CTI Logistics v Ogbonna
[2022] FedCFamC2G 781
Federal Circuit and Family Court of Australia
(DIVISION 2)
CTI Logistics v Ogbonna [2022] FedCFamC2G 781
File number(s): PEG 96 of 2022 Judgment of: JUDGE STREET Date of judgment: 20 September 2022 Catchwords: BANKRUPTCY –– whether the petitioning creditor has made out the statutory requirements to support the seeking of a sequestration order – whether any defects affect the creditor’s petition – whether the defects fall under s 306 of the Bankruptcy Act 1966 (Cth) – no substantive injustice suffered – whether other sufficient cause has been made out why a sequestration order ought not to be made – no bona fide counter-claim, set-off or cross-demand – sequestration order made Legislation: Bankruptcy Act 1966 (Cth) ss 27, 43, 47, 52, 306
Criminal Code Act 1995 (Cth)
Federal Court of Australia Act (Cth) s 37AO(2)
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) r 1.04, 2.06, 4.04
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 15.16
Cases cited: Adams v Lambert [2006] 225 ALR 396,
ANZ Banking Group Ltd v Elferkh [1999] FCA 1049
Cristova v Tan & Tan Lawyers Pty Ltd [2018] FCAFC 41
Daly v Watson (1994) 128 ALR 309
Donovan v Brown [2021] FCA 494
Ebert v Union Trustee Company of Australia Ltd (1960) 104 CLR 346
Hoskin v Robert Balzola & Associates (Legal) Pty Ltd [2019] FCA 1353
McDonald v Official Trustee in Bankruptcy [2001] FCA 140
Re Cirillo; Ex parte Commissioner of Taxation [1992] 36 FCR 2709
Division: Division 2 General Federal Law Number of paragraphs: 79 Date of hearing: 14 September 2022 Place: Sydney Counsel for the Applicant: Mr C Slater Solicitor for the Applicant: Jackson McDonald Solicitor for the Respondent: In person ORDERS
PEG 96 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: CTI LOGISTICS LTD - ACN 008 778 925
First Applicant
MARK VANDERLIST
Second Applicant
TIM BARTON
Third Applicant
AND: CELESTINE OGBONNA
Respondent
order made by:
JUDGE STREET
DATE OF ORDER:
20 September 2022
THE COURT ORDERS THAT:
1.A sequestration order is made against the estate of Celestine Ogbonna.
2.The petitioning creditors’ costs of the petition fixed in the amount of $10,324.16 be paid out of the estate with a priority to which it is entitled against the bankrupt estate.
THE COURT NOTES THAT:
1.The act of bankruptcy occurred on 29 November 2021.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE STREET:
introduction
These are proceedings within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the “Act”) in which the petitioning creditors (“the applicants”) seek a sequestration order against the respondent. A bankruptcy notice was issued on 6 June 2019 in respect of a final judgment in the sum of $22,762.00, which, together with interest, amounted to $29,050.63 (“the Judgment Debt”). The final order upon which the bankruptcy notice was founded was made by a judge of the then Federal Circuit Court of Australia on 28 August 2015.
evidence
At the commencement of the hearing, the Court identified the affidavit evidence relied upon by the applicants, being the affidavit of Chelsea Lee Quirk dated 11 May 2022, the affidavit verifying paragraphs 1, 2 and 3 of David Anderson Mellor dated 16 May 2022, the affidavit of service of the bankruptcy notice of Simon Ross Ringrose dated 22 April 2022, the affidavit of service of the creditors petition of Fedel Conti dated 26 May 2022, the affidavit of David Robert Watson dated 19 August 2022, the affidavit of search (updated) dated 13 September 2022, the affidavit of debt (updated) dated 13 September 2022 and the affidavit of service (updated) dated 14 September 2022.
The Court also accepted into evidence the affidavit of the respondent dated 4 July 2022, the affidavit of the respondent dated 8 August 2022, the affidavit (in two parts) of the respondent dated 9 September 2022, and the affidavit of the respondent dated 13 September 2022.
submissions
The applicants rely upon written submissions dated 1 September 2022 and put oral submissions that any defect in the petition was an irregularity within s 306 of the Act, that there was no substantive injustice occasioned by any defect, that the applicants had adduced proof of the requirements under s 52 of the Act, and that a sequestration order ought to be made. The applicants submitted that none of the grounds in the notice dated 9 September 2022 were made out, and that the respondent had not proven solvency or other sufficient cause why a sequestration order ought not to be made.
The respondent put lengthy oral submissions, contending that he was a victim whose rights had been infringed. The respondent contended that the defects were fatal to the petition, and alleged that they had occasioned substantive injustice. The respondent maintained that his grounds of opposition made out other sufficient cause not to make a sequestration order. The respondent also addressed, at length, on his proposed application and proposed statement of claim annexed to his affidavit, dated 13 September 2022 to contend that he had a genuine counter-claim and that this proposed process identified other sufficient cause not to make a sequestration order. The respondent also submitted that because of the time that had expired, no sequestration order ought to be made.
LITIGATION HISTORY
Following the making of the final order the subject of the bankruptcy notice, the respondent applied for an extension of time to appeal on 25 September 2015. The applicants decided not to seek payment of the Judgment Debt until the appeal was determined. On 11 March 2016, the learned Honourable Justice Barker granted the respondent an extension of time to appeal, but then dismissed the appeal.
On 7 April 2016, the respondent applied for special leave to appeal to the High Court of Australia. On 20 July 2016, the respondent’s application for special leave was refused.
There were then subsequent proceedings brought by the respondent against the first applicant and another person who was employed by or associated with the first applicant. On 20 July 2016, the respondent commenced defamation proceedings in the District Court of Western Australia. The applicants resolved not to seek payment of the Judgment Debt, given the amount claimed in the defamation proceedings commenced in the District Court of Western Australia, until those proceedings were resolved.
On 20 July 2017, the defamation proceedings were placed on the inactive cases list. On or about 17 January 2018, the respondent applied to have the proceedings removed from the inactive case list. On 20 January 2018, the defamation proceedings were automatically dismissed for want of prosecution. On 20 February 2018, the District Court of Western Australia dismissed the respondent’s application to have the defamation proceedings removed from the inactive cases list.
On 28 February 2018, the respondent commenced a second defamation suit (“the Second Defamation Proceedings”) in the District Court of Western Australia against the first applicant and another, separate defendant. Given the amount of damages sought in the Second Defamation Proceedings, the applicants decided to withhold from seeking payment of the Judgment Debt until those proceedings were resolved. On 13 August 2019, the Second Defamation Proceedings were summarily dismissed by a Registrar of the District Court of Western Australia. An appeal to the Court of Appeal in Western Australia by the respondent was unsuccessful, and an application for special leave to the High Court of Australia was also refused.
On 10 May 2019, the first applicant requested payment of the outstanding judgment. The bankruptcy notice was then issued on 6 June 2019. On 26 June 2019, the respondent applied to have the bankruptcy notice set aside, alleging a counterclaim, set-off or cost demand exceeding the amount of the Judgment Debt.
On 26 June 2019, by order of a Justice of the Federal Court of Australia, the time within which the respondent could comply with the bankruptcy notice was extended up until 5 August 2019. On 5 August 2019, the Justice of the Federal Court of Australia ordered that time be extended up until 19 August 2019.
On 16 August 2019, the respondent lodged a notice of appeal in respect of the decision of the Registrar of the District Court of Western Australia.
On 19 August 2019, a Justice of the Federal Court of Australia ordered that time for compliance with the bankruptcy notice be extended up until 7 October 2019. On 4 October 2019, a Justice of the Federal Court of Australia further extended time for compliance up until 16 March 2020.
On 20 November 2019, the District Court of Western Australia dismissed the appeal in the Second Defamation Proceedings. On 5 December 2019, the respondent filed a notice of appeal in the Supreme Court of Western Australia.
On 13 March 2020, a Justice of the Federal Court of Australia ordered that time for compliance with the bankruptcy notice be extended up until 16 June 2020. On 15 June 2020, a Justice of the Federal Court of Australia ordered that time be extended up until 29 June 2020. On 19 June 2020, a Justice of the Federal Court of Australia ordered that time be extended up until 21 September 2020. On 21 September 2020, a Justice of the Federal Court of Australia ordered that time be extended up until 14 December 2020. On 14 December 2020, a Justice of the Federal Court of Australia ordered that time be extended up until 8 February 2021. On 8 February 2021, a Justice of the Federal Court of Australia ordered that time be extended up until 8 March 2021.
On 12 February 2021, the Supreme Court of Western Australia dismissed the respondent’s appeal in the Second Defamation Proceedings.
On 8 March 2021, a Justice of the Federal Court of Australia extended time for compliance with the bankruptcy notice up until 3 May 2021.
On 12 March 2021, the respondent applied to the High Court of Australia for special leave in respect of the Second Defamation Proceedings.
On 3 May 2021, a Justice of the Federal Court of Australia extended time for compliance with the bankruptcy notice up until 31 May 2021. On 28 May 2021, a Justice of the Federal Court of Australia extended time for compliance up until 12 July 2021.
On 24 June 2021, the High Court of Australia refused the application for special leave by the respondent.
On 12 July 2021, a Justice of the Federal Court of Australia extended time for compliance with the bankruptcy notice up until 12 October 2021.
On 13 October 2021, the respondent filed a statement of claim in the Federal Court of Australia against the first applicant, alleging an unlawful conspiracy and claiming damages (“the Conspiracy Proceedings”). In the Conspiracy Proceedings, other legal practitioners were joined who had been engaged to act for the first applicant in earlier proceedings.
On 23 November 2021, a Justice of the Federal Court of Australia extended time for compliance with the bankruptcy notice up until 26 November 2021. On 26 November 2021, a Justice of the Federal Court of Australia further extended time up until 29 November 2021. On 29 November 2021, a Justice of the Federal Court of Australia dismissed the application to set aside, which was filed by the respondent, and ordered the respondent to pay the applicants’ costs of that application.
On 30 November 2021, the respondent made an application that a particular Justice recuse himself from the Conspiracy Proceedings. On 30 November 2021, that application by the respondent was dismissed. On 13 December 2021, the respondent filed an application for leave to appeal the recusal decision.
On 25 January 2022, the first applicant applied for vexatious proceedings orders pursuant to s 37AO(2) of the Federal Court of Australia Act (Cth) (“the Federal Court Act”) in the Conspiracy Proceedings.
On 7 February 2022, the Conspiracy Proceedings in the Federal Court of Australia were dismissed and the respondent was ordered to pay the applicants’ costs.
On 28 February 2022, the respondent sought leave to appeal the decision dismissing the Conspiracy Proceedings. On 18 March 2022, the Federal Court of Australia dismissed the application for leave to appeal the Conspiracy Proceedings and ordered the respondent to pay the costs of the application.
On 1 April 2022, the respondent sought leave to file a notice to admit in the Conspiracy Proceedings. On 6 April 2022, that application for leave was refused.
On 11 May 2022, the applicants filed the creditor’s petition which is the subject of these proceedings.
On 23 May 2022, the respondent was made the subject of orders pursuant to s 37AO(2) of the Federal Court Act in the conspiracy proceedings.
On 6 July 2022, the respondent filed an application in the present proceedings that the bankruptcy notice be set aside.
On 20 July 2022, the respondent’s application for leave to appeal the Conspiracy Proceedings was dismissed and orders were made that the respondent pay the first applicant’s costs.
the respondent’s amended notice stating grounds of opposition to the petition
On 9 September 2022, the respondent filed an amended notice stating grounds of opposition to the creditors’ petition as follows:
Grounds of opposition
1.First, given the decision supporting the creditor’s petition is fraudulent, it is a sufficient cause that justifies a sequestration order should not be made and for the creditor’s petition to be dismissed pursuant to s 52(b) of the Bankruptcy Act 1966 (Cth):
a.It follows the decision: Ogbonna v CTI Logistics Limited [2021] FCA 1491 by Justice Craig Grierson Colvin on which the creditor petition was issued is fraudulent, CTI Logistics Ltd, Mark Vanderlist, and Tim Barton did not file the mandatory affidavit in opposition pursuant to rule 2.06 of the Federal Court (Bankruptcy) Rules 2016 (Cth) and the Bankruptcy Act 1966 (Cth) - a prerequisite was not applied (there is no Bankruptcy decision in Australian in which the Bankruptcy Act 1966 (Cth) is not applied).
1.Second, the creditor’s petition be dismissed pursuant to rules 15.18 and 15.19 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules2021 (Cth):
a.the applicants’ solicitor on 19 August 2022 pursuant to rule 15.19 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) was served a ‘notice to admit facts or documents’.
b.Subsequently the applicants did not serve a ‘notice disputing a fact or a document’ within 14 days, on or before 2 September 2022, as required by the Court rules.
c.the applicants’ admission pursuant to rule 15.18 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) mandates that the creditor’s petition be dismissed.
3.Third, the Respondents can satisfy the Federal Circuit and Family Court of Australia that he has a counterclaim, set-off or cross demand exceeding the amount of the judgement debt pursuant to s 40(1)(g) and 41(7) of the Bankruptcy Act 1966 (Cth) and Rules 3.02 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021(Cth).
a.the claim against CTI Logistics Ltd and Mr Neil Raspa for defamation of the Respondent’s character which began at the District Court of Western Australia in the sum of $745,959.20 in the matter: Ogbonna v CTI Logistics Ltd & Anor – CIV 744 of 2018 and led to further judicial corruption in WAD266/2021 and WAD41/2022 is a bonafide claim that has not been extinguished because of fraud.
b.the counterclaim, set-off or cross demand and the amount exceeds the amount claimed in the Creditor’s petition, which is $29.050.63 and the claim could not be filed at the time because of fraudulent conduct by the Applicants’ employees, who have already committed a criminal offence along with Ms Karene Primrose and Chelsea Quirk in filing a fraudulent vexatious applicant application to stifle the Respondent from filing further applications to exercise his fundamental rights.
c.the Applicants, and their lawyers, has never challenged or opposed the Respondent’s asserted cross-claim, set-off or cross demand that has been provided in various affidavit that has been filed in this and other related proceedings.
STatement of issues
In summary, the issues are as follows:
·Whether any defects in relation to the creditors petition are mandatory requirements under s 47 of the Act and or are defects or irregularities the subject of s 306 of the Act, and whether there has been any substantive injustice;
·Whether the applicants have made out the statutory requirements to support the making of a sequestration order;
·Whether other sufficient cause has been made out why a sequestration order ought not to be made.
the creditors petition
The creditor’s petition was the subject of an affidavit that had expressly verified paragraphs 1, 2, and 3 in accordance with the form of the bankruptcy petition under the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (“the Bankruptcy Rules”).
On 11 May 2022, there was also filed an affidavit of Chelsea Lee Quirk that identified the respondent sought to have the bankruptcy notice set aside on 26 June 2019, contending a counter-claim, set-off or cross-demand. The affidavit also identified, relevantly, that, on 26 November 2021, time for compliance with the bankruptcy notice was extended up until 29 November 2021. The affidavit further identified that, on 29 November 2021, the respondent’s application to set aside the bankruptcy notice was dismissed.
Technically, no affidavit was filed verifying paragraph 4 of the petition in accordance with the form under the Bankruptcy Rules. It is also the case that, technically, the affidavit filed by Ms Quirk dated 11 May 2022 did not follow the whole of the language the subject of paragraph 4 in the petition.
the relevant law
Section 43 of the Act is as follows:
SECT 43 – Jurisdiction to make sequestration orders
(1) Subject to this Act, where:
a. a debtor has committed an act of bankruptcy; and
b. at the time when the act of bankruptcy was committed, the debtor:
i. was personally present or ordinarily resident in Australia;
ii. had a dwelling-house or place of business in Australia;
iii.was carrying on business in Australia, either personally or by means of an agent or manager; or
iv.was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;
the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.
(2)Upon the making of a sequestration order against the estate of a debtor, the debtor becomes a bankrupt, and continues to be a bankrupt until:
a. he or she is discharged by force of subsection 149(1); or
b.his or her bankruptcy is annulled by force of subsection 74(1) or 153A(1) or under section 153B.
Section 47 of the Act is as follows:
SECT 47 – Requirements as to creditor's petition
(1)A creditor's petition must be verified by an affidavit of a person who knows the relevant facts.
(1A) If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed.
(2)Except with the leave of the Court, a creditor's petition shall not be withdrawn after presentation.
Section 52 of the Act is as follows:
SECT 52 – Proceedings and order on creditor's petition
(1)At the hearing of a creditor's petition, the Court shall require proof of:
a.the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
b. service of the petition; and
c.the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
(1A) If the Court makes a sequestration order, the creditor who obtained the order must give a copy of it to the Official Receiver before the end of the period of 2 days beginning on the day the order was made.
Penalty: 5 penalty units.
Note: See also section 277B (about infringement notices).
(1B) Subsection (1A) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2)If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
a. that he or she is able to pay his or her debts; or
b.that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
(3)The Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days.
(4)A creditor's petition lapses at the expiration of:
a.subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or
b.if the Court makes an order under subsection (5) in relation to the petition--the period fixed by the order;
unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn.
(5)The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor's petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order.
Section 306 of the Act is as follows:
SECT 306 – Formal defect not to invalidate proceedings
(1)Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court.
(2)A defect or irregularity in the appointment of any person exercising, or purporting to exercise, a power or function under this Act or under a personal insolvency agreement entered into under this Act does not invalidate an act done by him or her in good faith.
The Court has taken into account the decision in McDonald v Official Trustee in Bankruptcy [2001] FCA 140. At [22], the Court treated an omission from the form in a bankruptcy notice as a formal defect or irregularity within s 306(1) of the Act.
The Court has taken into account the change in language of s 47 of the Act since the decision of the learned Emmett J in ANZ Banking Group Ltd v Elferkh [1999] FCA 1049, and the decision of the Full Court of the Federal Court in Daly v Watson (1994) 128 ALR 309, which expressly addressed the subject matter of the affidavits verifying a creditor’s petition that can be further supplemented, as is apparent from the language of s 52(1)(a) of the Act. In the decision in Re Cirillo; Ex parte Commissioner of Taxation [1992] 36 FCR 2709 at 285, a defect in an affidavit verifying the petition was treated as a defect or irregularity under s 306 of the Act.
The Court has also taken into account the decision in Donovan v Brown [2021] FCA 494, where the learned Jackson J, under the new language of s 47 of the Act, followed the reasoning of the learned Emmett J in relation to an alleged defect, which was found not to invalidate the proceedings because of s 306 of the Act. The Court has also taken into account the observations of the Full Court High Court of Australia in the unanimous decision in Adams v Lambert [2006] 225 ALR 396, and in particular, at [29] to [34].
THE PETITION DEFECTS
The evident purpose of s 47(1) of the Act is to ensure that the core factual grounds to support the seeking of a sequestration order are true. Section 47 (1A) uses the same mandatory language reflecting an evident purpose of uniformity in the form of the petition. Given the evidentiary ability to address the matters the subject of the petition as identified in s 52 of the Act, the whole of the language of s 47 of the Act, its evident purpose and the terms of s 306 of the Act, as a matter of construction, the mandatory language of s 47 in both sub-s (1) and sub-s (1A) should not be construed as imposing a strict obligation of compliance and this means that strict compliance is not required in respect of the whole of the content of the affidavit(s) verifying the creditor’s petition. The Court accepts that s 47(1) of the Act should be construed so as to permit substantial compliance in respect of defects of form of the kind identified in the present case as being subject to s 306 of the Act.
The Court notes that a different position may well arise if there had been no affidavit verifying any of the paragraphs of the petition. In the present case, the substance of paragraphs 1, 2, 3 and 4 were addressed in the two affidavits, and the Court is satisfied that the respondent was not misled by reason of those defects. The Court is satisfied that the defects are ones that are defects or irregularities within s 306 of the Act.
The respondent submitted that he had suffered substantive injustice because the whole of the decision of the learned justice of the Federal Court of Australia who dismissed the application for an extension of time was not attached to the affidavit. As the respondent was a party to those proceedings, no substantive injustice arises in that regard.
The respondent also contended that there was a substantive injustice because the period of time that had elapsed as a result of which a fresh bankruptcy notice could not now be issued given the expiry of the six-year period. The Court does not regard that as a substantive injustice occasioned by the defects in the form of the petition. The expiry of that time, the Court finds, is primarily due to the conduct in proceedings taken by the respondent. Further the Court accepts the applicants’ explanations for the delay as being reasonable. The defects and irregularities identified have not caused substantial injustice. Accordingly, the creditor’s petition is valid.
Compliance with requirements OF ss 43 and 52(1) of the Act
The Court is satisfied that the bankruptcy notice was properly served on the respondent. The Court is satisfied that the respondent was present in Australia at the time the act of bankruptcy was committed. The Court finds that proof has been adduced of the matters stated in the petition, that the petition was served on the respondent, and the fact that the Judgment Debt the subject of the petition is still owing. There has been compliance with the requirements of s 43 of the Act, proof of the matters required under s 52(1) of the Act and compliance with the updated affidavit of debt and search. Accordingly, the Court is satisfied that its powers to make a sequestration order have been enlivened under s 52(1) of the Act.
The Court notes that, in substance, it accepts the submissions of the applicants that there was compliance with r 4.04 of the Bankruptcy Rules, given the affidavit that was filed, addressing the application to set aside the bankruptcy notice and the final decision of this. For the purpose of s 52(2) of the Act, the Court is satisfied with the proof of the matters required under s 52(1) of the Act. Accordingly must consider whether other sufficient cause has been made out whereby the Court ought not to make a sequestration order.
OTHER SUFFICIENT CAUSE
The Court has taken into account the observations of the learned Bromwich J in Hoskin v Robert Balzola & Associates (Legal) Pty Ltd [2019] FCA 1353 as to the content and meaning of other sufficient cause. The Court is not confined in relation to the scope or the meaning of other sufficient cause, but insofar as it is advanced as a counter-claim, set-off or cross-demand, the Court must be satisfied that it is a real and bona fide counter-claim, set-off or cross-demand and that it has a likelihood of success (see Blair v The Owners – Strata Plan No 71656 [2016] FCA 1522 at [19] to [25], [29] to [30], and at [69], which treats the reference to a prima facie case in Ebert v Union Trustee Company of Australia Ltd (1960) 104 CLR 346 (“Ebert”) at 350 as requiring at least a fair chance of success and demonstrating an entitlement to litigate the claim).
Ground 1 – Alleged Fraud Counter-Claim
The respondent filed a notice stating grounds of opposition on 9 September 2022 which, in paragraph 1, contended the creditor’s petition as fraudulent and taking issue with the decision dismissing the application to set aside the bankruptcy notice.
To the extent that paragraph 1 is seeking to impeach the Judgment Debt the subject of the bankruptcy notice, the Court has taken into account the decision in Cristova v Tan & Tan Lawyers Pty Ltd [2018] FCAFC 41 at [32] to [34]. The Court finds that there is no evidentiary basis to find that the Judgment Debt is not, in truth and in reality, a debt owing. There is no proper evidentiary basis for the allegation that the creditors’ petition is fraudulent.
The respondent has identified a theory of alleged conspiracy involving the applicants and judicial officers involved in adverse determinations to the respondent. The making of an adverse determination by a court in respect of published reasons cannot be a proper basis for an allegation of fraud. Beyond conclusory assertions by the respondent there is no evidence to support the existence of any fraud by the applicants in the obtaining of the judgment debt the subject of the bankruptcy notice and the respondent’s assertions concerning judicial officers are baseless.
The respondent’s disquiet appears to arise from how he perceives he was treated and the seeking of a sequestration order. The respondent’s other sense of grievance arises because of his belief that he has been treated differently by reason of his African heritage. The respondent articulated that he believes his rights have been violated and that he has been subject to systemic racism. These allegations are conclusory assertions and there is no proper evidentiary basis to support the respondent’s complaint of differential treatment, violation or rights or racism. The applicants have a legal rights to pursue bankruptcy proceedings given the outstanding judgment debt. There is no evidence of pursuit of these proceedings for an improper purpose.
The respondent identified himself as the author of a proposed pleading that was attached to the respondent’s affidavit dated 13 September 2022 and described as a counter-claim. There is a proposed originating application with parties to be named later and prayers for relief seeking the payment of damages, including aggravated damages and a proposed statement of claim, identifying the petitioning creditor as the first respondent and identifying other persons as proposed respondents, which comprises 103 paragraphs. That proposed application, proposed statement of claim and the relevant paragraph in the affidavit were initially proposed to be admitted by the Court subject to relevance. However, the Court varied that ruling and admitted the same into evidence. This is because it is apparent that the documents have a potential relevance, being the alleged basis of the counter-claim upon which the respondent seeks to resist the making of a sequestration order and to show other sufficient cause.
The respondent’s case is re-characterised as fraud in the nature of an unlawful conspiracy and is at the highest level of generality. The allegations involve alleged unlawful conspiracy and contraventions of the Criminal Code Act 1995 (Cth) which are not properly pleaded and, on their face, appear vexatious and, in relation to judicial officers, scandalous. However, because the two documents are at the heart of the respondent claim to have an alleged counter-claim, it, accordingly, cannot be said to be irrelevant to the issues before this Court. Admitting the documents into evidence does not however give the documents any evidentiary foundation.
The Court decided, at this hearing, not to strike out the content of the same under r 15.16 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (“the GFL Rules”), or, at this hearing, to make suppression orders in respect of the content. However, it should be observed that the serious allegations of unlawful conspiracy are not properly pleaded, are not properly particularised and that the unsupported allegations are vexatious and scandalous There is no factual basis to support any agreement to found an allegation of conspiracy and no factual basis to identify unlawful conduct. There is no skerrick of an evidentiary basis for the allegations of fraud. The documents disclose no real cause of action, are embarrassing and do not disclose a genuine counter-claim, set-off or cross demand. There is no need to give further air to the allegations contained in the documents, which require leave to commence proceedings. The Court has no hesitation in finding that the documents have no real prospect of leave being granted to commence proceedings.
The Court also finds that the proposed counter-claim is not a real counter-claim, set-off or cross demand. Nor is the counter-claim one which is bona fide. The breadth and seriousness of the unsupported allegations of unlawful conspiracy and embarrassing reference, to judicial officers is sufficient for the Court to find that the counter-claim is not one that is bona fide. Further, there is no evidence of a kind relevant to supporting such serious allegations, so that no prima facie case in the sense understood in Ebert has been made out. The Court finds that the counter-claim does not have a fair chance of success and does not demonstrate that the respondent is entitled to litigate that counter-claim.
The Court accepts the submissions of the applicants that the counterclaim appears to be a dressed-up endeavour through the lens of unlawful conspiracy to re-agitate unsuccessful defamation proceedings brought by the respondent. As found above there is no evidence before the Court that the respondent’s rights have been violated. There is no evidence before the Court that the respondent has been the subject of some systemic racism. There is no evidence before the Court that the respondent has suffered unlawful discrimination by the petitioning creditors or by any of the representatives of the petitioning creditors.
There is no basis to find that the respondent has been subjected to conduct that has stripped him of his dignity and rights. The applicants have obtained a lawful judgment debt and do have legal rights to bring these proceedings. The respondent has recently been the subject of an order that requires him to seek leave to bring proceedings in accordance with a statutory regime, the purpose of which is to prevent the limited court resources from being unnecessarily drained from vexatious proceedings that have no real prospect of success and to prevent baseless litigation to the detriment of the public.. It should be noted that the respondent has not, thereby, been deprived of the ability to seek access to the courts.
If the respondent identifies a proper claim in respect of which there is a reasonable prospect of success, it can be anticipated that leave would be granted to bring such proceedings. However, the documents annexed to the respondent’s affidavit of 13 September 2022 are, as referred to above vexatious and have no reasonable prospect of success and have no reasonable prospect of a grant of leave by a court to permit the respondent to bring the same. The court’s resources are limited and judicial time is precious and there are statutory objects that require the courts, parties and practitioners to resolve genuine matters fairly, efficiently and without unnecessary expense. The Court finds that the respondent’s proposed statement of claim and proposed originating application do not make other sufficient cause why a sequestration order ought not to be made.
The respondent also submitted that other sufficient cause should be made out because the Judgment Debt could not now be the subject of a bankruptcy notice, and the substantial period of time that has elapsed. That submission would be of a compelling weight, if that delay were not due, in large part, on the evidence before the Court, to the conduct of the respondent. The Court has found that the applicants’ decisions that deferred the earlier taking of bankruptcy proceedings were reasonable.
The Court does regard the expiry of the period within which a bankruptcy notice could be issued as being capable of being taken into account as a basis to find other sufficient cause. However, taking into account the Court’s finding that the period of time that has elapsed has been substantially due to the conduct of the respondent, and the reasonable decisions of the applicants to defer earlier bankruptcy proceedings the Court finds that the expiry of a six-year period and the time overall that has expired since final judgment does not satisfy the Court of other sufficient cause why a sequestration order ought not to be made.
The Court finds that the first ground of opposition to the creditor’s petition provides no proper basis why a sequestration order ought not to be made.
Ground 2 – Alleged Failure in relation to a Notice to Admit Facts
The second ground upon which the notice of objection contends that the creditor’s petition should be dismissed makes reference to a notice to admit facts and the absence of a service of a notice disputing facts. On the respondent’s evidence, it is apparent that the notice to admit facts identified four paragraphs, and contained content that could not fairly be described as “facts”.
Paragraph 1 of the notice to admit facts made reference to the requirement in the Bankruptcy Rules in respect of the respondent’s application to set aside the bankruptcy notice. Rule 2.06 was relevant in that application but is not relevant to these proceedings. Further, it is apparent that r 2.06 was subject to r 1.04 of the Bankruptcy Rules.
Further, the content of paragraph 1 appears to be a contention of legal construction or argument and does not fairly reflect a fact engaging the relevant provisions of the Bankruptcy Rules in respect of a notice to admit.
Paragraph 2 of the notice to admit facts appears also to be an argument of law or submission as to the application of provisions of the Act and Bankruptcy Rules. Paragraph 2 does not, on its face, identify a fact engaging the Bankruptcy Rules or the GFL Rules in respect of a notice to admit facts.
Paragraph 3 of the notice to admit facts also appears to be a submission or contention of law in respect of the validity of the creditor’s petition and does not reflect a fact capable of being the subject of a notice to admit facts under the Bankruptcy Rules or the GFL Rules.
Paragraph 4 of the notice to admit facts also advances an alleged submission of law and does not articulate a fact capable of being the subject of a notice to admit facts under the Bankruptcy Rules or the GFL Rules. Further and in any event, it is apparent that there was a response sent which, under the Bankruptcy Rules and the GFL Rules, did not have to be in a particular form. That response, which was sent by a letter dated 31 August 2022, was within the time period applicable under the GFL Rules and squarely identified the same as being formal notice pursuant to the GFL Rules that the facts are not admitted. The Court finds that that was a valid response to the notice to admit facts, even if it were otherwise capable of being said to articulate facts to which the Bankruptcy Rules or GFL Rules could apply. No relevant admissions arise from the respondent’s purported notice to admit facts because the facts if so characterised were disputed within time.
Accordingly, the reference to the notice to admit facts does not identify any basis as to why the creditors’ petition should be dismissed.
Ground 3 – Alleged Counter-Claim in Defamation
In relation to the third ground in the notice of opposition, the respondent contends that the outcome of the Second Defamation Proceedings were tainted by fraud and that there remains a counter-claim in relation to the defamation proceedings. This proposition of the Second Defamation Proceedings being tainted because of the existence of fraud is not supported by any proper evidence and is baseless. There is no real or bona fide counter-claim, set-off or cross demand arising from alleged defamation or fraud. The respondent has made out no prima facie case or fair chase of success as explained above and Court is not satisfied that there is any fraud or defamation suit that the respondent has demonstrated that the he is entitled to litigate.
The respondent’s endeavour to re-agitate the Second Defamation Proceedings is, on its face, hopeless and does not identify other sufficient cause as to why a sequestration order ought not to be made.
The respondent’s assertion of criminal offences and reference to his fundamental rights and an endeavour to stifle the same has no proper evidentiary basis. The Court is not satisfied that any proper counter-claim, set-off or cross-demand has been identified by the respondent in relation to the applicants by reason of the content of Ground 3 of the notice of grounds of opposition.
Ground 3 otherwise appears to assume an absence of challenge to the existence of a cross-claim, set-off or counter-demand which is, on its face, clearly contradicted by the contested proceedings upon which the respondent was ultimately unsuccessful in seeking to set aside the statutory demand. No other sufficient cause as to why a sequestration order ought not to be made has been made out by ground 3.
conclusion
The applicants have established the grounds upon which a sequestration order may be made. The respondent has not established that he is able to pay his debts. The respondent has not satisfied the Court that as to other sufficient cause why a sequestration order ought not to be made. The Court is satisfied that a sequestration order should be made in this case. Accordingly, the Court orders that a sequestration order be made against the estate of Celestine Ogbonna.
79 I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Judge Street.
Associate:
Dated: 20 September 2022
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