Danes v Sulman

[2012] FMCA 741

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DANES v SULMAN [2012] FMCA 741

BANKRUPTCY – Application to set aside bankruptcy notice – dispute as to identity of contracting party – application dismissed.

Danes v Sulman [2012] QCATA 81
Wren v Mahony (1972) 126 CLR 212

Applicant: COLLEEN DANES

Respondent: MATTHEW JAMES SULMAN

File Number: BRG 992 of 2011

Judgment of: Jarrett FM

Hearing date: 21 June 2012

Date of Last Submission: 21 June 2012

Delivered at: Brisbane

Delivered on: 21 June 2012

REPRESENTATION

The Applicant appeared in person

The Respondent appeared in person

ORDERS

1. That the application for review filed on 25 November, 2011 be dismissed.

2. The applicant pay the respondent’s costs of and incidental to the application to be taxed and paid in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 992 of 2011

COLLEEN DANES

Applicant

And

MATTHEW JAMES SULMAN

Respondent

REASONS FOR JUDGMENT

Ex tempore

1. I propose not to adjourn the proceedings and to dispose of them now.  I see no basis upon which I would grant a further adjournment of the application as requested by the applicant.

2. Before the Court is an application to review the orders of Registrar Baldwin made on 17 November, 2011.  By those orders, the Registrar dismissed an application to set aside a bankruptcy notice and to extend time within which to comply with the bankruptcy notice.  The basis upon which the applicant now seeks to have the bankruptcy notice set aside is essentially that she is not a person who owes a debt to the respondent. 

3. The background facts have been set out chapter and verse in the material but a convenient and, it seems to me accurate recitation of those facts appears in the decision of Dr John Forbes, the member of Queensland Civil Administrative Tribunal who delivered a judgment on 18 May, 2012 on Ms Danes’ application to extend time within which to appeal a decision of QCAT: Danes v Sulman [2012] QCATA 81. In that decision, Dr Forbes sets out the facts as follows:

   [1] The family of Colleen Danes has been associated with Rugby League football for many years. She developed a talent for devising internet websites, operating a business known as Australian Sportsline Pty Ltd, of which she is sole director. In more successful times her clientele included the South Sydney Leagues Club and the NSW Rugby League Club.

   [2] In early 2009  Danes  suspected that rival businesses, Sporting Pulse (ANZ) Pty Ltd and ARLD Pty Ltd were infringing copyright in her (or her company’s) websites. So she consulted the Respondent Michael Sulman, who advertises his firm as intellectual property lawyers, patent and trade mark attorneys.

   [3] In February 2010 Sulman commenced proceedings for Australian Sportsline against Sporting Pulse in the Federal Court of Australia. However, some five months later, those proceedings were abandoned for lack of funds. Sulman delivered his final account, addressed to “Colleen and Michael Danes”, on 28 July 2010, claiming a balance of $12,008.34. The claim is based on a costs agreement of the kind now recognised by law. As appears below, the main issue in this case is whether Colleen Danes  is bound by the form of agreement, several copies of which are in evidence.

   [4] Sulman’s final account remains unpaid. On 20 October 2010 he moved to recover it in this Tribunal, naming Danes as sole Respondent.

   [5] It appears to be settled that a solicitor’s unpaid and overdue costs are a debt or liquidated demand, within the meaning of the first limb of the definition of “Minor civil dispute”.

   [6] The form of agreement in evidence is expressed to be between Sulman and Colleen Danes, Michael Danes, and Australian Sportsline Pty Ltd. (However, it is now common ground that Matthew Danes is not a party.) The document appears to be signed “for and on behalf of the client” by C Danes, on 5 April 2009.

   [7] Danes denies liability. She agrees that she received the draft agreement in April 2009, but says that she returned it unsigned, with a request that her husband’s name be deleted, as in fact it was. Sulman swears that, when returned, the document was already signed by Mrs Danes.  Danes  admits that she signed and returned a copy of the final page in August 2010, but insists that this was not acceptance, but was merely to assist Sulman to satisfy auditors from the Law Society. It is her case that Australian Sportsline Pty Ltd is the only proper respondent.  Performance of the services detailed in the subject bill, and the amounts charged are not in dispute.

   [8] The Response, belatedly filed on 8 December 2010, was followed by Sulman’s Reply on 31 January 2011.

   (footnotes omitted)

4. As appears from the above, the respondent is a solicitor.  He has done legal work for – and this is the nub of the dispute – the applicant and a company associated with her and he has commenced proceedings and obtained a judgment against her for unpaid legal fees.  The applicant contends that she is not responsible for the fees because she did not contract the legal work.  That is to say, she was not the client.  However, there has been determination on a number of occasions now that, in fact, she was the person liable on the account.

5. The most recent decision is that of Dr John Forbes.  The respondent solicitor commenced his proceedings against the applicant seeking payment of his fees in QCAT in October, 2010.  There was a mediation but, apparently, the applicant did not attend but nothing turns on that.  On 29 March, 2011 the proceedings in QCAT were set down for hearing and heard.  QCAT found in favour of the solicitor and ordered that the applicant pay the sum of $12,699 to the respondent solicitor within 21 days.  That sum was not paid and there was no appeal filed from that decision within the time limited for appealing it. 

6. On 4 May, 2011 the decision in QCAT was registered with the Magistrates Court of Queensland as the respondent was entitled to have done.  Since then, he has set about enforcing that judgment. 

7. On 8 August, 2011, the applicant made a complaint about the respondent to the Queensland Law Society and to the Legal Services Commissioner.  On 27 October, 2011, a bankruptcy notice was served on the applicant by the respondent. 

8. On 10 November, 2011 there was an application filed in this Court to set aside the bankruptcy notice and an application to extend time with compliance for the bankruptcy notice.  That was served in the usual way.  On 17 November, 2011 time for compliance with the bankruptcy notice, as served on the applicant, expired.  On 17 November, 2011 the application to set aside the bankruptcy notice was dismissed by Registrar Baldwin.  On 25 November, 2011, this application was filed and it sought not just a setting aside of the bankruptcy notice but, alternatively, or in addition to the principal relief, an order extending the time for compliance with the bankruptcy notice until such time as an appeal with QCAT was determined by QCAT or a decision was made on an application to stay enforcement of the QCAT decision which was also apparently filed by the applicant on 24 November, 2011. 

9. On 26 November, 2011 the application to stay QCAT’s decision was refused by QCAT and there were some directions made, apparently, for the filing of an application for extension of time and an application for leave to appeal the original decision of QCAT.  There was, at the same time, an application to set aside the judgment in the Magistrates Court.   That application was dismissed on or about 19 December, 2011.  The application for an extension of time and leave to appeal the decision of QCAT, as I have already said, was dismissed on 18 May, 2012. 

10. A Court exercising jurisdiction in bankruptcy has power to go behind a judgment debt to determine whether, in truth, a debt is indeed owing: Wren v Mahony (1972) 126 CLR 212. Those cases, although not limited to cases where judgments have been given in default or where there has not been an adjudication on the merits, tend to suggest that where cases have had a full and proper hearing through various processes including appeals, it is generally not appropriate to go behind the judgment.

11. In this case, I see no reason to doubt that there is, in fact, a debt owed by the applicant to the respondent.  There is a judgment which has its genesis in the QCAT decision which has been the subject of both a stay application and an application to extend time for leave to appeal.  Both of those applications, but particularly the application to extend time for leave to appeal, was dismissed on the basis that the appeal had no merit.  That is to say, the applicant’s argument that she did not contract with the solicitor for the performance of the relevant legal work was rejected.  That view accords with my own view that her argument that she was not the contracting party should properly be rejected on the evidence. 

12. There is a written document which sets out the retainer.  The applicant says in her evidence that she signed the document on behalf of a company.  She asked for the document to be amended and she asserts that the circumstances in which she was asked to sign the document meant that it she should be taken as having consented to the terms set out in the agreement.  In my view, those arguments ought all be rejected and I reject them.  The argument for Ms Danes is summarised by Dr Forbes, again – accurately with respect, as follows:

    [19] Danes returns repeatedly, not to say obsessively, to the claim that there is no relevant contract between herself and Sulman. She says that she signed no costs agreement until August 2010, and that when she then did so, her signature was not an acceptance, but merely a favour to help Sulman avoid possible difficulties with Law Society auditors. Sulman, for his part, claims that he had an agreement with Danes at all material times. The Adjudicator accepted an unsworn statement to that effect, and the statement was earlier confirmed on oath.  It is not the function of an appeal tribunal to re-determine the relevant issues of fact and credit.

    
    
    

    [20] But in any event, a timely signature was not the only possible mode of acceptance. The document states that that the offer therein may be accepted by “giving us instructions after receiving this document”.  That procedure is permitted by the Legal Profession Act 2007, which provides that a costs agreement may be accepted in writing or by other conduct.

    [21] Danes admittedly received the draft agreement in April 2009, and subsequently, without any clear indication by her that she was merely an agent for Australian Sportsline Pty Ltd, she instructed Sulman to advise her and to institute Federal Court proceedings. That is sufficient to dispose of her “past consideration” argument.  It is highly improbable that an experienced practitioner would incur substantial costs and outlays without recourse against the person behind the private company in whose name litigation was to be instituted, and in fact the costs agreement is addressed to Danesin her own right, as well as to the company. That being so, no need for a “personal guarantee” arose. The contention thatDanesherself did not accept responsibility for costs is untenable.

    [22] Equally insubstantial are the Appellant’s submissions that “no case [is] pleaded against me in the QCAT claim” and that “until I received the QCAT decision in this matter ... I was not aware that I was a party to these proceedings”.  As noted above, she is the sole respondent named in the originating process.

    There is, in my view, no basis to set aside the bankruptcy notice nor is there any basis to extend time within which to comply with it.  The application for review is refused.

    (footnotes omitted)

RECORDED   :   NOT TRANSCRIBED

1. Ordinarily in proceedings such as these, costs ought to follow the event.  I have not heard any persuasive submission that suggests that I should not apply the ordinary rule.  The applicant shall pay the respondent’s costs of and incidental to the application to be taxed and paid in accordance with the Federal Magistrates’ Court Bankruptcy Rules 2006.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Date:  22 August 2012