Kelly v Mosman Municipal Council
[2010] FMCA 588
•4 August 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KELLY v MOSMAN MUNICIPAL COUNCIL | [2010] FMCA 588 |
| BANKRUPTCY – Application to set aside a Bankruptcy Notice – the Land and Environment Court made a demolition order in respect of an illegally constructed garage – Council sought to recover costs – Bankruptcy Notice issued – objections to notice not established – application dismissed. PRACTICE AND PROCEDURE – Further application for adjournment of proceedings – application made in absentia – application dismissed. |
| Bankruptcy Act 1966, s.306 Civil Procedure Act 2005 (NSW) s.133 Land and Environment Court Act 1979 (NSW), s.66 Legal Profession Act 2004 (NSW), ss.353, 356, 359, 367A, 368(5), 369(7) Bankruptcy Regulations 1996 (Cth) Land and Environment Court Rules 2007 (NSW) |
| Amos v Brisbane TV Ltd (2000) 174 ALR 769 Australian Securities Investment Commission v Forge (2003) 133 FCR 487 De Robilliard v Carver [2007] FCAFC 73 D’Orta-Ekenaike v Victorian Legal Aid (2005) 223 CLR 1 Goldberg v Morrow [2005] FCA 1038 Jensen v Queensland Law Society Incorporated [2006] FCA 1206 Kelly v Mosman Municipal Council [2009] FMCA 706 McWilliam v Jackson (2000) 96 FCR 561 Meekin v Commonwealth Bank of Australia [1999] FCA 682 Robilliard v Carver [2007] FCAFC 73 Re Athans; Ex parte Athans (1991) 29 FCR 302 Stec v Orfanos [1999] FCA 457 Trustees of the Franciscan Monasteries of Mary v Weir (2000) 98 FCR 447 Wenkart v Abignano [1999] FCA 354 |
| Applicant: | DAVID KELLY |
| Respondent: | MOSMAN MUNICIPAL COUNCIL |
| File Number: | SYG 600 of 2009 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 24 June 2010 |
| Delivered at: | Sydney |
| Delivered on: | 4 August 2010 |
REPRESENTATION
| Applicant: | No Appearance |
| Counsel for the Respondent: | Mr J .E. Lazarus |
| Solicitors for the Respondent: | Pikes Lawyers |
ORDERS
The application filed on 12 March 2009 seeking to set aside Bankruptcy Notice Number 445 of 2009 be dismissed.
The Applicant pay costs of the Respondent, as assessed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 600 of 2009
| DAVID KELLY |
Applicant
And
| MOSMAN MUNICIPAL COUNCIL |
Respondent
REASONS FOR JUDGMENT
This is an application filed on 12 March 2009 seeking to have Bankruptcy Notice Number 445 of 2009 set-aside. The matter came before Registrar Hedge on 24 March 2009. The matter was adjourned by consent on that occasion and relisted for 14 April 2009 when it was again adjourned by consent. On 28 April 2009 the matter was referred to this Court for hearing. On that occasion Mr Kelly appeared with the assistance of a Mckenzie’s Friend and sought an adjournment to prepare argument seeking to have the matter transferred to the Federal Court so that the matter could be tried before a jury pursuant to s.30(3) of the Bankruptcy Act 1966 (“the Act”). That Application was heard and dismissed on 16 July 2009: Kelly v Mosman Municipal Council [2009] FMCA 706.
Since the handing down of that judgment the matter has been adjourned on five occasions, substantially because of Mr Kelly’s medical condition and hospitalisation. On most of those occasions Mr Kelly was represented by a Ms Williams who held Mr Kelly’s Power of Attorney. When the matter was before the Court on 5 March 2010, I indicated to Ms Williams that the matter must proceed on the next scheduled hearing date, which was listed for 24 June 2010. On the day prior to the hearing Ms Williams forwarded an application to the Registry seeking yet another adjournment on the basis that Mr Kelly was still convalescing and unable to attend Court. A medical certificate was provided. For the reasons set out below, the adjournment sought in absentia was dismissed and the substantial hearing proceeded. I believe it is in both parties’ interest to know, with some certainty, the future progress of this matter. Consequently, I made orders at the completion of the hearing and indicated that I would publish my reasons for these orders.
Application for adjournment
On 24 June 2010, Ms L Williams forwarded a letter to the Court Registry on behalf of Mr Kelly under a Power of Attorney issued in July 2007 (which has not been revoked) which contained the following information:
i)The original matter which gave rise to the FMC matter is in appeal in the Supreme Court of New South Wales, Court of Appeal. File and stamped Notice of Appeal follows this page (annexure 1).
ii)David Kelly still convalescing and unable to attend Court. Medical certificate follows (annexure 2).
iii)We were not served any notice of hearing date changes or documents filed in relation to SYG600/2009 by the other party. I found out about it when calling the registry today.
Mr Lazarus of Counsel appearing for Mosman Municipal Council indicated that the application for an adjournment, made in absentia, was opposed. In support of this objection, Mr Lazarus sought leave to file in Court an affidavit of his instructing solicitor, Andrew David Simpson, sworn 23 June 2010. That affidavit recites the recent procedural history of the matter and the various attempts made by his instructing solicitor to notify the Applicant of the hearing date to ensure there was an appearance. There have been a number of recent occasions, both in this Court and to other jurisdictions where adjournments had been sought and in some cases granted on the basis of medical evidence tendered by the Applicant. Mr Lazarus contends that it was certainly apparent that Ms Williams, who acts for Mr Kelly under a Power of Attorney, was aware of the listing of the proceedings on this day, evidenced by her letter reproduced above. Ms Williams attended Court on 5 March 2010 and applied for an adjournment which I granted.
Mr Lazarus referred to the first annexure of Ms Williams’ letter, which is a Court of Appeal, Notice of Appeal. That relates to an appeal lodged in respect of the decision of Jagot, Lloyd and Biscoe JJ in the Land and Environment Court. The first Mention of the matter is listed on 22 July 2010 but has no relevance in terms of an application to adjourn the proceedings in this Court. Annexure 2 is a medical certificate issued by Dr Vladimir Brodski dated 11 June 2010. Mr Lazarus indicated that it is known from previous medical certificates filed in these proceedings that as at August 2009, Mr Kelly was suffering from post-cardiac surgery. In about July 2009 he had open heart surgery and a medical certificate that was then tendered dated 13 August 2009 stated that Mr Kelly would be convalescing until 13 November 2009 and would be unavailable for Court in that period. Mr Kelly suffers from diabetes, hypertension, coronary artery disease, stress related chest pain. These medical conditions are related to his open heart surgery. However, the certificate issued by Dr Brodski does not provide any information as to when Mr Kelly would become available or how long his convalescence needs to be.
Mr Lazarus advised the Court that his instructions are that Mr Kelly is not required to attend Court for the purposes of an argument relating to the validity of the Bankruptcy Notice. Mr Kelly filed an affidavit which was sworn on 21 April 2009 which simply exhibits an envelope and a Bankruptcy Notice, together with the following statement:
to my observation there is no original signature on the covering letter from Pikes.
Mr Lazarus indicated that he did not propose to cross examine Mr Kelly on any of these matters and if the matter proceeded, he would not object to the evidence being admitted. Mr Lazarus advised the Court that on every occasion either in this Court, the Land and Environment Court or the District Court of New South Wales, Mr Kelly has not appeared himself from the Bar table. Ms Williams appeared , or on a number of other occasions three different unidentified gentlemen have appeared as McKenzies’ friends.
Mr Lazarus makes the application that these proceedings should not be adjourned as there is simply insufficient information on the medical certificate to draw any conclusion as to when Mr Kelly would be available to attend Court or for what purposes he is medically unfit. It is submitted that although he suffers from a number of medical conditions, they do no preclude him from giving instructions as necessary.
Consideration in respect of adjournment application
I am satisfied that there is a considerable body of information before me in the form of affidavits addressing all issues that have been raised asserting the alleged defect in the Bankruptcy Notice. Mr King of Counsel, when he was retained by Mr Kelly, prepared written submissions addressing defects in the Bankruptcy Notice. Mr Lazarus assisted the Court in preparing a detailed chronology which is cross referenced to the bundle of documents which is marked “joint bundle of documents”.
In the circumstances which are briefly outlined above, I am satisfied that no further adjournment should be granted in this matter and that it should proceed to hearing today.
I am satisfied that the appropriate steps have been taken by the solicitors representing Mosman Municipal Council to advise the other side of today’s hearing despite the claim advanced by Ms Williams (on a number of occasions) that they had not received notification. Consequently, the application for an adjournment, made in absentia, is dismissed.
Background
On 12 October 2006, Mosman Municipal Council (“the Council”) filed an application in the Land and Environment Court seeking an order for the demolition of a garage which had been constructed on Mr Kelly’s land. That garage was constructed without development consent. On 10 November 2006, orders for substituted service were made. On 19 February 2007 the matter was heard in the Land and Environment Court before Her Honour Jagot J and Her Honour ordered demolition but stayed it for a period of approximately 60 days in order to allow Mr Kelly to abide by the order. Her Honour also made an order for costs.
Several months later, on 15 June 2007, the Council made an application for a costs assessment and nothing further was done by the Council in relation to this matter until about a year later. On 24 January 2008, Mr Kelly filed a Notice of Motion seeking to set aside the orders of Jagot J. On 31 July 2008, Lloyd J heard the application to set aside Jagot J’s order, which included the costs order. Justice Lloyd varied the timing of the demolition order to 30 November 2008 but otherwise dismissed the application and ordered Mr Kelly to pay the Council’s costs.
On 15 May 2008, the costs assessor issued certificates of determination of costs for both proceedings. Costs were assessed at $11,000.00 and the costs of the assessment were set at $882.00. Those two amounts form the basis of the Bankruptcy Notice that is in dispute before this Court.
On 31 July 2008, the Council applied to the Local Court to register those judgments. The provisions of the Legal Profession Act 2004 (NSW) give jurisdiction to the Local, District and Supreme Courts depending on the amount of the costs orders, and the amounts of costs that are the subject of this assessment. All of the steps were performed in compliance with that Act.
On 19 August 2008, the Council demanded the payment of $12,000.00 from Mr Kelly. That demand was again issued on 8 December 2008. On 20 January 2009 the Local Court issued judgment in both matters and on 9 February 2009 the Bankruptcy Notice was issued and served on Mr Kelly on 20 February 2009. Mr Lazarus submits that each step of the process outlined above was carried out in a regular and appropriate manner in accordance with the appropriate provision of the relevant legislation. It is submitted that no criticism can fall at the door of the Council in acting precipitously or contrary to any rule or provision of any legislation.
Submissions
Mr Lazarus indicated to the Court that his written and oral submissions were prepared in response to the written submissions prepared and tendered by Mr King of Counsel, dated 17 April 2009, who was acting for Mr Kelly at that time.
Mr Lazarus referred the Court to the decision in Australian Securities Investment Commission v Forge (2003) 133 FCR 487 where Emmett J (with whom Branson and Stone JJ agreed) set out the relevant principles in respect of an application to set aside a Bankruptcy Notice. At [26] – [27] His Honour stated:
[26] While there is no express power conferred by the Act on a Court to set aside a bankruptcy notice, it is clear that there is power to do so. The power is derived from s 30 of the Act and from the principle that a power conferred by Parliament carries with it the power necessary for its performance or execution. Thus, the express power to extend time for compliance with the requirements of a bankruptcy notice, when an application to set it aside has been filed, carries with it the power to set aside the bankruptcy notice itself: Re Sterling; Ex parte Esanda Ltd (1980) 44 FLR 125.
[27] However, the Act gives no general discretion to set aside bankruptcy notices that are valid in form and not an abuse of process. The Act permits the issue of a bankruptcy notice and, if the notice is valid, prescribes the consequences to the bankrupt of non-compliance. The grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the notice, service of the notice or the existence of the debt upon which the judgment, and, in turn, the notice, is founded [emphasis added].
In the written submissions prepared by Mr King, he attaches the Bankruptcy Notice on three grounds, being:
a)That the Bankruptcy Notice relates to a debt, the existence of which remains unchallenged by ongoing proceedings on the basis of alleged irregularities in the assessed costs order of Jagot J;
b)That there are four alleged formal defects in the Notice itself; and
c)Raises the question of solvency of Mr Kelly.
Mr King’s submissions are concerned with the existence of the debt which arises from the costs orders made by Her Honour Jagot J on 19 February 2007 in the following form:
The Respondent [i.e. Mr Kelly]is to pay the Applicant’s [i.e. the Council’s] costs of the proceedings as agreed or assessed.
Mr Lazarus submits that for the purpose of these proceedings and for the purpose of enforcing the costs orders, the Land and Enviornment Court proceedings were brought to an end despite subsequent attempts to enliven them. When Jagot J made those orders, they were final orders. The Council sought a demolition order, which it obtained, and a costs order. They were final orders within the meaning of both the Land and Environment Court Rules 2007 (NSW) in the Land and Environment Court Act 1979 (NSW) and also under the Act.
An appeal has now been filed by the Applicant in relation to every relevant judgment of the Land and Environment Court. Mr Lazarus submits this does not impact on the question currently before this Court for the reason that lodging an appeal three years after a judgment cannot affect the validity of a Bankruptcy Notice. Mr Kelly sought to have the orders made by Jagot J set aside. On 31 July 2008, Mr Kelly’s application was heard by Lloyd J. His Honour varied the timing of the demolition order to 30 November 2008 but otherwise declined to set aside the judgment of Jagot J. His Honour concluded that Mr Kelly had “no arguable defence and no prospects of success” (at [18]) and ordered Mr Kelly to pay the Council’s costs.
That order permitted the Council to seek its costs of the proceedings, which it did on 15 June 2007 pursuant to s.353 of the Legal Profession Act 2004 (NSW). The costs assessor, Ms Huntley, considered the application, pursuant to ss.359, 356 of the Legal Profession Act and on 15 May 2008 issued a certificate of determination for both the costs of the Land and Environment Court proceedings (tab 17) and of the costs of the assessment (tab 18) pursuant to s.367A of the Legal Profession Act. Mr Kelly was aware of the costs assessment but did not exercise his right to apply for a review of the determination. However, he subsequently applied to the District Court appealing the decision of the costs assessor and that decision was delivered in May 2010 where the proceedings were dismissed with costs.
On 31 July 2008, the Council applied to the Local Court to register the judgments for $882.32 and $11,032.22. On 20 January 2009 the Local Court issued judgment in both matters (tab 28 and 29). Section 368(5) of the Legal Profession Act 2004 (NSW) states:
In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for an amount of unpaid costs, and the rate of any interest payable of that amount of costs is a rate of interest in the court of which the certificate is filed.
Mr Lazarus advanced the argument that there is no basis for “going behind” judgment in this case. He submits that the circumstances where a Bankruptcy Court may “go behind” the judgment are in any of them quite limited: Wenkart v Abignano [1999] FCA 354 per Sackville, North and Hely JJ at [23] – [24]. Finality of litigation is a fundamental aspect of the legal system which has recently been affirmed by the High Court in D’Orta-Ekenaike v Victorian Legal Aid (2005) 223 CLR 1 per Gleeson CJ, Gummow, Hayne and Heydon JJ at [34].
Mr Lazarus submits that grounds 1 – 3 of Mr Kings’s lack substance. The submission in ground 1(a) is factually incorrect as the orders made by Jagot J were correctly entered and they are signed by a Registrar of that Court pursuant to s.66 of the Land and Environment Court Act 1979 (NSW) (tab 4). There was no requirement to serve the orders made by Jagot J prior to their enforcement pursuant to ground 1(b). Contrary to the submission at 2(e), there is no requirement that only orders for costs payable forthwith authorise the demand for payment of those costs. Mr King relies on the Supreme Court Rules (Part 52.9 and 52A r.9) however that provision was not incorporated into the Land and Environment Court Rules which were relevant at the time of the decision.
The submission that the costs orders made by Jagot J were not enforceable as the proceedings “are ongoing” should be rejected as the orders were final orders disposing of the proceedings: Goldberg v Morrow [2005] FCA 1038 per Crennan J at [19] where Her Honour stated:
[19] As to ground (D), the respondent submitted that the costs order of Gillard J is clearly a final order. It is also well settled that a costs order can be treated as a final order for the purposes of a bankruptcy notice (see ss 40(1)(g) and (3)(b) and 41(3)(b) of the Act; for a consideration of the relevant history of s 40(1)(g) see Abigroup Ltd v Abignano (1992) 39 FCR 74 at 80–81 (Lockhart, Morling and Gummow JJ). See also Re Skinner’s and Smith’s Application (1982) 45 ALR 553 at 555 (per Fitzgerald) and Re: Gibbs; Ex parte Triscott (1996) 65 FCR 80 at 92 (Drummond J). An appeal from this decision was dismissed: Gibbs v Triscott [1996] FCA 895 (Ryan, Whitlam and Kiefel JJ). The order made by Gillard J finally disposed of the matter with which it dealt, even though it did not dispose of the action or the proceeding in which it was made. In accordance with the Supreme Court Rules the order is able to be enforced by execution, there being no stay in place (see s 3(5) of the Supreme Court Act 1986 (Vic) and Supreme Court Rules O 66).
The fact that Mr Kelly belatedly sought to re-agitate the proceedings nearly 11 months after Jagot J delivered judgment does not detract from the Council’s entitlement to enforce the costs order. The cost order made by Jagot J was a final order and it was enforceable as such.
Mr Lazarus submits that contrary to the submission in 1(h) – (i), there was no difficulty with s.364(2)(f) as the “outcome of the matter” being the Council’s application for a mandatory injunction for the demolition of the applicant’s unlawful garage, by the cost assessor. The submission at 2(a) was factually incorrect as the certificates of judgment were filed with the Local Court, which was the relevant Court under s.368(5) and s.369(7) of the Legal Profession Act. In respect to the submission at 2(e), it does not matter that the form referred to s.133 of the Civil Procedure Act 2005 (NSW).
Alleged formal defects
The first alleged formal defect in the Bankruptcy Notice concerns a photocopied signature on the notice. That document is not before the Court and has not been proved. However, if the signature was a photocopy, that does not have the consequences that there is any defect in the demand: Jensen v Queensland Law Society Incorporated [2006] FCA 1206 per Keifel J at [11] where Her Honour states:
I do not think that it could be suggested that a copy signature could mislead a debtor or that an original signature on a service copy is regarded by the Act as essential in the sense that, were it not provided, the notice should be taken as so defective as to be invalid. If the copy signature does amount to a defect in the bankruptcy notice s 306 would apply and the notice would not be invalidated. In the present case however I do not think that point is reached. It may be that the original application lodged with the Official Receiver should bear an original signature, since it forms part of the requirement of personal confirmation by the judgment creditor’s agent. It is not however the original draft bankruptcy notice which is here relevant, but the copy served upon the judgment debtor. There is nothing in the regulations to suggest that a copy of the bankruptcy notice must also bear an original signature and I can discern no reason why that would be a requirement. In my view his Honour was correct to hold that there had been compliance with the requirements of the regulations.
The second alleged formal defect relates to the fact that the notice was not signed by Stephen Griffith (the Creditor’s authorised agent), who is a partner in the firm Pikes Lawyers, but by his employed solicitor Andrew David Simpson. The argument advanced on behalf of Mr Kelly is that a Bankruptcy Notice is liable to be set aside if it is not signed by the Creditor or its “authorised agent” personally. This contention has been considered by the Full Court of the Federal Court in two decisions. In Trustees of the Franciscan Monasteries of Mary v Weir (2000) 98 FCR 447, an employed solicitor signed a Bankruptcy Notice with her own signature, on behalf of her principal, adding the words “per employ”. The Full Court held that it was permissible for an authorised agent of the person applying for a Bankruptcy Notice to sign in his stead. In so holding, the Full Court expressly approved the decision of Moore J Meekin v Commonwealth Bank of Australia [1999] FCA 682, who had held that at general law, an agent (the solicitor for the Creditor) could delegate the signing of documents in his or her name (Meekin at [27]), and disapproved the contrary decision of Wilcox J in McWilliam v Jackson (2000) 96 FCR 561. In De Robilliard v Carver [2007] FCAFC 73; per Moore, Conti and Buchanan JJ at [96] – [113].
The third alleged defect is that the certification of costs by the costs assessor was not attached. Mr Lazarus submits that nothing in the Act or the Regulations requires the determination of the costs assessor to be attached to the notice. The Regulations do not require an annexure of the copy of the cost assessor’s determination because it is the judgment obtained as a consequence of the assessment, rather than the assessment itself, that is the “source of the obligations to pay”: Stec v Orfanos [1999] FCA 457 at [15].
The argument advanced by Mr King in his written submissions [4(c)] is that “legal costs are being claimed” as part of the Bankruptcy Notice. However, note 1 only applies in circumstances where “legal costs [were] ordered to be paid in a specific amount was not included in the judgment or orders( see note 1 below). In the matter currently before this Court, a specific amount was included in both judgments of the Local Court.
The forth alleged defect is that there is an inconsistency between the terms of the covering letter dated 11 February 2009 and the notice itself. The notice was filed on 9 February 2009, and the covering letter dated 11 February 2009 simply confirms that fact. On a clear reading of the two documents there is no inconsistency that would give rise to an alleged defect in the Bankruptcy Notice.
Mr Lazarus submits that if there is any alleged defect in the notice that gives rise to a right to have it set aside, then the Respondent relies upon the operation of s.306(1) of the Act which states:
Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the Court before which the objection on that ground is made is of the opinion that substantial injustice has been caused by the defect or irregularities and that the injustice cannot be remedied by an order of that Court.
Consequently, any of the four alleged defects in the Bankruptcy Notice may be cured by s.306(1) as there is no substantial injustice arising out of any of the alleged defects: Robilliard v Carver (supra) at [117] – [121].
Solvency
Mr Lazarus submits that it is well established that solvency is a relevant consideration to the question of whether a Bankruptcy Notice should be set aside, because the Act gives no general discretion to the Court to set aside a Bankruptcy Notice: Re Athans; Ex parte Athans (1991) 29 FCR 302 at 310; Amos v Brisbane TV Ltd (2000) 174 ALR 769 at [14] – [21]. This ground cannot be sustained and should be dismissed.
Alleged lack of authority
In Mr King’s written submissions, Mr Kelly alleges that the Bankruptcy Notice was issued without authority. This allegation is unsupported by particulars or submissions and on the material before the Court it appears to be baseless.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM
Associate:
Date: 4 August 2010
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