Deputy Commissioner of Taxation v Cutts
[2017] FCCA 1760
•3 August 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DEPUTY COMMISSIONER OF TAXATION v CUTTS | [2017] FCCA 1760 |
| Catchwords: BANKRUPTCY – Sequestration order – application for review of Registrar’s decision to make sequestration order – application for default judgment on application to review decision of a Registrar to issue sequestration order – alleged non-compliance with earlier order of the Court – whether orders required filing of amended review application and affidavits. |
| Legislation: Federal Circuit Court Rules 2001 (Cth), r.13.03B(1) |
| Cases cited: BYF15 v Minister for Immigration & Border Protection [2016] FCA 774 |
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| Respondent: | MAURICE JAMES CUTTS |
| File Number: | PEG 47 of 2016 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 30 June 2017 |
| Date of Last Submission: | 30 June 2017 |
| Delivered at: | Perth |
| Delivered on: | 3 August 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr T de Bess |
| Solicitors for the Applicant: | Australian Government Solicitor |
| For the Respondent: | No appearance |
ORDERS
That the applicant’s application for default judgment on the respondent’s application to review the decision of a Registrar made on 13 September 2016 to make a sequestration order against the respondent’s estate be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 47 of 2016
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| MAURICE JAMES CUTTS |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant, the Deputy Commissioner of Taxation (“Deputy Commissioner”) seeks orders in this case that the application of the respondent, Maurice James Cutts (“Mr Cutts”), for review of a decision by a Registrar to make a sequestration order against Mr Cutts’ estate (“Cutts Sequestration Order”) be dismissed by reason of default, with no order as to costs.
Background
A Creditor’s Petition was filed in this matter on 2 February 2016, supported by the usual affidavits. When the matter came before a Registrar on 8 March 2016 it was adjourned to 29 March 2016. On 29 March 2016 procedural orders were made in relation to:
a)Mr Cutts’ Notice of Opposition and affidavit;
b)the filing and serving of an answering affidavit by the Deputy Commissioner; and
c)Mr Cutts’ filing of any further answering written submissions,
and the Creditor’s Petition was adjourned to 2 May 2016.
On each of 2 and 16 May and 13 June 2016 a Registrar adjourned the Creditor’s Petition to a later date.
On 27 June 2016 the Creditor’s Petition was adjourned to 2 August 2016, and the Registrar made an order that any request by Mr Cutts for further adjournment of the matter be supported by affidavit to be filed by 28 July 2016.
Mr Cutts filed an affidavit on 1 August 2016, sworn that day (“Mr Cutts’ August 2016 Affidavit”), which was in slightly unusual terms, but which averred that:
a)a debt owing to him would be repaid at 100 cents in the dollar;
b)he sought one “final adjournment” so that he could “finalise matters and payment”;
c)he also sought “one final adjournment” because he was “currently not in the best of health or wellbeing” and enclosed a medical certificate from a local doctor recommending an adjournment for a further two weeks; and
d)a medical certificate from a Dr Seton dated 28 July 2016 certified having seen Mr Cutts that day, and said of Mr Cutts as follows:
He has had a very stressful time of late and tells me he has a court date for the 2 August 2016.
In order to better prepare himself and emotionally stabilize himself, I believe it to be in his best interest to have an adjournment of this care [case] until later in August.
e)on 28 July 2016 Mr Cutts sent a letter to the relevant Registrar seeking an adjournment “on medical grounds” for 14 days; and
f)the Deputy Commissioner’s lawyers advised Mr Cutts that they opposed the adjournment request and sought to proceed with seeking a Sequestration Order with costs at the hearing on 2 August 2016.
On 2 August 2016 a Registrar adjourned the Creditor’s Petition to 13 September 2016 and made an order that Mr Cutts file and serve an affidavit of solvency on or before 12 September 2016.
On 9 September 2016 Mr Cutts filed a further affidavit, sworn the same day (“Mr Cutts’ September 2016 Affidavit”), giving his occupation as “gentleman”, and annexing what was described as a “special affidavit” (“Mr Cutts’ Special September 2016 Affidavit”). Mr Cutts’ September 2016 Affidavit again averred that pursuant to a private arrangement with, and a schedule of assets provided by, a Mr Williams, which Mr Cutts said he was unable to disclose because of a confidential commercial arrangement, funds in excess of $3million would be available to apply to any proven debt. There was also an assertion that by reason of alleged inaction on the part of the Deputy Commissioner there had been an acceptance of, or acquiescence in, to certain terms put forward by Mr Cutts. Given the limited basis upon which the Deputy Commissioner has applied for default judgment it is unnecessary in these Reasons for Judgment to say anything about the admissibility or merit of the content of Mr Cutts’ August 2016, September 2016 and Special September 2016 Affidavits.
On 13 September 2016 a Registrar made the Cutts Sequestration Order, and an order that the costs of the Deputy Commissioner be paid from the bankrupt estate of Mr Cutts, and noted that the date of the act of bankruptcy was 21 September 2015.
On 4 October 2016 Mr Cutts filed an application for review of the Sequestration Order issued by the Registrar on 13 September 2016 (“Review Application”). The sole order sought by the Review Application is as follows:
1.That all the ORDERS be set aside, until the applicant has sought available, lawful rights.
(Emphasis in original).
It appears that the applicant referred to in the order sought in the Review Application is Mr Cutts, and Mr Cutts has signed the Review Application as the applicant. For the purposes of these proceedings he however remains the respondent to the application before the Court by the Deputy Commissioner, an order in which, namely the Cutts Sequestration Order, Mr Cutts now seeks to have reviewed by the Court.
By a consent order dated 18 October 2016 a hearing of the Review Application scheduled for that date was adjourned to 4 November 2016.
On 4 November 2016, despite having filed the usual affidavits in a sequestration order application prior to that date, the Deputy Commissioner sought, and an order was made, adjourning the matter to 6 December 2016.
On 6 December 2016 the Deputy Commissioner indicated that there was agreement to having the matter adjourned, and the matter was then adjourned to a directions hearing on 3 March 2017.
On 3 March 2017 the Court made orders in the following terms:
1. Both parties have leave to rely at the hearing of the application for review on any affidavit or materials already filed, subject to any objections by any other party.
2. The respondent, Maurice James Cutts, file and serve any:
a. amended application for review including the grounds of review; and
b. further affidavits in support of the application for review,
by 3 May 2017
3. The applicant, the Deputy Commissioner of Taxation, file and serve:
a. any affidavits in opposition to the application for review by 3 June 2017; and
b. any other affidavits required to be filed under the provisions of the Bankruptcy Act 1966 (Cth) and the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) by the time required by that Act and those Rules.
4. Outlines of submissions are to be filed and served by the:
a. applicant by 3 July 2017; and
b. respondent by 3 August 2017.
5. The application for review be listed for hearing at 10.15am on 8 August 2017.
6. There be liberty to apply.
7. Costs be reserved.
(“3 March 2017 Orders”).
Mr Cutts did not file any amended Review Application or any further affidavits in support of the Review Application as he was entitled to do under the 3 March 2017 Orders.
On 9 March 2017 the Deputy Commissioner’s lawyers sent a letter to Mr Cutts enclosing the 3 March 2017 Orders: third affidavit of Tegan Waller, affirmed 30 June 2017.
On 21 April 2017 the lawyers for the Deputy Commissioner wrote to Mr Cutts referring to the 3 March 2017 Orders. The letter went on to refer to order 2 of the 3 March 2017 Orders, and to ask Mr Cutts to inform the lawyers for the Deputy Commissioner as to whether he intended to amend his Review Application or file any further supporting affidavits in according with the 3 March 2017 Orders: second affidavit of Tegan Waller, sworn 30 June 2017.
On 9 May 2017 the Deputy Commissioner sent an email to the Court requesting that the matter be re-listed due to Mr Cutts’ “non-compliance” with order 2 of the 3 March 2017 Orders and Mr Cutts’ letter to the Court dated 2 May 2017. By email dated 10 May 2017 the Court advised the parties to confer concerning the alleged non-compliance with the 3 March 2017 Orders. On 12 May 2017 the Deputy Commissioner’s lawyers wrote to Mr Cutts referring to the 3 March 2017 Orders and the Deputy Commissioner’s letters to Mr Cutts dated 9 March and 21 April 2017. The Deputy Commissioner indicated that it had received a letter seemingly sent by Mr Cutts to the Court dated 2 May 2017 requesting that the matter be adjourned sine die. The Deputy Commissioner’s lawyers confirmed that the Deputy Commissioner opposed the matter being adjourned sine die, or at all. The Deputy Commissioner’s lawyers went on to say that under order 2 of the 3 March 2017 Orders Mr Cutts was required to file and serve the documents referred to therein and that the Deputy Commissioner had not been served with a copy of those documents. The Deputy Commissioner’s lawyers further indicated that they had written to Mr Cutts on 21 April 2017 querying whether he intended to file any documents in accordance with order 2 of the 3 March 2017 Orders and had received no response. Enclosed with the 12 May 2017 letter was a request sent by email to the Court requesting that the matter be re-listed and the Court’s email requesting that the parties confer before the matter be re-listed (both of which it appears had been copied to Mr Cutts in any event). The letter then indicated that the Deputy Commissioner’s instructions were to seek that the matter be re-listed and that the Review Application be dismissed for non-compliance with the 3 March 2017 Orders. For the purpose of conferral, Mr Cutts was requested to confirm whether he would comply with the requirements of order 2 of the 3 March 2017 Orders and whether he was still seeking that the matter be adjourned sine die: second affidavit of Georgia Kyros, sworn 30 June 2017.
On 22 May 2017 the Deputy Commissioner’s lawyers wrote to Mr Cutts referring to their letters dated 9 March, 21 April and 12 May 2017, to which it was said no response had been received. The letter went on to indicate that the lawyers would call Mr Cutts on Thursday, 25 May 2017 at 2.00pm to confer about whether he intended to comply with the 3 March 2017 Orders, and that if the Deputy Commissioner’s lawyers were not able to contact Mr Cutts on the date and time proposed, or failed in attempts to contact him following that time, that they would write to the Court on 29 May 2017 requesting the matter be re-listed and that the Review Application be dismissed for “non-compliance” with the 3 March 2017 Orders: first affidavit of Tegan Waller, affirmed 30 June 2017 at [2] and Annexure TW 1.
On 1 June 2017 the Deputy Commissioner wrote to the Court and advised that conferral had been unsuccessful, and that the Deputy Commissioner sought to have the matter re-listed due to Mr Cutts’ alleged non-compliance with order 2 of the 3 March 2017 Orders. On 16 June 2017 the parties were advised that the matter had been listed for a further directions hearing at 12.30pm on 30 June 2017.
On 19 June 2017 the Deputy Commissioner’s lawyers wrote to Mr Cutts and:
a)advised that the matter had been re-listed for a directions hearing on 30 June 2017 at 12.30pm; and
b)advised that at the hearing the Deputy Commissioner’s lawyers were instructed to seek that the Review Application be dismissed for non-compliance with the 3 March 2017 Orders: first affidavit of Georgia Kyros, sworn 30 June 2017 at [2] and Annexure GK 1.
The Deputy Commissioner’s application for dismissal of the Review Application for non-compliance
At hearing the Deputy Commissioner sought that the matter be dismissed for non-compliance with the 3 March 2017 Orders, and in particular order 2, as set out above at [14]. The relevant history of the matter was set out in terms of the correspondence between the Deputy Commissioner’s lawyers and Mr Cutts referred to above: see [16]-[21] above, and the Court’s attention was specifically drawn to those aspects of the correspondence in which Mr Cutts was:
a)asked whether he intended to file an amended Review Application or any further affidavits;
b)advised that “non-compliance” with the 3 March 2017 Orders would result in the Deputy Commissioner asking the Court to list the matter for a further directions hearing; and
c)advised that the Deputy Commissioner intended, in light of the “non-compliance” with the 3 March 2017 Orders, to seek default judgment by way of dismissal of the Review Application, pursuant to r.13.03B(1) of the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”).
The matter came before the Court on 30 June 2017. Mr Cutts did not appear on 30 June 2017. Nor, the Court notes, did Mr Cutts appear on any occasion on which the matter was listed before the Court up to and including the directions hearing on 3 March 2017. The Court is aware that Mr Cutts has forwarded various correspondence to the Court in relation to his health, none of which is on affidavit, or otherwise before the Court in evidence. At no stage, however, has Mr Cutts sought to file any application in a case, supported by affidavit, making application for any adjournment of any of the proceedings before this Court on the basis of his health, none of which is on affidavit, or otherwise before the Court in evidence. Judgments of the Federal Court and this Court establish that a person alleging a medical condition, and seeking to rely upon that medical condition for the grant of an indulgence (such as an adjournment), needs to provide sworn evidence to the Court concerning the medical condition: see, for example, NAKX v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1559 at [5]-[10] per Lindgren J; Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 at [48]-[49] per Collier, Griffiths and Mortimer JJ; BYF15 v Minister for Immigration & Border Protection [2016] FCA 774 at [35] per Perry J; Ellis v Rottnest Lodge (1989) Pty Ltd trading as Rottnest Lodge (No 2) [2017] FCCA 190 at [35] per Judge Lucev. The Court reserved judgment on the Deputy Commissioner’s application for default judgment.
Consideration
Rule 13.03B(1) of the FCC Rules provides as follows:
(1) If an applicant is in default, the Court may order that:
(a) the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or
(b) a step in the proceeding be taken within the time limited in the order; or
(c) if the applicant does not take a step in the time mentioned in paragraph (b)--the proceeding be stayed or dismissed, as to the whole or any part of the relief claimed by the applicant.
Order 2 of the 3 March 2017 Orders (set out in full at [14] above), provided for the filing of “any” amended Review Application and further affidavits.
Order 2 of the 3 March 2017 Orders is not an absolute one. That is, it does not require, oblige or mandate Mr Cutts to file an amended Review Application or an affidavit or affidavits, but rather to file “any” amended Review Application and affidavit or affidavits, that being a form of order which permits Mr Cutts to do those things rather than requiring, obliging or mandating that he do those things. In Matthews v Hargreaves (No 3) [2011] FMCA 254 (“Matthews (No 3)”) the respondent had not filed affidavits, and the Federal Magistrates Court held that there was “no actual failure to comply with an order of the Court” similarly worded to Order 2 of the 3 March 2017 Orders, and it was therefore “inappropriate to grant … default judgment”: Matthews (No 3) at [3] and [5] per Lucev FM; see also Wintle v RUC Cementation Mining Contractors Pty Ltd [2012] FMCA 140 at [20] per Lucev FM.
The wording of order 2 of the 3 March 2017 Orders means that that order is not truly susceptible to non-compliance, because it was for Mr Cutts to decide whether to file any amended Review Application or any further affidavits, and it is evident that he has decided not to do so.
It follows from the above that the Deputy Commissioner’s application to dismiss Mr Cutts’ Review Application for default based on non-compliance with order 2 of the 3 March 2017 Orders must fail because the alleged non-compliance by Mr Cutts has not, and cannot, be made out.
Conclusion and orders
The Court has concluded that the Deputy Commissioner’s application for default judgment on the Review Application for alleged non-compliance with the Court’s orders of 3 March 2017 has not been made out, and therefore the Deputy Commissioner’s application for default judgment must be dismissed.
The Court will hear the parties as to costs.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Date: 3 August 2017
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