Cheung v Burness (Trustee)

Case [2016] FCA 1381


FEDERAL COURT OF AUSTRALIA

Cheung v Burness (Trustee) [2016] FCA 1381

Appeal from: Capital Finance Australia Ltd v Cheung [2016] FCCA 352
File numbers: VID 255 of 2016
VID 256 of 2016
VID 257 of 2016
Judge: MOSHINSKY J
Date of judgment: 21 November 2016
Catchwords: BANKRUPTCY – appeal from Federal Circuit Court of Australia – where primary judge refused application for an extension of time for bankrupt to seek review of sequestration order – whether primary judge erred in refusing to extend time – where primary judge found that the guarantee from which the bankruptcy stemmed was executed by the bankrupt and was not forged – whether primary judge erred in proceeding on the basis that the bankrupt bore the onus of establishing forgery
Legislation:

Evidence Act 1995 (Cth), s 140

Federal Court of Australia Act 1976 (Cth), s 24(1)(d)

Cases cited:

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424

Corney v Brien (1951) 84 CLR 343

Devries v Australian National Railways Commission (1993) 177 CLR 472

Fox v Percy (2003) 214 CLR 118

Grundy v Wattyl Australia Pty Ltd [2002] FCA 1480

Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 334

Miller & Associates Insurance Pty Ltd (ACN 089 245 465) v BMW Australia Finance Ltd (ACN 007 101 715) (2010) 241 CLR 357

RailPro Services Pty Ltd v Flavel [2015] FCA 504

Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550

Sopikiotis v Owners Corporation RP017740 (2013) 211 FCR 321

Wren v Mahony (1972) 126 CLR 212

Wolff v Donovan (1991) 29 FCR 480

Zoltaszek v Downer EDI Engineering Pty Ltd [2011] FCA 744

Date of hearing: 26 and 27 July 2016
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 87
Counsel for the Appellant/Applicant: The appellant/applicant appeared in person
Counsel for the Trustees: Mr S Waldren
Solicitor for the Trustees: Hutchinson Legal
Counsel for Capital Finance Australia Ltd: Mr B Carew
Solicitor for Capital Finance Australia Ltd: Kemp Strang

ORDERS

VID 255 of 2016
BETWEEN:

KT CHEUNG

Appellant

AND:

PAUL ANDREW BURNESS AND MATTHEW JAMES JESS (AS TRUSTEES OF THE BANKRUPT ESTATE OF KT CHEUNG)

First Respondent

CAPITAL FINANCE AUSTRALIA LTD (ACN 069 663 136)

Second Respondent

JUDGE:

MOSHINSKY J

DATE OF ORDER:

21 NOVEMBER 2016

THE COURT ORDERS THAT:

1.The matter be listed for hearing on a date to be fixed for submissions on the form of orders to be made (including as to costs).

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


ORDERS

VID 256 of 2016
BETWEEN:

KT CHEUNG

Applicant

AND:

CAPITAL FINANCE AUSTRALIA LTD (ACN 069 663 136)

First Respondent

PAUL ANDREW BURNESS AND MATTHEW JAMES JESS (AS TRUSTEES OF THE BANKRUPT ESTATE OF KT CHEUNG)

Second Respondent

JUDGE:

MOSHINSKY J

DATE OF ORDER:

21 NOVEMBER 2016

THE COURT ORDERS THAT:

1.The matter be listed for hearing on a date to…

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Cheung v Burness (Trustee) [2016] FCA 1381
Case
[2016] FCA 1381
Decision Date

CaseChat Overview and Summary

The case of Cheung v Burness (Trustee) involves a bankruptcy appeal from the Federal Circuit Court of Australia. The primary judge had refused an application for an extension of time for the bankrupt, Ms Cheung, to seek a review of her sequestration order. The appeal questioned whether the primary judge erred in his refusal to extend time and whether he was correct in proceeding on the basis that Ms Cheung bore the onus of establishing forgery in relation to the guarantee document from which the bankruptcy stemmed.

The legal issues before the court were twofold: firstly, whether the primary judge was correct in his decision not to extend the time for Ms Cheung to seek a review of her sequestration order; and secondly, whether the primary judge erred in placing the onus of proving forgery on Ms Cheung, rather than on the creditor who alleged the guarantee was valid. The court needed to assess the evidence presented regarding the authenticity of the guarantee and the credibility of Ms Cheung’s claims of forgery.

The court found that the primary judge was correct in his decision not to extend the time for Ms Cheung to seek a review of her sequestration order. The court upheld the primary judge’s findings that the guarantee was indeed executed by Ms Cheung and was not forged. The court noted that Ms Cheung had been inconsistent in her claims of forgery and that the primary judge had appropriately assessed the credibility of the witnesses, placing more weight on the evidence presented by the other parties. The court also found that it was not erroneous for the primary judge to place the onus of proving forgery on Ms Cheung, given the nature of her claims and the evidence presented.

The court listed the matter for hearing on a date to be fixed for submissions on the form of orders to be made, including as to costs. The final orders were to be dealt with in accordance with Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The matter be listed for hearing on a date to be fixed for submissions on the form of orders to be made (including as to costs).

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

Background

Background to the litigation

I will list the matter for hearing on a date to be fixed for submissions on the form of orders to be made (including as to costs).Background facts The following statement of the background facts is drawn primarily from the reasons of the primary judge (the Reasons). I have also drawn on some evidence in Part C of the Appeal Book (AB) in relation to matters which appear to be uncontentious. To assist the parties’ consideration of these reasons, I have included references to the Reasons and the Appeal Book. References to the transcript (T) are to the transcript of the hearing before the primary judge. Ms Cheung’s previous name was Katie Truong (Reasons, [28]). In her evidence before the primary judge, Ms Cheung said that “KT”, “Katie” and “Katherine” are pretty much the same name, and that “Truong”, “Zhang”, “Chang” and “Cheung” are all different spellings of the same surname, depending on whether one takes the Vietnamese or Chinese version (Reasons, [82]). Ms Cheung initially studied three years of Computer Science at Monash University. She then transferred to complete an undergraduate degree majoring in Psychology at Monash University. This was followed by a postgraduate qualification in Psychology and a Masters of Psychology (Counselling). Her employment history included management at a number of retail stores (Reasons, [48]). As noted above, on or about 10 July 2004, a guarantee and indemnity dated 10 July 2004 was purportedly signed by Ms Cheung in favour of Capital Finance (AB tab 4). The guarantor is named as “KT Cheung”. The customer is named as LWY Holdings Pty Ltd, a company controlled by Ms Cheung’s then husband. The document has a Capital Finance logo at the top of the first page and is expressed to be given to Capital Finance. It is a two-page, standard form document. It purports to be signed by KT Cheung in the presence of BJ Lazzaro (Mr Lazzaro). Another document, which formed part of a suite of documents which included the guarantee, is a six-page business finance application (the Business Finance Application). (A copy of the six-page application is at AB tab 10, exhibit “PAD-3”. A better copy of pages 5 and 6 of the application is at AB tab 15, Annexure E, item (A) 2.) The document has the date 10 July 2004 typed into a field which appears at the top of each page. The last two pages – pages 5 and 6 – relate to the guarantee to be given by Ms Cheung. A number of fields on these pages have been completed with details which, Ms Cheung contended before the primary judge, were incorrect. The application purports to be signed on page 6 by Ms Cheung and by Mr Lazzaro. The date alongside each signature is 19 June 2004, which curiously is earlier than the date which appears in the date field for the application at the top of each page (10 July 2004). Nor does it match the date on which the document was printed as indicated at the foot of each page (also 10 July 2004). Thus the document purports to have been signed on a date before the date on which it was printed. Further, it appears from the time at which each page was printed, as appearing in the footer on each page, that pages 1-4 and 6 were printed at 10.13 am on 10 July 2004, but page 5 was printed at 12.50 pm on that day. The reason why this page bears a different (and later) print time was not explained in the evidence.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 23 January 2015, Ms Cheung issued the Extension of Time Application in the proceeding in which the sequestration order had been made (Federal Circuit Court proceeding MLG 1701/2010). This application comprised an application in a case, seeking leave to bring an application for review of the sequestration order. The parties to the original proceeding were Capital Finance as applicant and Ms Cheung as respondent. The parties to the Extension of Time Application were Ms Cheung as applicant and Capital Finance and the Trustees as respondents.The judgment below A hearing took place before the primary judge over three days. As the primary judge noted in the Reasons (at [6]) another judge of the Federal Circuit Court had directed that the matters be heard together, but that a preliminary hearing take place to determine two questions. The primary judge summarised the preliminary questions in his Reasons at [6]:They are whether time should be extended to permit Ms Cheung to bring her Application to set aside her bankruptcy and whether, as Ms Cheung strongly asserts, the guarantee from which all this stems, already referred to, was in fact a forgery. The primary judge set out his conclusions at [8] of the Reasons. His Honour concluded:For the reasons that follow, I am positively satisfied that the original guarantee was indeed executed by Ms Cheung and was not forged. I also decline the Application to extend time within which to allow the Application to be brought. The primary judge dealt with background factual matters at [11]-[46] of the Reasons. I have drawn on this part of the Reasons in the section on background facts set out above. His Honour then considered the evidence of Ms Cheung (Reasons, [47]-[85]) and the evidence of Philip Duxbury (Reasons, [86]-[88]). His Honour then considered the evidence of Mr Ganas, a handwriting expert (from QD Forensics) engaged by the Trustee pursuant to a direction of the Court (Reasons, [89]-[95]), and the evidence of Mr Holland, a handwriting expert engaged by Capital Finance (Reasons, [96]-[103]). Next, his Honour considered the evidence of Mr Lazzaro, who worked on-site at the Mercedes-Benz Berwick dealership (Reasons, [104]-[109]). Mr Lazzaro’s signature appears on the Capital Finance documents, including as witness on the guarantee. The primary judge then considered Mr Lowe’s evidence, relating to service of the creditor’s petition (Reasons, [110]-[113]) and the evidence of Mr Burness (Reasons, [114]-[119]). His Honour made findings as to the credit of witnesses at [120]-[128] of the Reasons. He considered Ms Cheung to be a poor witness and stated that, where there was a conflict between the evidence of Ms Cheung and the witnesses called by the other parties, he preferred the evidence of the other parties (Reasons, [128]). The primary judge’s findings of fact, and conclusions, are set out in [129]-[163] of the Reasons. The primary judge stated at [145]-[147]:145.I have already said what I have had to say about Ms Cheung’s credit. By now, she may well believe the story she has been saying for so many years. It must be remembered that her response has been, since a relatively early stage, to the effect that the original Guarantee was a forgery. That document was executed at a time when it is not clear whether or not she was still in a relationship with her former husband, Mr Lai. I pay regard to the fact that he is undergoing an extensive period of imprisonment, apparently for fraud.146.Mr Lai, of course (and Mr King), were not called to give evidence, and I give their affidavits no weight accordingly. It should be noted, moreover, that although Ms Cheung has asserted forgery from an early stage, she did not do so right from the beginning. It took her some time before this important assertion was made.147.A finding such as this is one to which s.140 of the Evidence Act applies. It is not to be made lightly. Having regard, however, to the evidence as a whole, including the evidence of Mr Holland and, indeed, the evidence of Ms Cheung herself, I have no doubt that Ms Cheung did indeed execute the original Guarantee. The form may well have had errors, but as Mr Burness pointed out, such are not uncommon.

Ratio Decidendi

Legal Principle Established

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