Commonwealth Bank of Australia v Maher

[2008] FMCA 1280

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COMMONWEALTH BANK OF AUSTRALIA & ORS v MAHER [2008] FMCA 1280

BANKRUPTCY – Creditors Petition – Application for adjournment – whether one of creditors still exists.

Bankruptcy Act 1966 (Cth), ss.52(1), 52(2), 52(5)
Federal Court Rules, Order 62 r.45(3)
Federal Magistrates Court Rules 2001, r.15.29A

Applicant: COMMONWEALTH BANK OF AUSTRALIA & ORS

Respondent: DENNIS MAHER

File number: MLG 263 of 2008

Judgment of: Phipps FM

Hearing date: 15 August 2008

Date of last submission: 15 August 2008

Delivered at: Melbourne

Delivered on: 15 August 2008

REPRESENTATION

Counsel for the Applicant: Mr. R. Shepherd

Solicitors for the Applicant: A. J. Mullumby Solicitors

The Respondent appearing in person via telephone link:

ORDERS

1. A sequestration order be made against the estate of DENNIS MAHER.

2. The applicants’ costs of and incidentals to the petition, including reserved costs, be taxed in accordance with Order 62 of the Federal Court Rules and paid in accordance with the statute.

3. The Court notes that the date of the act of bankruptcy is 15 March 2007.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 263 of 2008

COMMONWEALTH BANK OF AUSTRALIA & ORS

Applicant

And

DENNIS MAHER

Respondent

REASONS FOR JUDGMENT

(Application for Adjournment)

1. The Respondent, Mr Maher, has applied for an adjournment.  The application before me is an application for a sequestration order.  It was originally filed on 23 March 2007 and has a significant history in this court and in the Federal Court.  Mr Maher, the respondent, applied to set aside the bankruptcy notice on which the petition is founded.  That application was dismissed by O'Dwyer FM.

2. There was an appeal filed in the Federal Court.  The petition, at one point, was transferred to the Federal Court by McInnis FM.  The basis for that I do not need to deal with. Sundberg J in the Federal Court transferred the petition back to the Federal Magistrates Court. 

3. I note that on 18 March 2008 Hartnett FM gave Mr Maher leave to withdraw a notice of motion he had filed on 17 March 2008. Her Honour, pursuant to s.52(5) of the Bankruptcy Act 1966 (Cth), extended the period for the creditors' petition, or extended the period under which it would lapse to 23 February 2009, and then fixed the hearing of the creditors' petition for 21 July 2008. It was subsequently adjourned and it is now fixed for hearing today.

4. Yesterday, Mr Maher sent, by facsimile, to the court a medical certificate and a letter in which he sought an adjournment. This morning he has sent an application and affidavit by facsimile.  The application he has filed has not been sealed or issued through the registry as yet, but he has made an application for an adjournment.  The medical certificate to which he refers is dated 5 August 2008 by Dr Teasdale and it says, "Mr Dennis Maher, of 9 Knight Street, Clayton, states that he is still suffering from a gastric infection with vomiting and diarrhoea.  This has caused an exacerbation of his neurodermatitis, for which he has seen a consultant dermatologist, who will review him in two weeks.  He will be unfit to attend court for at least the next two weeks." 

5. The application filed seeks a number of things, but includes an application for an adjournment. I do not need to deal with the other matters in that application at the moment; I will only be dealing with the application for adjournment. On his accompanying correspondence, Mr Maher had a mobile telephone number and he is now appearing in the court through that mobile telephone number. As well as the medical matters, he has said that he wants to retain a solicitor and he refers to matters which are deposed to in his affidavit in which he says that one of the petitioning creditors, Gray and Johnson, a firm, does not exist now and he alleges it may well not have existed at the time the judgment debt was obtained.

6. The adequacy of the judgment debt is a substantive issue itself, not a subject matter for adjournment.  This court can conduct hearings by telephone.  Mr Maher has dealt quite adequately with his submissions on the application for an adjournment, so he is able to attend by telephone.  In addition, I am not satisfied that the medical certificate does show that, in the circumstances of this case, where there is a history of late applications and delay by the respondent, Mr Maher cannot attend.  It is dated 5 August 2008 and that is 10 days ago now.  It does say he will be unfit for two weeks. He has not satisfied me that there are medical circumstances which would require an adjournment.  Independently of the fact that he can attend by telephone, I would not grant the adjournment in any event. 

7. I should refer to his stating that he wishes to obtain legal representation. He has not had any legal representation since this proceeding commenced. Mr Maher first filed a document on 19 April 2007, when he filed a notice of appearance. He has not been represented so there is no basis for him now to apply for an adjournment. On the grounds that he wishes to obtain representation the application for an adjournment is refused.

REASONS FOR JUDGMENT

1. There are three Creditors, Commonwealth Bank of Australia, Greg Firth, and Gray and Johnson (a firm). The Creditors' petition was filed on 23 March 2007. On 18 March 2008 Hartnett FM ordered that, pursuant to s.52(5) of the Bankruptcy Act 1966 (Cth), the period at the expiration of which the creditors' petition filed 23 March 2007 will lapse be extended to 23 February 2009. On that day, her Honour fixed the hearing of the creditors' petition for 21 July 2008. It has subsequently been adjourned until today. Her Honour ordered that any further affidavit material sought to be relied upon by the respondent be filed and served prior to 18 April 2008.

2. In support of the creditors' petition the petitioning creditor relies upon the affidavit of Dean Christian Groves, sworn on 23 March 2007, which verifies the matters stated in the creditors' petition. The creditors' petition relies upon an act of bankruptcy, being a failure to comply with a bankruptcy notice numbered BN1355. That notice was extended on two occasions and, eventually, it expired at 4.00pm on 15 March 2007.

3. The formal matters which are required in support of the petition are proved.  So far as proving debt and that the debtor is not bankrupt by some other means, an affidavit of debt sworn by Peter Puki has been filed today and an affidavit of search sworn by Dean Christian Groves has been filed today.  Two affidavits by Mr Peter Puki have been filed.  Mr Puki deposes that he is a manager of the Commonwealth Bank.  The first affidavit says that he is authorised, on behalf of the Commonwealth Bank, and has access to the books and records of the applicant creditor, and he then verifies the debt has not been paid.  The second is in the same form but he deposes to having access to the books and records of the applicant creditors and he deposes that the money is still owing. 

4. Mr Maher, who appears for himself, objects to the affidavit and applies for cross-examination on the basis that he asserts that Mr Puki could not swear on behalf of all of the creditors and, in particular, he could not swear on behalf of the third creditor Gray and Johnson, a firm, because Mr Maher asserts that firm does not exist.  If Gray and Johnson, a firm, does not exist at this time, then that makes no difference to what Mr Puki is swearing to.  It means he would be swearing the money that has not been paid to two existing creditors.

5. The affidavit of debt is a formal requirement, but a necessary requirement.  I can see from the background to these proceedings that a manager at the bank would well be able to swear to the money not having been paid to any of the creditors in these circumstances.  The debt itself is two cost orders which were made in the Federal Court of Australia. That costs order was taxed by Registrar Mussett. 

6. Attached to the bankruptcy notice is the order of Registrar Mussett made on 24 July 2002, which records that the court ordered the applicant to pay the first, second and third respondents' costs of the proceedings and, on 5 February 2004, ordered the applicant to pay the costs of the cross-application, including any reserved costs, and Registrar Mussett refers to the taxation and then orders, pursuant to Order 62 r.45(3) of the Federal Court Rules that the applicant pay to the first, second and third respondents the sum of $57,603.00.  Given the background of the dispute, it is clear that a bank manager would be in a position to swear that that money has not been paid. 

7. Mr Maher has made an application for cross-examination. He does not allege that the money has been paid. His allegation is to the contrary. He asserts that there is not a proper debt so he asserts that the money has not been paid. There is no relevant matter in Mr Puki’s affidavit about which there could be cross-examination. Insofar as it is necessary, I will exercise the power under r.15.29A of the Federal Magistrates Court Rules 2001, or generally what power I may have to dispense with any requirement of cross-examination.

8. Mr Maher has filed a Notice of Opposition on 23 April and an amended Notice of Opposition on 4 December. Now his opposition is based on a document which he has referred to in the course of the submissions, which he says is dated in July and which he says has been filed, but it does not appear on the file.  Now his opposition is based on several things, the first of which is that he alleges that the third applicant creditor, Gray and Johnson, a firm, does not exist and has not existed for quite some time. 

9. He has read an affidavit by a Mr Donaldson, a solicitor. This affidavit has not been filed but, through reading that document, Mr Maher asserts that the name Gray and Johnson was owned by a corporation at all times and that corporation has been deregistered.  Possibly it was owned by two corporations but both of those corporations have been deregistered and, therefore, no longer exist.  If that is the case it makes no difference to the application. It would simply be an application on behalf of the two remaining creditors.  I do not see that as the basis of a ground of opposition. 

10. Mr Maher disputes the validity of the costs order.  I say two things about that; the first is that the costs order is made by the Federal Court, a superior court and it is presumed to be regular until set aside. Secondly, Mr Maher challenged the bankruptcy notice.  He applied to set aside the bankruptcy notice.  That application was heard by O'Dwyer FM on 15 and 16 March 2007.  He delivered judgment on 19 March 2007. 

11. Part of the grounds of opposition was similar to the current ground of opposition - that is, that the third creditor does not exist or could not have been properly made a party to the bankruptcy notice.  His Honour dealt with that point and did not see it as a basis for setting aside the bankruptcy notice.  Mr Maher appealed from O'Dwyer FM's decision. 

12. On 29 February 2008 Sundberg J, in the Federal Court, ordered that on or before 14 March 2008, the applicant provide security in the sum of $13,215.00 for the costs to be incurred by the respondent in the appeal; such security to be provided in a form acceptable to the district registrar. He further ordered that if such security is not provided as aforesaid the appeal be forthwith dismissed. The appeal has not proceeded and I infer that the security was not provided, which means that the appeal stands dismissed.

13. His Honour's judgment is given on 29 February 2008 in matter number VID284/2007.  At paragraph 10 his Honour says, "The complaint that the respondent's demand for payment should have been on behalf of all parties jointly entitled to costs and that each should have been named in the notice for that purpose was dealt with by the magistrate at paragraphs 32 to 35 of his reasons.  On the evidence before him the magistrate found that the respondent was authorised to collect all of the costs on behalf of the other parties."

14. Paragraph 11: "Having reviewed the magistrate's reasons my assessment is that the applicant's prospect of succeeding on any appeal are slight." Mr Maher, as I discern from what he says, opposes the sequestration order on the basis that the current solicitors and the Commonwealth Bank are not authorised on behalf of all the creditors to proceed with this petition. That issue, the issue of the ability of the Commonwealth Bank to act on behalf of all the creditors, has already been dealt with and decided in O'Dwyer FM's decision, and referred to by Sundberg J. It cannot be reopened by the respondent debtor now. I am satisfied of the matters required under s.52(1) of the Bankruptcy Act 1966 (Cth).

15. Section 52(2) of the Bankruptcy Act 1966 (Cth) says that if the court is satisfied by the debtor that he or she is able to pay his debts, or that for other sufficient cause a sequestration order not be made, it may dismiss the petition. It seems that Mr Maher is relying on the second of those - that is, that for other sufficient cause a sequestration order ought not be made. A part of what he has referred to in the course of his submissions is proceedings in the County Court. These have been stayed. He asserts that he has a claim against the Commonwealth Bank, or possibly a claim against all of the petitioning creditors, whether it is two or three petitioning creditors. The question of a counterclaim has already been dealt with by O'Dwyer FM in the application to set aside the bankruptcy notice. It cannot be raised again by Mr Maher now.

16. Even if it can, insofar as Mr Maher may be alleging that he has some form of claim against any of the petitioning creditors, there is no material before me which shows that there is a claim with any prospect of success, let alone any reasonable prospects of success.  On that basis he has not shown sufficient cause for the sequestration order not being made. 

17. The basis of Mr Maher's submissions are either matters already dealt with by O'Dwyer FM and Sundberg J in the application to set aside the bankruptcy notice, or they are based on the alleged non-existence of Gray and Johnson, a firm.  None of those matters are a reason for not making the sequestration order. 

18. The respondent, Mr Maher, has applied for a stay in the operation of the order I have just pronounced.  He alleges reasonable apprehension of bias on the basis that the application has been sprung on him by way of a telephone call and that he has not had time to prepare for it.  What he says is not correct.  The application was last fixed for hearing by Hartnett FM in her order of 18 March, when it was adjourned to 21 July.  I have already referred to that.  It then was adjourned again until this day, so that Mr Maher has had ample notice of the application.  It is not correct that he has been surprised by a hearing today.  Today's date has been fixed for many weeks.  He puts forward no basis for a stay in the operation of the sequestration order.  That application is refused.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Phipps FM

Deputy Associate:  Paul Moss

Date:  10 September 2008