Cooper v Director of Public Prosecutions (Cth)

[2023] SASC 83

SUPREME COURT OF SOUTH AUSTRALIA

(Magistrates Appeal: Criminal)

COOPER v DIRECTOR OF PUBLIC PROSECUTIONS (CTH) AND ANOR

[2023] SASC 83

Judgment of the Honourable Justice McIntyre 

25 May 2023

MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT

BANKRUPTCY - PROCEEDINGS IN CONNECTION WITH SEQUESTRATION - PROCEEDINGS CONSEQUENT ON SEQUESTRATION ORDER - DEBTOR'S STATEMENT OF AFFAIRS

BANKRUPTCY - BANKRUPTCY COURTS - JURISDICTION AND POWERS OF COURT

On 15 December 2022, following a summary trial, the appellant was convicted of two offences charged on separate Informations under ss 54(1) and 267B(1) of the Bankruptcy Act 1966 (Cth). The appellant appeals against both convictions.

The appellant submits that: the Magistrate did not have jurisdiction to hear the summary trial (grounds 1 and 2); the Magistrate made an error of law (ground 3); the sequestration order that led to the appellant being declared bankrupt was improperly made and the Magistrate should have taken steps to annul the bankruptcy (grounds 4 and 6); and the Magistrate acted in a biased manner or demonstrated actual bias (ground 5).

Held:

1.      Appeal dismissed.

Bankruptcy Act 1966 (Cth) ss 27, 54, 77C, 267B, 275; Magistrates Court Act 1991 (SA) s 42; Australian Constitution s 75; Judiciary Act 1903 (Cth) s 68(2); Evidence Act 1929 (SA) s 45, referred to.

Fox v Percy (2003) 214 CLR 118; Police v A, TG [2006] SASC 299; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; Craig v South Australia (1995) 184 CLR 163; Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia (2012) 249 CLR 398; Taikato v The Queen (1996) 186 CLR 454; Wheare v Police [2008] SASC 13, considered.

COOPER v DIRECTOR OF PUBLIC PROSECUTIONS (CTH) AND ANOR
[2023] SASC 83

Magistrates Appeal: Criminal

McINTYRE J:

1. On 15 December 2022, following a summary trial, the appellant was convicted of two offences charged on separate Informations under ss 54(1) and 267B(1) of the Bankruptcy Act1966 (Cth) (the Act). The appellant, who was unrepresented both at trial and on the appeal, appeals against both convictions.

2. For the reasons that follow I dismiss the appeal.

   Background

3. On 5 March 2020, the Federal Circuit Court of Australia made a sequestration order in respect of the appellant following a creditor’s petition by Selection Steel Trading Co Pty Ltd.  On the same day, the official trustee in bankruptcy was appointed as the trustee of the appellant’s bankrupt estate.  On 9 April 2020, Mr Gregory Dudley of RSM Australia Pty Ltd took over as trustee.

4. Section 54 of the Act requires a person against whose estate a sequestration order is made to make out and file with the official receiver a statement of affairs and furnish a copy of the statement to the trustee within 14 days of them being notified of their bankruptcy.  This is a strict liability offence.[1]  On 27 January 2021, an Information was filed by the first respondent, the Commonwealth Director of Public Prosecutions, alleging that the appellant failed to comply with s 54 of the Act.  It is common ground that the appellant has not filed a statement of affairs.

   [1]     Bankruptcy Act 1966 (Cth) s 54(3).

5. Section 77C(1) allows the official receiver to, by written notice given to a person, require that person to give specified information, to produce all relevant books, and/or to attend before the official receiver to give evidence.  Section 267B of the Act requires that a person not refuse or fail to comply with a notice given to that person under s 77C(1).  Section 267B(2) provides a defence for reasonable excuse. On 14 January 2022, an Information was filed by the second respondent, the Australian Financial Security Authority (AFSA), alleging that the respondent refused or failed to comply with a s 77C notice.

6. On 15 December 2022, a trial was held for the two matters together.  At trial the prosecution tendered 14 documents and called six witnesses who gave evidence.  The Magistrate accepted beyond reasonable doubt what each of them said.

7. With respect to the offence under s 54(1) of the Act, the Magistrate found beyond reasonable doubt that the appellant was notified of the sequestration order on more than one occasion by phone, that the appellant wrote to a representative of the trustee referring to the sequestration order and that he provided an address to the representative of the trustee in Two Wells to which a number of pieces of correspondence were sent.[2]  The Magistrate further found that another representative of the trustee reminded the appellant on more than one occasion of the fact that the sequestration order had been made and of his ongoing obligations under the Act to provide a statement of affairs.[3]

   [2] Reasons for Decision at [7].

   [3] Reasons for Decision at [7].

8. With respect to the offence under s 267B(1) of the Act, the Magistrate found that, after trying for some time to obtain a statement of affairs from the appellant, delegates of the trustee applied to the official receiver for an order under s 77C of the Act. On 17 June 2021, a delegate of the official receiver issued a notice under s 77C that required the appellant to give the information and produce all books specified in the schedule attached to the notice to AFSA within 21 days of receipt of that notice. The appellant did not give the information or produce the books in compliance with that notice and had not done so by the time of the trial.

9. The Magistrate found that the notice was sent by email and registered post to the appellant.  The Magistrate further found on the evidence that the appellant was asked on more than one occasion by Ms Maravillas of AFSA to confirm that he had received the s 77C notice and that he deliberately avoided the subject.  The Magistrate found that the postal receipt[4] constituted a prima facie proof of service.[5]  Accordingly, the Magistrate found beyond reasonable doubt that the appellant was validly served, and that the appellant continued to refuse to comply with the notice.

   [4]     Exhibit P12.

   [5] Reasons for Decision at [10].

10. The Magistrate proceeded to consider whether the appellant had raised a reasonable excuse for failure to comply with the notice.  The Magistrate found that he had not on the basis that he had been validly served and noting that the “fact that he may have paid the debts that led to the bankruptcy does not relieve him of his obligations under the Act”.[6]

    [6] Reasons for Decision at [12].

11. At the conclusion of the trial the Magistrate found the appellant guilty on both counts.

    The Appeal

12. The appeal is brought under s 42(2)(b) of the Magistrates Court Act1991 (SA) (MCA). An appeal against conviction is in the nature of a rehearing and the appeal Court is to review and reach its own conclusion based on the evidence.[7]  It is the duty of the Court to make up its own mind, after giving due weight to the Magistrate’s advantage in seeing and hearing the witnesses and after giving weight to any findings on credibility which depend largely or in part on demeanour.[8]

    [7]     Fox v Percy (2003) 214 CLR 118 at [20]-[25].

    [8]     Police v A, TG [2006] SASC 299 at [15].

    Grounds of appeal

13. The notice of appeal lists six grounds of appeal as follows:

    ·The first and second grounds of appeal appear to complain that the Magistrate did not have jurisdiction to hear the summary trial;

    ·The third ground appears to complain of an error of law which should result in the convictions being quashed;

    ·The fourth and sixth grounds appear to complain that the sequestration order made by the Registrar of the Federal Circuit Court was improperly made because there was no proof of service and that the Magistrate should have taken steps to annul the bankruptcy; and

    ·The fifth ground appears to complain that the Magistrate acted in a biased manner or demonstrated actual bias and that the appellant had a reasonable excuse for not lodging the statement of affairs.

14. At the hearing the appellant filed written submissions supported by a bundle of documents that I received de bene esse as exhibit A1.  The appellant relied on this material to support an argument that he was not served with the application that resulted in the making of the sequestration order and that accordingly the sequestration order ought not to have been made.  This appears to be relevant to the fourth ground of appeal dealing with the Magistrate’s refusal to entertain an application to “annul the alleged bankruptcy”.  I will receive the material as an exhibit.  However, for the reasons that follow, I place very limited weight on the material as it does not support the propositions for which it was tendered.

    Grounds one and two

15. The appellant submits that the Magistrate failed to follow the Kable principle.[9]  The Magistrate rejected a similar submission from the appellant at the commencement of the trial.[10] The Magistrate was correct to do so. He was sitting as a Magistrate of a State Court. Section 27(1) of the Act provides that the Federal Court and the Federal Circuit and Family Court of Australia (Division 2) have concurrent jurisdiction in bankruptcy which is exclusive of the jurisdiction of all courts other than the High Court under s 75 of the Australian Constitution or the jurisdiction of the Federal Circuit and Family Court of Australia (Division 1). Section 27(2) of the Act indicates that s 27(1) does not confer jurisdiction in a criminal matter or exclude the jurisdiction of a court of a State or Territory under the Judiciary Act1903 (Cth) (the Judiciary Act) in a criminal matter relating to the Act. Further, s 68(2) of the Judiciary Act confers power on state courts to exercise summary jurisdiction over Commonwealth offences. Accordingly, the Magistrate was exercising summary jurisdiction in respect of criminal offences expressly permitted to be heard by a Magistrate of a state court.

    [9]     Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51.

    [10]   Magistrates Court Transcript (MCT) 2.

    Ground three

16. Ground three reads as follows:

    Despite a diligent search I cannot find where a Writ of Certiorari is available in the Supreme Court of South Australia but is available in the High Court and was in 1995 applied in Anthony David Craig v the State of South Australia [1995} HCA 58 [sic], where a Superior Court has a duty to correct an error of law in an inferior court.

17. The appellant has not identified any jurisdictional error or any error of law which could compel this Court to quash the decision.

18. An inferior court commits jurisdictional error if it “misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist”.[11]  Likewise, a court or tribunal commits jurisdictional error if it fails to exercise a jurisdiction where there is a duty to exercise it.[12]  Whilst not entirely clear, it appears that the appellant is contending that the Magistrate did not consider his application to annul the bankruptcy and that this is the jurisdictional error.  If this is the case, this was beyond the power of the Magistrate, and he was correct to decline to do so.  The jurisdiction to annul the appellant’s bankruptcy cannot be exercised by a state court.[13]

    [11]   Craig v South Australia (1995) 184 CLR 163 at 177.

    [12]   Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia (2012) 249 CLR 398 at [15].

    [13]   Bankruptcy Act 1966 (Cth) s 27(1).

19. In any event, a writ of certiorari is irrelevant to this appeal which is brought under s 42 of the MCA.

    Grounds four and six

20. I have already dealt with the submission that the Magistrate should have annulled the appellant’s bankruptcy.  The documents tendered by the appellant[14] indicate that he has taken steps to annul his bankruptcy by filing an application with the Federal Court on 11 May 2022.  The appellant contends that he was not served with the creditor’s petition before he was made bankrupt, and that no debt was owed.  The material tendered on the appeal does not establish these propositions but, more crucially, even if they did, this was not a matter that the Magistrate could deal with.  Moreover, the respondents submitted at trial that under s 275 of the Act a person may be prosecuted for offences under the Act even if he or she has been discharged from bankruptcy or their bankruptcy has been annulled.  The Magistrate properly accepted that submission.[15]

    [14]   Exhibit A1.

    [15] Reasons for Decision at [9].

    Ground five

21. Ground five alleges that the Magistrate did not bring an unbiased mind to the proceeding, that the appellant was prevented from presenting affidavits and that the evidence from the AFSA officers called by the prosecution was untrue and should not have been believed.  The appellant further complains that the issue of reasonable excuse was available and “if given a fair and unbiased hearing by an impartial Magistrate I could have proved beyond reasonable doubt I had a lawful excuse not to lodge a Statement of Affairs in a bankruptcy that I only learned had occurred some six months after it happened”.

22. The notice of appeal did not disclose the manner or method by which the appellant contends that the Magistrate demonstrated either perceived or actual bias such that a fair-minded lay observer might reasonably apprehend that the Magistrate might not bring an impartial mind to the resolution of the issue.  I asked the appellant to explain the basis of that ground of appeal.  He said that it was the way the Magistrate would not receive his affidavits.[16]  He said that he tried to file the material before the hearing, and he tried to tender the affidavits on three occasions throughout the hearing.  The appellant did accept that he was invited to give evidence or to call witnesses.  The transcript discloses that he declined to present a contrary case.[17]

    [16]   T31.

    [17]   MCT58-59.

23. I have considered the transcript.  At no stage does it appear that the appellant sought to tender an affidavit although he was permitted to tender correspondence during the course of the prosecution case.[18]  It appears likely that the material sought to be tendered was similar to that in exhibit A1 and was directed to the validity of the sequestration order.  If that is the case, it is unlikely to have made a material difference in any event.

    [18]   Exhibit D10; MCT36-37.

24. In relation to the complaint about the Magistrate accepting the evidence of the witnesses called by the prosecution, I bear in mind my obligation to give due weight to the Magistrate’s advantage in seeing and hearing the witnesses.  The reasons for the Magistrate accepting that evidence are cogent and clearly expressed in the reasons for decision.[19]  Having considered the evidence I see no error in his approach.  Further the evidence itself appears from the transcript to be cogent and consistent.  I see no basis for rejecting it. 

    [19] Reasons for Decision at [5].

25. The statutory defence of reasonable excuse applies only to the offence under s 267B(1) of the Act. It does not apply to an offence under s 54 of the Act.[20]  Section 267B(2) provides that:

    Subsection (1) does not apply if the person has a reasonable excuse. 

    Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code)

    [20]   Bankruptcy Act 1966 (Cth) s 54(3).

26. What constitutes a “reasonable excuse” depends on the circumstances of the individual case and the legislative context.[21]

    [21]   Taikato v The Queen (1996) 186 CLR 454 at 464; Wheare v Police [2008] SASC 13 at [66]-[69].

27. The appellant contended before the Magistrate,[22] and on appeal, that he had a reasonable excuse because he was not served with the creditor’s petition, he did not owe a debt to the creditor, the sequestration order was fraudulent, and he had taken steps in the Federal Court to set it aside. These submissions do not, specifically, deal with the s 267B(1) offence but rather with the validity of the bankruptcy order which is, as set out above, irrelevant. Even if the appellant establishes that he should never have been made bankrupt and is successful in his application to the Federal Court to annul the bankruptcy, this does not constitute a reasonable excuse for failure to comply with a s 77C notice.

    [22]   MCT65-68.

28. Whilst the appellant did not specifically contend that he had a reasonable excuse because he had not been served with the s 77C notice, the Magistrate considered this issue.  It was, in my view, appropriate for him to do so.  The Magistrate accepted the evidence of Ms O’Connor and Mr Dudley that they applied to the official receiver for an order under s 77C.  He found that this was sent by email and by registered post to the appellant.  He noted that the appellant had been asked on more than one occasion by Ms Maravillas from AFSA to confirm that he had received the s 77C notice and found that he deliberately avoided the subject.  The Magistrate also found that the postal receipt[23] constituted prima facie proof of service under s 45 of the Evidence Act 1929 (SA).[24]

    [23]   Exhibit P12.

    [24] Reasons for Decision at [10].

29. I have considered the transcript of evidence and the exhibits at the hearing before the Magistrate.  The appellant corresponded with the trustee by letters dated 24 August 2021, 2 September 2021 and 28 November 2021.[25]  In that correspondence he gave an address in Two Wells and requested that correspondence be sent to a specified email address.  The evidence of Mr Dudley[26] and Ms Maravillas[27] establishes that the s 77C notice was addressed to the Two Wells address,[28] that it was posted there by registered post[29] and that a copy of the notice and the covering letter was also sent to the appellant by email on more than one occasion to the supplied email address.[30]

    [25]   Exhibit D9.

    [26]   MCT20; Exhibit P8.

    [27]   MCT46-51.

    [28]   Exhibit P10.

    [29]   Exbibit P12.

    [30]   Exbibit P11.

30. In my view the Magistrate was correct to find that the appellant had not established a reasonable excuse for failure to comply with the notice on the basis that he was validly served and was on notice of his obligations.

    Final issue

31. Finally, the appellant’s written submissions appear to raise[31] an issue of dishonesty or fraud relating to the obtaining of the sequestration order.  There is no evidence to support that assertion, or the assertion made during submissions that the sequestration order is likely to be set aside by the Federal Court.  In any event I note that the effect of s 275 of the Act renders this issue irrelevant for the purposes of the appeal.

    [31] Outline of Argument at [11].

    Conclusion

32. I have reviewed all of the evidence that was presented to the Magistrate and the material provided by the appellant during the course of the appeal.  The appellant has not established any of the grounds of appeal, nor, in my view, has the appellant undermined the factual basis upon which the convictions were based.

33. The main complaint raised by the appellant both orally and in his written material relates to the making of the sequestration order.  Plainly, this is not a matter the Magistrate had jurisdiction to deal with.

34. The prosecution discharged its burden of proving each element of each offence beyond reasonable doubt.  It tendered documents and called six witnesses.  The documents speak for themselves and support the finding of the Magistrate.  The witnesses were not, as the Magistrate observes, seriously challenged in the course of giving their evidence.  I see no error in the manner in which the Magistrate dealt with their evidence.  He accepted it beyond reasonable doubt.  On the basis of that material, the convictions were properly recorded.

1. The appellant did not put forward a mistake of fact that might have afforded a defence to the first of the two charges; he maintains that he ought to have never been made bankrupt.  The Magistrate properly dealt with this in his reasons for judgment.

2. The situation on appeal remains as it was before the Magistrate.  That is, the appellant has applied to the Federal Court to have his bankruptcy annulled or discharged.  No evidence was produced that this has occurred.  In relation to the question of reasonable excuse, I see no basis to interfere with the Magistrate’s finding beyond reasonable doubt that the s 77C notice was validly served and that the appellant continues to refuse to comply with that notice.