Burmingham v Moloney (No.3)
[2013] FMCA 47
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BURMINGHAM v MOLONEY (No.3) | [2013] FMCA 47 |
| BANKRUPTCY – Remitted application after successful appeal – the earlier unsuccessful application by the judgment debtor to set aside a sequestration order was remitted for rehearing in respect of one identified error – issue raised as to whether the Court should be differently constituted from the one whose decision was successfully appealed – same Federal Magistrate heard the matter when remitted – evidence led in respect of identified error – application to set aside sequestration order dismissed. |
| Federal Court of Australia Act 1976, s.28 Federal Magistrates Court Rules 2001, R.16.05 |
| Burmingham & Anor v Hynes & Ors [2005] QCA 274 Maurice Blackburn Pty Ltd v David Burmingham [2009] VSC 20 Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261 |
| Applicant: | DAVID BURMINGHAM |
| Respondent: | COLMAN FRANCIS MOLONEY |
| File Number: | MLG 507 of 2010 |
| Judgment of: | O'Dwyer FM |
| Hearing date: | 7 August 2012 |
| Date of Last Submission: | 7 August 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 30 January 2013 |
REPRESENTATION
| The Applicant: | No appearance |
| Counsel for the Respondent: | Mr Lapirow |
| Solicitors for the Respondent: | Davies Moloney |
ORDERS
The application, filed on 28 February 2011, to set aside the sequestration order made on 7 February 2011 is dismissed.
The applicant judgment debtor pay the respondent’s costs, which costs be taxed and paid from the estate of the applicant in accordance with the Bankruptcy Act 1966.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 507 of 2010
| DAVID BURMINGHAM |
Applicant
And
| COLMAN FRANCIS MOLONEY |
Respondent
REASONS FOR JUDGMENT
Introduction
This proceeding has been remitted to the Court for a determination according to law of the applicant’s application to set aside a sequestration order made against him on 7 February 2011.
The remission was made pursuant to an order of the Full Federal Court on 25 November 2011.
It is necessary, in my view, to have an understanding of the background that gives rise to this litigation in order to gain an understanding of the applicant’s approach to litigation in general, the difficulties encountered by those involved in litigation with the applicant and also the difficulties imposed on various Courts in dealing with the applicant.
Hereafter, a statement of fact is to be taken as a finding of fact unless the context suggests otherwise.
Background and history of the proceeding
The genesis of this litigation goes back as far as March 1992 when the applicant was said to have had a mental breakdown at a time when he was a chartered accountant, and had been so for the previous 10 years.
At the time he had income protection insurance with Australian Casualty and Life (later AXA). Under that policy he received regular payments until October 1998. In October 2000 the applicant commenced proceedings against AXA in the Supreme Court of Victoria. A settlement was reached under which the applicant received a substantial sum of money. The solicitors employed for this litigation, Maurice Blackburn Cashman were sacked after they recommended to the applicant that he accept an offer of settlement in the sum of $600,000. Acting for himself, however, the applicant was able to increase that offer to $1M, which was accepted by him.
Maurice Blackburn Cashman was not paid for the work it had done up to the time they were sacked and was forced to issue proceedings against the applicant for their fees. Those proceedings were heard and determined over a 15 day trial commencing on the 3 March 2008 and concluding on 10 March 2009 due to adjournments and shortened hearing days. The efficient conduct of the proceeding was affected by the applicant’s ill-health. The evidence supporting the applicant's claim of ill-health was provided by Dr Gary Martin. It is fair to say that the trial judge was very accommodating of the applicant allowing adjournments and short hearing days. Judgment was delivered on
20 March 2009. In his judgment the trial judge did express concern about the conduct of the hearing, not only in respect of its disjointed process due to adjournments and shortened hearings days, but also in respect to the voluminous material provided by the applicant which appeared to be unfocused and demanded, unnecessarily, a significant effort on the part of the plaintiff and the Court to decipher.
Eventually the trial judge decided, based on the medical opinion of
Dr Martin that litigation caused stress which in turn debilitated the applicant and in those circumstances any future adjournments would not assist as every time, on an adjourned date, the applicant's condition would deteriorate.
It was during the running of the Supreme Court proceedings against Maurice Blackburn Cashman that the judgment creditor in this proceeding (“the respondent”) was engaged and instructed to advise and consider whether he would go on the record as the applicant’s legal representative. It is the work that was done by the respondent and the default judgment for the fees in respect thereof that forms the basis of the respondent’s Notice of Bankruptcy, the act of bankruptcy and the petition for bankruptcy.
The respondent obtained a default judgment in the Melbourne Magistrates’ Court for $2,429, being his fees, plus costs and interest.
Nature of hearing on 7 August 2012
After the successful appeal the matter was again listed before me for a determination according to law. The appeal Court identified the error in my previous determination and clearly, in my view, required me to consider that error, hear appropriate evidence and argument after which I could make a final determination in this matter. The applicant objected to the matter being remitted back to me and suggested strongly that it should be before a different Federal Magistrate. He also was of the view, in any event, that the hearing should be de novo and that he be allowed to again fully ventilate all of the issues as he understood them.
Whilst a successful appeal resulting in a matter being remitted to the lower Court often, if not usually, ends up being allocated to a different judicial officer to determine, it is not always so where a specific error has been identified.
Section 28 of the Federal Court of Australia Act 1976 (“the Federal Court Act”) prescribes the orders which the Federal Court may make when disposing of an appeal. Relevantly it states:
28 Form of judgment on appeal
(1) Subject to any other Act, the Court may, in the exercise of its appellate jurisdiction:
(a)affirm, reverse or vary the judgment appealed from;
(b)give such judgment, or make such order, as, in all of the circumstances, it thinks fit, or refuse to make an order;
(c)set aside the judgment appealed from, in whole or in part, and remit the proceeding to the court from which the appeal was brought or further hearing and determination, subject to such directions as the Court thinks fit;
(d)...
In TheCommunity & Public Sector Union v Telstra Corporation Ltd (No 2)[1] the Full Court of the Federal Court had set aside the order made at trial and "remitted [the matter] to the primary judge to be determined in accordance with [the Full Court's] reasons for judgment”[2]. The consequence of the Full Court's decision was that Finkelstein J had to determine an issue which he had not resolved initially: CPSU v Telstra Corporation Ltd (No 2)[3].
[1] (2001) 112 FCR 324
[2] ibid, at 325 [1]
[3] ibid, at 326 [4]-[6]
Following the return of the matter to Finkelstein J, the question arose as to how the remitted application was to be conducted. In resolving that issue his Honour considered the powers provided by s.28 of the Federal Court Act and concluded that the Full Court's order had been made pursuant to s.28(1)(c). His Honour further concluded that an order under that paragraph does not result in a new trial and that any further hearing which may be ordered pursuant to it is to be conducted on the basis that it is a continuation of the first trial “where the parties can only mend their hand or change course in accordance with
well-known rules”[4]. He ruled that it had not been shown that there was a reason why the CPSU should be permitted to reopen its case.
[4] ibid, : at 329 [17]
In Commissioner of Taxation v Pratt Holdings Pty Ltd[5], Kenny JA also dealt with a remitted matter which required her to consider an issue which she had not considered on the first occasion the matter had been before her. Her Honour followed Finklestein J’s reasons in CPSU v Telstra Corporation Ltd (No 2), saying:
Where a matter is remitted pursuant to s.28 (1)(c) of the Federal Court of Australia Act 1976 (Cth), the further hearing is conducted on the basis that it is a continuation of the first trial: see Community and Public Sector Union v Telstra Corp Ltd (No2) (2001) 112 FRC 324 at 329; [2001] FCA 479 at [17] per Finklestein J. Thus, the remaining issues fall to be determined on the evidence that has already been adduced and on the basis of the parties further written submissions ...[6]
[5] (2005) 225 ALR 266
[6] ibid, (at 270 [8]
It is plain from her Honour’s judgment that the further written submissions to which she referred were only to address the issue which had not been considered previously.
In a not dissimilar context, it was said by the English Court of Appeal in DK (Serbia) v Secretary of State for the Home Department[7]:
[7] [2007] 2 All ER at 483
The most important [consequence of a body having to reconsider a decision previously made] is that anybody asked to reconsider a decision on the grounds of an identified error of law will approach its reconsideration on the basis that any factual findings and conclusions or judgments arising from those findings which are unaffected by the error of law need not be revisited.
It is not a rehearing ... (at 495 [22] per Latham LJ, Longmore and Moore-Bick LJJ agreeing).
When applying the general statement as set out above to the specific circumstances before him Latham LJ continued, with Longmore and Moore-Bick LJ J agreeing:
It follows that if there is to be any challenge to the factual findings, or the judgments or conclusions reached on the facts which are unaffected by the errors of law that have been identified, that will only be other than in the most exceptional cases on the basis of new evidence or new material as to which the usual principles as to the reception of such evidence will apply ...
...
Accordingly, as far as the scope of reconsideration is concerned, the tribunal is entitled to approach it, and to give directions accordingly, on the basis that the reconsideration will first determine whether or not there are any identifiable errors of law and will then consider the effect of any such error or errors on the original decision. An assessment should prima facie take place on the basis of the findings of fact and the conclusions of the original tribunal, save and in so far as they have been infected by the identified error or errors of law. If they have not been infected by any error or errors of law, the tribunal should only revisit them if there is new evidence or material which should be received in the interests of justice and which could affect those findings and conclusions (at 496 [23], [25]).
I am satisfied that the Full Court in this instance, on a fair reading of the judgment, clearly identified one error that needed to be addressed when his Honour North J said[8]:
It is clear the Federal Magistrate determined that he was not able to go behind the judgment of the Melbourne Magistrates’ Court. This is wrong in law. The Federal Magistrate had power to go behind the judgment of the Melbourne Magistrates’ Court. Indeed, that the judgment was a default judgment and that the rehearing judgment was determined without reference to the merits, are the very circumstances in which a bankruptcy court will characteristically examine the facts to determine whether there was a debt: Wren v Mahoney (1972) 126 CL R 212 at 233: [1972] ALR 307. See also Wolff v Donovan 29 FCR 480 at 486, where Lee and Hill JJ said:
Where a judgment is obtained by default, the court in bankruptcy will more readily look behind the judgment than it would if the judgement were obtained following a hearing on the merits.
[8] [2011] FCA 1490 at [12]
His Honour went on further to say:
In the circumstances, the Federal Magistrate should have considered whether to go behind the judgment of the Melbourne Magistrates’ Court and hear the contentions to be made by the appellant that there was, in fact, no debt. Although the appellant has not himself raised this ground to impugn the judgment of the Federal Magistrates Court, there is an obvious error in the judgment and it is inevitable that the appeal would be allowed despite the failure of the appellant to articulate his grounds of appeal. The appeal must therefore be allowed and the matter remitted for the hearing by the Federal Magistrates Court.[9]
[9] ibid, at [14]
Clearly North J remitted the matter back to me with the specific task that I examine all issues in relation to the merit, or otherwise, of the claim by the applicant that he does not owe a debt to the respondent.
Events leading up to final hearing on 7 August 2012
After the appeal was determined on 25 November 2011 the matter was listed before me for hearing on 18 May 2012. Prior to that date the applicant made various attempts through the registry to change the hearing from me to someone else. He also sought to have North J give a direction that the further hearing not be before me. His Honour declined to do so.
A request was then made by the applicant to adjourn the hearing as a consequence of a long held specialist medical appointment on that day. In support of that application, the Court was provided with a medical report from Dr S. Arellano which confirmed his long-standing appointment with a liver specialist, Dr David Robinson.
The adjournment was accordingly granted until 19 July 2012 at
2.15pm.
On 19 July 2012 the applicant took part in the hearing via telephone link from Queensland. As was not unusual for the applicant in earlier hearings in which he partook via a telephone link, he complained of an inability to hear at times and complained of tiredness. I note however that his hearing was not always inhibited and I can say any technical problems complained of in respect of the telephone seem to coincide very much with matters that, on the face of it, were not supportive of his position.
I find the applicant's credibility questionable and his complaints in this regard dubious. Nonetheless, the nature of the evidence being referred to by Counsel for the respondent was detailed and complex and not, as the applicant asserted, before him. It became evident that to proceed in those circumstances would be a clear breach of procedural fairness and that the applicant should be afforded the opportunity of examining the documentation been presented to me and given an opportunity to formulate a response. Accordingly, the further hearing was adjourned to allow the documents to be forwarded to the applicant in good time for him to consider them and formulate his response.
The adjournment was granted until 7 August 2012 at 2.15pm; a date and time negotiated with the applicant to suit his needs. Directions were made to ensure the service of the documents upon the applicant in good time for the hearing.
On 7 August 2012 at 2.15pm numerous attempts were made to establish the telephone link with the applicant on the number confirmed as appropriate by him and on the number previously successful in communicating with him. There was no answer.
Unlike other occasions when matters were listed for hearing there had been no attempt by the applicant to contact the Court and there was no provision of any medical report that may indicate the applicant being unable to partake in the hearing. I resolved to conduct an undefended hearing in circumstances where I was satisfied that the applicant had full knowledge of the hearing date and time, which was given to him after negotiation on 19 July 2012 and further by service of the adjournment order on him.
I heard evidence from Mr Moloney as to the service on the applicant of the identified documents and I am satisfied that service was indeed effected.
Since the hearing on 7 August 2012 there has been only one communication by the applicant with the Court which was to enquire as to what happened on 7 August 2012. There has not been an application under the Rules for a rehearing[10]. It can be said in the circumstances that he has shown no interest since the hearing on
19 July 2012 in prosecuting his application.
[10] R.16.05, Federal Magistrates Court Rules 2001
Evidence on extant issue for determination
Viva voce evidence was given by Mr Moloney on the matters crucial to determination of the outstanding issue; namely, whether there was any real prospect of the applicant being successful in his argument that he did not engage Mr Moloney to act for him and that Mr Moloney had no entitlement to the payment of any fees. In addition, the applicant asserted the respondent was not entitled to fees, as he never went on the record as representing him in the Supreme Court proceedings. Further, there was the suggestion that Mr Moloney had breached his obligations as the applicant’s lawyer when he engaged in conversation with the lawyer from Maurice Blackburn Cashman without the applicant’s specific instructions he could.
Mr Moloney tended various documents, the most significant of which were the disclosure documents presented to the applicant in relation to Mr Moloney's engagement as his solicitor, the various e-mails passing between Mr Moloney and himself, all of which confirm a solicitor client relationship and the bill of costs in taxable form in respect of the work undertaken by Mr Moloney which came to a total of $12,274.20 (from which should be taken $631 incorrectly claimed).
Although Mr Moloney's evidence was unchallenged, I can say he nonetheless impressed me as a honest witness and I have no reason at all to doubt his veracity or the accuracy of his evidence.
I am satisfied that the amount claimed for the work done is reflective of the significant work undertaken on his part where he was required to evaluate the applicant's case in defence of the claims for fees by Maurice Blackburn Cashman. Such things as perusing 19 folders of documents, reading the applicant’s 94 page Defence filed in the Supreme Court, the preparation of an affidavit for Dr Martin and the attendance of Mr Moloney before the Supreme Court are examples of the work undertaken by Mr Moloney, although these examples are by no means an exhaustive list. The full detail of the work undertaken is well set out in the bill of costs in taxable form. For this work,
Mr Moloney sought only to charge the applicant $2,429. When queried why he charged so little in light of his entitlement to greater as set out in the bill of costs, his response was that he thought he had a better chance of getting the lesser figure - enough to cover his time - than he would have if he asked for his entitlement. In light of the history of the applicant in respect of payment of costs to former legal advisers[11], in my view, this was not an unreasonable position to have adopted.
[11] See Burmingham & Anor v Hynes & Ors [2005] QCA 274; Maurice Blackburn Pty Ltd v David Burmingham [2009] VSC 20
After hearing from Mr Moloney on oath and examining the documentation in support of his position, I have no hesitation in finding that Mr Moloney was entitled, at the very least, to the charge actually made for his work done. A charge of $2,429.00 was more than reasonable.
In respect of the applicant's contention that he never engaged
Mr Moloney, I say that is preposterous and it reflects, as many other matters also do, on the creditworthiness of the applicant.
In respect of the suggestion that in engaging with the solicitor from Maurice Blackburn Cashman the respondent has acted improperly and therefore was disqualified from any entitlement for fees, I accept the evidence of Mr Moloney. He gave evidence that he did engage with the solicitor with the simple enquiry as to the prospect of settling the matter. Not to have done so would have been in breach, in my view, of his professional obligations to his client. It is, in my view, within the ambit of implied instructions to have sounded out the prospect of settlement.
In light of the above, I find that the applicant has no reasonable prospect of successfully defending the claim for professional fees by Mr Moloney and accordingly has no reasonable prospect of setting aside the judgment debt in the Melbourne Magistrates’ Court in respect of the same. The debt is clearly owed to the respondent.
The applicant’s credit
In giving his evidence Mr Moloney also gave evidence of a more general nature about his dealings with the applicant and about enquiries he has made concerning the past and present background to the applicant. In support of his understanding as a consequence of those enquiries he tended various documents. Significantly, in my view, having regard to the persistent complaint of the applicant that his health is so bad that he is unable to rise and function until the afternoon and that he is physically incapable of concentrating and applying himself to the preparation of Court documents, it is surprising, if not confounding, to discover that the applicant holds himself out to the world at large as being able to provide services in the nature of acting, as a model, as a musician, as a singer, as providing voice-overs, giving intellectual property advice, conducts a business known as “Raging Bull Media Group” and has acted in many feature films, TV series and corporate videos; that he has appeared in numerous national and international TV shows, including live to air performances. He is a man, admittedly some years ago, that has engaged in litigation to protect trademarks, of which he boasts to be the proprietor of 25.[12]
[12] Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261
Mr Moloney produced an affidavit by Mr Andrew Clement Dimsey, that was created and filed in the proceedings against the applicant by Maurice Blackburn Cashman, in which Mr Dimsey swore an affidavit with many exhibits which essentially showed the applicant was an outgoing business person, exhibiting various newspaper articles about the applicant, webpages and press releases for the purposes of showing the applicant as someone other than how he presented himself to the Supreme Court.
In July 2005 the applicant was embroiled in litigation in the Supreme Court of Queensland in respect of a claim against his former legal advisers, which litigation involved an appeal.[13] That litigation stemmed from trademark issues concerning another entity, Woolly Bull Enterprises Pty Ltd, of which the applicant was sole director and beneficiary. There is a pattern of the applicant being involved in litigation against, or by former legal advisers.
[13] ibid
Mr Moloney also gave evidence that in discussions with Maurice Blackburn Cashman it was indicated that the firm felt compromised in respect of the applicant's claim against AXA, as the applicant had made an earlier claim against a supermarket where, as a consequence of a fall in the supermarket, he was unable to do those things that formed the basis of his claim against AXA for which he claimed compensation. This could properly be classified as hearsay as to the truth of what was said to Mr Moloney, but I accept it is evidence that it was said to him.
His present claimed activities to the world at large belie the nature of his complaints about incapacity to litigate, to travel and prepare appropriate Court documentation. It is also contradictory to the nature of the medical reports provided by Dr Martin. I note, as I did in earlier proceedings, that the tone and content of Dr Martin’s reports do not have what one would expect from a medical practitioner, a detached and professional assessment, but have more of the tone of an emotionally committed advocate. This in my view diminishes the weight to be given to them. Until more recent times when a referral was made to Dr David Robinson, a liver specialist, the applicant has not been, to the best of my knowledge, under the supervision of a specialist or has obtained a specialist opinion. It seems implausible having regard to the nature of the complaints over a very long period that the opinion of a specialist has not been obtained. Although the applicant was referred to a liver specialist who saw him on
18 May 2012 no report has been produced from that person as to the nature of the applicant's medical problems and his capacity to partake fully in the Court process.
The applicant has maintained that he has been unable to travel to Melbourne because of his ill-health which position has been supported by his doctor. However, after the sequestration order was made, in April 2011, the applicant applied to this Court for leave to travel to Japan which is an activity contra indicated having regard to his claimed medical problems. I note the capacity of the applicant to do what he likes if he is so minded, even though it contradicts positions held by him about his incapacity.
It is also to be noted that the applicant seems to be able to prosecute his own applications diligently and in a timely manner where it is to his advantage to do so, and here I am speaking of his application to set aside the judgment debt in the Melbourne Magistrates’ Court.
Also I have found, when the applicant has engaged in the process, albeit by telephone from Queensland, his explanations for purportedly not receiving documentation were dubious, but he was given the benefit of the doubt.
In my view, his contention that he has a fax machine that is incapable of receiving faxes, only sending them, is implausible; particularly, having regard to the fact that he sells himself to the world at large as a man abreast of all modern electronic technologies.
Having regard to my personal experience in dealing with the applicant and having regard to those matters set out above which are contradictory to the general position concerning his claimed ill-health and incapacity projected by the applicant, I am of the view that he is not a person in whom I could have much confidence about his creditworthiness
Conclusion
My findings and comments about the creditworthiness of the applicant do not form the basis of my determination of the identified issue which the Appeal Court remitted back to me. They are only by way of background and an expression of my concerns in that regard.
Clearly the evidence of Mr Moloney was determinate of the outcome, which evidence established his entitlement for fees for work done by him in his professional capacity at the request of the applicant.
The amount charged was more than reasonable and the applicant has no basis to refuse payment. There is no merit in any suggested defence to the Melbourne Magistrates’ Court proceedings. The end result is that my earlier findings made on 19 May 2011 stand, and the only outstanding issue has been considered and findings made in favour of the respondent. There is no basis for setting aside the sequestration order of Registrar Allaway made on 7 February 2011.
The application to set aside that order should be dismissed.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of O'Dwyer FM
Date: 30 January 2013
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