Bui v Acimall Australia Pty Ltd

[2003] FMCA 595

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BUI v ACIMALL AUSTRALIA PTY LTD [2003] FMCA 595

BANKRUPTCY – application to set aside bankruptcy notice – where applicant claims the debt is not a true debt – whether the court should go behind the judgment – whether applicant’s conduct put him outside the exercise of judicial discretion.

Bankruptcy Act 1966, s.306

Bui v Acimall Australia Pty Ltd [2002] FCA 995
Wolfe v Donovan (1991) 29 FCR 480
Oliveri v Stafford (1989) 24 FCR 413
Re Longo; Ex parte Longo (1995) 57 FCR 323
Australian Steel v Lewis (2000) 199 ALR 68
Marshall v General Motors Acceptance Corporation Australia (2003) 199 ALR 109
Re Vella; Ex parte Seymour (1983) 48 ALR 420

Applicant: CONG BUU BUI

Respondent: ACIMALL AUSTRALIA PTY LTD

File No: SZ 1934 of 2003

Delivered on: 10 December 2003

Delivered at: Sydney

Hearing date: 10 December 2003

Judgment of: Raphael FM

REPRESENTATION

Counsel for the Applicant: Mr A Canceri

Counsel for the Respondent: Mr M Richardson

Solicitors for the Respondent: Kemp Strang

ORDERS

1. Application dismissed. 

2. The applicant to pay the respondent's costs, to be taxed if not agreed, pursuant to the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 1934 of 2003

CONG BUU BUI

Applicant

And

ACIMALL AUSTRALIA PTY LTD

Respondent

REASONS FOR JUDGMENT

1. The applicant comes before me today seeking to set aside a bankruptcy notice numbered NN1842/03, issued on 28 July 2003.  The bankruptcy notice is based upon a judgment debt obtained in the Downing Centre Local Court and a certificate of the judgment File number 6075/99 is attached to the notice.  The judgment is a default judgment in the sum of $39,516.30.

2. The grounds upon which the applicant seeks to set aside the bankruptcy notice are that he maintains that the debt upon which it is based is not a true debt and he asks the Court to go behind the judgment and make an appropriate finding.  Counsel for both parties agree that in dealing with this matter I should adopt a two-stage process.  Firstly I should consider whether or not I should in my discretion go behind the judgment and only then should I consider whether there was, in truth, a debt owed by the applicant to the respondent.

3. This matter has an unfortunate history which is set out in an affidavit by Michael Shortall, dated 2 December 2003, and filed in these proceedings.  The liquidated statement of claim was filed in the Local Court on 2 June 1999 and the judgment was obtained on 27 August 1999.  The judgment related to an alleged contract between the parties in 1997.  The defendant brought an application to set aside the judgment which was listed on 16 June 2000.  He was unsuccessful in that application.  He brought a second application which was listed on 14 July 2000 and was successful.  The judgment was set aside on the basis that the defendant file his defence within 14 days and pay the plaintiff's costs.  A defence was filed and in October 2000 the parties received a Court notice advising that the matter had been listed for call over on 6 November 2000.  On that date the plaintiff appeared but there was no appearance for the defendant.  The Court struck out the defence and ordered the defendant to pay the plaintiff's costs.  On

   
   

   8 November 2000 the Court entered judgment in favour of the plaintiff in the sum of $39,516.30.

4. On 25 January 2002 a bankruptcy notice was issued by ITSA.  The defendant brought a third application to set aside the default judgment.  This was listed for hearing on 28 March 2002 and adjourned until 19 April 2002.  On 19 April 2002 the application was dismissed.  In the meantime the applicant had made an application to the Federal Court of Australia in proceedings number NN7092/2002 to set aside the bankruptcy notice.  This matter came before Gyles J on 25 July 2002  (Bui v Acimall Australia Pty Ltd [2002] FCA 995). I shall discuss His Honour's judgment in more detail later in these reasons. On 21 August 2002 the applicant brought a fourth application to set aside the default judgment. This came on for hearing on 24 October 2002 but it did not proceed on that day. The reason it did not proceed on that date was because both the solicitor for the applicant and the solicitor for the respondent thought that it was due to be heard on 25 October 2002. After a letter was written to the Court, the Court determined that a notice of motion was required to be filed to deal with the problem; see orders of the Registrar dated 9 November 2002. The applicant in these proceedings, the defendant in the Local Court, did not file such a notice of motion.

5. Although Gyles J dismissed the application to set aside the bankruptcy notice, the actual notice that was before him was withdrawn and the notice which was before me was then issued.  The applicant seeks to set aside the later notice but his grounds of application are to my mind - and with one exception with which I shall deal – no different to those that were before His Honour.

6. The one exception is the submission now being made which follows from a remark made by His Honour at paragraph 13 of his judgment and is in the following form:

   “I should say that before an adjournment during the hearing today I expressed to counsel for the parties some concern as to whether the pleading of the matter was appropriate to lead to a default judgment which can only be based upon a liquidated claim or demand.  That is not a ground which has been taken on behalf of the applicant debtor in the proceeding and is still not taken.  I have done no more than draw that possibility to the attention of the parties.  No doubt attention will be given to that possibility, because if there is a real question about the basis for the default judgment, that may provide a reason for setting the default judgment aside.  I say that without, of course, intending to indicate any views about that issue.”

   Before me today Mr Canceri, on behalf of the applicant, seeks to utilise the possible error in the form of the judgment as a ground for setting aside the bankruptcy notice.

7. Although His Honour's judgment was given ex tempore, he went into some detail in his reasons.  He came to the conclusion on the basis of authorities which he cited, Wolfe v Donovan (1991) 29 FCR 480, Oliveri v Stafford (1989) 24 FCR 413 and Re Longo; Ex parte Longo (1995) 57 FCR 323, that the matters raised by the applicant were matters that were particularly within the purview of the Local Court and that that Court was the appropriate forum in which they should have been raised. His Honour was critical of the applicant for the manner in which he had conducted himself prior to the application before the Federal Court. Notwithstanding that, His Honour indicated that he was disposed to grant the applicant a further period of extension of the bankruptcy notice in order that a fresh application might be made to the Local Court. He felt that in view of the consequences of an act of bankruptcy the applicant debtor should be given one last opportunity and stated:

   “It should be clear, however, that this application is at an end.”

8. The applicant made that application and, as has been set out, failed to proceed with it after his counsel and that of the creditor had mistakenly failed to appear at the Court.  Mr Canceri now argues that the applicant's conduct, including his failure to pursue the matters raised by Gyles J and the proceedings which he commenced, should be used by me in his favour.  He argues that the seminal decision of Wolfe v Donovan was given in circumstances where no attempt had been made by Mr Wolfe to set aside the judgment.  He says that in this case many attempts have been made to set aside the judgment and that is all the more reason why I should look behind it.

9. As I expressed to counsel in arguendo I do have serious concerns (as I note His Honour Gyles J also had) about the validity of a default judgment in this case but I think that the manner in which I expressed myself may have suggested that I was adopting a view that the irregularity of the judgment might carry over into the bankruptcy notice so that by virtue of the judgments of the Full Bench of the Federal Court in Australian Steel v Lewis (2000) 199 ALR 68 and more recently in Marshall v General Motors Acceptance Corporation Australia (2003) 199 ALR 109 an irregularity in the bankruptcy notice will require it to be set aside subject only to the very limited use of s.306 of the Bankruptcy Act 1966.  On reflection I do not believe this to be the case. There is no irregularity in the form of the bankruptcy notice. The judgment upon which it is based has not been impugned. It remains regular until that occurs. (Re Vella; Ex parte Seymour (1983) 48 ALR 420). The possibility that it might be found to be irregular might have influenced me to grant the applicant more time to raise this issue in the Local Court. But that is what Gyles J did and the debtor failed to carry the application through.

10. It is my view that I should not stray from the views expressed by Gyles J in relation to this matter.  He concluded that the applicant's conduct was such as to put him outside the exercise of judicial discretion.  No evidence has been provided to me that would excuse that conduct and I have been made aware of an additional factor, namely the abandonment of the latest application, which would tend to emphasise the applicant's failure to deal with his problems in the appropriate manner.  The applicant had every opportunity to persuade the Local Court the judgment was irregular; he failed to take it.  I do not believe it is appropriate for this Court to step in and set aside a bankruptcy notice in the circumstances with which I am today faced, knowing full well that a judge of the Federal Court took the same view over a year ago.  He gave the applicant an opportunity to alleviate his discomfort which he failed conspicuously to take advantage of.

11. I dismiss this application.  I order that the applicant pay the respondent's costs, to be taxed if not agreed, pursuant to the Federal Court Act and Rules.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

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