewed objectively one might (I suggest) wonder the utility of pursuing the claims in relation to costs. If it were purely a commercial matter, I suggest that the old adage about the game not being worth the candle might be apposite. Why the parties, and Mr Brennan in particular, would not simply just walk away [respectfully] defies common sense. If it has not already become so, if the matter(s) keep going, it could very likely end up as akin to an old western movie where a vendetta is pursued until one or both parties are completely consumed by the bitterness of the dispute. Again respectfully, I suggest that such is hardly a beneficial or very productive way of life, with or without the added complication of bankruptcy proceedings.
I certify that the preceding one hundred and twenty-six (126) paragraphs are a true copy of the reasons for judgment of Judge Neville
Associate:
Date: 26 March 2015
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