Ezekiel-Hart v Reis
[2024] FedCFamC2G 121
•15 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Ezekiel-Hart v Reis [2024] FedCFamC2G 121
File number(s): CAG 25 of 2023 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 15 February 2024 Catchwords: BANKRUPTCY – Application to set aside bankruptcy notice – whether application to set aside bankruptcy notice was made before the time for complying with it had expired – application to set aside bankruptcy notice not made before the time for complying with it had expired – whether in any event the applicant would have succeeded on any of the grounds on which he relies for setting aside the bankruptcy notice – applicant would not have succeeded – application dismissed. Legislation: Bankruptcy Act 1966 (Cth) ss 40(1)(g)(ii), 41(6A)
Federal Circuit Court of Australia Act 199 (Cth) s 88Q
Holidays Act 1958 (ACT) s 3(1)(a)(ix)
Legal Profession Act 1996 (ACT) ss 576(1), 576(2), 577(1)
Civil Procedure Rules 2006 (ACT) rr 1800(3), 1835(5), 1835(6)
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) rr 2.01(1), 3.02
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 2.05, 2.09
Cases cited: Derek George Shephard v Chiquita Brands South Pacific Limited [2004] FCAFC 76
Ezekiel-Hart v Reis [2018] ACTSC 264
Ezekiel-Hart v The Law Society of the ACT & Anor [2014] FCCA 658
Ezekiel-Hart v The Law Society of the ACT & Anor [2014] FCCA 658
Glew v Harrowell, in the matter of Glew [2003] FCA 373
Lamb v Sherman [2023] FCAFC 85
Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd [1980] FCA 78
Division: General Number of paragraphs: 52 Date of hearing: 1 November 2023 Place: Sydney Counsel for the Respondents: Ms P Bindon, by video Solicitor for the Respondents: Thomson Geer The Applicant: In person, by video ORDERS
CAG 25 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF EMMANUEL TAM EZEKIEL-HART
BETWEEN: EMMANUEL TAM EZEKIEL-HART
Applicant
AND: ROBERT ANTHONY REIS
First Respondent
COUNCIL OF THE LAW SOCIETY OF THE ACT
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
15 FEBRUARY 2024
THE COURT ORDERS THAT:
1.The application is dismissed.
2.The applicant pay the respondents’ costs.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
By an application electronically lodged at 7:24 pm on 26 May 2023 with the Canberra Registry of this Court, but accepted for filing on 30 May 2023, Mr Ezekiel-Hart applies to set aside a bankruptcy notice (bankruptcy notice) issued on 3 May 2023 on the application of the Council of the Law Society of the Australian Capital Territory (Council). The bankruptcy notice demands that, within 21 days after service of the bankruptcy notice, Mr Ezekiel-Hart pay $25,530.45 to the Council.
The $25,530.45 the bankruptcy notice demands Mr Ezekiel-Hart pay is the amount stated in a certificate of costs assessment (Costs Certificate) signed and sealed by a Registrar of the Supreme Court of the Australian Capital Territory (ACTSC) pursuant to r 1835(5) of Civil Procedure Rules 2006 (ACT) (CP Rules), and filed with the Court of Appeal of the ACTSC (Court of Appeal). The Registrar assessed the costs recorded in the Costs Certificate to give effect to two orders for costs the Court of Appeal made on 14 November 2019 against Mr Ezekiel-Hart. It may be inferred that the Registrar assessed the costs referred to in the Costs Certificate in response to the Council filing a bill of costs pursuant to r 1800(3) of the CP Rules. Subrule 1835(6) of the CP Rules provides that a “certificate of assessment is final when it is signed, sealed and filed by the registrar, and operates as if the certificate were an order of the court”.
Mr Ezekiel-Hart, who is not legally represented, has set out the matters on which he relies for setting aside the bankruptcy notice in a number of affidavits and written submissions. These documents are not easy to comprehend; but one of the grounds or set of grounds appears or appear to be that Mr Ezekiel-Hart has counter-claims, set-offs or cross demands equal to or exceeding the amount the bankruptcy notice demands.
The Council opposes Mr Ezekiel-Hart’s application to set aside the bankruptcy notice on a number of grounds: Mr Ezekiel-Hart filed his application to set aside the bankruptcy notice after the expiration of time fixed for compliance, thus denying this Court of jurisdiction to entertain the application; Mr Ezekiel-Hart has not articulated any counter-claim, set-off or cross demand; and Mr Ezekiel-Hart does not, in any event, have any counter-claims, set-offs or cross demands equal to or exceeding the amount the bankruptcy notice demands. The Council also relies on a declaration made on 4 April 2013 by a judge of this Court pursuant to s 88Q of the Federal Circuit Court of Australia Act 199 (Cth) that Mr Ezekiel-Hart is a vexatious litigant,[1] but I do not propose to consider that ground.
[1] Ezekiel-Hart v The Law Society Of The ACT & Anor [2014] FCCA 658
Before I consider the questions that arise on this application, it would be useful to say something about the legal personality of the Council.
THE LEGAL PERSONALITY OF THE COUNCIL
The Council comprises persons who from time to time answer the description of the classes of persons stated in Art 11(a) of the Constitution of the Law Society of the Australian Capital Territory, and in whom Art 11(a) vests the management of the affairs of the Law Society of the Australian Capital Territory (Law Society). The Law Society is established by s 576(1) of the Legal Profession Act 1996 (ACT) (LP Act) and, under s 576(2), is a corporation that may sue and be sued in its corporate name. The LP Act does not expressly provide that the Council is a corporation, or otherwise has a separate legal personality. The LP Act does, however, confer a number of powers or functions on the Council, including those stated in s 577(1) of the LP Act. The LP Act’s conferral of extensive functions on the Council manifests an intention that the Council is a body having a distinct corporate personality.
I will proceed on the basis that the Council has a distinct legal personality sufficient for it to have applied in its own name for the Costs Certificate and for the issue of the bankruptcy notice Mr Ezekiel-Hart applies to set aside.
JURISDICTION TO EXTEND TIME FOR COMPLIANCE WITH BANKRUPTCY NOTICE
Mr Ezekiel-Hart’s application for an order to set aside the bankruptcy notice must be viewed in the light of s 41(6A) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), which provides as follows:
Where, before the expiration of the time fixed for compliance with a bankruptcy notice:
(a) proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or
(b) an application has been made to the Court to set aside the bankruptcy notice;
the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.
It will be seen that s 41(6A) of the Bankruptcy Act concerns the extension of time for compliance with the bankruptcy notice; it does not expressly say anything about the time by which the debtor may apply to set aside the bankruptcy notice. Nevertheless, the effect of s 41(6A) of the Bankruptcy Act is to compel a person on whom a bankruptcy notice has been filed to apply to set aside the bankruptcy notice before the time for compliance with the bankruptcy notice expires. Thus, unless before the time for complying with the bankruptcy notice the debtor either commences a proceeding to set aside the judgment or order in respect of which the bankruptcy notice is issued, or the debtor applies to set aside the bankruptcy notice, the debtor will have committed an act of bankruptcy.
This consequence would not follow if the Court has another source of power for extending the time for compliance with a bankruptcy notice. It has been held, however, that there is no “statutory grant of power to extend the time for compliance except in accordance with the requirements of s 41(6A) of the Act”.[2] Thus, unless Mr Ezekiel-Hart filed his application to set aside the bankruptcy notice within 21 days after it was served on him, the Court will have no jurisdiction to extend the time for compliance with the bankruptcy notice, which means that Mr Ezekiel-Hart will have committed an act of bankruptcy, and the Court would have no jurisdiction to set aside the bankruptcy notice. That requires me to consider the evidence relating to the service of the bankruptcy notice.
[2] Derek George Shephard v Chiquita Brands South Pacific Limited [2004] FCAFC 76, at [48] (Sackville J)
There is in evidence an exhibit to the affidavit of Mr Hill, the solicitor for the Council, which includes an affidavit made by Ms Woodward, a process server. Ms Woodward deposes that on 5 May 2023 she served on Mr Ezekiel-Hart a letter dated 4 May 2023 from the Council’s lawyer addressed to Mr Ezekiel-Hart, together with the documents referred to in the letter; and that she served these documents by handing them to Mr Ezekiel-Hart. The documents referred to in the letter were the bankruptcy notice, the orders made by Court of Appeal on 14 November 2019 (CA Orders), and the Costs Certificate. The Council did not read Ms Woodward’s affidavit, although it is otherwise in evidence. Mr Ezekiel-Hart has not disputed, however, that he was served with the bankruptcy notice on 5 May 2023.
I find that Mr Ezekiel-Hart was served with the bankruptcy notice on 5 May 2023. That means Mr Ezekiel-Hart was required by 26 May 2023 either to apply to set aside the CA Orders, or to apply to this Court or to the Federal Court of Australia, to set aside the bankruptcy notice. There is no evidence Mr Ezekiel-Hart applied to set aside the CA Orders. As I noted at the beginning of these reasons, however, at 7:24 pm on 26 May 2023 Mr Ezekiel-Hart electronically lodged for filing with the Canberra Registry of this Court an application to set aside the bankruptcy notice. The question arises, however, whether by Mr Ezekiel-Hart electronically lodging the application to set aside the bankruptcy notice at 7:24 pm on 26 May 2023, “an application has been made to the Court to set aside the bankruptcy notice” on 26 May 2023, being the last day by which Mr Ezekiel-Hart was required to comply with the bankruptcy notice.
The starting point is r 2.01(1) of Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules):
Originating application and interim application
(1) Unless these Rules otherwise provide, a person must make an application required or permitted by the Bankruptcy Act to be made to the Court:
(a) if the application is not made in a proceeding already commenced in the Court—by filing an application in accordance with Form B2; or
(b)in any other case—by filing an interim application in accordance with Form B3.
The Bankruptcy Rules do not contain rules relating to the filing of documents. Subrule 1.04(2) of the Bankruptcy Rules, however, provides:
The other Rules of the Court apply, to the extent that they are relevant and not inconsistent with these Rules, to a proceeding in the Court to which the Bankruptcy Act applies.
The “other Rules of the Court” include the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules); and the GFL Rules contain provisions relating to the filing of documents. These include r 2.05, which relevantly provides:
How documents may be filed
. . . .
(4) However, a document sent by fax or electronic communication, if accepted, is taken to have been filed:
(a) if the whole document is received by 4.30 pm on a day the Registry is open for business — on that day; or
(b) in any other case — on the next day the Registry is open for business.
Also relevant is r 2.09 of the GFL Rules, which relevantly provides:
Other requirements for filing by electronic communication
(1) If a document sent by a person by electronic communication is required to be signed or stamped, and it is accepted at a Registry, a Registrar must comply with the following (as applicable):
(a) for a document that, under these Rules, must be endorsed with a date for hearing—insert a notice of filing and hearing as the first page of the document;
(b)for any other document—insert a notice of filing as the first page of the document;
(c) make one copy of the document (including the notice mentioned in paragraph (a) or (b) (whichever applies));
. . . .
(2) A notice mentioned in paragraph (1)(a) or (b) is part of the document for the purposes of these Rules.
. . . .
(5) If a document has been filed electronically and a notice has been inserted as the first page of the document as required by paragraph (1)(a) or (b), the notice is treated as part of the document for the purposes of the Act and these Rules (including any rules about service of the document).
Mr Ezekiel-Hart did not purport to lodge for filing his application to set aside the bankruptcy notice in a proceeding that had already been commenced. That means that Mr Ezekiel-Hart was required to apply to set aside the bankruptcy notice by “filing” with the Court an application in accordance with Form B2. Mr Ezekiel-Hart, however, did not lodge his application by 4:30 pm on 26 May 2023, being the last day by which he was required to comply with the bankruptcy notice, but at 7:24 pm on that day. That means that, under r 2.05(4)(b) of the GFL Rules, the application to set aside the bankruptcy notice Mr Ezekiel-Hart electronically lodged at 7:24 pm on 26 May 2023 is to be taken to have been filed on the next day the (Canberra) Registry was open for business. That day was Tuesday 30 May 2023 because 26 May 2023 was a Friday, and Monday 29 May 2023 was a public holiday in the Australian Capital Territory.[3]
[3] Holidays Act 1958 (ACT) s 3(1)(a)(ix).
It follows, therefore, that Mr Ezekiel-Hart did not apply to the Court to set aside the bankruptcy notice by 26 May 2023, being the last day by which Mr Ezekiel-Hart was required to comply with the bankruptcy notice. This Court, therefore, does not have jurisdiction to extend the time for compliance with the bankruptcy notice and, consequently, does not have jurisdiction to set it aside. For these reasons, Mr Ezekiel-Hart’s application to set aside the bankruptcy notice must be dismissed.
The application of r 2.05(4) of the GFL Rules to deny Mr Ezekiel-Hart’s application to set aside the bankruptcy notice as having been filed on 26 May 2023 may seem harsh. There is, however, an important rationale to the rules relating to the filing of documents; and the Full Federal Court in Lamb v Sherman identified the rationale of the equivalent rule in the Federal Court Rules 2011 (Cth):[4]
The effect of r 2.25 is to put a person who lodges a document electronically in the same position as one who does so physically. That is, lodgment will only be effective during business hours when there is an officer of the Court with authority to accept the document, and, if the officer accepts it, filing occurs in accordance with the deeming provisions in the rule, unless the Rules otherwise provide or the Court orders. For example, ordinarily if a person attends the Registry to present an originating application or a bankruptcy petition for filing, he or she physically hands the document to an officer of the Registry who must accept it and put it on the court file, unless rr 2.26 or 2.27 apply. Those acts are usually synchronous. However, if the person arrives after the Registry has closed for business, the person must either apply to reopen it or must apply to a person, such as a registrar or a judge, with the authority to waive compliance with the Rules for lodging or filing documents, if the person wants to initiate a proceeding in the Court or lodge a document for filing on that day.
. . . .
One reason for this, particularly in bankruptcy matters or where a limitation period is about to expire, is that people need certainty as to whether or not a proceeding has been commenced or, in the language of s 41(6A) of the Bankruptcy Act, “an application has been made to the Court”. Applications to the Court are not made in the air. They are made to the Court to invoke regularly its jurisdiction in accordance with the requirements of a statute and relevant rules of Court. It would be absurd to suggest, in the example we have given earlier, that standing outside a closed Registry after business hours is enough to “make” an application to the Court. That is because nobody was at the Registry to receive and accept it or to file it. Hence, the Rules are structured in the way they are, to allow an officer in the Registry to consider whether or not a document lodged electronically or physically should be put on the Court’s file or be used to create a Court file to commence a proceeding and thus invoke the jurisdiction of the Court.
[4] Lamb v Sherman [2023] FCAFC 85, at [39], [42]
Although I have concluded the Court does not have jurisdiction to consider Mr Ezekiel-Hart’s application to set aside the bankruptcy notice, I will consider the grounds on which Mr Ezekiel-Hart relied at the hearing to set aside the bankruptcy notice.
GROUNDS ON WHICH MR EZEKIEL-HART RELIES FOR SETTING ASIDE BANKRUPTCY NOTICE
At the hearing Mr Ezekiel-Hart read three affidavits, and relied on two sets of written submissions. In the course of his oral submissions, Mr Ezekiel-Hart identified six grounds on which he relied. I will proceed to identify and consider each ground.
First ground – costs order in favour of Mr Ezekiel-Hart
Mr Ezekiel-Hart claimed he has an order for costs in his favour. The Council accepts that is the case. The relevant order is that made by McWilliam AsJ on 19 September 2018 that the Council pay Mr Ezekiel-Hart’s costs in relation to the Council’s unsuccessful application to have Mr Ezekiel-Hart declared a vexatious litigant.[5] In his affidavit made on 26 May 2023, Mr Ezekiel-Hart asserts that $28,000 is his estimate of his costs. That is the amount Mr Ezekiel-Hart asserted to be his costs in an attachment to an email he sent to the President of the Law Society on 5 May 2023. The email stated:[6]
Dear President,
I refer to my letter attached, posted to you this week, this is just a reminder that the amount is not yet paid and no negotiation has been sought to settle the amount owed by the Law Society and Mr Reis.
You still have about 21 days to settle the debt or negotiate a settlement. I am open to frank discussion with a view to resolve this matter and avoid court hearings. I note that other than me requesting for the past 10 years neither the Council nor its representative has considered mediation or accept conciliation of the ACT Human Rights Commission's offer to resolve the matters.
I look forward to honest and frank offer to resolve the matter.
Wishing you a pleasant weekend
[5] Ezekiel-Hart v Reis [2018] ACTSC 264
[6] Exhibit JMH1, page 38
The attachment included the following:[7]
[7] Exhibit JMH1, page 39
TO: The Council of the Law Society of the Australian Capital Territory and Mr Robert Reis
FINAL LETTER OF DEMAND OF ACCRUED DEBT OWED BY THE COUNCIL OF THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY AND MR ROBERT REIS
RECALL THAT ON 19 SEPTEMBER 2018 HER HONOUR MCWILLIAM ASJ as she then was made order that you pay me cost for failure in your applications.
Cost and damages suffered for those applications dismissed by the Court: $28,000.00
It is common ground that Mr Ezekiel-Hart represented himself in the proceeding in which he was awarded costs. The only costs to which Mr Ezekiel-Hart would be entitled, therefore, are disbursements he reasonably incurred in relation to the Council’s application that he be declared a vexatious litigant. Mr Ezekiel-Hart has not, however, adduced any evidence that he incurred disbursements. In the absence of such evidence, there is no basis on which it is open to find that the costs Mr Ezekiel-Hart would be entitled to recover under the costs order are equal to, or greater than the $25,530.45 the bankruptcy notice demands.
The first ground on which Mr Ezekiel-Hart relies, therefore, would have failed if the Court had jurisdiction to determine whether to set aside the bankruptcy notice.
Second ground - failure to agree or negotiate payment by instalments
At the hearing Mr Ezekiel-Hart made the following submission:[8]
Your Honour, I had also put before them an offer to pay by instalment following the type of order that the ACT tribunal usually make in relation to payment of matter – of cost instalment but the respondent had declined to accept such offer of instalment payment. Your Honour, what for the unreasonable rejection of the offer? Your Honour, I believe that given that that is an offer that is usually given by an ACT tribunal that that would intervene an issue will not be given before your Honour. Your Honour, I have – as I said, I have put an instalment offer for that but they refused. Your Honour, the only rationale – a reasonable reason for rejecting the offer to get paid was to get hold of my certificate and hold it indefinitely.
[8] T20.45
I asked Mr Ezekiel-Hart what is “the date of the offer and what is that offer”, in response to which Mr Ezekiel-Hart said:[9]
There was an offer that was made about – about – between 13 to 25 July 2020. Then there is another one which was the final demand which I now provided to them on 5 May 2023.
[9] T22.35
I have been unable to identify in the evidence an offer Mr Ezekiel-Hart says he made “between 13 to 25 July 2020”; and the offer Mr Ezekiel-Hart says he made on 5 May 2023 appears to be the email I reproduced above. In any event, even if Mr Ezekiel-Hart had made an offer that the amount the bankruptcy demands be paid by instalments, and the Council did not accept the offer, the Council’s non-acceptance would not be a ground for setting aside the bankruptcy notice because the Council was not obliged to consider or accept such offer.
The second ground on which Mr Ezekiel-Hart relies, therefore, would also have failed if the Court had jurisdiction to determine whether to set aside the bankruptcy notice.
Third ground – alleged deception of the Court
Mr Ezekiel-Hart contends that in the hearing before Judge Neville of an application by the Council to have Mr Ezekiel-Hart declared a vexatious litigant, the Council had misrepresented to his Honour that it had issued a conditional practising certificate to Mr Ezekiel-Hart when the Council did not in fact issue a practising certificate.[10] I asked Mr Ezekiel-Hart how these assertions, if true, link to his application to set aside the bankruptcy notice. After a number of exchanges I attempted to articulate the ground I understood Mr Ezekiel-Hart was seeking to advance as follows:
HIS HONOUR: All right. Well, I understand what you say about that. So let me just reiterate – and I will put it generally. You say that Judge Neville was misled . . . I understand in one . . . or possibly two ways and you say that is relevant because it discloses an ulterior motive on the part of the Law Society and that motive is to make you bankrupt so that they can withhold granting you a certificate to practice. That’s the essence of what you wish to say. Have I ‑ ‑ ‑
MR EZEKIEL-HART: Correct.
HIS HONOUR: Have I – have I correctly understood that? All right. So that’s your ‑ ‑ ‑
MR EZEKIEL-HART: That’s correct, your Honour.
HIS HONOUR: All right. That’s the third ground. Third point.
[10] Mr Ezekiel-Hart relies on Judge Neville having stated the following statement at paragraph 126 of his reasons for judgment in Ezekiel-Hart v The Law Society of the ACT & Anor [2014] FCCA 658: “Moreover, it is not as though he has been prevented from pursuing his chosen profession, because he has been issued with a practising certificate, albeit that it has not been unrestricted as he has sought”.
In his affidavit made on 19 September 2023 Mr Ezekiel-Hart asserts that Mr Reis “lied” to Judge Neville. That is no more than an unparticularised assertion which it was and is not open to Mr Ezekiel-Hart to make. In any event, there is no evidence on the basis of which it would be open to find that Mr Reis, or any other person on behalf of the Council or Law Society, had lied to Judge Neville. Even if there were such evidence, that could not afford a rational basis for concluding that the Council had issued the bankruptcy notice for an ulterior motive or otherwise in bad faith. I should note that Judge Neville himself “cautioned” Mr Ezekiel-Hart against his making “grave allegations” against Mr Reis “which he has failed to particularised, or to provide relevant evidence to support them”; and that the accusations Mr Ezekiel-Hart made “against Mr Reis should not have been made”.[11]
[11] Ezekiel-Hart v The Law Society of the ACT & Anor [2014] FCCA 658, at [65]
The third ground on which Mr Ezekiel-Hart relies, therefore, would also have failed if the Court had jurisdiction to determine whether to set aside the bankruptcy notice.
Fourth ground – bankruptcy notice issued because Mr Ezekiel-Hart made complaint with the Australian Human Rights Commission and lodged criminal complaint
Mr Ezekiel-Hart submitted that the Council issued the bankruptcy notice after he made a complaint to the Australian Human Right Commission (AHRC), and after Mr Ezekiel-Hart lodged a criminal complaint in the Magistrates Court against Mr Reis. Mr Ezekiel-Hart submits that the Council issued the bankruptcy notice for the “ulterior motive to coerce” Mr Ezekiel-Hart “from asserting [his] human rights before the [AHRC] and maintaining [his] discrimination action against [Mr Reis] and the Council, and to cause [Mr Ezekiel-Hart] detriments and intimidate” Mr Ezekiel-Hart. [12]
[12] Affidavit of Mr Ezekiel-Hart 19.09.2023, [6]
These submissions do not go beyond unparticularised assertions; and there is no evidence on the basis of which it would be open to find that the Council applied for the issue of the bankruptcy notice for a reason other than to demand payment of the amounts recorded in the Costs Certificate.
The fourth ground on which Mr Ezekiel-Hart relies, therefore, would also have failed if the Court had jurisdiction to determine whether to set aside the bankruptcy notice.
Fifth ground – alleged lies to ACAT
Mr Ezekiel-Hart asserts that Mr Reis lied to the ACT Civil and Administrative Tribunal in November 2016. This is no more than assertion, and is unsupported by any evidence. It was not open to Mr Ezekiel-Hart to make this allegation. Further, even if there were any basis for the assertions (there is none), this could not have afforded a rational ground for finding that the Council applied for the issue of the bankruptcy notice and served it on Mr Ezekiel-Hart for any reason other than to demand payment the judgment for it costs.
The fifth ground on which Mr Ezekiel-Hart relies would also have failed if the Court had jurisdiction to determine whether to set aside the bankruptcy notice.
Sixth ground – proceedings in the ACT Supreme Court and the High Court of Australia
In paragraph 9 of his affidavit made on 26 May 2023 Mr Ezekiel-Hart asserts he has a “proceeding against the Respondents in the ACT Supreme Court for damages, a summary judgment and default judgment has also been filed and the amount claimed by the Applicant is greater than the $25,530.45” demanded by the bankruptcy notice; and in paragraph 10 of the same affidavit Mr Ezekiel-Hart asserts he has a “proceeding against the Respondents in the High Court of Australia for damages, the matter is awaiting direction and the amount claimed by the Applicant is greater than the” bankruptcy notice.
In these paragraphs Mr Ezekiel-Hart appears to rely on s 40(1)(g)(ii) of the Bankruptcy Act which relevantly provides that a judgment debtor on whom a bankruptcy notice is served does not commit an act of bankruptcy if he or she satisfies the Court that he or she has:[13]
a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.
[13] Bankruptcy Act, s 40(1)(g)(ii)
Principles
A judgment debtor on whom a bankruptcy notice is served does not commit an act of bankruptcy if he or she satisfies the Court that he or she has:[14]
a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.
[14] Act, s 40(1)(g)(ii)
The matters of which a Court must be satisfied before it can conclude that a debtor has a counter-claim, set-off, or cross demand against the creditor have been stated in different ways, and in ways that sometimes overlap. The various statements were summarised by Lindgren J in Glew v Harrowell, in the matter of Glew.[15] In broad terms, a debtor must satisfy the Court that the counter-claim, set-off, or cross demand is made in good faith, and there is sufficient substance to the counter-claim, set-off or cross demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy.
[15] Glew v Harrowell, in the matter of Glew [2003] FCA 373, at [9]
That the judgment debtor may have a “counter-claim, set-off or cross demand equal to or exceed the amount of the judgment debt” within the meaning of s 40(1)(g)(ii) of the Bankruptcy Act is relevant to whether a bankruptcy notice can be set aside only if the counter-claim, set-off, or cross demand “could not have been set up” by the judgment debtor “in the action or proceeding” in which the judgment was obtained. The expression “could not have been set up in the action or proceeding” has been construed narrowly:[16]
The words “that he could not have set up in the action or proceeding in which the judgment or order was obtained” mean “which he could not by law set up in the action”: see Re Jocumsen (1929) 1 A.B.C., at p. 85; Re A Debtor per Avory J. [1914] 3 K.B., at p. 730 and Re Stockvis (1934) 7 A.B.C. 53 especially per Lukin J. where his Honour said: “I take a counter claim, set off, or cross demand which could not be set up as one which, from the point of time, or from its nature, or from absence of empowering provisions, or from positive inhibition so to do, could not be set up in the particular case in which judgment was obtained . . . Mere failure to take advantage of the opportunity can hardly be said to be inability” (1934) 7 A.B.C., at p. 57.
[16] Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd [1980] FCA 78; (1980) 44 FLR 135, at page 139 (Lockhart J)
Also relevant is r 3.02 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth), which relevantly provides:
(1) An application to set aside a bankruptcy notice under the Bankruptcy Act must be accompanied by an affidavit stating:
(a) the grounds in support of the application; and
(b) the date when the bankruptcy notice was served on the applicant.
(2) A copy of the bankruptcy notice must be attached to the affidavit.
(3) If the application is based on the ground that the debtor has a counter‑claim, set‑off or cross demand referred to in paragraph 40(1)(g) of the Bankruptcy Act, the affidavit must also state:
(a) the full details of the counter‑claim, set‑off or cross demand; and
(b) the amount of the counter‑claim, set‑off or cross demand and the amount by which it exceeds the amount claimed in the bankruptcy notice; and
(c) why the counter‑claim, set‑off or cross demand was not raised in the proceedings that resulted in the judgments or orders to which the bankruptcy notice relates.
The ACT proceeding
Mr Ezekiel-Hart does no more than assert that he has a “proceeding against the Respondents in the ACT Supreme Court for damages, a summary judgment and default judgment has also been filed and the amount claimed by the Applicant is greater than the $25,530.45 in the” bankruptcy notice. That does not identify the claims Mr Ezekiel-Hart makes in the ACTSC proceeding, or identify the matters that are relevant to determining whether Mr Ezekiel-Hart has made the claims in good faith, and whether there is sufficient substance to his claims to permit them to be heard and determined in the usual way.
Mr Hill, the solicitor for the Council, has deposed that the proceeding to which Mr Ezekiel-Hart appears to intend to refer is proceeding SC139 of 2023 Mr Ezekiel-Hart commenced in the ACTSC against the Law Society, Mr Reis and seven other persons, including the Attorney-General of the ACT, the Director of Public Prosecutions, and the ACT Police Commissioner. Mr Hill has exhibited to his affidavit a statement of claim Mr Ezekiel-Hart filed in the proceeding. Although it is a lengthy document, it is replete with unparticularised allegations of wrongdoing. These include allegations that the defendants acted in concert to “[w]eaponise their regulatory powers to victimize” Mr Ezekiel-Hart; the defendants engaged in conduct that amounted to “self-help, victimisation, and distinction and unfavourable treatment”; and the defendants authorised persons to lie.
The statement of claim is incapable of supporting a finding that the claims Mr Ezekiel-Hart makes in the proceedings have any, or any sufficient substance to permit them to heard and determined in the usual way, rather than Mr Ezekiel-Hart being compelled to choose between complying with the bankruptcy notice by payment, or to commit an act of bankruptcy.
High Court proceeding
Mr Hill deposes that the High Court proceeding to which Mr Ezekiel-Hart appears to intend to refer is proceeding C5 of 2023, being an application for special leave to appeal orders of the Court of Appeal. On 15 June 2023, however, the High Court dismissed that application.
At the hearing counsel for the Council informed me she was instructed that Mr Ezekiel-Hart had filed another application for special leave to the High Court, but counsel was not in a position to provide any additional information. That information is obviously insufficient to identify whether Mr Ezekiel-Hart’s application for special leave relates to a proceeding in which Mr Ezekiel-Hart claims an amount that is equal to or greater than the debt the bankruptcy notice demands and, if so, whether the application for special leave has any or any sufficient basis to justify its being determined in the usual course rather than compelling Mr Ezekiel-Hart to comply with the bankruptcy notice, or committing an act of bankruptcy.
Conclusion
The sixth ground on which Mr Ezekiel-Hart relies would also have failed if the Court had jurisdiction to determine whether to set aside the bankruptcy notice.
CONCLUSION AND DISPOSITION
The Court does not have jurisdiction to entertain Mr Ezekiel-Hart’s application to set aside the bankruptcy notice because he purported to apply to set aside the bankruptcy notice after the time by which he was required to comply with it had expired. Even if Mr Ezekiel-Hart did apply to set aside the bankruptcy notice before the time for compliance with the bankruptcy notice had expired, he would not have succeeded on any of the grounds on which he intended to rely. I therefore propose to order that the application be dismissed.
As for costs, I asked Mr Ezekiel-Hart what submissions he would make about costs if he were to fail in his application to set aside the bankruptcy notice. Mr Ezekiel-Hart submitted I should not exercise my discretion to award costs. He relied on the assertion that the respondents had lied. Mr Ezekiel-Hart also relied on a submission that I do not understand. Mr Ezekiel-Hart said that “costs is not automatic”, and that the “High Court has also made a decision that even in betting who will win a case, because an order can still be made for me to pay the costs of the other party”.[17]
[17] T44.45-T45.5
These are not matters that would cause me not to follow the usual outcome as to costs, namely, that the unsuccessful party should be ordered to pay the costs of the successful party. I will therefore also order that the Mr Ezekiel-Hart pay the respondent’s costs.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 15 February 2024
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