Henderson v The Corporation of the City of Adelaide - [2019] FCCA 385

FEDERAL CIRCUIT COURT OF AUSTRALIA

HENDERSON v THE CORPORATION OF THE CITY OF ADELAIDE

[2019] FCCA 385

Catchwords:
BANKRUPTCY – Application for review of sequestration order made by Registrar – sequestration order sought on basis of unsatisfied judgment debt – nature of review – hearing de novo – compliance with section 52(1) – is there sufficient cause to dismiss petition pursuant to section 52(2) – abuse of process – allegations of improper purpose – whether principles of issue estoppel apply – is there a counterclaim – assertion petition futile as applicant has no assets – matters to be considered.

Legislation:

Bankruptcy Act 1966 (Cth), ss.40, 41(1)(a), 43(1), 52(1), 52(2)

Federal Circuit Court of Australia Act 1999 (Cth), ss.31A(2), 103, 104(2), 104(3)

Federal Circuit Court Rules 2001 (Cth), r.20.03

Local Government (Elections) Act 1999 (SA), s.17(3)(b)

Cases cited:
Henderson v Corporation of City of Adelaide (No2) [2012] FCCA 9
Henderson v Corporation of City of Adelaide (No3) [2012] FCCA 39
Aon Risk Services Australia Limited v Australian National University [2009] HCA 27
Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8
Lever Finance v Westminster LBC [1970] 3 WLR 732
Jurkovic v Corporation of the City of Port Adelaide [1979] 23 SASR 434
Williams v Spautz (1992) 174 CLR 509
Re Gye & Perkes v McIntyre [1992] FCA 235
Dowling v Colonial Mutual Life Assurance Society Limited [1915] 20 CLR 509
Tomlinson v Ramsey Food Processing Pty Ltd [2015] 256 CLR 507
Re Sarina; Ex parte Council of the Shire of Wollondilly [1980] 43 FLR 163
Bayne v Blake (1909) 9 CLR 347
Radich v Bank of New Zealand (1993) 45 FCR 101

Applicant:

PATRINA KELLY HENDERSON

Respondent:

THE CORPORATION OF CITY OF ADELAIDE

File Number:

ADG 42 of 2018

Judgment of:

Judge Brown

Hearing date:

6 February 2019

Date of Last Submission:

6 February 2019

Delivered at:

Adelaide

Delivered on:

21 February 2019

REPRESENTATION

Counsel for the Applicant:

In person

Counsel for the Respondent:

Mr Douglas

Solicitors for the Respondent:

Norman Waterhouse

ORDERS

The application for review filed 13 June 2018 is dismissed.
The petitioner’s costs are to be paid out of the estate of Patrina Kelly Henderson.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADG 42 of 2018

PATRINA KELLY HENDERSON

Applicant

And

THE CORPORATION OF CITY OF ADELAIDE

Respondent

REASONS FOR JUDGMENT

Introduction

The applicant in these review proceedings is Patrina Kelly Henderson. The respondent is the Corporation of the City of Adelaide.[1] The proceedings arise under the provisions of the Bankruptcy Act 1966 (Cth).[2]
[1] Hereinafter referred to as “the City of Adelaide”
[2] Hereinafter referred to as “the Act”
Ms Henderson is a committed environmentalist, who is the self-styled “guardian of the parklands”, which surround the central business district of Adelaide.
In June of 2011, Ms Henderson commenced proceedings, in the Federal Court at Adelaide, against the City of Adelaide seeking declarations and injunctions pursuant to the provisions of the Environment Protection and Biodiversity Conservation Act 1999 (Cth).
In broad terms, Ms Henderson alleged that the City of Adelaide had contravened the provisions of this Act by removing patches of native remnant grasslands in a section of Victoria Park, within the Adelaide parklands.
The proceedings were listed before Besanko J. The City of Adelaide sought the summary dismissal of Ms Henderson’s application against it pursuant to the provisions of section 31A(2) of the Federal Court of Australia Act 1975 (Cth). On 31 January 2012, Besanko J granted this application and entered judgment in favour of the City of Adelaide.[3]
[3] Henderson v Corporation of City of Adelaide (No2) [2012] FCCA 9
Thereafter, the City of Adelaide sought its costs incurred in the proceedings. On 31 January 2012, Besanko J ordered that Ms Henderson pay the City of Adelaide’s costs, in Ms Henderson’s absence.[4]
[4] Henderson v Corporation of City of Adelaide (No3) [2012] FCCA 39
On 29 June 2012, a deputy registrar of the Federal Court fixed the party-party costs, awarded in the City of Adelaide’s favour by Besanko J, in an amount of $45,146.81. A certificate of taxation has issued, by the Federal Court, in this amount.
On 22 September 2017, the City of Adelaide applied to the Official Receiver for a Bankruptcy Notice to issue against Ms Henderson requiring her to pay the sum of $64,492.73 within 21 days. This sum was calculated by reference to the judgment debt of $45,146.81 together with interest of $19,345.92 calculated to have accrued form 1 August 2012.
The Bankruptcy Notice was served on Ms Henderson, by email, on 22 December 2017. Attached to the Notice was the relevant certificate of taxation and the two judgments of Besanko J, which gave rise to it. It does not appear to be controversial that the sum remains outstanding.
As a consequence, on 24 January 2018, the City of Adelaide filed a creditor’s petition against Ms Henderson seeking an order from the court for the sequestration of her estate. An order to this effect was made by Registrar Colbran on 13 June 2018 together with a further order that costs in an amount of $7,908.14 be paid from Ms Henderson’s estate.
On 13 June 2018, Ms Henderson filed an application to review the decision of the Registrar. These reasons for judgment are directed to resolving the review. The proceedings constitute a hearing de novo of the City of Adelaide’s creditor’s petition. As such, the central issue for the court is whether Ms Henderson has committed an act of bankruptcy and thereafter whether there is sufficient cause not to make a sequestration order.
The City of Adelaide contends that Ms Henderson has committed the necessary act of bankruptcy to found a sequestration order. On the other hand, Ms Henderson contends that various species of mala fides attach to the City of Adelaide’s conduct, which are of sufficient moment not to justify the making of a sequestration order against her.
Ms Henderson has deposed an affidavit in support of her application.[5] Essentially, it is Ms Henderson’s position that the City of Adelaide is well aware that she is a person without either extensive means or assets and therefore has no possible mechanism available to her to satisfy the sum in question.
[5] See affidavit of Ms Henderson filed 13 July 2018
Accordingly, she contends that it must be the case that the City of Adelaide has some ulterior motive for bringing the application to bankrupt her, which must relate to her profile as an activist interested in the affairs of the City of Adelaide, who has regularly sought office in the municipal elections for Adelaide.
It is common ground between the parties that an undischarged bankrupt is disqualified from running for municipal office in the state of South Australia.[6] It is also agreed that Ms Henderson has frequently run for election to the City of Adelaide Council and was most recently intending to run in the council elections, which were concluded in November of 2018.
[6] See Local Government (Elections) Act 1999 (SA) at section 17(3)(b)
The election post-dated the City of Adelaide’s bankruptcy application against Ms Henderson. As such, Ms Henderson contends that the City of Adelaide has breached her civil and civic rights to run for office or is otherwise intent in silencing her, in some way, from expressing her opinions or otherwise taking part in public life.
In addition, Ms Henderson contends that she and the City of Adelaide compromised the proceedings, which gave rise to the judgment debt in question, by entering into a settlement deed in February of 2013. It is her case that the effect of this deed was to forgive the debt in question.
It is also Ms Henderson’s case that she has potential counterclaims, against the City of Adelaide, in respect of its conduct in removing remnant vegetation from Victoria Park, which exceed the City’s claim against her. These proceeding include a potential private criminal prosecution.
Ms Henderson has additionally raised some criticisms of the proceedings before Besanko J, which led to the costs order being made against her on which the bankruptcy petition was founded. The summary judgment proceedings and the costs order were made in her absence.
At the time she contends that she was not able to attend court because she was nursing her father, who was sick and stroke-affected. In these circumstances, she asserts that the conduct of the City of Adelaide in obtaining summary judgment against her is unconscionable and reprehensible. However, at this juncture, no appeals have been pursued in respect of either of His Honour’s judgments.
Ms Henderson has provided evidence that she is in receipt of a disability pension. She has also indicated to the court that she has a number of psychological disabilities, particularly a propensity to suffer panic attacks. As a consequence, it would appear to be her case that it is unfair to her that the bankruptcy proceedings have been permitted to continue.

Background

The current review proceedings and the initiating sequestration application have not had a smooth progress through the court. The petition was first made returnable on 27 February 2018. The registrar’s order of that date indicates that the petition had not been served, although Ms Henderson did attend court but left after having indicated to the court officer that “she was too ill to remain”.
In this context, the hearing of the petition was re-listed to 10 April 2018 and re-listed again, following the failure to effect personal service to 29 May 2018. In the meantime, on 10 May 2018, the City of Adelaide made application for orders for substituted service to be made.
On 11 May 2018, the registrar made comprehensive orders dispensing with the need for personal service of the petition and in lieu thereof directing that it be left at an address associated with Ms Henderson; posted to her post box at the North Adelaide post office; and emailed to her last known email address and the email address of her solicitor.
On 29 May 2018, Ms Henderson filed a notice of appearance. On the same date, the registrar further adjourned the proceedings until 13 June 2018. Ms Henderson was directed to file any notice of opposition and supporting affidavit material by 7 June 2018.
It is apparent from the registrar’s order that Ms Henderson raised issues to do with her health at this hearing. In this context, she was directed to file any relevant medical reports. She did not do so.
Ms Henderson did not file any notice of opposition or affidavit material, as directed and did not apparently appear on the adjourned date, which was 13 June 2018. As a consequence, the registrar made the relevant sequestration and costs order, which are the subject of these review proceedings.
The review application was first listed before me on 26 June 2018. Ms Henderson appeared on her own behalf, although I granted her the assistance of a Mackenzie friend, Mr Jacobson, who sat with her at the bar table and, from time to time made some submission on her behalf.
The transcript of the proceedings indicates that the mention of the matter occupied just over an hour of the court’s time. It was a hearing not without its difficulties. It was not always easy, for me, to follow Ms Henderson’s submissions. At the hearing, Ms Henderson sought to agitate an application in a case, in which she sought the following orders:
·a stay of the sequestration order;
·discovery from the City of Adelaide of all minutes, resolutions, reports and correspondence relating to its decision to institute bankruptcy proceedings against her.
In her submissions to the court, on 26 June, Ms Henderson produced medical evidence regarding her health. She also sought to be referred for legal assistance, so that she could have representation equivalent to that enjoyed by the City of Adelaide. She also indicated that her income was below or close to the poverty line. As such, the City of Adelaide had no prospects of recovering any monies from her.
In this context, she asserted that the bankruptcy proceedings had been: “brought for political purposes to silence me and prevent me running against any of the elected members of council…” She also indicated that there was in existence a deed of settlement between her and the City of Adelaide, which she had been forced to execute because the City wished to compel her to drop a private criminal prosecution previously brought by her against it.
A significant thrust of Ms Henderson’s submissions was that she wanted access to relevant records of the City of Adelaide, in which the council had made the decision to institute the bankruptcy proceedings against her. In this context, she alluded to difficulties, which she had apparently experienced in pursuing a freedom of information request. She also complained that procedural practices of the Council prevented her from making deputations to it. This becomes relevant when the terms of the relevant deed of settlement is considered.
Ms Henderson concluded her submissions with a passionate statement as to the possible consequences, on her personally, of remaining bankrupt. She indicated that it would have severe consequences for her psychological health and would exacerbate the panic attacks, post-traumatic stress, anxiety and agoraphobia from which she currently suffered. The consequences of this would be to place her at a severe risk of suffering harm.
I did not consider that I was in a position to dismiss Ms Henderson’s submissions that her case potentially raised issues of public significance given what she characterised as her public profile in the Adelaide community, particularly given the imminence of the municipal elections. At the same time, I was aware that issues of personal insolvency are usually better resolved expeditiously, given the potential involvement of the rights of other creditors and the duties incumbent on trustees.
After some discussion about how each of the parties might serve relevant documents on the other, I made the following orders:
·the proceedings were adjourned until 26 July 2018;
·Ms Henderson was to file any affidavit in support of her application to set aside the sequestration order by 13 July 2018;
·the City of Adelaide was to file any answering affidavit by 20 July 2018;
·each party was to serve documents on the other, by post, via the post box addresses exchanged that day in court.
As directed, Ms Henderson filed a notice of objection to the sequestration order and an affidavit in support on 13 July 2018. The City of Adelaide, through the agency of its solicitor, Mr Burke filed a responding affidavit on 23 July 2018.
Each of these affidavits – that of Ms Henderson and that of Mr Burke – purported to annex the completed settlement deed between the City of Adelaide and Ms Henderson, which was entered into on 14 February 2013. It is Ms Henderson’s position that this deed represents a bar to the City of Adelaide bringing bankruptcy proceedings against her and as a consequence the current proceedings represents an abuse of process.
It is also Ms Henderson’s position that she has a counterclaim against the City of Adelaide for an amount equal to or greater than the amount of the judgment debt sought by it against her as a consequence of potential claims for compensation regarding the alleged illegal removal of remnant native vegetation from Victoria Park and for trespass on her home premises. Finally, she asserts that the proceedings have been brought against her, by the City of Adelaide, for an improper purpose.
There is no controversy that, on 23 November 2012, the City of Adelaide filed a creditor’s petition against Ms Henderson based on a bankruptcy notice in an amount of $45,934.06, which was founded on Besanko J’s costs order. It is also common ground that the Registrar dismissed the petition, with no orders as to costs, on 18 February 2013. Ms Henderson provided the relevant order in her affidavit. In the context of the settlement deed, it is Ms Henderson’s position that this order is significant.
The hearing of the substantive review application did not proceed on 26 July. Ms Henderson remained unrepresented and reiterated her concerns about the probity of the proceedings against her. She also indicated a desire to seek legal advice.
At the time, I was struck by the coincidence of the bankruptcy proceedings and the imminence of the municipal elections, in which Ms Henderson had announced her candidacy. As such, I was prepared to adjourn the proceedings so that Ms Henderson could seek legal advice about any possible public policy component of her case. As a consequence, I made the following orders:
“Within fourteen (14) days of today’s date Ms Henderson is to take all reasonable steps to contact Justice Net to receive advice and possible pro bono assistance in the bankruptcy proceedings pertaining to her currently before the court and she is to advise the solicitor for the Corporation of the City of Adelaide and the court in writing within fourteen (14) days that she has made such approach.
Until further or other order the sequestration order made on 13 June 2018 be stayed.
Further consideration of this matter is adjourned to 26 October 2018 at 2:15pm.”
The stay of the sequestration order was made so as to enable Ms Henderson to nominate for the forthcoming municipal elections and was made with the acquiescence of the City of Adelaide. The hearing of 26 October did not proceed. On the initiative of the City of Adelaide, the proceedings were further adjourned until 6 February 2019.
Mr Burke, solicitor for the City of Adelaide, wrote to the court as follows:
“Since the stay order was made, the Respondent has nominated as a candidate in the South Ward for The Corporation of the City of Adelaide 2018 Election. The close of voting for the election is on 9 November 2018, and counting of the votes commences the following day. It is anticipated that certified results of the election will be declared by 16 November 2018.
The parties agree that their intention in seeking, and consenting to, the stay order, was to allow the Respondent to nominate as a candidate in the election, and remain as an eligible candidate for the duration of the election period. It has now come to the attention of the parties, that the intent of the stay order would be frustrated if, at the hearing on 26 October 2018, the Court was to dismiss the Respondent's application and lift the stay order made on 26 July 2018 as the Respondent would no longer be eligible to be elected as a councillor.
To avoid the intent of the stay order becoming frustrated, the parties consider that the best approach would be to vacate the hearing schedule for 26 October 2018 and for the hearing to be re-listed on a date after 16 November 2018, as this will mean the stay order will continue to operate for the length of time the Respondent needs to remain eligible for election.”[7]
[7] Letter of Mr Burke dated 15 October 2017

Application for adjournment

It is not controversial that Ms Henderson was not returned in the relevant municipal elections. In these circumstances, the City of Adelaide indicated that it wished Ms Henderson’s review application to be finalised by the court on the adjourned date of 6 February 2019.
Ms Henderson has filed no further material since July of 2018. She remains unrepresented. On 6 February, she sought to adjourn the proceedings further so that she could pursue further avenues to secure legal assistance for herself but more particularly so that she could issue subpoenae to relevant officers of the City of Adelaide.
In so doing, she hoped she would be able to discover documentary evidence relating to the City of Adelaide’s decision to pursue bankruptcy proceedings against her, which she believed would reveal it had not followed correct procedure in so doing but rather was motivated by some form of improper purpose regarding Ms Henderson.

I was not prepared to adjourn the proceedings. In my view, Ms Henderson had had ample time to pursue each such avenue and it would be unfair to the City of Adelaide to delay the proceedings further. Further, I was not persuaded that such an adjournment would advance the matter to any significant degree, given the uncertain basis of Ms Henderson’s allegations of impropriety against the City of Adelaide generally and its counsellors and staff in particular.
In reaching this decision, I bore in mind what was said by the former Chief Justice of the High Court, French CJ in Aon Risk Services Australia Limited v Australian National University[8]. His Honour said this:
“The adversarial system has been qualified by changing practices in the Courts directed to the reduction of costs and delay and the realisation that the Courts are concerned not only with justice between the parties, which remains their priority, but also with the public interest in the proper and efficient use of public resources.”
[8] Aon Risk Services Australia Limited v Australian National University [2009] HCA 27
In my view, Ms Henderson had been granted a significant degree of latitude in respect of the conduct of the proceedings. The original petition had been much delayed. The original case had been concluded in her absence. More significantly, the review proceedings had been adjourned for in excess of six months in order to allow Ms Henderson to obtain legal advice about what she characterised as matters of significant public interest.
These were not new issues. Rather, she had raised them from the outset of the review proceedings and indeed was given the opportunity to expand upon them orally at the first mention of the matter before me. Yet, in my assessment, she had done little to advance her complaints. In addition, the case had been adjourned so that she could have the opportunity to pursue election to the City of Adelaide council.
In my assessment, much of Ms Henderson’s case relies on imprecise insinuation. Because she has something of a public profile, as an opponent of some of the actions of the City of Adelaide, she alleges its actions against her are likely to be politically motivated. In support of her submissions, Ms Henderson has further asserted that this is what she has been given to understand by persons associated with the City of Adelaide.
However, none of these persons has provided any evidence to the court in this regard nor have they come forward during the most recent hearing. In these circumstances, Mr Douglas, counsel for the City of Adelaide characterised Ms Henderson’s desire to subpoena Corporation records as a trawling exercise. I respectfully agreed.
In Culleton v Balwyn Nominees Pty Ltd[9] the Full Court discussed what were the relevant principles applicable to whether bankruptcy proceedings should be adjourned. In so doing, it reminded first instance courts, such as this one, not to forget the “human reality of bankruptcy” and the potential emotional significance it held for the individuals affected by it. In this context, I accept Ms Henderson is a person of particular emotional fragility, as her conduct throughout these proceedings has demonstrated.
[9] See Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8 at [55]
However, as the Full Court pointed out, bankruptcy proceedings are fundamentally about a person’s solvency. The Full Court said as follows:
“The question of an adjournment of a creditor’s petition is often not easy. Bankruptcy lists, by their nature, have many litigants who are insolvent, who may be insolvent, and who may be desperate to avoid bankruptcy. A desire to delay and prevaricate is not uncommon. Often delay is in no one’s (including an insolvent debtor’s) interests. Sometimes, however, an adjournment will be necessary to avoid injustice. Each case should be dealt with on the merits. Central to the decision will generally, if not invariably, be the consideration of solvency or insolvency, because of its essentiality in the exercise of the jurisdiction.”[10]
[10] Ibid at [54]
In support of his submission opposing the adjournment, Mr Douglas relied on what he characterised as the doctrine of ostensible authority or the indoor management rule, by which it is to be assumed that the delegated officers of a municipal corporation have exercised the powers conferred on them regularly and properly unless there is evidence to the contrary.[11]
[11] See Lever Finance v Westminster LBC [1970] 3 WLR 732 at 739 and Jurkovic v Corporation of the City of Port Adelaide [1979] 23 SASR 434 at 440
In this case, there can be no doubt that Ms Henderson is ostensibly a creditor of the City of Adelaide, as a consequence of a judgment debt, in its favour, from the Federal Court. As such, the City of Adelaide, through the agency of its staff, had ostensible authority to commence whatever proceedings were deemed appropriate to recover that sum.
Ms Henderson wishes to go behind that authority without, in my view, any cogent evidence to support her assertion that this authority has been improperly utilised. She sought an adjournment to pursue this line of inquiry. She contends that council records will support her assertion but has not indicated precisely why this should be so.
I am not persuaded that it would be appropriate to grant such an adjournment, given the length of time the proceedings have been on foot and the time which has been available to Ms Henderson to pursue the matters of interest to her. In addition, her assertions are unsupported by evidence and arise in the context of a situation in which the City of Adelaide has exercised its apparent authority to pursue a debt owed to it.
I also note that Ms Henderson carries a heavy onus to persuade the court that the City of Adelaide has brought the petition in question for some illegitimate purpose. In this context, it is not sufficient for Ms Henderson to establish that one of the collateral consequences of her bankruptcy may be something potentially advantageous to her creditor but otherwise unrelated to her insolvency, namely her ineligibility to bring further suit against it or indeed her disqualification from standing for public office.[12]
[12] See Williams v Spautz (1992) 174 CLR 509 at 529

Applicable legal principles

The court’s jurisdiction to make a sequestration order is founded in section 43(1) of the Act. It depends upon the petitioning creditor establishing the commission of an act of bankruptcy by the debtor concerned. In addition, the section provides a number of other conditions which must be satisfied which include residence in Australia, at the time of the commission of the act of bankruptcy. It is also clear that the authority to make a sequestration order is discretionary in nature.
Section 40 provides an exhaustive list of circumstances which constitute an act of bankruptcy. Of particular relevance in the following matter is section 40(1)(g) which provides as follows:
“(g)if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i)where the notice was served in Australia--within the time specified in the notice; or

(ii)where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service;

comply with the requirements of the notice or satisfy the Court that he or she has 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;”

The power granted to the Official Receiver, to issue bankruptcy notices, arises pursuant to section 41(1)(a) of the Act, which reads as follows:
“(1)An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:
(a)     a final judgment or final order that:
(i)     is of the kind described in paragraph 40(1)(g); and
(ii)     is for an amount of at least $5,000; or”
In this case, the bankruptcy notice issued to Ms Henderson was in an amount of $64,492.73. It issued from the Official Receiver on 22 September 2017 and had attached to it the taxation certificate dated 29 June 2012 and the costs order of Besanko J made on 31 January 2012. The relevant notice required payment of this sum within 21 days of service of the notice on Ms Henderson.
There is no dispute that Ms Henderson did not satisfy the bankruptcy notice. As indicated, it is her position that she does not have the means to satisfy the debts and the issue of the notice is, in general terms, an abuse of process. As a consequence of the non-payment of the judgment debt, the City of Adelaide presented a petition seeking the sequestration of Ms Henderson’s estate.
As indicated above, this engaged the provisions contained in section 52(1) of the Act, which reads as follows:
“(1) At the hearing of a creditor’s petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.”
On 13 June 2018, the registrar had evidence from an official at the City of Adelaide responsible for managing the Corporation’s governance and financial records that the debt remained outstanding and proof of service of the petition on Ms Henderson.
As the Full Court indicated in Culleton, the court’s jurisdiction under the Act is fundamentally concerned with the solvency of the respondent in the proceedings before it. This follows from the terms of section 52(2) of the Act, which reads as follows:
“If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.”
Accordingly, after determining that a debt remains outstanding and that the creditor has been properly served, the court is furnished with a discretion to dismiss a petition if there exists sufficient cause to do so. It is my understanding of Ms Henderson’s case that she submits that there is such sufficient cause in respect of the current petition.
Pursuant to section 103 of the Federal Circuit Court of Australia Act 1999 (Cth) “the FCC Act” the court, through its rules, is authorised to delegate its powers to a registrar of the court. One such power is the power to make a sequestration order pursuant to the Act. The registrar in this case was exercising power delegated to her.
Section 104(2) of the FCC Act authorises the court to review any delegated exercise of power to a registrar pursuant to section 103. In particular, section 104(3) provides as follows:
“(3) The Federal Circuit Court of Australia may, on application under subsection (2) or on its own initiative, review an exercise of power by a Registrar under subsection 102(2) or under a delegation under subsection 103(1), and may make any order or orders it thinks fit in relation to the matter in respect of which the power was exercised.”
On an application for review of a registrar’s decision, the court:
·is engaged in a fresh proceedings;
·does not scrutinise the original reasons to ascertain error;
·makes its own decision on the merits of the case; and
·in an application for review of a sequestration order, where a sequestration order is still sought, the petitioning creditor is required to prove all necessary matters, including those specified in section 52(1) of the Act.
The review hearing arising is a hearing de novo. This is specified by rule 20.03 of the Federal Circuit Rules 2001 “the FCC Rules”, which also authorises the court to receive additional evidence.
Accordingly, in my view, I am required to resolve the following matters:
·Has an act of bankruptcy occurred?
·Have the requirements of section 52(1) of the Act been met?
·Is there other sufficient cause, pursuant to section 52(2) of the Act that a sequestration order not be made?

The grounds for review

(a) Ms Henderson is not indebted in the amount claimed

Ms Henderson asserts that she offered to provide up to two hundred hours of community service to the City of Adelaide, in lieu of the amount specified in the relevant judgment debt. Apart from her assertion of this offer to compromise the matter, she has provided no evidence in respect of it and certainly none which indicated the offer was acceptable to the City of Adelaide.
In the alternative, Ms Henderson asserts that the City of Adelaide has either waived its entitlement to the sum fixed in the costs order or is, in some other way, estopped from seeking the sum, because of the settlement deed entered into between her and the City of Adelaide.
There is no doubt that there was such a settlement deed but its exact terms are controversial. Ms Henderson has provided one copy of it; and the City of Adelaide another. On balance, it appears to me that the copy provide by the City of Adelaide is the one actually executed by each party; and the one provided by Ms Henderson an earlier draft.[13]
[13] See annexure TWB-2 to the affidavit of Thomas Burke filed 23 July 2018
The executed deed bears the date 15 February 2013. The recitals to it acknowledge Ms Henderson’s strong conservationist interests, particularly in respect of the protection of native vegetation. In addition, the City of Adelaide acknowledges that is has removed some native plants from the Victoria Park area but intends to replant those native plants in the Adelaide parklands at some time in the near future.
Significantly, the deed contains the following recitals:
“ACC has resolved on 12 February2013, on the one hand, consistent with its obligations with respect to the responsible allocation of public money, that it is not prepared to forgive the Amount but on the other hand, having regard to Henderson’s personal circumstances, that it remains open to consider terms on which the Amount may be forgiven in part.
The ACC is prepared to permit Henderson’s legal representative (“Campbell Law”) to make a confidential deputation to a future meeting (and in any event by 15 March 2013) of the ACC in relation to matters pertaining to Henderson’s personal and financial circumstances which are relevant to its future deliberations about the Amount.
In the meantime, the Parties have agreed to finalise the Bankruptcy proceedings (“the Claim” on the terms and conditions as recorded in this Deed.”[14]
[14] See affidavit of T Burke filed 23 July 2018 at TWB-1 [8] – [9]
As previously indicated, there is no controversy that the City of Adelaide did consent to the dismissal of an earlier petition on 18 February 2013. The deed recognises this. However, it is the current submission of the City of Adelaide that the deed did not represent an unqualified and total forgiveness of the debt in question. Rather, it represented a temporary remittal of Ms Henderson’s obligations, whilst both parties concerned considered their respective positions.
It is the submission of Mr Douglas that this is clear from the terms of the deed itself, when read in conjunction with the recitals already referred to. In this context, the City of Adelaide relies on the following provisions of the deed:
“ACC agrees to permit Henderson’s legal representatives to make a confidential deputation to a future meeting of the ACC regarding Henderson’s personal and financial circumstances and, thereafter, to give earnest consideration in good faith to any proposal put by or on behalf of Henderson, with the intention of agreeing to a settlement of part payment and forgiveness of the Amount. Prior to the meeting referred to in Recital G, the ACC CEO or his delegate will meet with Campbell Law to consider and formulate, in good faith, a joint proposal from the CEO or delegate to be presented to that meeting.”[15]
[15] Ibid at paragraph 2.3
It is the position of the City of Adelaide that Ms Henderson has never availed herself of the opportunity to make any deputation to it regarding the issue of the costs awarded against her. On the other hand, it is Ms Henderson’s position that the bureaucratic machinery of the Council is so byzantine in nature that it is to all intents and purposes impossible to make such a deputation.
Again, apart from Ms Henderson’s assertion of this state of affairs, she has provided no evidence in regards to her attempts to make the deputation in question. In my view, on a fair reading of the deed in question, it does not represent a total forgiveness of the debt in question. Accordingly, in this aspect, I accept the submissions of Mr Douglas.
In addition, I do not consider that the fact that an earlier petition, in respect of the same judgment debt, creates any issue estoppel in respect of any subsequent petition, based on the same debt. This is particularly so given that the earlier proceedings did not establish the existence or otherwise of the requisite debt for the purpose of making any sequestration order.[16]
[16] See Re Gye & Perkes v McIntyre [1992] FCA 235 per Beaumont J
In Re Gye & Perkes v McIntyre Beaumont J considered that “the dismissal of a creditor’s petition in bankruptcy does not, in any final or conclusive sense, create an estoppel on the issue of whether the petitioner’s claim is a good debt.”[17] His Honour went on to say as follows:
“In the bankruptcy court, the question for determination, depending on a finding of insolvency, actually inferred or assumed, is whether the court, in its discretion, will make a sequestration order. If the bankruptcy court declines to exercise that discretion, it does not follow that the court has finally determined that no debt actually exists. That is a different question.”[18]
[17] Ibid at [25]
[18] Ibid at [26]
In my view, the earlier proceedings did not determine the issue of whether firstly the debt in question was owed by Ms Henderson and secondly whether she was insolvent. The earlier dismissal of the petition cannot have any relevance to the state of affairs, so far as Ms Henderson is concerned, at a later date. Ms Henderson has conceded that she has no means of paying the debt in question. I am also satisfied that the debt remains extant.
In all these circumstances, I am satisfied that the City of Adelaide has discharged its evidentiary burden, arising under section 52 of the Act that the debt on which the petition relies remains owing and Ms Henderson herself is unable to pay it. Essentially, if Ms Henderson had made the deputation in question, it alone may not have been sufficient to persuade the City of Adelaide to waive any or all of its entitlements arising under the judgment debt of Besanko J.
The petition in this matter was filed on 24 January 2018. Mr Burke, the City of Adelaide’s solicitor, has provided evidence that he invited Ms Henderson to make a written confidential deputation to his client, in December of 2017.
It is his position that Ms Henderson did not respond to that offer. In my view, this state of affairs is not relevant to the court’s jurisdiction arising under section 52(1), which require proof of the matters stated in the relevant petition. I concede, however, that these issues may be germane to the court’s discretion, provided by section 52(2) of the Act, not to make such a sequestration order.

(b) Existence of counter-claim, set off or cross-demand

Ms Henderson has not, in my view, specified with any clarity what is the basis for her alleged counter-claim against the City of Adelaide. The earlier dismissal of her claim pursuant to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) is not subject to appeal.
Ms Henderson has indicated that she intends to bring some form of suit, either by way of an action for civil damages or private criminal prosecution, in respect of what she claims are the illegal actions of the City of Adelaide in removing remnant native vegetation from the Victoria Park area.
However, in my assessment, these actions remain inchoate. Certainly, Ms Henderson is not in position to point to her instigation of any proceedings against the City of Adelaide, either both or after the service of the bankruptcy notice upon her. More significantly, after the service of the bankruptcy notice upon her, Ms Henderson did not apply to extend the time for her compliance, to the notice, on the basis of any such counter-claim.
The relevant act of bankruptcy occurred when Ms Henderson failed to comply with the relevant bankruptcy notice by not satisfying its demand within the twenty one day period stipulated by it. The court cannot retrospectively extend the time for compliance.

(c) Abuse of process

Ms Henderson has made many serious allegations regarding the conduct of the City of Adelaide towards her. These include fraud; failure to act honestly; acting in breach of its responsibilities under the Local Government Act; and breaching the criminal law.
In my view, apart from asserting these allegations, Ms Henderson is not in a position to provide any evidence in support of her serious allegations. In my view, she bears the burden, which is a heavy one, of establishing these various species of misconduct and or malfeasance against the City of Adelaide.
More specifically, it is Ms Henderson’s case that the City of Adelaide is well aware that she is a person of limited means and therefore has no viable means of satisfying the costs order awarded in its favour. As a consequence, she asserts that it must therefore be the case that the Council is motivated either by malice towards her or is intent on disenfranchising her in some way.
In my assessment, Ms Henderson is not able to provide any concrete evidence that the City of Adelaide has such a collateral purpose to its ostensible obligation to collect moneys due to it as a public authority. Rather, her case, in this regard, relies on the court inferring such an improper motive from the circumstances surrounding the matter.
The essence of an abuse of process is that the proceedings concerned have been brought not to prosecute them to their proper legal conclusion but rather as a means of obtaining some advantage, for which they are not designed or some collateral advantage beyond what the law offers.
In this case, to establish an abuse of process, Ms Henderson must establish that the City of Adelaide has brought the sequestration proceedings against her, not to recover the moneys owed to it, but rather to achieve some objective extraneous to the remedies available to it under the Bankruptcy Act, namely to prevent her taking part in the public life of the municipality of Adelaide.
In Culleton v Balwyn Nominees Pty Ltd[19] the Full Court of the Federal Court applied the principles enumerated by Isaacs J in Dowling v Colonial Mutual Life Assurance Society Limited,[20] which differentiated between the malicious use of a process and the abuse of such process. In the case, Isaacs J said as follows:
“If the object sought to be effected by the process is within the lawful scope of the process, it is a use of the process within the meaning of the law, though it may be malicious, or even fraudulent, and in the circumstances the
[19] See Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8
[20] See Dowling v Colonial Mutual Life Assurance Society Limited [1915] 20 CLR 509 at [521]-[522]
This passage was approved by the High Court in Williams v Spautz, which categorised the statement as being an “an attempt to achieve a formulation which keeps the concept of abuse of process within reasonable bounds.”
Essentially, it may be acceptable if the use of a particular process achieves some end in addition to the proper legal purpose entailed but if the sole purpose of engaging a legal mechanism is directed towards achieving something to which the provision is not directed, it is abuse.
However, it both impossible and undesirable to attempt to proscribe every instance which may amount to an abuse of process. Each particular case must turn on its particular circumstances and the overall test is whether the suit in question is unjustifiably oppressive in its application or otherwise is calculated to bring the administration of justice into disrepute.
Although Ms Henderson does not articulate it as such, this is her position. She contends that the use of sequestration against her, an invalid pensioner, who is passionate about the environment is analogous to breaking a butterfly upon a wheel and, as such, will bring the administration into disrepute on the basis that it is unnecessarily severe.
In my view, the difficulty with this submission is that it asks the court to look behind the award of costs made by Besanko J, following his summary dismissal of Ms Henderson’s action pursuant to the provisions of the Environment Protection and Biodiversity Conservation Act. I do not consider that I have the authority to do so. I now turn to whether the sequestration proceedings can be characterised as an abuse of process in some other way.
In Tomlinson v Ramsey Food Processing Pty Ltd[21] the majority of the High Court said as follows:
“Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute.”
[21] See Tomlinson v Ramsey Food Processing Pty Ltd [2015] 256 CLR 507 at [25]
In this case, in my view, the City of Adelaide has established both it has an unsatisfied judgment debt in its favour and its debtor – Ms Henderson – is unable to satisfy that judgment debt. As such, it is entitled to use the process of sequestration to attempt to recover the debt in question.
In this context, I accept that, as a public authority, the City of Adelaide has a responsibility to collect monies due to it. In addition, as previously indicated, although it was earlier open to entering into some form of negotiation with Ms Henderson, in respect of the debt, in the light of her personal circumstances, it did not agree to forgive the debt. In this context, it is significant, I think, that the debt in question has been outstanding for a reasonably significant period of time.
It may well be the case that the sequestration will prove to be a futile exercise, so far as recouping the entire amount of the debt in question. However, the City of Adelaide is under no obligation to accept Ms Henderson’s untested assertion that she has no means of satisfying the debt.
It also may be the case that the sequestration will achieve other outcomes, which may be conceivably of some utility to the City of Adelaide, namely the avoidance of future suits against it, during the currency of any bankruptcy administration of Ms Henderson’s estate. There may well be other advantages, pertaining to individual councillors, of which I am unware.
However, in my view, that does not result necessarily in the exercise in question becoming categorised as an abuse per se. In any event, in my view, Ms Henderson has not established any evidentiary basis to support her assertion that there is some species of mala fides colouring the City of Adelaide’s otherwise legitimate entitlement to pursue bankruptcy proceedings against one of its debtors.
In addition, in my view, Ms Henderson’s allegation of an abuse of process does not sit comfortably with the City of Adelaide’s willingness to hold the review proceedings in abeyance, until the conclusion of the recent City of Adelaide municipal elections. I do however appreciate that, in the event Ms Henderson had been successful, her election may well have been subsequently vitiated by her later bankruptcy and therefore the concession is open to being categorised as token in nature.
During the course of the proceedings before me Ms Henderson presented as a passionate and emotional person. In these circumstances, I acknowledge the psychological moment, for her personally, if she is rendered bankrupt by the court’s order.
However, in my view, concerns about Ms Henderson’s welfare are not sufficient cause to engage the discretion available to the court pursuant to section 52(2)(b) of the Act in circumstances in which Ms Henderson has conceded her inability to satisfy the debt in question and has, in addition, been given the latitude of several adjournments of the proceedings, the last of which was lengthy in nature.
In Culleton the Full Court recognised the special nature of bankruptcy proceedings, which deal not only with the private rights and obligations of debtors and creditors, but also the public’s interests in ensuring the proper administration of insolvent estates, which have the consequence of change in the status of a bankrupt person.
As such, the question of solvency and its implications for the community as a whole, were categorised as being central to the bankruptcy jurisdiction. By way of example, the Full Court endorsed an earlier Full Court decision of Re Sarina; Ex parte Council of the Shire of Wollondilly[22] in which it was held that the use of sequestration was inappropriate in a case of a person who was otherwise solvent but refused to pay a judgment debt entered against him.
[22] See Re Sarina; Ex parte Council of the Shire of Wollondilly [1980] 43 FLR 163
In Culleton the Full Court said as follows:
“Re Sarina demonstrates the centrality of the question of solvency to the jurisdiction of bankruptcy. Whilst one must recognise the permissive “may” in s52(2), the circumstances where a sequestration order would be made if the debtor satisfied the Court of his or her solvency are difficult to imagine. Proof of solvency may not necessitate dismissal of the petition; an adjournment may be the appropriate course.”
Whilst it is legitimate for a creditor to proceed in bankruptcy for the purpose of recovering a debt that does not mean that bankruptcy should be viewed in its essential character as part of the process of execution of judgment debts. It is the changing of the status of an insolvent person: A sequestration order, as demonstrated by Re Sarina, will not be made against the estate of someone who refuses to pay a debt if that person can prove (the onus being on him or her) that he or she is solvent.”
In my view, the circumstances arising in this case are significantly different to those in Re Sarina. Firstly, Ms Henderson is not in a position to assert that she is otherwise solvent but is not willing to pay the debt in question for some other reason, including a matter relating to her political convictions.
In addition, she has been granted a number of adjournments of her application. There do not appear to be any other avenues available to the City of Adelaide, to recover its debt other than to have her estate appropriately administered to see if assets are available to be distributed to satisfy the debt in question.
In this regard, I consider the petitioner is entitled to have a proper forensic examination made of Ms Henderson’s financial affairs. As indicated above, the City of Adelaide is not bound to accept Ms Henderson’s untested assertion that she is incapable of ever satisfying the debt in question. Finally, it is not beyond the bounds of possibility that Ms Henderson has other unsecured creditors, who will come forward after the trustee undertakes his statutory responsibilities.
As the Full Court indicated in Culleton, whilst noting the public policy consideration attaching to the proper administration of bankruptcy, it remains legitimate for a creditor to utilise bankruptcy to recover a debt owed to it. In this case, given the unchallenged nature of the judgment debt of Besanko J; the absence of any counterclaim; and the fact that it is unchallenged the debt remains outstanding, in my view, legitimacy attaches to the City of Adelaide’s decision to utilise a creditor’s petition against Ms Henderson.

(d) Ms Henderson is insolvent and therefore the bankruptcy proceedings are futile

This ground is related to the abuse of process ground and the matters discussed in relation to it. Ms Henderson asserts that she has insufficient assets to satisfy her creditors and therefore the court should exercise its discretion not to make a sequestration order.
Ms Henderson has provided evidence that she is in receipt of social security and rents a property from the Housing Trust of South Australia. In these circumstances, she contends that it must be axiomatic that she has no assets to satisfy the creditor’s petition. As a consequence of these matters, she seeks the exercise of the court’s discretion not to make a sequestration order against her on the basis that such an order would be futile.
In opposition to this submission, Mr Douglas relies on an old authority of the High Court in Bayne v Blake[24] in which Griffith CJ rejected the argument that a sequestration order should not be made because there was no reason to consider that there were any assets in the estates of each of the debtors concerned. It being held that until the petition was formally presented it was impossible for the creditor to know whether what was asserted was true or otherwise.
[24] Bayne v Blake (1909) 9 CLR 347 at 364
Clearly Bayne was determined over a century ago, prior to universal social security. However, in my view, it remains the case, that there is no requirement for a petitioning creditor to establish assets to which the bankruptcy may attach as a precondition to the making of a sequestration order. As was held in Bayne, all a petitioner is required to establish is a debt owed and, after taking steps to recover it, payment remains outstanding.
More recent authority, to this effect, is provided by the Full Federal Court in Radich v Bank of New Zealand.[25] Einfeld J said as follows:
“Part of the reason why courts are reluctant to refuse a sequestration order on discretionary grounds is that it may only be after sequestration, with a full investigation by a trustee in bankruptcy including a possible public examination of the bankrupt and other persons, that assets come to light…”
[25] Radich v Bank of New Zealand (1993) 45 FCR 101
In these circumstances, I have come to the conclusion that Ms Henderson’s self-stated impecuniosity is insufficient grounds to deny the City of Adelaide its right to pursue its debt through sequestration proceedings. I agree with Mr Douglas’ submission that it would not be consistent with the principles and practicality of insolvency that a debtor could escape bankruptcy by asserting he/she was destitute.

Conclusions

I am satisfied with proof of the matters required under section 52(1) of the Act based on the creditor’s petition and the affidavits filed by the creditor as required under the Bankruptcy Rules. The creditor relied on the following documents:
·The creditor’s petition and attached affidavit of Rudiger Deco verifying the debt in question remains outstanding to the City of Adelaide;
·The affidavit of Thomas Burke filed 24 January 2018 attesting to the service of the bankruptcy notice on Ms Henderson on 22 December 2017;
·The affidavit of William Eglinton filed 28 May 2018 attesting to the service of the creditor’s petition on Ms Henderson;
·The affidavit of Rudiger Deco verifying the debt remains outstanding as at the date of the review proceedings;
·The affidavit of search of the National Personal Insolvency Index of Thomas Burke sworn 6 February 2019.
On the basis of this evidence and having noted the consent to act as trustee, I am satisfied that it is appropriate to make the sequestration order pursuant to the provisions of section 52(1) of the Act. I am satisfied that the relevant judgment debt remains owing.
There is no evidence available to me to indicate that Ms Henderson is able to pay the debt in question. I am further satisfied, for the reasons outlined above, there is no other sufficient cause to dismiss the petition pursuant to the discretion provided by section 52(2). It therefore follows that the application for review should be dismissed.
I will direct that the petitioner’s costs be paid out of Ms Henderson’s estate.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of Judge Brown

Date: 21 February 2019

[23] Ibid at [43]-[44]