David v Cohen (No.2)

[2018] FCCA 3936

FEDERAL CIRCUIT COURT OF AUSTRALIA

DAVID & ANOR v COHEN (No.2) [2018] FCCA 3936

Catchwords:
PRACTICE AND PROCEDURE – Interim application seeking to add a ground to a notice of grounds of opposition to creditor’s petition – additional ground refuting acts of bankruptcy alleged – where application made in Court on the morning of the final hearing – balance test – whether prompt disposition of the matter is outweighed by the concern as to the importance of the matter of jurisdiction under s.43 of the Bankruptcy Act 1996 – interim application dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.41C, 43

Corporations Act 2001 (Cth), ss.205D, 1264B

Cases cited:

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27

First Applicant: SUZY DAVID

Second Applicant: FRED DAVID

Respondent: ROBIN COHEN

File Number: SYG 1651 of 2018

Judgment of: Judge Baird

Hearing date: 18 October 2018

Date of Last Submission: 18 October 2018

Delivered at: Sydney

Delivered on: 18 October 2018

REPRESENTATION

Counsel for the Applicant: Mr N Kirby

Solicitors for the Applicant: Mr F David, David Legal

Counsel for the Respondent: Mr R Notley

Solicitors for the Respondent: Mr G Hadchiti, Paramonte Legal

ORDERS

1. The Respondent’s interim application is dismissed.

2. Costs reserved.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1651 of 2018

SUZY DAVID

First Applicant

FRED DAVID

Second Applicant

And

ROBIN COHEN

Respondent

REASONS FOR JUDGMENT

(Ex Tempore Revised from Transcript)

1. In this matter this morning, Mr Notley for the Respondent brings a late application, of which no prior notice has been given to the Court, seeking leave to file an interim application, in turn seeking leave to amend the notice stating grounds of opposition to the creditor’s petition to add a ground as follows: 

   the Court does not have jurisdiction to make a sequestration order against the estate of the Respondent as, pursuant to s.43 of the Bankruptcy Act 1966 (Cth), at the time when the alleged act of bankruptcy was committed, the Respondent:

   (a) was not ordinarily resident in Australia; and

   (b) did not have a dwelling house or place of business in Australia as alleged by the Applicants. 

   Mr Notley assures the Court that the Respondent would not seek to rely on any further evidence. 

2. By way of explanation for the lateness of the proposed amendment Mr Notley candidly explains that it was only in the course of counsel’s preparation of the case last week, indeed, last Thursday, 11 October 2018, that it occurred to him, that as well as the ground presently relied upon, namely, “the Respondent was not served with the purported Bankruptcy Notice as alleged by the Applicant” – that this additional ground was one that the Respondent should rely on.  He accepts that otherwise the sole issue before the Court today was the question of service. 

3. Whilst Mr Notley intends no discourtesy to the Court and it is the case, that the time at least from Thursday until Tuesday this week was in part taken by seeking the consent of the Applicants, which consent was ultimately not given, no explanation other than inattentiveness – and again I mean no discourtesy to Mr Notley in that regard – has been proffered for why the ground has not been raised previously. 

Procedural background

1. Although Mr Notley did not appear on the first occasion the matter was before me on 16 July 2018, when the issue of substituted service or other service of the bankruptcy notice on Mr Cohen was to be argued.  That proceeding ultimately resulted in consent orders made on 19 July 2018.  Neither counsel presently before me was present on that occasion.  However, both the Applicants and the Respondent were represented by the respective same firms as the ones that continues to represent them. 

2. I returned the matter to the Registrar’s bankruptcy list for further directions on 6 August 2018.  By consent on that date, the creditor’s petition was adjourned until 2 pm on 20 August 2018.  On 20 August 2018 the matter was before Registrar Segal, at which time orders were made for the Respondent, namely, Mr Cohen, to file and serve any further affidavit evidence by 10 September 2018, and the petition be referred for allocation to a Judge’s docket (my docket), and the petition and the Respondent’s notice of grounds of opposition be listed for directions before me at 9.30 am on 12 September 2018, or such other date and time as notified by the Associate. 

3. In the event, the matter came before me for directions on 14 September 2018, at which time Mr Maroya of counsel appeared for the Applicants and Mr Notley of counsel appeared for the Respondent.  When on that date I proposed to list the matter for hearing on 18 October 2018, namely, today, with an estimate of one day, Mr Maroya for the Applicants took that date, on the expressed understanding that the Respondent’s evidence was that filed and served, although my recollection is that the date was inconvenient to him.  Without disagreement, orders were made for the filing of submissions, and that on or before 11 October 2018, the parties exchange written outlines of submissions and a list of authorities with hyperlinks, and email them to me.  I also granted leave to the Respondent to issue subpoenas, and liberty to apply.  No liberty to apply was exercised, nor was the Court informed until this morning that the present application would be before me. 

Consideration

1. I have heard the parties extensively and grilled both counsel as to the consequences of either accepting or not accepting the application, and allowing it or disallowing it. It is a balancing exercise. It has at all times been apparent on the face of the creditor’s petition that the creditors intended to rely on s.43(1)(b)(i) and (ii) of the Bankruptcy Act 1966 (Cth) to enliven the Court’s jurisdiction. The matter has been prepared by both parties on that basis. Affidavits have been sworn, filed and served. And the matter has been set down for hearing today.

2. The concern I have with the prompt disposition of the matter is also balanced with the concern as to the importance of the matter of jurisdiction under s.43 for both the Applicants and the Respondent. For the Respondent, Mr Notley draws my attention to the principles and factors adverted to by the plurality of the High Court in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 at [102]. I do not need to repeat those matters. Mr Kirby for the Applicants draws my attention to the plurality in Aon at [113].

3. I am persuaded, having regard to the lateness of the application, the forensic decisions of both parties taken until at least late last week, and indeed, the forensic decisions that would have been available to the Applicants had this additional ground been raised at any time prior to the act of bankruptcy relied upon in the creditor’s petition, namely that s.40(1)(c) of the Act may have also been available to the Applicants,  that the interests of justice are served by running the case today that has been prepared without the amendment. 

4. I note the statutory presumptions within s.205D and s.1274B of the Corporations Act 2001 (Cth) also may be sought to be relied upon by the Applicants, and it seems to me, that were I to allow the amendment, notwithstanding that Mr Kirby seeks to proceed today, it is a likelihood that Mr Kirby would need to supplement his clients’ case either by way of evidence and submissions, or by way of submissions. Whilst Mr Notley assures the Court that at present he does not wish to rely on any further evidence, that position too may change depending upon what would have occurred as a result of Mr Kirby acting in his clients’ interests.

5. Thus balancing the prejudice to both parties, respectively, to the Respondent, if the amendment is not allowed, and to the Applicants, if the amendment is allowed, having regard to the High Court in Aon, to the state of preparation of the matter to date, and the parties’ readiness to run the case as presently articulated, I have determined not to allow the amendment. 

Conclusion

1. I dismiss the interim application.  It has been made orally.  The usual course would be that the Respondent would be liable for any costs of the Applicants. As the application has been made orally, and the hearing proceeds today, I reserve costs.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Baird

Associate: 

Date:       18 January 2019