Invion Ltd v Jones

[2016] FCCA 702

FEDERAL CIRCUIT COURT OF AUSTRALIA

INVION LTD v JONES [2016] FCCA 702

Catchwords:

BANKRUPTCY – Creditors petition – whether the Court should go behind judgment – application dismissed – Sequestration order made.

Legislation:

Bankruptcy Act 1966 (Cth)

Katten v Melhem (No2)(2014) 319 ALR 646

Applicant: INVION LIMITED (FORMERLY CBIO LIMITED) ACN 094 730 417

Supporting Creditor: CHARTIS AUSTRALIA INSURANCE LIMITED

Respondent: STEPHEN GEORGE BURCH JONES

File Number: BRG 831 of 2014

Judgment of: Judge Baumann

Hearing date: 5 February 2016

Date of Last Submission: 5 February 2016

Delivered at: Brisbane

Delivered on: 6 April 2016

REPRESENTATION

Counsel for the Applicant: Mr Hodge

Solicitors for the Applicant: McCullough Robertson

Solicitors for the Supporting Creditor Carter Newell

The Respondent appearing in person

ORDERS

1. That a Sequestration order be made against the estate of STEPHEN GEORGE BURCH JONES.

2. That the Applicant Creditor’s costs be fixed in the sum of $8,276.66 and paid from the estate of the Respondent debtor in accordance with the Bankruptcy Act 1996 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 381 of 2014

INVION LIMITED (FORMERLY CBIO LIMITED)
ACN 094 730 417

Applicant

CHARTIS AUSTRALIA INSURANCE LIMITED

Supporting Creditor

And

STEPHEN GEORGE BURCH JONES

Respondent

REASONS FOR JUDGMENT

1. Mr Jones has failed to comply on or before 1 August 2014 with the bankruptcy notice served on 11 July 2014 founded on a final judgment.

2. After a trial before former Chief Justice De Jersey over seven days in May 2014, an order was made on 20 June 2014 that Mr Jones (and other defendants), pay the plaintiff Invion Limited, $1,290,739.23 and interest.

3. Mr Jones (and the other Defendants) had appealed that order to the Court of Appeal.  That Appeal was dismissed. A Special Leave Application to the High Court of Australia was dismissed.

4. The Creditors Petition filed on 19 September 2014 was adjourned for hearing on a number of occasions and then extended, so as to allow Mr Jones to exhaust all his appeal remedies. On 7 September 2015, the Creditor’s Petitioner was extended to 19 September 2016.

5. With the final avenue of Appeal completed, the Creditor presses for the making of a sequestration order.  I am satisfied that the Creditor has adduced evidence that meets the formal requirements under the Bankruptcy Act1966 for the Court to make a sequestration order.

6. By way of an Amended Notice of Opposition to the granting of the Creditors Petition dated 21 December 2015, Mr Jones essentially seeks to “go behind the judgement” of De Jersey CJ and further asserts that an “abuse of process”  has occurred.  On the basis of these grounds, Mr Jones says that Petitioner should be dismissed because:

   “on the grounds that the reasons for judgment are open to review questions and cast doubt on the efficacy and truth of the debt claimed in the Petition”.

7. The full terms of the Amended Application are:

   “1. Those facts deposed in the Affidavit of Stephen George Burch Jones sworn 21st December 2015.

   2. That the Court should go behind the reasons for the Judgement Order which establishes the debt upon which the Petition is based and should it find that any of the reasons in the judgment open to Serious question then the Petition should be set aside. In particular the respondent claims (a) that the adverse credit findings made against the Respondent are seriously flawed (b) in a similar way the findings in respect of Authority are seriously flawed and (c) serious Errors in Law that are deposed in the supporting Affidavit have been made and relevantly findings pursuant to S 180, 181, 182 and 199B of the Corporations Act 2001 (Cth) are seriously flawed as are findings in respect of s308(3C) and the reliance of director on Audit reports and likewise findings in respect of directors reliance on S 189 Corporations Act 2001 (Cth)and (d) serious Errors of fact make wrong conclusions as to the circumstances of the Respondents departure from the Applicant Company.

   3. There are serious abuses of process inherent in the use of legal means to obtain a judgment that gives rise to the judgement debt and the Petition itself for the reason deposed in the supporting Affidavit, specifically the respondents second amended defence and counterclaim date 4th February 2014 and the respondent’s  evidence in chief provided by Affidavit dated 28th April 2014. 

   4. Because of (1) or (2) or (3) or all and subject to the Court’s findings, to dismiss the Creditors Petitioner on the grounds that the reasons for judgment are open to serious questions and cast doubt on the efficacy and truth of the debt claimed in the Petition.”

8. Mr Jones acts on his own behalf but has filed an extensive and well prepared Affidavit sworn 17 December 2015.  The Affidavit annexes:

   a)The reasons for Judgment of De Jersey CJ;

   b)The Summary of Argument filed in the High Court of Australia;

   c)A copy of the Affidavit of Mr Jones admitted as evidence at the trial and parts of the trial transcript;

   d)Correspondence between Mr Jones and the Legal Services Commission;

   e)Copies of court documents filed in the Supreme Court of Queensland;

   f)A copy of the Notice of Appeal to the Full Court and the Reasons for Judgement of the Court (McMurdo P; Philippides JA & P Lyons J) delivered on 12 June 2015 to support the order made to dismiss the appeal with costs.

9. The annexures to the Affidavit of Mr Jones comprise over 400 pages. It is clear Mr Jones has a good working knowledge of the law (at least Corporations Law) from the way in which his Affidavit articulates his concerns. He demonstrated that understanding of the issues again during his oral submissions on 5 February 2016.

10. Counsel for the Creditor Mr Hodge, has made written submissions and also oral submissions.

11. In circumstances where the legal issues alleged by Mr Jones (and others) has been so fully ventilated before a Trial Judge of the Queensland Supreme Court in a trial (referring to a written judgment); has been ventilated before the Full Court (again referring in a lengthy written judgement ) I do not regard it as necessary or expedient for this Court exercising jurisdiction in Bankruptcy to “rehear” in view of all of the evidence.

12. To seek to do so, would be to ignore the long standing principles that  apply to these matters.  The issues in dispute were full investigated at a hearing where both parties appeared.  As was said by Wigney J in Katten v Melhem (No2)(2014) 319 ALR 646 at 659:

    “…the Court will not reopen the matter unless a prima facie case of fraud or collusion or miscarriage of justice is made out.”

13. In my view no such grounds have been made out by Mr Jones and I am, as a result compelled to grant the relief in the form of a sequestration order sought by the Creditor.

14. Properly however, I explain my reasons for not being persuaded by Mr Jones of his grounds of opposition to the Petition, as follows:

    a)Mr Jones asserts that De Jersey CJ made errors in his original judgment.  It is not for this Court to act as some sort of Appeal Court against that determination, however an Appeal was fully ventilated by Mr Jones and dismissed relying almost entirely upon the same allegations of error he make to me.

    b)I adopt the summary of facts set out at paragraphs 7 to 11 of the written submissions of the Petitioning Creditor as below:

    “7. In 2001, the Respondent was a director, and the Chairman of the Board of Invion.  The respondent also provided services to Invion through a company he controlled pursuant to a consultancy agreement.  Hence, he was an Executive Chairman. Mr Yeates and Mr Greig were also directors of Invion and also held executive positions. On 25 March 2011, the Board of Invion resolved to amend the executive contracts (including the contracts of the respondent’s company, Mr Yeates and Mr Greig) to “extend the termination notice period to be provided by [Invion] … to 12 months.” The respondent, Mr Yeates and Mr Greig abstained from voting on the Resolution.

    8. In April, the respondent, Mr Yeates and Mr Greig (together with the company secretary against whom proceedings were settled) decided between themselves, and purported, to change their contracts to have the effect that if either they or Invion terminated their employment (or consultancy), Invion would have to pay them the equivalent of 12 months salary (or consultancy payments) and they would not have to work any of the 12 months if they did not wish to do so.

    9. The respondent, Mr Yeates and Mr Greig did not tell the other members of the Board what they had done. In October 2011, they each gave notice and, in various combinations, caused the equivalent of 12 months fees or wages to be paid to themselves.

    10. The learned primary judge held that the respondent, Mr Yeates and Mr Greig had breached their statutory duties under the Corporations Act 2001 (Cth) (the Act) and their fiduciary duty by this conduct. The respondent, Mr Yeates and Mr Greig offered various justifications for their conduct. His Honour carefully considered and rejected each of the justifications.

    11. His Honour found that the respondent, Mr Yeates and Mr Greig had consistently not disclosed to the Board what they had had done and acted dishonestly.  His Honour inferred that the respondent, Mr Yeates and Mr Greig had “by-passed the Board because they surmised the Board would not agree”.”

    c)I regard this as an accurate summary.  The four complaints of Mr Jones raised in his material, and my conclusions (within the limits of the discretion I am able to exercise) are as follows:

    i)The Chief Justice, as the Trial Judge clearly made adverse credit findings against the Respondent and found that the Respondent was dishonest.  Such a finding has clearly had fundamentally adverse consequences for the case advanced by the Respondent.  In circumstances where this concern was raised on Appeal and did not succeed, there is no basis upon which this Court could do so.  No new evidence is advanced;

    ii)Where the Trial Judge made a finding of fact, based on the earlier articulated credit findings about the Respondent’s authority to amend the contracts, it would be contrary to principle to a Court exercising jurisdiction in Bankruptcy to “look behind” the judgment founding the final order on such a basis;

    iii)Similarly, if as the Respondent valiantly asserts, the Trial Judge made errors of law, then this Court is entitled to accept that a properly informed Court of Appeal would have identified them.  The Court of Appeal did not, nor did the High Court; and

    iv)Finally, the Respondent says the Trial Judge erred in finding that the Respondent had resigned from his position as Executive Chairman of his own volition.  Clearly the Trial Judge (again it may be reasonably inferred to some degree reliant on the adverse credit finding), did not accept the Respondent’s position that he did not really resign by choice.  There is no basis upon which this Court would be entitled to “go behind” that finding.

15. I agree with the submissions of Counsel for the Petitioning Creditor that there is no basis, even remotely established of any “abuse of process”.  It seems clear to me that that the Creditor has, as it is perfectly entitled to do, accessed the Supreme Court of Queensland seeking relief which it was ultimately awarded.  That cannot be an “abuse of process”.  If the Trial Court had so felt, the relief may not have been granted.

16. The sequestration order must be made and I do so.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Baumann

Date: 6 April 2016