Dunkerley v Comcare

Case [2019] FCA 1002

FEDERAL COURT OF AUSTRALIA

Dunkerley v Comcare [2019] FCA 1002

File number: ACD 77 of 2018
Judge: GRIFFITHS J
Date of judgment: 27 June 2019
Catchwords: BANKRUPTCY AND INSOLVENCY – application to set aside a bankruptcy notice – where debts underlying the bankruptcy notice arise from costs orders from prior litigation between the applicant and respondent – where grounds claimed for setting aside the bankruptcy notice amount to an attempt to litigate again the same legal and factual issues tried in the previous proceedings on the same evidence – where no fraud, abuse of process or miscarriage justice of justice established – no special circumstances to warrant going behind the previous judgments and the costs orders flowing from them – application dismissed with costs
Legislation:

Administrative Appeals Tribunal Act 1975 (Cth) s 44

Bankruptcy Act 1966 (Cth) s 41

Evidence Act 1995 (Cth) s 140

Federal Court of Australia Act 1976 (Cth) s 25

Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 5A, 14, 16, 19, 57, 62, 69

Federal Court (Bankruptcy) Rules 2016 (Cth) rr 3.02, 3.2

Federal Court Rules 2011 (Cth) r 36.74
Cases cited:

Assistant Commissioner Condon v Pompano Pty Ltd [2013] HCA 7; 252 CLR 38

Australian Postal Corporation v Oudyn [2003] FCA 318; 73 ALD 659

Brumminghausen v Glavanics, unreported decision of Emmett J, 3 March 1998

Cavoli v Etl [2007] FCA 1191

Doggett v Commonwealth Bank of Australia [2019] FCAFC 19

Dunkerley v Administrative Appeals Tribunal [2012] FCA 41

Dunkerley v Comcare [2012] FCAFC 132; 131 ALD 1

Dunkerley v Comcare [2015] FCA 392

Dunkerley v Comcare [2015] FCA 1076

Dunkerley v Comcare [2015] FCA 1519

Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337

Emerson v Wreckair Pty Ltd (1992) 33 FCR 581

Killoran v Duncan [1999] FCA 1574

Kirk v Ashdown [1999] FCA 522

Maxwell Smith v S & E Hall Pty Ltd [2006] FCA 825; 233 ALR 81

Petrie v Redmond [1943] St R Qd 71

Plumb v Comcare (1992) 36 FCR 236

Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132

Re Bedford; Ex parte H E Sleigh (Queensland) Pty Ltd (1967) 9 FLR 497

Re Dunkerley and Comcare [2010] AATA 915

Re Dunkerley and Comcare [2014] AATA 381

Re Skaff; Ex parte Farrow Mortgage Services Pty Ltd (1993) 41 FCR 331

Rosillo v Telstra Corporation Limited [2003] FCA 1628; 77 ALD 396

Seller v Deputy Commissioner of Taxation [2011] FCA 865; 282 ALR 80

SZRURv Minister for Immigration and Border Protection [2013] FCAFC 146; 216 FCR 445

Telstra Corporation v Hannaford [2006] FCAFC 87; 151 FCR 253

Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461; 315 ALR 523
Date of hearing: 30 April 2019
Date of last submissions: 24 May 2019
Registry: Australian Capital Territory
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of…

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AGLC
Dunkerley v Comcare [2019] FCA 1002
Case
[2019] FCA 1002
Decision Date

CaseChat Overview and Summary

Ms Dunkerley brought an application to set aside a bankruptcy notice issued by Comcare against her. The bankruptcy notice arose from three costs orders made against Ms Dunkerley in proceedings between her and Comcare relating to her claim for compensation for a psychiatric injury. The Court was required to determine whether there were any grounds upon which the bankruptcy notice could be set aside, including whether it was an abuse of process and whether the Court had the power to go behind the judgment debt on which the bankruptcy notice was based. The Court held that the application to set aside the bankruptcy notice should be dismissed. The Court found that the grounds claimed for setting aside the bankruptcy notice amounted to an attempt to litigate again the same legal and factual issues tried in the previous proceedings on the same evidence. The Court held that there was no evidence of fraud, abuse of process or miscarriage of justice. Ms Dunkerley had not established any special circumstances which would warrant the Court going behind the previous judgments and the costs orders flowing from them. The Court found that there was no basis upon which the bankruptcy notice could be set aside. The Court dismissed Ms Dunkerley’s application with costs. The orders of the Court were that the applicant’s application to set aside the bankruptcy notice was dismissed and that the applicant pay the respondent’s costs, as agreed or assessed.

Orders

Orders of the court

1. The applicant’s application dated 9 October 2018 to set aside bankruptcy notice BN229029 is dismissed.

2. The applicant pay the respondent’s costs, as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Before describing Ms Dunkerley’s claims in more detail, it is desirable to outline the relevant events which lead to the present application. Summary of background events Ms Dunkerley is a teacher. On 24 October 2007, she suffered an injury described as an “adjustment disorder with anxious mood” which she claimed was contributed to, in significant measure, by her employment at the former Commonwealth Department of Education, Science and Training (DEST). Although initially attempts were made to return her to work in another area of DEST, these attempts were unsuccessful and she was transferred to the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISR) in May 2008. Comcare initially declined liability for the October 2007 injury. On 16 June 2009, the AAT made a consent decision in which Comcare accepted liability for Ms Dunkerley’s injury suffered on 24 October 2007. In March 2009, Dr George (a psychiatrist), concluded that Ms Dunkerley no longer presented with any psychiatric diagnosis and that she had full capacity to return to work. On 1 September 2009, Ms Dunkerley made a claim for compensation from Comcare for aggravation of her condition arising from her interactions with a more senior colleague at DIISR in July 2009 in the context of her participation in a promotion round. This claim for aggravation was rejected by Comcare on 8 December 2009 and its decision was upheld on an internal review by Comcare on 11 February 2010. Ms Dunkerley sought a review of Comcare’s decision in the AAT. Comcare’s decision was affirmed by the AAT in its decision dated 17 November 2010, which is reported as Re Dunkerley and Comcare [2010] AATA 915 (First AAT Decision). The AAT found that Ms Dunkerley’s aggravation had been suffered as a result of the feedback that she received from her more senior colleague (who was the Chair of the Selection Advisory Committee) on 17 July 2009. The feedback related to her unsuccessful attempt to obtain a promotion and the AAT found that it constituted reasonable administrative action taken in a reasonable manner in respect of her employment and that, accordingly, there was no “injury” for the purposes of s 5A of the SRC Act. Ms Dunkerley appealed the First AAT Decision to this Court. The appeal was dismissed by Perram J on 3 February 2012. His Honour’s reasons for judgment are reported as Dunkerley v Administrative Appeals Tribunal [2012] FCA 41. Comcare did not seek costs against Ms Dunkerley and none was ordered. Ms Dunkerley appealed to the Full Court from Perram J’s decision. On 13 September 2012, the appeal was dismissed by Lander, Logan and Barker JJ. Their Honours’ reasons for judgment are reported as Dunkerley v Comcare [2012] FCAFC 132; 131 ALD 1. An order for costs was made in favour of Comcare. Comcare did not pursue those costs and they do not form part of the basis of the bankruptcy notice which is the subject of the present proceeding. Before describing the background to the three costs orders which form the basis of the bankruptcy notice, it is apt to say something about other proceedings in the AAT involving Ms Dunkerley and Comcare which preceded the making of those three costs orders.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In early May 2013, Ms Dunkerley reagitated her claim for compensation arising from her October 2007 injury. On 20 May 2013, Comcare denied liability to pay Ms Dunkerley compensation under ss 16 and 19 of the SRC Act from 2 March 2009 to the date of that determination in relation to Ms Dunkerley’s “adjustment disorder with anxious mood” suffered on 24 October 2007. The basis for the denial was Comcare’s determination that Ms Dunkerley had recovered from the injury suffered on 24 October 2007 by no later than 2 March 2009. Comcare’s determination that Ms Dunkerley had recovered from her injury was based on a medical report by a medical practitioner named Dr George. This decision was affirmed on internal review and Ms Dunkerley then sought review of that internal review decision in the AAT. On 18 June 2014, the AAT affirmed Comcare’s decision (the Second AAT Decision). It found that, as at 2 March 2009, Ms Dunkerley did not suffer from a “Axis 1 psychiatric disorder”, and did not at that time suffer incapacity for work nor require further medical treatment for the injury suffered on 24 October 2007. The Second AAT Decision is reported as Re Dunkerley and Comcare [2014] AATA 381. Ms Dunkerley appealed the Second AAT Decision to this Court. Ms Dunkerley represented herself. On 27 April 2015, Perram J dismissed the appeal and ordered Ms Dunkerley to pay Comcare’s costs. The decision is reported as Dunkerley v Comcare [2015] FCA 392. This is the First Federal Court Proceedings. Justice Perram concluded that Ms Dunkerley’s appeal was “devoid of merit” and at [28] he recorded his view “that the proceedings are beginning to border on the vexatious”. His Honour stated at [12] that Ms Dunkerley’s claim was “one for aggravation of her pre-existing condition” and that it was treated as such by all concerned. Liability was declined, however, on the basis that the conduct which underpinned the aggravation was “reasonable administrative action” within the meaning of s 5A(2) of the SRC Act. In brief, Perram J found that:(a)contrary to Ms Dunkerley’s contention, neither the AAT nor Comcare were bound by the medical certificates which Ms Dunkerley had obtained in respect of the conduct which underpinned the aggravation of her pre-existing 2007 adjustment disorder;(b)the AAT did not err in relying upon Dr George’s opinion in concluding that the 2007 injury was not causing Ms Dunkerley any ongoing disability; and(c)contrary to Ms Dunkerley’s allegation, Comcare had not behaved inappropriately and a breach of the Model Litigant Guidelines had no consequences in civil litigation. Comcare enforced the costs order in its favour made in the First Federal Court Proceedings. On 15 September 2017, the Registrar issued a certificate of taxation in Comcare’s favour in the amount of $24,335.90. This figure forms part of the total amount stipulated in the bankruptcy notice. As noted in [3] above, Ms Dunkerley appealed the orders made in the First Federal Court Proceedings. The appeal was case managed by Flick J. Comcare filed a notice of objection to competency and a notice of contention which claimed that Ms Dunkerley had not identified a “question of law” as required by s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act). On 10 June 2015, at a case management hearing, the Court ordered Ms Dunkerley to complete an appeal book by 26 June 2015 and to file an outline of written submissions by 9 July 2015. A further case management hearing was scheduled. Ms Dunkerley failed to appear at that directions hearing (held on 23 July 2019). Ms Dunkerley also failed to comply with the directions made on 10 June 2015.

Ratio Decidendi

Legal Principle Established

It is unnecessary to summarise Comcare’s submissions because they are substantially reflected in my reasons given below for dismissing Ms Dunkerley’s application. Consideration and determination It is well to commence with a summary of the relevant principles relating to an application to set aside a bankruptcy notice. Ms Dunkerley does not assert that she has a counter-claim, set-off or cross-demand. Nor does she claim that the bankruptcy notice is defective in form. It is generally recognised that the power of the Court to extend time under s 41(6A) of the Act carries with it the power to set aside the bankruptcy notice itself. The procedure is set out in r 3.02 of the Bankruptcy Rules. Although there is no general discretion or broad ranging principle of fairness to set aside a bankruptcy notice, it is well established that there is an implied power to set aside a bankruptcy notice as an abuse of process (see, for example, Seller v Deputy Commissioner of Taxation [2011] FCA 865; 282 ALR 80 (Seller) at [14]-[20] per Flick J). This includes where the bankruptcy notice was issued for a collateral purpose (see Brumminghausen v Glavanics, unreported decision of Emmett J, 3 March 1998 and Maxwell Smith v S & E Hall Pty Ltd [2006] FCA 825; 233 ALR 81 at [45]-[52] per Jacobson J). The relevant time to judge whether there is an abuse of process which warrants the setting aside of a bankruptcy notice is the time when the notice is issued and “subsequent events have relatively slight relevance” (see Killoran v Duncan [1999] FCA 1574 (Killoran) at [13] and [15] per Gyles J). It is uncontroversial that the Court’s power to set aside a bankruptcy notice is discretionary (see Killoran, supra). That is not to say, however, that a bankruptcy notice may not be set aside as an abuse of process if such abuse is evident in, for example, the creditor relying on it due to events which occurred after the bankruptcy notice was issued. In Killoran, Gyles J said that, in considering an application to set aside a bankruptcy notice as an abuse of process, it may also be relevant to consider whether there has been a bona fide offer of security by the debtor, or some other means of paying the underlying debt. It is incontrovertible that Ms Dunkerley carries the onus of establishing the basis upon which the bankruptcy notice should be set aside (see Cavoli v Etl [2007] FCA 1191 at [17]). I turn now to summarise the principles relating to the circumstances in which the Court may go behind a judgment debt. It is generally accepted that a Court will accept a judgment as being conclusive of the existence of a debt, however, the Court has a discretion in an appropriate case to go behind a judgment debt to examine whether there is in truth consideration for it. The relevant principles may be summarised as follows:(a)The Court has the power in an appropriate case to go behind a judgment in an application to set aside a bankruptcy notice, but that power “is not readily exercised if there has been a substantive hearing of the matter on its merits by the court in which the judgment was granted” (see Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461; 315 ALR 523 at [55] (Xu) per Robertson J).(b)In determining whether to go behind a judgment on which a bankruptcy notice is based, the Court will take into account similar considerations to those which apply when determining whether or not to go behind a judgment on the hearing of a creditor’s petition (see Xu at [55], [118]-[120] and [131] per Robertson J). (c)Although the Court has the power in an appropriate case to go behind a judgment on which a bankruptcy notice is based, the Court does not have the power to set aside the judgment itself and it is also important to bear in mind that the Court is not hearing an appeal from the judgment on which a bankruptcy notice is based (Xu at [57]).(d)A judgment debt is usually expected to provide the most reliable statement of debt humanly attainable because the ordinary processes of the adversarial system provide a practical guarantee of reliability. That is why there usually is no occasion in a bankruptcy proceeding to investigate whether the judgment debt is a true reflection of the underlying debt (Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132 (Ramsay) at [68] per Kiefel CJ, Keane and Nettle JJ).(e)Ms Dunkerley must establish special circumstances for the Court to go behind the underlying judgment debt (Petrie v Redmond [1943] St R Qd 71 at 75-76 per Latham CJ, with whom Rich and McTiernan JJ agreed and see also Ramsay at [69] per Kiefel CJ, Keane and Nettle JJ). As a matter of practical experience, special circumstances of this nature are usually only when there has been a consent judgment, default judgment or some other circumstance which means the judgment debtor was unable to present his or her case on its merits in the litigation leading to the judgment debt (Ramsay at [70] per Kiefel CJ, Keane and Nettle JJ).(f)The Court is reluctant to go behind a judgment once it has been the subject of adjudication by a Court, even if there were problems relating to such matters as the debtor’s representation or some other unusual feature. It is accepted, however, that the Court can inquire into the validity of a judgment where there is evidence that it has, for example, been obtained by fraud, collusion or a miscarriage of justice, but the debtor carries the onus of establishing that the fraud was “directly material to the judgment” (see Kirk v Ashdown [1999] FCA 522) and Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 (Emerson) at 588). There may be other substantial reasons for going behind a judgment debt, however, in the absence of some evidence of fraud, collusion or miscarriage of justice, a court sitting in bankruptcy will rarely have substantial reasons to investigate whether the judgment debt was truly owed (Ramsay at [111] per Edelman J).(g)It is insufficient to set aside a bankruptcy notice merely because the debtor establishes that a judgment is irregular because, for example, the pleadings or proof that were offered were inadequate to support the judgment or the judgment is for the wrong amount (see, for example, Re Skaff; Ex parte Farrow Mortgage Services Pty Ltd (1993) 41 FCR 331 per Drummond J and Re Bedford; Ex parte H E Sleigh (Queensland) Pty Ltd (1967) 9 FLR 497 per Gibbs J). (h)Absent some good reason for doing so, a Court exercising bankruptcy jurisdiction should avoid embarking on a course which amounts to a re-trial of the issues that have been determined by another Court after a contested hearing. This is, particularly so where that other Court’s determination has been the subject of an appeal because the appeal is the appropriate form in which to review the correctness of the judgment (Emerson at 588).(i)A court exercising jurisdiction in a bankruptcy proceeding should not re-litigate on the same evidence, a dispute which has already been fully litigated in adversarial proceedings (Doggett v Commonwealth Bank of Australia [2019] FCAFC 19 (Doggett) at [49] per Kerr, Davies and Thawley).