Evans v Hi Fert Pty Ltd
[2003] SASC 186
EVANS v HI FERT PTY LTD
[2003] SASC 186Magistrates Appeal
DUGGAN J. This is an appeal against orders made by a magistrate in an action for goods sold and delivered.
The appellant was the defendant in the action. He conducts a primary producing business near Temora in New South Wales. The action in the Magistrates’ Court was commenced by the respondent company which is a supplier of fertiliser. The claim was issued on 9 May 2001. The respondent claimed the sum of $22,451.60 for goods sold by it and delivered to the appellant. There was also a claim for interest and costs. The total sum claimed was $24,632.88.
The claimed amount was based on goods sold and charged for in two invoices for $10,391.60 and $12,060.00 respectively.
The Registrar of the court arranged for service of the claim by post.
The appellant did not file a defence. At this stage the respondent’s solicitor was advised that the invoice in the sum of $10,391.60 had been paid. On 25 July 2001 the respondent signed judgment against the appellant in the sum of $13,901.93 which was based on the outstanding invoice of $12,060.00 together with interest and costs.
The appellant was served with a bankruptcy notice on 6 February 2002. The notice was issued on the application of the respondent as creditor. The respondent filed a creditor’s petition against the appellant on 14 August 2002 relying on the judgment debt. The appellant was served with the petition on 2 September 2002.
The petition came on for hearing before a registrar in the Federal Court on 23 September 2002. The matter was adjourned after the appellant claimed that the judgment sum was disputed. The matter was adjourned again on 14 October 2002 when the appellant repeated the assertion that the judgment sum was disputed. There was a further adjournment to 28 October 2002.
In the meantime, on 23 October 2002 the appellant applied to the Magistrates’ Court to set aside the judgment and for leave to file a defence and counterclaim. In an affidavit in support of the application the appellant stated that he had not received notice of the respondent’s claim until 6 February 2002 when he was served with the bankruptcy notice. He stated that he was unaware that he had to attend court on 25 July 2001. He denied that he owed the respondent the amount claimed. He claimed that since 7 July 1999 no products had been delivered to him by the respondent and no payments had been made by him to the respondent.
The appellant’s application was set down for hearing in the Magistrates’ Court on 6 November 2002. On that date it was further adjourned to 20 November 2002 to allow the appellant time to establish that there was a procedural irregularity in relation to the notification of the proceedings and to establish by way of affidavit or evidence that there was an arguable defence on the merits.
In his affidavit dated 18 November 2002 the appellant said that his personal address was PO Box 299 Temora 2666. The appellant’s address on the claim is given as “Karlo Park” Combaning via Temora, Temora NSW 2666. The claim was not received by him until 6 February 2002. He said that no product had been delivered to him or payments made by him since 7 July 1999. However, he said that the documentation supplied to him indicates that a payment of $10,730.95 was credited to his account.
He added:
“I have always said that I do owe Hi Fert $8,953.20 but are reluctant to pay an extra $6,000 – because of bad account keeping and solicitor’s fees.”
On 20 November 2002 the magistrate dismissed the appellant’s application to set aside judgment. Her Honour said:
“In accordance with my direction he has filed a further affidavit but regrettably his affidavit does not set out a defence. It sets out his opinion or his position where he says he has always thought that he owed $8,953.20 but he is reluctant to pay extra money because of bad accounting and solicitor’s fees. That does not show a defence on the merits. It is apparent from his affidavit that he has been aware of an ongoing dispute between the parties since July of 1999 and it is regrettable that so much time has passed without there being any resolution.
It appears, looking at the competing interests of the parties, that the respondent in these proceedings and the party who has a judgment against the defendant has done all that is required within the jurisdiction of this court to obtain this judgment. Mr Evans has done little to resolve the dispute and I consider this eleventh hour attempt must fail due to the fact that he has not been able to properly mount a case that there is a defence arguable on the merits. I dismiss his application.”
The hearing of the creditor’s petition had been adjourned on 28 November 2002 to 11 November 2002. The adjournment was granted in the light of the application to set aside the judgment. The creditor’s petition was called on again on 11 November 2002 and adjourned to 25 November 2002. The appellant’s application to set aside the judgment was discussed on 11 November 2002.
On 25 November 2002 the appellant advised the Federal Court Registrar that he intended to file an appeal against the refusal to set aside the judgment and the hearing was further adjourned to 5 December 2002. On that date the appellant advised that the notice of appeal had not been filed and a sequestration order was then made. The notice of appeal against the refusal to set aside the judgment was not filed until 9 May 2003. It was not served on the respondent until 2 June 2003.
Mr Slattery, for the respondent, has raised a threshold point challenging the locus standi of the appellant to appeal against the refusal of the magistrate to set aside the judgment.
I have said that the sequestration order against the appellant’s estate was made on 5 December 2002. The notice of appeal against the order of the magistrate was filed on 9 May 2003. According to the respondent’s submission, the appellant, by reason of the sequestration order in relation to his estate, does not have a sufficient interest in the appeal so as to give him locus standi.
Reliance is placed on Cummings and Fuller v Claremont Petroleum NL & Anor (1996) 185 CLR 124 in support of this proposition. In that case, the respondents had taken action against the appellants claiming damages and equitable remedies arising out of the acquisition of oil leases in the United States. Judgment was entered against the appellants on 10 June 1993 and, on 1 July 1993, the appellants filed notices of appeal against the judgment.
In May 1993 sequestration orders had been made against the estates of the appellants and, on 14 July 1993 the respondent applied for the notices of appeal to be set aside or dismissed. The Full Court of the Federal Court dismissed the appeals as incompetent on the basis that the appellants had no locus standi. The appellants then appealed to the High Court.
The High Court accepted the argument that the purported appeals against the judgment at first instance were incompetent. Dawson and Toohey JJ were of the view that the right of appeal was “property” within the meaning of the Bankruptcy Act and that it vested in the trustee pursuant to s 58(1)(a). Accordingly, it was a right which could not be exercised by the appellant’s personally after the sequestration order had been made.
In their joint judgment Brennan CJ, Gaudron and McHugh JJ reached the same conclusion, but for different reasons. They said at 137:
“So far as a judgment entered in an action against a bankrupt creates or evidences a provable debt, we respectfully agree that the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts Heath v Tang [1993] 1 WLR 1421 at 1427; [1993] 4 All ER 694 at 701. It was not suggested in argument that, pursuant to s 153, the discharge of the appellants from bankruptcy would not release them from liability for the judgment debt, albeit there has been a finding of fraud. On that footing, the appellants have no financial interest in the judgment entered against them.
Of course, a money judgment entered against a bankrupt has the effect of increasing the amount of the debts provable in his estate. But it is immaterial that, if an appeal against the judgment were successful, there would or might be a surplus in the estate after the remaining creditors are paid. A bankrupt’s contingent interest in a surplus does not give him an interest which would allow him to sue to enforce proprietary rights Rochfort v Battersby (1849) 2 HLC 388 at 408, 409 [9 ER 1139 at 1147] and, that being so, it cannot give him an interest to appeal to minimise liabilities.”
Their Honours went on to point out that the trustee would have been authorised to prosecute the appeal by virtue of the power to “bring, institute or defend any action or other legal proceeding relating to the administration of the estate” pursuant to s 134(1)(j) of the Bankruptcy Act.
The court also drew attention to s 178 of the Act which provides as follows:
“If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.”
Their Honours observed that there will be some cases in which the appeal reflects on the personal or professional character of the bankrupt and, in such cases, the court has a discretion under s 178 to make an order which is just and equitable. No formal application has been made under this section and, in any event, this is not a case in which the personal or professional character of the appellant is in issue.
The reasoning in Cummings and Fuller v Claremont Petroleum NL applies in the present case. The appellant has no locus standi to pursue an appeal in this matter. The fact that the appeal is in relation to the judgment upon which the bankruptcy petition was founded does not justify a departure from the general rule denying locus standi: Heath v Tang [1998] 1 WLR 1421 at 1425.
I should point out that, even if the appellant had been at liberty to bring the appeal, it is well out of time. I have said that the decision appealed against was delivered on 20 November 2002. The notice of appeal was not filed until 9 May 2003. No satisfactory reason has been given for the delay and it would be inappropriate to allow an extension of time.
The appeal must be dismissed as incompetent.
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