CFB18 v Reader Lawyers & Mediators

Case [2018] FCA 611

FEDERAL COURT OF AUSTRALIA

CFB18 v Reader Lawyers & Mediators [2018] FCA 611

File number: WAD 42 of 2017
Judge: COLVIN J
Date of judgment: 7 May 2018
Catchwords:

BANKRUPTCY AND INSOLVENCY - application to set aside bankruptcy notice - whether the applicant has a counter‑claim , set‑off or cross demand pursuant to s 40(1)(g) of the Bankruptcy Act 1966 (Cth) - where applicant's alleged off‑setting claim arises from respondent's representation in Family Court proceedings - no offsetting claim

BANKRUPTCY AND INSOLVENCY - Application to extend time to review Registrar's decision - whether there was a deemed extension pursuant to s 41(7) of the Bankruptcy Act 1966 (Cth)

PRACTICE AND PROCEDURE - judgment and orders -judgment containing an account of matters that occurred in Family Court proceedings - whether non‑publication order should be made having regard to s 121 of the Family Law Act 1975 (Cth) - non‑publication order made

Legislation:

Bankruptcy Act 1966 (Cth) ss 40(1)(g), 41, 41(3), 41(6A), 41(7), 44(1)(c)

Family Law Act 1975 (Cth) s 121

Federal Court of Australia Act 1976 (Cth) ss 35A(5), 37AE, 37AG(1)

Civil Judgments Enforcement Act 2004 (WA) ss 7, 15
Cases cited:

Abigroup Ltd v Abignano [1992] FCA 567; (1992) 39 FCR 74

Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16; (2016) 259 CLR 1

Chen v Migration Agents Registration Authority (No 1) [2016] FCA 649

Coshott v Prentice (No 2) [2016] FCA 1531

Ebert v Union Trustee Company of Australia Ltd (1960) 104 CLR 346

Ebert v Union Trustee Company of Australia Ltd (1961) 105 CLR 327

Elkateb v Lawindi [2000] FCA 1939

Guss v Johnstone [2000] HCA 26

Hinchcliffe v Commissioner of Police of the Australian Federal Police [2001] FCA 1747; (2001) 118 FCR 308

Lindholdt v Merritt Madden Printing Pty Ltd [2002] FCA 260

Martin v Commonwealth Bank of Australia [2001] FCA 87

Mazukov v University of Tasmania [2004] FCAFC 159

Murdaca v Accounts Control Management Services Pty Ltd [2007] FCA 964

Oreb v Australian Securities and Investments Commission [2016] FCA 321

Palaniappan v Westpac Banking Corporation [2017] FCAFC 121

Re Edelsten; Ex parte Donnelly (1988) 18 FCR 434

Re Glew; Glew v Harrowell [2003] FCA 373

ReSchekeloff; Ex Parte Schekeloff v The Hopkins Group Pty Ltd (1989) 22 FCR 407

Re Shaddock; Ex parte Commonwealth Bank of Australia [1998] FCA 355

Shephard v Chiquita Brands South Pacific Ltd [2004] FCAFC 76

State Bank of New South Wales v Gomez [2002] FCA 1476

Streimer v Tamas (1981) 54 FLR 253

Vogwell v Vogwell (1939) 11 ABC 83

Webb v Hunter [1995] FCA 1443; (1995) 59 FCR 24

Wiltshire-Smith v Mellor Olsson (1995) 57 FCR 572
Date of hearing: 19 April 2018
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 93
Counsel for the Applicant: The Applicant appeared in person
Counsel for the Respondent: Mr SV Forbes
Solicitor for the Respondent: Stewart Forbes Solicitor

ORDERS

WAD 42 of…

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Details
AGLC
CFB18 v Reader Lawyers & Mediators [2018] FCA 611
Case
[2018] FCA 611
Decision Date

CaseChat Overview and Summary

The case before the court involved CFB18, who sought to set aside a bankruptcy notice issued by Reader Lawyers & Mediators. CFB18 had previously engaged Reader Lawyers & Mediators to act on her behalf in Family Court proceedings in 2014, but had not paid some accounts rendered by the firm. A bankruptcy notice was issued on 21 January 2017, and CFB18 applied to set it aside on 13 February 2017. The application was dismissed by a Registrar of the Federal Court on 23 October 2017, and CFB18 sought to review this decision. The primary issues were whether the application to review the Registrar's decision was out of time, whether there should be an extension of time to comply with the bankruptcy notice, and whether the application to set aside the bankruptcy notice was meritorious.

The court held that the application to review the Registrar's decision was out of time, but granted an extension of time to bring the application. The court found that the application to set aside the bankruptcy notice was not meritorious as CFB18 had not established a valid offsetting claim. The court held that the alleged offsetting claim was not effective or real, and that it did not meet the requirements of section 40(1)(g) of the Bankruptcy Act 1966 (Cth). The court also found that there was an automatic extension of time under section 41(7) of the Bankruptcy Act 1966 (Cth), and that the respondent had six months after the dismissal of the application to present a creditor's petition based upon a failure to comply with the bankruptcy notice.

The court dismissed the application to review the decision of the Registrar and ordered CFB18 to pay the costs of the application. The court also made a non-publication order to protect the identity of the parties involved in the Family Court proceedings, in accordance with section 121 of the Family Law Act 1975 (Cth). The court's decision was based on the evidence presented and the relevant provisions of the Bankruptcy Act 1966 (Cth) and the Family Law Act 1975 (Cth).

Orders

Orders of the court

1. Until further order the applicant be named as CFB18.

2. The time for bringing an application to review the decision of the Registrar dismissing the application to set aside the bankruptcy notice issued by the respondent and served on the applicant on 21 January 2017 be extended until 23 February 2018.

3. The application to review the decision of the Registrar be dismissed.

4. The applicant do pay the costs of the application to review the decision of the Registrar to be assessed if not agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

Given that the complaints that the applicant now raises appear to have been raised in the context of the taxation and that they emerged in the context of part 2 of the proceedings when other lawyers took over conduct of the applicant's Family Court proceedings from the respondent, I am not satisfied that this is the kind of case where the allegations have been recently invented in an attempt to stave off the bankruptcy. They substantially precede the service of the bankruptcy notice.Evidence of the applicant in the part 1 hearing A considerable number of the complaints that the applicant raises in her affidavit (and which, it seems, are the subject of the District Court proceedings she has commenced) concern the approach to evidence about complaints of harm by the applicant's husband to their child. The matters that the applicant says should have been done but were not done include (a) obtaining evidence from a forensic medical doctor to be made available to the court; (b) providing assistance during interviews and meetings with the Department of Child Protection and Family Services; (c) acting within reasonable time to bring about the appointment of the clinical psychologist for the child of the marriage and assessment prior to the trial; (d) effectively arguing the case of abuse by conducting a more thorough and targeted cross‑examination of the father of the child; (e) instructing the barrister to effectively question the father's behavior and argue that the evidence of abuse be attributed to him; and (f) defending the applicant against accusations concerning the photographing of the child of the marriage and that it was the father who was inflicting bruises and marks on the child. As to these matters, the respondent refers to the following testimony of the applicant at the hearing in part 1 (redacted as to identifying material):No. All right. So do I take it then that, now that you've heard the evidence of Mr … and now that you've heard the evidence of his partner and now that you've heard the evidence of …, the nanny, do you now accept that Mr … did not and does not physically harm your [child]?---I do not believe that he physically harms … our [child].And do you accept - - -?---But that's not to say that, maybe in times of frustration or losing his temper or that, perhaps, in physically disciplining [the child], he has forgotten, perhaps, his strength, that he has inadvertently harmed [the child], but I do not believe that he would deliberately harm our [child].I didn't ask deliberately harm. I asked, do you accept that Mr …does not - did not and does not - physically harm your [child]. You initially said you accept it, but you then qualified it. And so the qualification, to me, suggests that you don't completely accept it?---I accept that he does not physically harmIn any way?---In any way.Unreservedly?---Unreservedly.Why are we then hearing from evidence from Dr ..., for instance, in this trial?---I guess because I've had, as I've explained, many concerns about in terms of marks and bruises that [the child] has presented with, in terms of comments that [the child] has made with - to me over a long, long period of time.

Decision

Reasons for decision

In those circumstances, to enable these reasons to be published in accordance with principles of open justice, I have prepared them in a manner that will not identify the participants in the Family Court proceedings if the name of the applicant is not used in any publication and I make an order that in these proceedings the applicant be named as CFB18. No issue arises in relation to the communications that have occurred in the course of the proceedings to date: Re Edelsten; Ex parte Donnelly (1988) 18 FCR 434, 436.Review of Registrar's decision refusing application to set aside bankruptcy notice The applicant seeks to set aside a bankruptcy notice. A Registrar of this Court has refused the application. The matter comes before me on a hearing de novo: s 35A(5) of the Federal Court of Australia Act; Martin v Commonwealth Bank of Australia [2001] FCA 87 and Mazukov v University of Tasmania [2004] FCAFC 159. Three main issues arise. First, the application to review the Registrar's decision was commenced out of time so there is a question whether there should be an extension of time to enable the applicant to bring the application. Second, if time is extended, there is an issue as to the merits of the application. Third, if the application is not successful there is a question whether there should be an extension of time to comply with the bankruptcy notice for the benefit of the respondent.Chronology of relevant events The applicant engaged the respondent to act for her in Family Court proceedings in 2014. Some accounts rendered by the respondent were not paid. They were submitted for taxation in the Supreme Court of Western Australia and an amount of $65,000 was determined to be payable. A certificate of taxation issued in September 2016. A bankruptcy notice was served on the applicant on 21 January 2017. (Although there was uncertainty before the Registrar as to the date of service, before me it was accepted that the notice was served on 21 January 2017 and the application to set aside was brought within time). The applicant applied to set aside the bankruptcy notice on 13 February 2017. The applicant says that she has a counter-claim, set-off or cross demand (offsetting claim) that exceeds the amount of the judgment debt the subject of the notice. The set aside application was heard by a Registrar of this Court. Before the Registrar, the respondent submitted that the alleged offsetting claim was not 'effective' or 'real' and therefore it was not a valid application. The applicant acted on her own behalf on the application to set aside the bankruptcy notice. The Registrar dismissed the application on 23 October 2017 and indicated that reasons 'will follow in due course'. The Registrar found that the applicant failed to establish that she had an offsetting claim. He ordered that the application be dismissed with costs. No order was made for any extension of time in relation to compliance with the bankruptcy notice. It appears that the Registrar proceeded on the basis that there was an automatic extension under s 41(7) of the Bankruptcy Act 1966 (Cth) and therefore the respondent had six months after the dismissal of the application to present a creditor's petition based upon a failure to comply with the bankruptcy notice.

Ratio Decidendi

Legal Principle Established

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