Christou v Demandem Holdings Pty Ltd and Anor

[2013] HCATrans 78

[2013] HCATrans 078

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P24 of 2012

B e t w e e n -

NICK CHRISTOU

Applicant

and

DEMANDEM HOLDINGS PTY LTD ACN 009 258 664

First Respondent

GLENLEA ENTERPRISES PTY LTD ACN 065 274 544

Second Respondent

Application for special leave to appeal

HAYNE J
KEANE J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO PERTH

ON FRIDAY, 12 APRIL 2013, AT 11.43 AM

Copyright in the High Court of Australia

MR P.G. CLIFFORD:   If it please your Honours, I appear for the applicant.  (instructed by Alan Rumsley Commercial Disputes Lawyer)

MR M.L. BENNETT:   May it please the Court, I appear for the respondents.  (instructed by Bennett & Co)

HAYNE J:   Yes.

MR CLIFFORD:   I will go straight at this, your Honours.  The application is an application for leave to appeal from a decision of the intermediate appeal court, being Justice Barker’s decision, which was from an appeal from Justices, in effect, Raphael and Driver in the Federal Magistrates Court. 

The matter at issue concerns the application of the substantive justice test in section 52(2) of the Bankruptcy Act.  The material facts in the case may be stated very briefly.  They are:  there were at all times offsetting claims or claims that the applicant had against the respondents, not yet crystallised, that were for an amount equal to or greater than the debt that appeared in the petition.  If that is right, the exercise of the discretion under 52(2) of the Bankruptcy Act ought to have been exercised and there ought to have been set aside the petition. 

It ought to have been done as I have said because of the fact that there were at all times offsetting amounts owing to the applicant, Mr Christou, and/or he had claims for greater amounts.  To do otherwise, we say, is to give little or almost no utility to the substantive justice between the parties’ test in section 52(2) of the Bankruptcy Act.  I immediately accept, to save argument, that we did not have legally offsetting claims as that term is referred to in the cases in 41(5) of the Act.  So that forms the basis of the application.

If I cannot persuade your Honours of that then I will not get leave on behalf of my client.  Your Honours, I do not think there is any challenge to the factual materials set out in the written submissions, at least any relevant challenge.  So all I do now is say I rely upon the written outline and I will hear what Mr Bennett has to say, unless your Honours have any questions.

HAYNE J:   Yes, thank you very much, Mr Clifford.  Yes, Mr Bennett, perhaps if you could simply state, without elaborate development, or perhaps any development, the propositions you advance in answer.

MR BENNETT:   Firstly, this was not an appeal, your Honours, from the decision of his Honour Magistrate Raphael, which was the determinative decision at first instance not appealed by the applicant that there was no offsetting claim.  Secondly, there was no error of principle, either by his Honour Federal Magistrate Driver or on appeal by his Honour Justice Barker, in a consideration of section 52(2) and no point of general principle arises. 

For the consideration of justice under section 52(2), the court properly had regard to the facts as to what debts were then due and payable by the applicant, which included tax costs in your Honours’ Court that had crystallised with a signed certificate of taxation, in addition to the debt that was the foundation of the act of bankruptcy so found by his Honour Magistrate Driver.

Secondly, the court had proper regard, and invited additional evidence and submission, on what debts may become liable or the applicant would become liable for in the future, received that evidence, considered it properly.  In the absence of identifying an error of principle to say that the applicant had non‑legally potentially offsetting debts is an attempt to re‑agitate the matters before his Honour Magistrate Raphael which were not the subject of appeal.

Secondly, to say that he had claims is to allude to proceedings that were before this Court at the time of bankruptcy where the applicant’s claim was the subject of a strikeout application.  This came on the back of nearly a decade of litigation, the agreed facts being the dispute had commenced in 2001 between three partners in an accountancy practice.  Litigation had commenced in 2003 in the Supreme Court of Western Australia ‑ ‑ ‑

HAYNE J:   I think we are coming into the development of the propositions.  Have you identified the propositions on which you rely?

MR BENNETT:   Yes, your Honour.  If it please the Court.

HAYNE J:   Yes, then we need not trouble you further, Mr Bennett.  What do you say in answer, Mr Clifford?

MR CLIFFORD:   I say nothing substantive in answer, other than as set out in the written submissions and I have opened on.

HAYNE J:   Very well.  Thank you, Mr Clifford. 

We are of opinion that an appeal in this matter would enjoy insufficient prospects of success to warrant a grant of special leave to appeal.  Special leave is refused.  It must be refused with costs.

MR BENNETT:   We seek an order – it appears at page 81 of the application book – that the respondents’ costs be taxed and paid in accordance with section 109 of the Bankruptcy Act, as if they were costs of the petitioning creditor. 

HAYNE J:   Why would we make that special order, Mr Bennett?

MR BENNETT:   To give the respondent who defends the order made by the court sequestrating the estate of the applicant priority for the payment of those costs as against other creditors.

HAYNE J:   Yes, thank you.  Mr Clifford, do you seek to be heard in answer?

MR CLIFFORD:   I do not.

HAYNE J:   Yes, then you may take an order in the terms you seek, Mr Bennett.  The Court will again adjourn to reconstitute.

AT 11.49 AM THE MATTER WAS CONCLUDED