Ivory v Telstra Corporation Limited - [2010] FMCA 123

FEDERAL MAGISTRATES COURT OF AUSTRALIA

IVORY v TELSTRA CORPORATION LIMITED & ORS

[2010] FMCA 123

BANKRUPTCY – Bankruptcy Notice – application to set aside bankruptcy notice – whether notice properly served – whether debtor entitled to indemnity from third party a relevant consideration.

Bankruptcy Act 1966, s.40
Bankruptcy Regulations 1996, r.16.01
Judiciary Act 1903, s.65

Australian and New Zealand Banking Group Limited v Menso [2006] FMCA 1522
Gargan v Commonwealth of Australia [2005] NSWSC 1178

Applicant:

KENNETH CLYDE IVORY

Respondents:

TELSTRA CORPORATION LIMITED ACN 051 775 556 AND EACH OF ITS BOARD OF DIRECTORS AND ITS COMPANY SECRETARY AND ITS CHIEF FINANCIAL OFFICER

File Number:

BRG 836 of 2008

Judgment of:

Wilson FM

Hearing dates:

27 March, 3 April 2009

Date of Last Submission:

3 April 2009

Delivered at:

Brisbane

Delivered on:

26 February 2010

REPRESENTATION

Counsel for the Applicant:

N/A

Solicitors for the Applicant:

In person

Counsel for the Respondent:

Mr Sullivan S.C.

Solicitors for the Respondent:

Mallesons Stephen Jaques

ORDERS

The separate questions ordered to be decided by the Court on 6 February 2009 and 20 March 2009 be answered as follows:
(i)The Bankruptcy Notice should not be set aside on the grounds that:
(a)Service of the notice was not properly effected, because the notice was properly served;
(b)The judgment debtor is entitled to be indemnified by the Commonwealth of Australia against the judgment debt, because that is not a ground upon which to set aside the Bankruptcy Notice, and in any event the applicant is not so entitled;
(c)The judgment sought to be relied upon by the respondent Telstra Corporation Limited is stale and cannot be used to support the Bankruptcy Notice, because the judgment relied upon was made on 3 September 2008;
(d)The Bankruptcy Notice is invalid because it only has attached to it the order of the Deputy Registrar made on 3 September 2008, because such order is sufficient for the purposes of the Bankruptcy Act.
The names of all respondents other than Telstra Corporation Limited be removed from these proceedings.
The applicant pay the costs of the respondent Telstra Corporation Limited of and incidental to the hearing of the separate questions.
The matter otherwise be listed for directions before Federal Magistrate Jarrett on 18 March 2010 at 9.30am.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 836 of 2008

KENNETH CLYDE IVORY

Applicant

And

TELSTRA CORPORATION LIMITED
ACN 051 775 556 AND EACH OF ITS BOARD OF DIRECTORS AND ITS COMPANY SECRETARY AND ITS CHIEF FINANCIAL OFFICER

Respondents

REASONS FOR JUDGMENT

The applicant seeks to set aside Bankruptcy Notice QN 1443/2008. The respondent Telstra Corporation Ltd had previously had issued Bankruptcy Notice QN 1263/2008. On 5 December 2008, at Telstra’s request, Logan J set aside Bankruptcy Notice QN 1263/2008. His Honour ordered that the proceedings continue in respect of Bankruptcy Notice QN 1443/2008. The matter was transferred to this Court.
On 6 February 2009 this Court ordered:
(1)That the court will deal with the following as a separate question:
Whether the bankruptcy notice should be set aside on the grounds that:
(a)Service of the notice was not properly effected;
(b)The judgment debtor is entitled to be indemnified by the Commonwealth of Australia against the judgment debt; and
(c)Whether the judgments sought to be relied upon by the applicant are stale, and cannot be used to support the bankruptcy notice.
Application was subsequently made, by the respondent Telstra, to set aside Notices to Produce filed by the applicant, and to seal up part of the applicant’s material on the grounds that it was scandalous and vexatious. On 20 March 2009 I dealt with those applications, together with an application by the applicant filed 2 March 2009. I published reasons for my decision at that time: [2009] FMCA 227. I there set out some of the history of the litigation between the parties. I do not propose to repeat what I said on the earlier occasion. On 20 March 2009 order 5 provided:
(5)The separate questions to be decided by the Court at the hearing on 27 March 2009 be varied to add thereto the following:
“Whether the bankruptcy notice is invalid because it only has attached to it the order of the Deputy Registrar made on 3 September 2008”
Although the evidence before the Court on the hearing of the separate questions extended beyond the ambit of those questions, it must be kept in mind that the Court is not presently deciding the totality of the dispute between the parties, although, as I will later mention, certain aspects of the applicant’s case can be dealt with summarily. In my earlier reasons for decision, I referred to the jurisdiction of the court to monitor and control the proceedings before it.
The first matter to be decided is whether Bankruptcy Notice QN 1433/2008 was properly served on the applicant.
Regulation 16.01 Bankruptcy Regulations 1996 provides:
(1)     Unless the contrary intention appears, where a document is required or permitted by the Act or these Regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02), the document may be:
(a)     sent by post, or by a courier service, to the person at his or her last‑known address; or
(b)     left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility; or
(c) left, in an envelope or similar packaging marked with the person’s name, at the last‑known address of the person; or
(d)     personally delivered to the person; or
(e)     sent by facsimile transmission or another mode of electronic transmission:
(i) to a facility maintained by the person for receipt of electronically transmitted documents; or
(ii)     in such a manner (for example, by electronic mail) that the document should, in the ordinary course of events, be received by the person.
(2)     A document given or sent to, or served on, a person in accordance with subregulation (1) is taken, in the absence of proof to the contrary, to have been received by, or served on, the person:
(a)     in the case of service in accordance with paragraph (1) (a) or (b) — when the document would, in the due course of post or business practice, as the case requires, be delivered to the person’s address or document exchange facility; and
(b)     in the case of service in accordance with paragraph (1) (c), (d) or (e) — when the document is left, delivered or transmitted, as the case requires.
In his affidavit filed 10 November 2008 the applicant gives his address as 7 Tennessee Way ‘Freshwater’ Berrinba.
On 2 December 2008 the respondent Telstra filed an affidavit by Charmaine Teresa Keir, a licensed process server. Ms Keir deposed to having served the Bankruptcy Notice by leaving it in a sealed envelope addressed to the applicant at 7 Tennessee Way Berrinba on 25 November 2008. In his evidence the applicant admitted receiving the Bankruptcy Notice, left at his premises, when he arrived home one evening. The applicant argues that the Bankruptcy Notice ought to have been personally served upon him. That is incorrect.
Ms Keir gave oral evidence before me and was cross examined by the applicant. She was not challenged that she left the document in a sealed envelope appropriately addressed to the applicant at his address.
Regulation 16.01(1)(c) makes it clear that the manner in which the applicant was served with the Bankruptcy Notice was appropriate. There has been no proof to the contrary in terms of r.16.01(2) and accordingly I find that the Bankruptcy Notice was properly served on the applicant.
I turn next to determine the preliminary question ordered to be considered in my decision of 20 March 2009 because the determination of that question will affect the determination of the question regarding whether or not the respondent creditor is seeking to rely upon a stale judgment.
Bankruptcy Notice QN 1443/2008 has attached to it an order of a Deputy Registrar of the Supreme Court of Queensland made 3 September 2008 whereby the applicant was ordered to pay costs assessed at $222,900.15 pursuant to an order made 15 May 2008.
I ordered that the further question be tried as a preliminary issue because of my concern as to whether or not the order of the Deputy Registrar was sufficient to comply with the requirement in the Bankruptcy Act that the final judgment or order be attached to the Bankruptcy Notice, or whether the earlier order of 15 May 2008, by which the costs were ordered to be paid, should also have been attached to the Bankruptcy Notice.
As Senior Counsel for the respondent explained, in his excellent written submissions, the costs provisions of the Uniform Civil Procedure Rules (Qld) were changed on 10 December 2007, such that the issued addressed by me in Australian and New Zealand Banking Group Limited v Menso [2006] FMCA 1522 are no longer apposite. Now, the effect of the Uniform Civil Procedure Rules is that the order signed by the Deputy Registrar after an assessment of legal costs takes effect as a ‘money order’ and is enforceable in its own right. UCPR 740 makes it clear that the order made by the Deputy Registrar after the assessment of costs itself takes effect as a judgment of the court. The fact that the order of the Registrar is a money order, as defined in Schedule 2 to the Supreme Court Act 1991 means that it is a final judgment or order as required by s.40(3)(b) Bankruptcy Act 1966. I accept the submissions of the respondent and find that the Bankruptcy Notice is not defective by reason of the attachment only of the order of the Deputy Registrar made 3 September 2008.
That conclusion substantially answers the point taken by the applicant that the judgments sought to be relied upon by the respondent are stale and cannot be used to support the Bankruptcy Notice. The final judgment or final order relied upon to found the subject Bankruptcy Notice is the order of 3 September 2008.
I find that the Bankruptcy Notice ought not be set aside as the judgment sought to be relied upon is not stale.
I turn then to consider the issue in respect of which evidence was adduced on 27 March and 3 April 2009. As previously alluded to in my earlier reasons for decision (see paragraphs 18 – 34) the applicant seeks relief going well beyond the setting aside of a Bankruptcy Notice.
The Commonwealth of Australia is not a party to this litigation. In terms of the separate question formulated, the Commonwealth of Australia has not agreed to indemnify the applicant against the monies he owes to Telstra pursuant to the costs order of 3 September 2008. There is no evidence that the Commonwealth has given any such indemnity. What the applicant claims is that the Commonwealth of Australia has agreed to pay him in excess of $6.7 billion, and for that reason the bankruptcy proceedings ought not be permitted to continue. The fact that such an argument is irrelevant to the application to set aside the Bankruptcy Notice does not deter the applicant from pursuing it.
The fact that the Commonwealth of Australia, against which relief is sought, is not a party to this litigation is only one of many difficulties confronting the applicant. In my view, if the claim against the Commonwealth is manifestly hopeless, as I consider it is, it is both inefficient, and wasteful of public resources (both of this Court and of the Commonwealth as respondent) to require the Commonwealth to be joined, served, and then to dismiss the proceedings.
The applicant seeks orders from this Court that the Commonwealth of Australia pay him the demanded sum pursuant to an allegedly dishonoured bill of exchange. The applicant did not advance any basis on which this Court has jurisdiction to order the payment of such a large sum of money against the Commonwealth on what is essentially a civil claim. This court does not have jurisdiction to make the orders sought by the applicant against the Commonwealth. It can in no way be contended that such a claim against the Commonwealth of Australia is ancillary to the bankruptcy proceedings between the applicant and Telstra.
Further, in proceedings to set aside a Bankruptcy Notice, the applicant must, relevantly, demonstrate that he has a counter-claim, set-off or cross-demand against the party relying on the Bankruptcy Notice, that could not have been set up in the proceedings in which the judgment was obtained. In the present case the fact that the applicant contends that he has a right to recover monies from the Commonwealth is irrelevant to the validity of the Bankruptcy Notice.
Because at times during his evidence, and in some of his court documents, the applicant claims that Telstra owes him the same amount of money, and seeks orders that it be suspended from trading on the Australian Stock Exchange until payment is made, I will deal briefly with the substance of the claim sought to be advanced by the applicant. It is, on any view, a nonsense.
An earlier attempt to pursue somewhat similar relief was dismissed by Brereton J in Gargan v Commonwealth of Australia [2005] NSWSC 1178. There the proceedings failed, at least in part, because the alleged bill of exchange was not signed by or on behalf of the Commonwealth. There was also the difficulty that the plaintiff in those proceedings was not a party to the bill, although Brereton J, at paragraph [7], referred to the fact that the present applicant was.
Perhaps to address one of the problems identified by Brereton J, the applicant had certain documents prepared by him signed by an employee of the Department of Finance on 23 September 2008. This, he argued, was an acknowledgement by the Commonwealth that it was obliged to pay the applicant the claimed sum, of some $6.8 billion plus interest.
Without fully explaining the genesis of his entitlement to judgment of that magnitude, or what his cause of action was against the Commonwealth, the applicant contends that he obtained judgment from the Court of Faculties (in Norfolk Island) against, inter alia, the Commonwealth of Australia. The applicant has had prepared a document entitled “Certificate of Judgment” purportedly issued pursuant to s.65 Judiciary Act 1903. That section provides:
No execution or attachment, or process in the nature thereof, shall be issued against the property or revenues of the Commonwealth or a State in any such suit; but when any judgment is given against the Commonwealth or a State, the Registrar or other appropriate officer shall give to the party in whose favour the judgment is given a certificate in the form of the Schedule, or to a like effect.
It is apparent from the face of the document that the certificate is not one that complies with s.65 of the Judiciary Act 1903. It is a document, presumably prepared and signed by the applicant, and notarised by Christopher Wlodarczyk, a Notary Public. The document is not a judgment. Nor is it a certificate of a judgment contemplated by s.65 Judiciary Act. Its status is doubtful.
The document recites that the applicant was awarded judgment in the Court of Faculties on 9 March 2006. That judgment is not produced. It asserts that the applicant was awarded $5,386,943,767 together with interest at a rate of 9% per annum. The applicant alleges that in September 2007 the court awarded a notarial certificate of protest in favour of the applicant.
Some of the deficiencies in the applicant’s case were explained by Lord Carloway in an opinion delivered on the petition of the applicant reported at [2006] CSOH 85. From his Lordship’s opinion I glean that the applicant claims to have had a bill of exchange accepted by the Telecommunications Minister for and on behalf of the Commonwealth of Australia and Telstra on 8 February 2005. That bill of exchange was not produced. The applicant claims that this bill of exchange remains unsatisfied. He claims that judgment was given in his favour in the Court of Faculties of Norfolk Island. At section 3 of his opinion Lord Carolway says:
“The document presented for registration does not appear to be a judgment at all, but a notarial certificate of certain matters. In that regard, it does not appear that the Court of Faculties has arrived at any decision in relation to the subject matter of the dispute between the petitioner, the Australian Government and the Telstra Corporation. Its involvement seems to have been restricted to the appointment of various of the notaries involved in the certification of the sundry documents. It is a requirement of the Rules that the relevant judgment, or a court certified copy, be produced. No document that can reasonably be described as a judgment has been produced. At best, there is a document which narrates and certifies certain events concerning the “acceptance” and “dishonouring” of a document which does not even resemble a Bill of Exchange, at least as such a Bill is recognised in Scotland.
… A Court of Faculties is not a civil court determining such proceedings but an ecclesiastical one which exercises limited jurisdiction in church matters and in the appointment of notaries. A judgment of a Court of Faculties, even if one existed in relation to the subject matter of the petitioner’s dispute, cannot therefore be registered under the Act.”
Not only has the applicant not obtained a valid judgment against either the Commonwealth of Australia or Telstra, there is no evidence that any valid bill of exchange has been dishonoured. The document witnessed by Mr Wlodarczyk is not a judgment. It is a document of no utility witnessed by a Notary Public. The office of Notary Public is one of great antiquity. By the Ecclesiastical Licences Act 1533 a faculty to act as Notary was granted by the Archbishop of Canterbury through the Court of Faculties. As the learned authors of Halsbury’s Laws of England, volume 28, 3^rd edition at [121] state:
“A Notary Public is a duly appointed officer whose public office it is, amongst other matters, to draw, attest, or certify, usually under his official seal, deeds or other documents … to note or certify transactions relating to negotiable instruments.”
It is no part of the function of the Court of Faculties to give judgment in a civil dispute between parties such as the applicant and Telstra or the Commonwealth of Australia. It is no part of the function of a Notary to enter a judgment against a party or to certify that a judgment has been obtained. Whilst notaries have historically dealt with protests to bills of exchange, the document signed by Mr Wlodarczyk has no legal effect.
Purportedly in reliance on the so called “Certificate of Judgment” the applicant prepared an “Invoice” addressed to the Commonwealth of Australia, described as “the judgment debtor”. The applicant also prepared a document styled “Irrevocably A Certified Bank Payment Guarantee” by which the Commonwealth of Australia was required to pay to the account of the applicant $6,682,034,089.40 together with interest at the rate of 9% per annum.
The applicant and an associate, Mr Malcolm MacDougall, attended at the Department of Finance on 23 September 2008. They there spoke to two employees of the Department, Jennifer Koenig and Anthony Asome. Ms Koenig signed the “Bank Payment Guarantee” and the “Invoice”.
Each of Mr MacDougall, Ms Koenig and Mr Asome gave evidence before me, as did the applicant. It was quite evident, despite their attempts to suggest otherwise, that Mr MacDougall and the applicant have conferred with a view to presenting a consistent version of events as to what happened when they attended at the Department. They each purported to prepare an affidavit on the evening of 23 September 2008 but the contents of those affidavits are largely identical. The applicant’s explanation that he had prepared his own affidavit but had computer problems and therefore adopted what Mr MacDougall had said was fatuous. I accept the evidence of Ms Koenig and Mr Asome. They were not shaken in cross examination. Although Ms Koenig admitted that she signed the two documents presented to her, I accept that she did so as an acknowledgement that the documents had been received rather than in undertaking any responsibility on behalf of the Commonwealth to make payment to the applicant. Even if the so called Bank Payment Guarantee could be construed as a Bill of Exchange, I accept that Ms Koenig did not sign it “as acceptor”. The Bill would therefore not be enforceable. I accept that the applicant stated to her that the documents were from a court and were legitimate.

The gist of the case put by the applicant is that by signing the two documents exhibited to Ms Koenig’s affidavit, she accepted, on behalf of the Commonwealth, an obligation to pay the applicant in excess of $6.7 billion. The applicant seriously submitted that the court should accept that contention. It does not. Each of the applicant and Mr MacDougall claimed that Mr Asome, Ms Koenig’s superior, assured the applicant that payment would be made by bank cheque within three weeks. I reject that evidence as inherently incredible. No such statement was made to the applicant.
The applicant has no valid claim against the Commonwealth of Australia. The applicant has no valid claim against Telstra on the documents presented to this Court. The claim under the alleged bill of exchange, or under the alleged Certificate of Judgment do not constitute grounds for setting aside the Bankruptcy Notice relied upon in this case.
It still remains to be considered whether the Bankruptcy Notice should be set aside on the other grounds relied upon by the applicant, namely that it was issued as an abuse of process, and that Telstra had agreed to forego any claim for costs against the applicant. I will not decide either of those issues now. They will have to be determined at a later date. However, the applicant should have regard to the judgments of three justices of the Supreme Court of Queensland that have dealt with the argument that an agreement was made whereby Telstra would forego costs orders in its favour. I refer to the judgments of Justice McMurdo of 30 September 2005, Justice Muir of 12 December 2005 and Justice Philippides of 16 February 2006.
As I said in my earlier reasons for decision the applicant has also brought proceedings against not only Telstra but also:
a)Each of its board of directors;
b)Its company secretary; and
c)Its chief financial officer.
No claim is articulated against any of those individuals. It is difficult to see how, in the Court’s bankruptcy jurisdiction, any claim could be brought against any of the named respondents.
In a supplementary application filed on 30 January 2009 additional respondents appear in the heading of the proceedings:
a)Stephen Mead and Justin McDonnell;
b)Douglas Spence and Thynne & Macartney and its partnership partners.
As I pointed out at paragraph [32] of my earlier reasons no application has been made for the joinder of these additional parties. They have not been served with the proceedings.
In my view the proceedings should be regularised by the removal of all respondents other than Telstra. I will make an order to that effect. The applicant has articulated no claim against any other party that can be dealt with by this court. The application to set aside the Bankruptcy Notice cannot possibly involve those other parties. Those named respondents should not be put to the expense of having to deal with an obviously futile proceeding.
I will set out the answers to the preliminary questions in my orders. As I understand it, the only matter that is now required to be determined by the Court are the applicant’s two substantive arguments:
a)That the Bankruptcy Notice was issued as an abuse of process by Telstra;
b)That Telstra has agreed to forego the costs orders in its favour.
There will be orders as set out at the commencement of these reasons.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Wilson FM

Associate: Lynnette Chin

Date: 26 February 2010