Hahnheuser v Workcover SA

[2002] HCATrans 487

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B98 of 2001

B e t w e e n -

AXEL HAHNHEUSER

Applicant

and

WORKCOVER CORPORATION OF SOUTH AUSTRALIA

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 15 NOVEMBER 2002, AT 3.06 PM

Copyright in the High Court of Australia

MR A HAHNHEUSER appeared in person.

MR M J O’DONNELL:   Your Honours, I am for the respondent.  (instructed by Thomson Playford)

GUMMOW J:   Thank you.  We have read your written submissions, Mr Hahnheuser.  Now do you wish to supplement them?

MR HAHNHEUSER:   Yes, I do, your Honour, just to the extent where the respondent has, in fact, brought new evidence to this High Court, that is in relation to an affidavit which was allegedly written by myself on 17 October 2000.  That affidavit has never been entered into evidence in this matter from the Federal Magistrates Court or at appeal at the Federal Court level and only now appears in this particular Court, in this particular session, yet his Honour in the Federal Magistrates Court, Federal Magistrate Phipps, has already referred to that document within his judgment and made findings of bankruptcy from that document, having never heard the evidence.

So aside from the material we have already supplied to this Court and the fact that this is an application for special leave to appeal before the High Court against the sequestration order made in Adelaide against the applicant by the Federal Magistrates Court of Australia in February 2001, and a subsequent decision of the Federal Court of Appeal within the Queensland jurisdiction ‑ ‑ ‑

GUMMOW J:   It went from a magistrate to one judge of the Federal Court, did it not?

MR HAHNHEUSER:   That is correct, it was one judge sitting as the Full Court.

GUMMOW J:   Yes.

MR HAHNHEUSER:   We say that the bankruptcy notice was an obvious nullity for the reasons of the interest being incorrectly set out, the wrong source.  They had a wrong judgment, a judgment which never existed ‑ ‑ ‑

GUMMOW J:   Wait a minute, was an application made to set aside the bankruptcy notice?

MR HAHNHEUSER:   No, your Honour, the bankruptcy notice itself was an abuse of process and we refused to have anything to do with that.

GUMMOW J:   Was an application made to set it aside?  That is how these things are done.

MR HAHNHEUSER:   No, your Honour, because the amounts on costs of that particular judgment were disclosed as nil, and the amounts were not put down for us to actually – to have that full judgment set aside.  If your Honour has a look at the bankruptcy notice at page 4, which you will find in the authorities that were given to the Court, you will notice that the costs were put down as “NIL”, and there apparently was an allocatus available which had an amount of $7,700 attached to it.  It was found that that allocatus of $7,700 was attached to the bankruptcy notice.  Clearly, it was not.

We could not take that full amount and oppose that bankruptcy notice at any stage throughout the proceedings.  The figure was not there and we certainly could not appeal a figure of nil.  Why would we want to?  They required nil moneys paid.  We paid nil.  So, as far as we are concerned, we complied with those directions in the bankruptcy notice.

What we complain of, of course, your Honour, is that not only was it a nullity in relation to interests and costs, it was also an abuse of process in that bankruptcy had been threatened before in a letter in January 1999 and there was also an attempt by the WorkCover Corporation to enforce the judgment which we have given evidence to in a letter between themselves and their insurance agents in March 1999 as well.  We have proved all these matters before the Court.

GUMMOW J:   I take your point about decisions like Re Sterling and Lentini focusing on the question of using the Bankruptcy Court, as it were, as a debt collection procedure, but was there evidence that you were otherwise in a liquid state to pay your debts as they fell due?

MR HAHNHEUSER:   Well, your Honour, that never came up until such time as the Federal Magistrate mentioned that affidavit which, again, was not before the court.  It was not served upon us.  That affidavit was produced quite a few months beforehand for an application for leave of representation in Adelaide under rule 80 of the Federal Court Rules.  When we had that application heard before the application was entered into evidence, or the affidavit was entered into evidence, we were told that no solicitor had ever volunteered under rule 80 and therefore the matter would not even be considered.  We then threw that affidavit away.  The next time it popped up was in the decision of Federal Magistrate Phipps in his sequestration order.

So we say that we had the right to challenge that affidavit if it was going to be used and make our submissions on it.  We were denied that right and therefore a mistrial obviously occurred in addition to the fact that the bankruptcy notice is a nullity and we say, also, an abuse of process.

GUMMOW J:   Is there anything else you want to add?

MR HAHNHEUSER:   Your Honour, the other problem that we have with this bankruptcy notice is that the Bankruptcy Act requires under section 43 that:

Subject to this Act, where:

(1) a debtor has committed an act of bankruptcy; and . . . 

the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

Now, we point out that in his Honour’s judgment at page 39 of the application book, that is FCA 1730 paragraph 3 ‑ ‑ ‑

GUMMOW J:   Yes, we are looking at that.

MR HAHNHEUSER:   It states:

For present purposes, were I to consider the matter ‑ ‑ ‑

GUMMOW J:   Just a minute.  There is no need to read it out to us.  We can read it for ourselves.  What is your answer to the point Justice Dowsett makes in the last two or three sentences there on page 39, paragraph 3?

MR HAHNHEUSER:   The fact that he says:

Special leave has, as I understand it, been granted by the High Court in Kirk v Ashdown, and so a final resolution of the issue must await the outcome in that case.

GUMMOW J:   You are not listening to me, the last two or three sentences ‑ ‑ ‑

MR HAHNHEUSER:   I am sorry.

GUMMOW J:    ‑ ‑ ‑ the last two or three sentences in paragraph 3 on page 39 his Honour makes a very practical, what seems to me, sensible point.

MR HAHNHEUSER:   I have that page now.  Which section were you referring to, your Honour?

GUMMOW J:   Page 39.

MR HAHNHEUSER:   Yes, paragraph 3?

GUMMOW J:   Yes, the last four sentences.

MR HAHNHEUSER:   That start from:

The present appellant delivered a notice of intention to oppose the petition ‑ ‑ ‑

GUMMOW J:   The last four sentences in paragraph 3.

MR HAHNHEUSER:  

The petition was heard early this year and the judgment was delivered in July.  Had the present respondent been aware that the point was to be taken either at the time of the judgment or when the point was argued, it could have served another bankruptcy notice.  It will therefore suffer prejudice if the point is now raised successfully.

Is that the phrase you referred to?

GUMMOW J:   Yes.  Now, what do you say to that?

MR HAHNHEUSER:   I argue, your Honour, that either side will suffer prejudice for the forensic sins of the other.  I mean, if the bankruptcy was not a nullity then I obviously would suffer the prejudice of that case but the fact is that what they seek is forgiveness for their forensic sins and I do not believe that the court – that is not answer to the law.  The fact is the bankruptcy notice was a nullity.  The High Court has ruled in previous decisions that if the bankruptcy notice is a nullity we do not have to comply with it.  We follow that High Court ruling.

As a result of that, we were told that because we followed that ruling the other side will suffer prejudice and therefore we must be found guilty, if you like to put it that way.  We say that we have committed no offence; we have just followed the laws as they actually apply, but it is the Federal Court that has refused to apply the law in this particular case.  We do not have a bankruptcy based on an act of bankruptcy.  We have a bankruptcy based on an act of judicial discretion, and such discretion is not in the powers of the Federal Court.

GUMMOW J:   No, but you are now seeking special leave.  The best way of getting special leave would be able to say, “Look, there has been this miscarriage, but the fact is I was always able to pay my debts as they fell due.  I am wrongly in bankruptcy.”  Now, you do not put that.

MR HAHNHEUSER:   That is correct, your Honour.  No, we do not have any debts, and we do not recognise this debt.  I have no creditors whatsoever.  I have not had any creditors since the age of 20 - I am now 42.  So aside from this one instance where a person is deciding to enforce the judgment, a judgment which we say was wrongfully obtained and unlawfully obtained and where the evidence was corrupted by them themselves to obtain the judgment, we refuse to pay.  Now, the Bankruptcy Act does not permit a person to enforce a judgment through bankruptcy and this is what they tend to do.

GUMMOW J:   You are going to have to pay it sooner or later, Mr Hahnheuser, are you not?

MR HAHNHEUSER:   If the Court decides that ‑ ‑ ‑

GUMMOW J:   The underlying debt, I mean.  You are going to have to pay that sooner or later, are you not?

MR HAHNHEUSER:   Well, which is the underlying debt?  We do not even have a figure on which we could put the underlying debt on.  We have about five figures now and the respondent has brought another figure to the Federal Court of Appeal.  Now the judge did not take that figure into account either, so we still have the five figures on which the bankruptcy is based.  Even if we wanted to write out a cheque to them, we could not.  We asked the trustee, “How much did we owe?”  The trustee did not know and the trustee responded in saying that they will allow the Corporation to prove their debt after the fact.

Now, we say that they have already had the opportunity to prove their debt before a court of law.  They have failed to do that, why should they get a second try?  We do not get a second attempt at defence, we only get the one attempt.  I still believe that we have the right to defend ourselves against this action, no matter that the fact of any prejudice that might be against them.

GUMMOW J:   Is there anything else you want to say?

MR HAHNHEUSER:   Yes, the other significant factor I have to say is that one of the arguments the respondents put forward in this particular matter is that this case is of little consequence.  What does it matter if one person is in bankruptcy and, we say, we would probably agree with that because a person’s bankruptcy is inoperable.  We cannot put down a figure

on which upon it is actually based, so we cannot even start off with the bankruptcy process.

But what we have also given to the Court is some other evidence in relation only to this application, but not to the appeal itself, and that is that the WorkCover Corporation has a policy to use bankruptcy procedures in order to enforce judgments against injured workers in South Australia.  So it is not only the issue of one bankruptcy, but we are talking about injured workers throughout South Australia in the future and also, perhaps, in the past.  So we are saying that is a major factor when a government institution does, in fact, have a policy to enforce judgments through the bankruptcy process when that, in itself, is an abuse of process and an abuse of court’s process.  They are my submissions, your Honour.

GUMMOW J:   Thank you.  We do not need to call on you, Mr O’Donnell. 

The applicant seeks special leave to appeal from the Federal Court of Australia constituted by a single judge, Justice Dowsett.  The Federal Court was exercising appellate jurisdiction, although so constituted.  The appellate jurisdiction was in respect of a decision of Federal Magistrate Phipps in the Federal Magistrates Court.  Justice Dowsett’s decisions of 12 November 2001 dealt with four separate issues and his Honour declined to overturn the order of the Federal Magistrate.  We are not convinced that there has been shown error in the reasons of Justice Dowsett.  In particular, we take into account the comment made by his Honour in his reasons as they appear at page 39 of the application book.  The application does not enjoy sufficient prospects of success.  Accordingly, special leave is refused with costs.

AT 3.19 PM THE MATTER WAS CONCLUDED