Jeffrey v Giles

[2018] FCCA 2073

FEDERAL CIRCUIT COURT OF AUSTRALIA

JEFFREY & ANOR v GILES [2018] FCCA 2073

Catchwords:
BANKRUPTCY – Respondent debtor seeking to go behind judgment upon which Creditors’ Petition is based – wide ranging allegations of misconduct made against the creditors including fraud and perjury – creditors cross-examined by debtor and court finding them credible – debtor admitting insolvency – materials as a whole showing debtor’s assertions untenable – formal matters required under s.52(1) established – no sufficient cause why a Sequestration Order should not be made

Legislation:

Bankruptcy Act 1966, s.52

Civil Procedure Act 2010 (Vic), s 29

Cases cited:

Shaw & Yarranova Proprietary Limited (2017) 252 FCR 267, [2017] FCAFC 88 at [62]

First Applicant: DAVID JEFFREY

Second Applicant: THOMAS CURNOW

Respondent: VIRGINIA GILES

File Number: MLG 301 of 2018

Judgment of: Judge Burchardt

Hearing date: 6 June 2018

Date of Last Submission: 2 July 2018

Delivered at: Melbourne

Delivered on: 3 August 2018

REPRESENTATION

Counsel for the Applicants: Mr Fary

Solicitors for the Applicants: Meltzer-Green Lawyers

Respondent: In person

ORDERS

1. A Sequestration Order be made against the estate of VIRGINIA GILES.

2. The Applicant Creditor’s costs be taxed in accordance with the Federal Court Rules and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

3. The Court notes that the date of the act of bankruptcy is 26 August 2017.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

MLG 301 of 2018

DAVID JEFFREY

First Applicant

THOMAS CURNOW

Second Applicant

And

VIRGINIA GILES

Respondent

REASONS FOR JUDGMENT

Introductory

1. By a Creditor’s Petition (“Petition”) filed on 6 February 2018, the applicant creditors seek that a Sequestration Order be made against the estate of the respondent, Virginia Giles.  There is no dispute that the applicants have proved the matters required to be proved by s.52 of the Bankruptcy Act 1966 (“the Act”). 

2. The affidavit verifying the Petition has not been the subject of challenge.  There is no question that the applicant was served with the Petition (she has fully participated in the proceeding).  Likewise the respondent debtor concedes that she still owes the debts upon which the petitioning creditors rely.  Formal affidavits re-verifying the debt and the searches of indexes have been filed in Court and are not the subject of material challenge.

3. In truth, the only matter of controversy in this proceeding is whether or not Ms Giles has a counter-claim against the applicants such that the Court would be satisfied, pursuant to s.52(2)(b) of the Act that

   
   

   Ms Giles establishes that she has other sufficient cause why

   
   

   a Sequestration Order ought not to be made.

4. It should be noted that Ms Giles concedes that she is not presently solvent.

The Relevant History of the Matter

1. Ms Giles has filed very substantial tranches of material both in the proceeding in this Court and in the proceedings in the Federal Court in relation to her endeavours to set aside the Bankruptcy Notice served upon her.  From those materials, it is apparent that Ms Giles has been involved in litigation with the applicants (and at times a corporate interest controlled by them) for many years in relation to the operation of a quarry owned or controlled by the applicants.  Much of the history is helpfully canvassed in the decision of Registrar Ryan which is appended as exhibit LPG1 to the affidavit of Lionel Peter Green sworn 27 March 2018.  I adopt and acknowledge the history that Registrar Ryan set out.

2. The foundation for the Bankruptcy Notice consists of a judgment debt obtained by the applicants in the costs court of the Supreme Court of Victoria on 25 August 2017.  The sum owing is slightly in excess of $229,000.

3. In 2008, proceedings were commenced in VCAT by Ms Giles seeking to challenge the granting of a planning permit to the respondent’s company for the operation of the quarry, those proceedings being unsuccessful.

4. On 23 May 2013, Pagone J found in the Supreme Court of Victoria that that Ms Giles had defamed the applicants and ordered her to pay $12,000 to Mr Jeffrey and $8,000 to Mr Curnow, together with costs.  On 24 April 2015, the Court of Appeal refused Ms Giles leave to appeal against the costs order made by Pagone J and allowed the respondent’s appeal on quantum.  The Court of Appeal set aside the damages orders made by Pagone J and ordered $75,000 in favour of

   
   

   Mr Jeffery and $65,000 in favour of Mr Curnow.

5. On 5 February 2016, McDonald J dismissed applications by Ms Giles seeking costs orders against the respondents and relief under s.29 of the Civil Procedure Act 2010 (Vic) in relation to the respondents’ conduct in the defamation proceeding before Pagone J, including allegations that the respondents had lied on oath. McDonald J also ordered that Pagone J’s costs order against the applicant be amended to be provided that the costs be paid to a considerable extent on an indemnity basis. On 11 March 2016, McDonald J ordered that Ms Giles pay the applicants’ costs of the proceedings before him on an indemnity basis. On 14 December 2016, the Court of Appeal refused to grant Ms Giles leave to appeal against the orders made by McDonald J and ordered her to pay the applicant’s costs of that application.

6. An application for special leave to the High Court of Australia did not defer the operation of the costs orders.

7. As earlier indicated, on 25 August 2017, Judicial Registrar Gourlay taxed the costs of the trial in the Supreme Court at $225,000.  On 12 September 2017, the High Court dismissed the application for special leave.

8. Following service of a Bankruptcy Notice and a Notice of Objection by Ms Giles, the matter went to Registrar Ryan who dismissed the application by Ms Giles to set the Notice aside.

The Nature of the Cross-Claim

1. It appears that Ms Giles was under the impression that she could pursue her cross-claim in the bankruptcy proceedings themselves and her statement of counter-claim in relation to setting aside the order dated 28 August 2017 and Bankruptcy Notice BN218213 is exhibit TC2 to the affidavit of Thomas Curnow sworn 7 May 2018.  It is sufficient to say that it is a lengthy document, replete with numerous assertions of what might globally be described as misconduct (including fraud and perjury) against Mr Curnow and Mr Jeffrey.  It is also fair to say, in my view that much of what it is asserted is in extremely general terms.

2. Ms Giles has informed the court that an application is presently before the Supreme Court for acceptance and from what she said to the court at the trial of this matter, it would appear that it is likely to be in the same or largely indistinguishable terms to the document to which I have just referred.

3. The matter is also traversed at paragraphs 45 and following of Ms Giles’ affidavit sworn 25 March 2018 and paragraph 48, which seems to summarise the claims, asserts perjury by each of the petitioning creditors, fraudulent misrepresentations and negligent misstatements to the court, and abuse of process.

The Evidence Given at Trial

1. When this matter first commenced, I clarified with the parties that, in respect of the creditors, they did not wish to cross-examine Ms Giles, and in respect of Ms Giles, she did wish to cross-examine each of Mr Curnow and Mr Jeffrey. 

2. Mr Curnow was called and adopted the affidavit he had filed as true and correct.  He was then cross-examined for in excess of half an hour.  The cross-examination process was made understandably more difficult by Ms Giles’ lack of forensic experience as an advocate.  She asked a number of questions which were objectionable on a variety of bases.  I endeavoured to assist her by reformulating some of the questions myself. 

3. Ms Giles put it squarely to Mr Curnow that he had lied under oath and he denied that this was the case.  Ms Giles then ceased her cross-examination, asserting that:

   I think it’s a bit pointless me continuing on, your Honour.”  (Transcript P-25)

4. Cross-examination of Mr Jeffrey followed.  At P-29, Ms Giles observed:

   I actually think this is quite pointless because neither man is telling the absolute truth. 

5. She made it clear she did not wish to further cross-examine. 

Should the Court go Behind the Judgment upon which the Petition Rests

1. All parties agree that the court has the power in an appropriate case to go behind the terms of the original judgment.  I note that in this instance it is a costs judgment which, as was pointed out in Shaw & Yarranova Proprietary Limited (2017) 252 FCR 267, [2017] FCAFC 88, the Full Court of the Federal Court observed at [62]:

   The costs orders, in and of themselves, created the obligation to pay.  The case was not one in which an antecedent transaction giving rise to a pre-existing debt had merged in a default or consent judgment or in a judgment following a contested trial as to the existence of a liability to pay.

2. As if this was not a significant enough difficulty, the fact is that even in the brief period of time Mr Curnow and Mr Jeffrey were in the witness box, I formed the clear impression that they were witnesses of truth.  Even allowing for the relative lack of sophistication of the cross-examination of them, they presented as direct and responsive witnesses, albeit plainly wearied by the lengthy litigation with Ms Giles.  I appreciate that these are findings made on brief acquaintance with the witnesses, but I repeat, they were in the witness box long enough for me to form the clear impression that I have. 

3. In my view it is appropriate to paint with a broad brush given the circumstances of this case.  Having read (a process which took some time) all of the materials filed by Ms Giles, the picture could scarcely be more stark.  She conducted very lengthy and unsuccessful proceedings in VCAT.  She was unsuccessful before Pagone J and yet more unsuccessful before the Court of Appeal.  She was utterly unsuccessful in front of McDonald J.  Her assertions that all of this was obtained by fraud or other forms of misconduct is simply untenable. 

4. Whatever may happen to the application apparently presently being sought to be filed in the Supreme Court, I do not think that claim, as disclosed thus far, in the light of all the relevant circumstances including most particularly the history of the matter as I have set it out above and my findings about the credit of the two persons who are impugned by Ms Giles, means that the court cannot possibly be satisfied that she has established other sufficient cause why a Sequestration Order ought not be made. For completeness however, I will address the matters in Ms Giles’ Notice of Opposition.

The Debtors Notice Stating Grounds of Opposition to the Petition

1. Ground 1 is in essence the matter I have just dealt with above.  It is clearly not made out. 

2. Ground 2 appears to involve an assertion that the Registrar was misled as to how much money had been paid in relation to the costs of the Court of Appeal proceedings.  The Registrar noted that there was no dispute that the debt of $229,623.29 claimed in the Bankruptcy Notice had not been paid to the creditors.  During the hearing before this court at transcript P-13, Ms Giles expressly confirmed that she has not paid that sum.  Ground 2 is therefore devoid of merit.

3. Ground 3 appears, as the creditors’ written submissions point out, to endeavour to assert some differentiation between dishonesty and deception and broad allegations of fraud.  The creditors are correct to say that this is a distinction without a difference.

4. Ground 4 raises an alleged abuse of process.  For the reasons set out in the creditor’s written submissions at paragraphs 25 to 30, which I incorporate by reference, this ground is devoid of merit. 

5. Ground 5 has already been dealt with.  The applicant’s prospects of success in her proposed cross-claim are wholly insufficient to satisfy the court, as earlier indicated, that she has other sufficient cause why a bankruptcy order ought not be made. 

6. Ground 6 is merely a restatement of other grounds. 

7. Ground 7 raises various procedural complaints, none of which have any validity.  As the creditors point out, there is nothing objectionable in the petition being filed in the Federal Circuit Court when the Bankruptcy Notice proceedings were in the Federal Court.  The documents before the court were all perfectly legible.  The alleged defects in the Bankruptcy Notice are devoid of substance. 

8. Ground 8 is, in these terms “on the grounds that the respondent is already a proven undeclared bankrupt”. From her affidavit material it is apparent that the applicant is asserting inter alia that there is no point in the Court making a Sequestration Order because she is insolvent. The only relevance of this ground is that it goes to show why the court could not be satisfied pursuant to section 52(2)(a) that Ms Giles is able to pay her debts.

9. Ground 9 is a reference to prior endeavours to settle the matter which is plainly irrelevant. 

Conclusion

1. It is very clear from what Ms Giles had to say during the hearing of the matter and the way that she said it, that she remains bitterly distressed by what she perceives as the petitioning creditors’ dishonest conduct over many years in various different forums.  Unfortunately for her, I formed a different view of the two persons about whom she complains. 

2. Even if that were not the case, looked at objectively, there is simply no evidence to support, in any objective way, the complaints that Ms Giles makes.  To the contrary, it would appear that the creditors have been successful in every court proceeding in which they have been involved.

3. There is no question that the creditors have proved the matters required to be proved pursuant to section 52(1) of the Act.  The applicant is not solvent and able to pay her debts.  There is no other sufficient cause why a Sequestration Order should not be made. It follows that the Court will make a Sequestration Order in the usual terms.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Date: 3 August 2018