Khadpekar v Official Trustee in Bankruptcy

[2013] FMCA 186

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KHADPEKAR v OFFICIAL TRUSTEE IN BANKRUPTCY [2013] FMCA 186

BANKRUPTCY – Application for review of discretionary decision of trustee in bankruptcy – decision by Official Trustee not to proceed with application for extension of time in which to file an appeal – putative appeal against 10 year old judgment of Magistrates Court of Queensland – application not pursued.

BANKRUPTCY – Application for inquiry into conduct of trustee in bankruptcy – factors for consideration.

Architects Act 2002 (Qld), s.11
Bankruptcy Act 1966 (Cth), ss.19(1), 54, 77, 134, 139W, 153B, 178, 179
Bankruptcy Regulations 1996 (Cth), Schedule 4A, cll.2.2 and 2.3
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.4.06
Federal Magistrates Court Rules 2001 (Cth), rr.2.03, 11.08(1), 11.11(1)
Judiciary Act 1903 (Cth), ss.55ZG(2) and (3)
Legal Services Directions 2005, ss.2(1), 2(d), (e), (f) and (g), Appendix B, Notes 2, 3 and 4
Legal Profession (Solicitors) Rules 2007 (Qld), rr.14.1, 14.2, 14.6, 14.12
Magistrates Court Rules 1960 (Qld), rr.8, 160, 161(2), 171
Professional Engineers Act 2002 (Qld)

Adsett v Berlouis (1992) 37 FCR 201
Boensch v Pascoe (2007) 5 ABC(NS) 480; [2007] FCA 1977
Brehoi v Minister for Immigration and Multicultural Affairs [2001] FCA 931
Crosthwaite v National Jet Systems Pty Ltd (No.5) [2011] FMCA 136
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63
Fazio v Centrelink [2008] FMCA 594
Khadpekar v Kowanyama Aboriginal Council [1999] FCA 1748
Khadpekar v Official Trustee in Bankruptcy [2008] FCA 1888
Khadpekar v Official Trustee in Bankruptcy [2008] FMCA 700
Khadpekar v Official Trustee in Bankruptcy [2009] FMCA 936
Khadpekar v Official Trustee in Bankruptcy (No 2) (2009) 175 FCR 247; [2009] FCA 244
Khadpekar v Official Trustee in Bankruptcy (No 3) [2009] FCA 495
Kowanyama Aboriginal Council v Khadpekar [2004] FMCA 337
Mahenthirarasa v State Rail Authority of New South Wales (No 2) (2008) 72 NSWLR 273; [2008] NSWCA 201
Maxwell-Smith v Donnelly (2006) 4 ABC(NS) 621; [2006] FCAFC 150
Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333
Mersey v Persons Unknown (1974) 231 EG 1159
Morley & Ors v Australian Securities and Investments Commission (2010) 247 FLR 140; [2010] NSWCA 331
NADH of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 214 ALR 264; [2004] FCAFC 328
P&C Cantarella Pty Ltd v Egg Marketing Board (NSW) [1973] 2 NSWLR 366
Re F: Litigants in Person Guidelines (2001) 161 FLR 189; [2001] FamCA 348
Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207
Reynolds v The Minister for Health & Anor (2010) 247 FLR 425; [2010] FMCA 843
Scott v Handley (1999) 58 ALD 373; [1999] FCA 404
Suh & Ors v Minister for Immigration & Citizenship & Anor (2009) 175 FCR 515; [2009] FCAFC 42
Trkulja v Morton  (2005) 3 ABC(NS) 231; [2005] FCA 659
Trkulja v Morton (2005) 4 ABC(NS) 110; [2005] FCAFC 259
Wade v Leroy [2010] FCA 178

PP McQuade and MGR Gronow, McDonald, Henry & Meek Australian Bankruptcy Law and Practice (6^th edn) (Sydney: Thomson Reuters, 2008)
D. Marr, Barwick (Sydney: George Allen & Unwin, 1980)
H. Montgomery-Hyde, Norman Birkett. The Life of Lord Birkett of Ulverston (London: The Re-Print Society Ltd, 1965)

Applicant: MANGALA KHADPEKAR

Respondent: OFFICIAL TRUSTEE IN BANKRUPTCY

File Number: BRG 841 of 2007

Judgment of: Lucev FM

Hearing dates: 27 November 2009, 10 February 2010, 18 January 2013

Date of Last Submission: 18 January 2013

Delivered at: Perth (by telephone to Brisbane)

Delivered on: 22 March 2013

REPRESENTATION

The Applicant: In person

Counsel for the Respondent: Mr G Rodgers

Solicitors for the Respondent: Rodgers Barnes & Green

ORDERS

1. That the applicant’s application of 18 January 2013 for leave to file further documents and to amend the relief sought be granted, except for the amendment to the relief sought seeking an order for the annulment of the applicant’s bankruptcy.

2. The application, as amended, be dismissed.

3. As to costs:

   (a)the respondent is to file and serve written submissions and costs schedules, on both a non-indemnity and indemnity basis, by 5 April 2013;

   (b)the applicant is to file written submissions and costs schedules, on both a non-indemnity and indemnity basis, in response, by 3 May 2013; and

   (c)the respondent is to file and serve written submissions and any amended costs schedules, in reply, both on a non-indemnity and indemnity basis, by 10 May 2013;

   (d)the issue of costs is listed for hearing at 9.30am on 17 May 2013 for not more than one hour with a video-link to the Brisbane Registry of the Court.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PERTH

BRG 841 OF 2007

MANGALA KHADPEKAR

Applicant

And

OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

REASONS FOR JUDGMENT

The application

1. By an application[1] under s.178 of the Bankruptcy Act 1966 (Cth)[2] filed on 1 October 2007 the applicant, Ms Khadpekar, sought final orders in the following terms:

   a)the respondent, the Official Trustee in Bankruptcy,[3] be required to elect to bring, and bring, an Application for Extension of Time to Appeal, and Appeal, to the District Court of Queensland at Cairns[4] for an order setting aside the Orders of 11 September, 1997 and 16 September 1997[5] made in the Magistrates Court of Queensland at Cairns[6] in Plaint No. 381/1997;[7]

   b)further, or alternatively, that Ms Khadpekar be permitted to instruct her own solicitors and Counsel for the bringing of the Proposed Appeal in the name of the Official Trustee as trustee of her bankrupt estate;

   c)that the Official Trustee indemnify Ms Khadpekar as to all of her legal professional costs and outlays incurred and payable in respect of the Proposed Appeal and any cost orders made in favour of Kowanyama Aboriginal Council[8] as respondent to the Proposed Appeal;

   d)such further or other orders as seem proper or just and equitable to this Court;[9]

   e)for such enquiries into the conduct of the Trustee as may be proper or necessary to dispose of this Application justly and equitably; and

   f)that each party bear their own costs of and incidental to this Application.

   [1] “Application”.

   [2] “Bankruptcy Act”.

   [3] “Trustee”.

   [4] “Proposed Appeal”.

   [5] “Cairns Orders”.

   [6] “Magistrates Court of Queensland”.

   [7] “Cairns Action”.

   [8] “Kowanyama”.

   [9] “Application”.

2. In Ms Khadpekar’s Submissions at hearing in late 2009 and early 2010 she sought amended additional orders, which were not objected to by the Official Trustee, and which were as follows:

   1.That the Court remove the Queensland Bankruptcy District and its solicitor from any further involvement in respect of this bankruptcy and litigation on the grounds of their conduct pursuant to s 179 of the Bankruptcy Act;

   2.That the inspector General act as the Official Trustee in Bankruptcy in lieu of the official trustee in bankruptcy, pursuant to s 18 (8B) of the Bankruptcy Act and take all further actions in respect of this matter including, but not limited to:-

   a)Applying for annulment of the bankruptcy and revocation of all costs orders against the Applicant in the bankruptcy hearings of 1999, 2003 and 2004;

   b)Applying for Orders quashing the Applicant’s criminal conviction and expunging the conviction from the record;

   c)Discharge the Respondent’s obligation to act as a model litigant by apologising for the conduct of the Respondent and its solicitor;

   d)Direct the Respondent to refund all monies taken unjustifiably from the Applicant including:-

   ·    To the Applicant’s bank account, monies garnisheed from her severance pay based on its unreasonable assessment of her contribution liability which would be found to be inconsistent with the Fringe Benefits Tax Assessment Act.

   The Respondent continues to hold the garnisheed amount to date despite its knowledge that the Applicant has not subsequently been employed and her social security income falls below BITA:

   ·    To the Applicant’s estate, monies drawn from it, presumably for its legal costs incurred for:-

   w  The Federal Magistrates Court action, to which the Applicant’s challenge was successful;

   w  The Federal Court action where the Respondent’s solicitor led the Court into an Order potentially per incuriam, allowing it to draw on the Applicant’s estate for its costs of the appeal, by not instructing the Court on the law contrary to its case, namely that a Trustee engaging in unsuccessful adversarial litigation is not entitled to draw on the estate for costs;

   e)Notify the Board of Architects of such potential annulment of the bankruptcy.

   3.That the Court make all such Orders required so as to achieve an outcome that is just, equitable and necessary to remedy such actual injustice as she is found to have suffered.

   4.Costs and disbursements.

   5.Such other Orders as this honourable Court deems fit.

3. For reasons which will become apparent when the law with respect to s.179 of the Bankruptcy Act is dealt with below,[10] the Court will treat the first order sought as one seeking an inquiry into the conduct of the Official Trustee, and the removal of the Official Trustee as Ms Khadpekar’s trustee in bankruptcy, and a further order removing the Official Trustee’s solicitors as solicitors on the record for the Official Trustee.

   [10] See paras.9-13 below.

4. Following advice that judgment was to be delivered on 18 January 2013 the applicant filed an application seeking to amend the relief sought and to file further documents. The amendment to the relief sought is:

   a)to abandon, or no longer press, the first three grounds of the application as originally filed, and as set out at paragraph 1(a), (b) and (c) above; and

   b)an annulment of her bankruptcy.

5. The former amendment is not opposed by the Official Trustee. The latter amendment is opposed by the Official Trustee.

6. The application seeking to amend the relief sought and to file further documents will therefore be granted, save for that part of the application which seeks to amend the grant of relief to include an annulment of Ms Khadpekar’s bankruptcy. That application, being made on the day on which Reasons for Judgment were to otherwise be delivered, and more than five years after the Application was originally made, and following other earlier amendments:

   a)is too late;

   b)would require further hearing and submissions; and

   c)for reasons otherwise set out below,[11] lacks merit.

   [11] See paras.216-218 below.

7. The Court is not persuaded that the Official Trustee would be prejudiced by such a late amendment, but that is irrelevant in circumstances where the amendment, on its face, lacks merit as to the relief sought in any event.

Inquiry into conduct, and duties, of a trustee in bankruptcy

1. Given the abandonment of the grounds relating to the Proposed Appeal,[12] it is necessary and convenient to set out the law and statutory provisions with respect to an inquiry into the conduct, and the duties, of a trustee in bankruptcy.

   [12] See para.4(a) above.

Section 179 inquiry

1. Section 179(1) of the Bankruptcy Act provides as follows:

   (1)  The Court may, on the application of the Inspector‑General, a creditor or the bankrupt, inquire into the conduct of a trustee in relation to a bankruptcy and may do one or both of the following:

   (a)  remove the trustee from office; and

   (b)  make such order as it thinks proper.

2. In determining whether s.179(1) of the Bankruptcy Act is to be invoked it is usual to consider first whether an inquiry should be held into the conduct of a trustee in bankruptcy.[13]

   [13] Boensch v Pascoe (2007) 5 ABC(NS) 480 at 482 per Buchanan J; [2007] FCA 1977 at para.7 per Buchanan J (“Boensch”).

3. The relevant authorities concerning the power to order an inquiry are set out in Maxwell-Smith v Donnelly[14] where the Full Court of the Federal Court of Australia said as follows:

   [14] (2006) 4 ABC(NS) 621; [2006] FCAFC 150 (“Maxwell-Smith”).

   [52] The authorities concerning the exercise of the power to order an inquiry have recently been conveniently gathered together in Moore v Macks [2006] FMCA 594. The learned Federal Magistrate described what he called the threshold requirement before an inquiry could be ordered under s 179 (at [13]-[18]):

   The threshold requirement

   In Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 Riley J observed in relation to a request by the Registrar in Bankruptcy for an inquiry in relation to the conduct of a trustee at p 268:

   Before the application is heard, therefore, the trustee will know the grounds on which the court will be asked, inter alia, to inquire into his conduct and the facts on which the Registrar proposes to rely in supply [sic] of his application that the court do so inquire. I do not wish to be taken as presuming to lay down any rule as to the procedure to be followed in, or the approach to be made by the court to, a case of this sort; but it seems to me that in such a case there is a preliminary question to be decided by the court -- namely on the grounds and facts before it, has a case been made for inquiry into the trustee's conduct? If the answer to that question is "yes", the next question is -- what is to be the scope of the inquiry? It may be that the material already before the court sufficiently defines the scope of the inquiry; on the other hand, the court may find it necessary to define the subjects for inquiry -- eg in the form: "Did the trustee do (or fail to do) so and so?" -- and to give directions before proceeding to inquire.

   In Re Gault; Gault v Law (1981) 57 FLR 165 the Federal Court was asked to conduct an inquiry in relation to the trustee of the bankrupt's estate. In fact, the case involves the second such request for an inquiry made many years after the first request had been made and refused. Ellicott J referred to Re Alafachi (above) at p 173 and said:

   It was with his Honour's comments in mind that I required the applicant to give particulars of the misconduct he relied on to found his application. The court has a broad discretion in deciding whether to order an inquiry. In my opinion it is not required to order an inquiry unless it is satisfied that sufficient grounds had been made out.

   For instance, the court should be loathe to order an inquiry unless it considers that on the evidence before it there are substantial grounds for believing that the trustee erred in his administration. If the court considers that an inquiry is unlikely to reveal misconduct it should not make an order and put the respondent and possibly the creditors to the expense and trouble involved. It should also be borne in mind that a debtor applicant may have other remedies to pursue, for example in an action for breach of trust.

   In Muir v Bradley (1983) 72 FLR 231 Beaumont J was considering an application by the Registrar in Bankruptcy for a s 179 inquiry. His Honour referred to the passages from Re Alafachi and Gault (above) and said at p 233:

   In my opinion, the balance of convenience in this case indicates that a preliminary inquiry of the type urged by the respondent was the appropriate course to be adopted provided that, in the event that the matter goes forward to an inquiry on a final hearing, the evidence taken and submissions made in the preliminary inquiry are to be regarded as evidence and submissions in the final inquiry: in other words, the preliminary inquiry should be treated as part of the final inquiry. It is as if the respondent were to move for the dismissal of the proceedings as an abuse of process and then to fail in that application, in which event the material before the court in the summary application is to be treated as part of the material before the court upon the final hearing of the proceeding.

   Finally, in Wilson v Commonwealth [1999] FCA 219 Branson J discusses the nature of proceedings pursuant to s 179 of the Act in addition to proceedings under s 178 of the Act. At [44] Her Honour summarises the law in relation to s 179 as follows:

   Although it is not a rule of universal application, the court will not ordinarily initiate an inquiry under s 179 unless it is satisfied that a proper case for an inquiry has been demonstrated ... There will ordinarily be a proper case or an inquiry where there is a reasonable cause to believe that a trustee may have failed to act in relation to a bankruptcy in the manner required by the Act or the General law. However, as Ellicott J pointed out in Re Gault at 173:

   The court has a broad discretion in deciding whether to order an inquiry. In my opinion it is not required to order an inquiry unless it is satisfied that sufficient grounds have been made out.

   ....

   There can be no doubt then that the court is not obliged to embark upon an inquiry pursuant to s 179 simply because it is asked to do so. I have to be satisfied before embarking upon the inquiry that sufficient grounds have been demonstrated for the inquiry to be conducted. I will only be able to determine that if the applicant has revealed the basis claimed for the inquiry and the trustee given the opportunity to respond.

   [53] The power to order an inquiry is a discretionary one. In addition, as just discussed, it is a discretionary power which is not ordinarily exercised. A clear case must be made out to warrant an inquiry.[15]

   [15] Maxwell-Smith ABC(NS) at 632-633 per Moore, Nicholson and Conti JJ; FCAFC at paras.52-53 per Moore, Nicholson and Conti JJ.

4. In Trkulja v Morton[16] a single Judge of the Federal Court of Australia set out the requirements for a s.179 inquiry as follows:

   [4] In its terms, this power is plainly concerned with "the conduct" of the trustee "in relation to a bankruptcy". As Macchia v Nilant (2001) [2001] FCA 7, 110 FCR 101 at [49]-[50] demonstrates, the Court must first consider whether it should inquire into the conduct of the trustee. If an inquiry is undertaken, the next question is whether the trustee should be removed from office and/or whether any other order should be made. The Court should be reluctant to undertake an inquiry, unless there are substantial grounds for believing that the trustee erred in the administration. If an inquiry is unlikely to reveal misconduct, it should not be undertaken. The Court should not unduly interfere with the day-to-day administration of a bankrupt's estate by the trustee. In order to remove a trustee in bankruptcy, it is necessary to find misconduct on the part of the trustee. Removal is possible if the relationship between the trustee and the bankrupt has broken down totally: Doolan v Dare (2004) [2004] FCA 682, 2 ABC(NS) 16 at [49]. In that case, Spender J found that there was a clear conflict of interest between the trustee's interests in having her remuneration paid and how she thought that might be achieved, and her obligations as a fiduciary to the creditors and the bankrupt.[17]

   [16] (2005) 3 ABC(NS) 231; [2005] FCA 659 (“Trkulja”).

   [17] Trkulja ABC(NS) at 232-233 per Gray J; FCA at para.4 per Gray J.

5. Trkulja was subsequently upheld by the Full Court of the Federal Court of Australia.[18]

   [18] See Trkulja v Morton (2005) 4 ABC(NS) 110; [2005] FCAFC 259. See also Wade v Leroy [2010] FCA 178 at para.33 per Moore J.

Duties of trustee

1. The duties of a trustee in bankruptcy are as follows:

   (1) The duties of the trustee of the estate of a bankrupt include the following:

   (a)notifying the bankrupt's creditors of the bankruptcy;

   (b)determining whether the estate includes property that can be realised to pay a dividend to creditors;

   (c)reporting to creditors within 3 months of the date of the bankruptcy on the likelihood of creditors receiving a dividend before the end of the bankruptcy;

   (d)giving information about the administration of the estate to a creditor who reasonably requests it;

   (e)determining whether the bankrupt has made a transfer of property that is void against the trustee;

   (f)taking appropriate steps to recover property for the benefit of the estate;

   (g)taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt's duties under this Act;

   (h)considering whether the bankrupt has committed an offence against this Act;

   (i) referring to the Inspector‑General or to relevant law enforcement authorities any evidence of an offence by the bankrupt against this Act;

   (j) administering the estate as efficiently as possible by avoiding unnecessary expense;

   (k) exercising powers and performing functions in a commercially sound way.

   (2)  Where a person who became a bankrupt on a creditor's petition is unable to prepare a proper statement of affairs, the trustee may employ, at the expense of the estate, a qualified person to assist in the preparation of the statement.[19]

   [19] Bankruptcy Act, s.19.

1. For present purposes the general duties of a trustee can be summarised as follows:

   1.A trustee appointed in relation to a bankrupt becomes trustee of the bankrupt’s estate and is bound to administer that estate in accordance with the Bankruptcy Act … and the Bankruptcy Rules.

   2.The trustee has a dual function:

   (a)    to administer the estate in the interests of the creditors and the bankrupt;

   (b) to exercise, as a public duty and for the public welfare, the powers given and duties imposed, under the Bankruptcy Act 1966 ….

   3.The trustee’s conduct is subject to the supervision of the court: Div 4 of Pt VIII.

   4.The trustee is regarded as an officer of the relevant court.

   5.A trustee in bankruptcy who acts for remuneration is under a duty of care greater than a gratuitous trustee.

   6.The trustee is required to bring reasonable skill to the performance of her or his duties. A trustee must exercise judgment so as to save the estate unnecessary expenditure of money.

   7.The discharge of a public duty imposed by the Bankruptcy Act … is to be performed conformably with the requirements of that duty, but also conformably with the trustee’s obligation to administer the estate in such a manner as to maximise satisfaction of the creditors’ claims and any possible surplus for the bankrupt. The trustee is in charge of the assets of the bankrupt and those assets are to be applied to the benefit of the creditors, and if there is any surplus, for the benefit of the bankrupt. It is clear that the minimum standard required of the trustee is that he or she shall handle the assets with a view to achieving the maximum return from the assets to satisfy the claims of the creditors and to provide the best surplus possible for the bankrupt.

   8.A great deal of discretion and judgment is required to be exercised by the trustee.

   9.The standard of conduct required of the trustee will ordinarily be the standard required of a professional person and perhaps higher.

   10.Where an order is sought that a trustee be removed and make good losses suffered by the estate, it must be established that the trustee has been guilty of a breach of duty to act “diligently and prudently in regard to the business of the trust”.

   11.The trustee is bound to execute the trust with fidelity and reasonable diligence and ought to conduct its affairs in the same manner as an ordinary prudent business person would conduct her or his affairs. A trustee in bankruptcy is governed by the general law relating to trustees … save where the position of the trustee is modified by the Bankruptcy Act … or the Bankruptcy Rules.[20]

   [20] PP McQuade and MGR Gronow, McDonald, Henry & Meek Australian Bankruptcy Law and Practice (6^th edn) (Sydney: Thomson Reuters, 2008) (“Australian Bankruptcy Law & Practice”) at para.[19.1.10] summarising the judgment of the Full Court of the Federal Court in Adsett v Berlouis (1992) 37 FCR 201 at 208-209 per Northrop, Wilcox and Cooper JJ.

Litigation history prior to the Application

1. The relevant litigation history prior to the making of this Application is lengthy, [21] but must necessarily be set out in light of the submissions made by Ms Khadpekar.[22]

   [21] See also Khadpekar v Official Trustee in Bankruptcy (No 2) (2009) 175 FCR 247; [2009] FCA 244 (“Khadpekar – Federal Court 2009 (No 2)”) where the Federal Court set out much of this litigation history.

   [22] “Ms Khadpekar’s Submissions”.

Ms Khadpekar’s work for Kowanyama

1. Ms Khadpekar is a qualified architect and town planner. In 1995 Ms Khadpekar was carrying on business as a town planning consultant. She entered into an agreement[23] with Kowanyama to prepare a report on the formulation of a five-year plan for upgrading Kowanyama’s existing safe storage facilities. In September 1995 and December 1995, Kowanyama paid Ms Khadpekar advances on professional fees and disbursements for this work.

Cairns Action[24]

[23] “Agreement”.

[24] This history of the Cairns Action leading to the Summary Judgment is largely summarised from the Affidavit of Mangala Khadpekar, sworn 1 October 2007, (“Ms Khadpekar’s 1 October 2007 Affidavit”) at paras.15 and 16, and the judgment in Khadpekar – Federal Court 2009 (No 2) FCR at 248-249 per Siopis J; FCA at paras.5-9 per Siopis J.

1. Kowanyama commenced the Cairns Action against Ms Khadpekar on 13 February 1997 by way of a copy of plaint and summons together with a statement of particulars of claim filed in the Magistrates Court of Queensland at Cairns. Kowanyama’s claim against Ms Khadpekar was for the recovery of monies paid to her for work as a professional retainer under the Agreement as a consultant for planning services. Kowanyama alleged that Ms Khadpekar had breached, or alternatively repudiated, the Agreement by failing to provide either a draft report or final report in accordance with the terms of the Agreement. Ms Khadpekar filed an Entry of Appearance, Defence and Counterclaim dated 18 March 1997.[25] The Defence claimed that there was no repudiation, and the Counterclaim was for fees and disbursements not paid. Kowanyama’s Defence to Counterclaim was dated 12 May 1997.

   [25] “Appearance, Defence and Counterclaim”.

2. Kowanyama made an application for an order for discovery of documents dated and filed 19 June 1997. On 17 July 1997 the Magistrates Court of Queensland in Cairns ordered that Ms Khadpekar “make discovery on oath of the documents which are or have been in her possession or power relating to the matters in question in this proceeding”.[26] No time limit for compliance was contained in the order.

   [26] “Discovery Order”.

3. On 21 July 1997 Kowanyama advised Ms Khadpekar that they were willing to allow 14 days from the date of the Discovery Order (that is until 31 July 1997) for Ms Khadpekar to comply with the Discovery Order. That was in the context of the Court not specifically ordering a time within which Ms Khadpekar was to provide discovery.

4. It appears that discovery was not provided by Ms Khadpekar.

5. On 6 August 1997, Kowanyama applied for judgment on the ground that Ms Khadpekar had failed to comply with the Discovery Order. The terms of the orders sought by Kowanyama were as follows:

   The Defendant, Mangala Khadpekar trading as Archi Planning Network, be debarred from defending the proceeding altogether, and

   The Plaintiff, Kowanyama Aboriginal Council, be entitled to enter judgment of the claim and costs of the action to date including the cost of entering default judgment.

6. On 11 September 1997 an order was entered in the following terms in the Magistrates Court of Queensland at Cairns:

   1.Pursuant to Rule 171 the Defendant, failing to appear and failing to otherwise take any steps in the matter that the Defendant be debarred from defending the proceedings altogether.

   2.Pursuant to Rule 95, Kowanyama be at liberty to enter judgment against the Defendant.[27]

   [27] “11 September 1997 Order”; Ms Khadpekar’s 1 October 2007 Affidavit, Annexure MK-16.

7. On 16 September 1997 judgment was entered against Ms Khadpekar for the sum of $45,466.56.[28]

   [28] “Summary Judgment”; Ms Khadpekar’s 1 October 2007 Affidavit, Annexure MK-18.

8. On 9 December 1997 Ms Khadpekar applied to have the Summary Judgment set aside. On 12 December 1997 an order was made dismissing the application to set aside the Summary Judgment.[29] In submissions in opposition to the application to set aside the Summary Judgment Kowanyama submitted that there were no irregularities in the method by which Kowanyama had obtained the Summary Judgment. Ms Khadpekar now appears to concede that the making of the Set Aside Dismissal Order was “correct”.[30]

   [29] “Set Aside Dismissal Order”; Ms Khadpekar’s 1 October 2007 Affidavit, Annexure MK-25.

   [30] Ms Khadpekar’s 1 October 2007 Affidavit, para.17.4.

9. The Summary Judgment formed the basis for a bankruptcy notice, and subsequent creditor’s petition, on which a sequestration order was made by this Court on 3 February 2004 and entered on 5 February 2004.[31]

   [31] “Sequestration Order”; Ms Khadpekar’s 1 October 2007 Affidavit, Annexure MK-84.

Bankruptcy proceedings

1. Ms Khadpekar was served with a bankruptcy notice by Kowanyama on 4 May 1999[32] which she subsequently sought to have set aside in the Federal Court.[33] The Federal Court dealt with the various contentions then raised by Ms Khadpekar. Ms Khadpekar’s principal contention was that the 11 September 1997 Order and the Summary Judgment were improperly obtained because Kowanyama’s solicitors deliberately withheld service of documents upon her between May and September 1997, and as a result, she was unaware of steps she was obliged to take in the proceedings, and that it was as a result of those defaults that the 11 September 1997 Order and the Summary Judgment were made against her.[34] It suffices to observe that the Federal Court found that although Ms Khadpekar had changed her address, at various times between May and September 1997, she had filed an address for service, being her residential address at the time of filing. The Federal Court did not accept that Kowanyama had an obligation to make inquiries concerning Ms Khadpekar’s change of address, or that service of the relevant documents had not been attempted at her residential address.[35] The Federal Court also found that the calculation of interest accrued since the Summary Judgment was understated, and Ms Khadpekar might thereby have been misled. The Federal Court held that there was, however, no doubt as to the sum required to be paid.[36] Significantly, the Federal Court also made this observation:

   14. With respect to Ms Khadpekar's application to set aside the judgment of 16 September 1997, I was informed that the Magistrate acceded to a submission, on the part of the Council, that the Magistrates' Court had no power to set it aside. The reasons were not produced. Ms Khadpekar wishes to bring an appeal from that decision to the District Court but will, no doubt, require an extension of time. She explains that she has been unable to lodge an appearance to do so because of poor health she has suffered. Unfortunately for Ms Khadpekar as an appeal has not been lodged, and lodged prior to the expiration of the time limited by the bankruptcy notice, no extension of time for compliance with the notice can be given under s 41(6A). However, whilst Ms Khadpekar has not been successful in her application to have the bankruptcy notice set aside, she is still able to pursue her appeal rights, subject to any necessary extensions of time being granted. The making of a sequestration order in these proceedings is not automatic and would be influenced by a successful outcome on an appeal.[37]

   The Federal Court dismissed Ms Khadpekar’s application to set aside the 1999 Bankruptcy Notice, with costs.[38]

   [32] “1999 Bankruptcy Notice”.

   [33] Khadpekar v Kowanyama Aboriginal Council [1999] FCA 1748 (“Khadpekar – Federal Court 1999”).

   [34] Khadpekar – Federal Court 1999 at para.2 per Kiefel J.

   [35] Khadpekar – Federal Court 1999 at paras.3-4 per Kiefel J.

   [36] Khadpekar – Federal Court 1999 at paras.7-13 per Kiefel J.

   [37] Khadpekar – Federal Court 1999 at para.14 per Kiefel J.

   [38] Khadpekar – Federal Court 1999 at para.15 per Kiefel J.

2. In Kowanyama Aboriginal Corporation v Khadpekar[39] this Court said:

   [39] [2004] FMCA 337 (“Kowanyama – FMC 2004”).

   17. The second issue relates to the grounds for opposing the objection, which could perhaps be described as grounds 6, 7 and 8.  They relate to issues in relation to a valid petition being required, within six months of the first available act of bankruptcy, to be signed.  It is submitted that the service of the bankruptcy notice was 3 February 2003 and that therefore, there is non compliance with the Act.

   18. I am mindful particularly, of the fact, that there was an application made by Ms Khadpekar, some considerable time ago, being proceeding number BZ94 of 2002, to set aside the bankruptcy notice. On 9 September 2003, that application was dismissed by me. The submission therefore that there was non compliance with the rules must be read in conjunction with the ruling that I made in relation to the matter, on 9 September 2003.

   19. At that time I ordered that the time for compliance with the bankruptcy notice be extended to a date, 21 days from the date of the order.  Accordingly, with the order having been made on 9 September 2003, the time limit for presenting the creditors petition, in fact would not, and does not, expire until 30 April 2004.  The creditors petition was therefore presented on 11 December 2003 and was presented in accordance with both the requirements of the Act and in accordance with the directions, that I had made.

   20. It is alleged in the further grounds for opposing the petition, that in paragraph 9 of those grounds, that the default judgment, on which the bankruptcy notice and petition is based, was obtained by deceit.  The submissions that were made in that regard relating to those allegations and whether in fact there was a proper course followed by the respondent, Ms Khadpekar, in relation to the matter.

   21. Ms Khadpekar has, on a number of occasions, indicated that she has not appealed the decision and is in fact now considerably out of time. It is the fact, however, that she says she has not been well enough to proceed in relation to such a course, in relation to the matter and suggests, that there has been deceit and in fact quite implicit impropriety, in relation to the obtaining of the judgment and the continuation of the effectiveness of that judgment.

   22. It is the case that the respondent, Ms Khadpekar, has applied to the Magistrates Court at Cairns for an order that the judgment be set aside.  On 12 December 1997 Mr Fitzsimmon SM, dismissed that application to set aside the judgment.  Ms Khadpekar has, in a considerable number of documents, indicated that that was in fact a direction or order made by Mr Fitzsimmon SM as a result of having been led into error by the legal representatives for the applicants, the Kowanyama Aboriginal Council.

   23. The fact is, however, that not only I, but also her Honour, Keiffel J, of the Federal Court, in 1999 indicated that there was a proper course to be taken in relation to this matter and that included, making application for leave to appeal out of time.  I am well aware, as I have indicated, that Ms Khadpekar has said, that she has not been able to do so. 

   24. However, it is also abundantly clear that there is very little, if any, real medical evidence in relation to this matter and, notwithstanding the apparent inability to appeal the decision, or the proceedings in the State Courts, Ms Khadpekar has been able to file, very considerable amounts of documents and very complex documents, in relation to these proceedings, as well as to gather, what she says, is significant evidence which has been presented to parliamentarians and as recently as yesterday, 2 February 2004, to present same to the Australian Federal Police.  Ms Khadpekar also indicated, that with the assistance and under the auspices of, a State parliamentarian, the position that she has given concern to, has been forwarded to the Crime and Misconduct Commission in Queensland, for consideration. 

   25. It is clear, that the judgment, until such time as it is set aside, is valid and it is submitted on the part of the Kowanyama Aboriginal Council, that the issue of the validity of the judgment has been raised and dealt with in various other proceedings, including particularly, those which were before me and which were determined on 9 September 2003.

   26. I am satisfied that there is a judgment in relation to this matter.  What, however, needs to be considered, is whether there is a basis, upon which the Court could, and should, look behind the position in relation to the judgment.  In paragraphs 12 and 13 of the grounds for opposing the petition, Ms Khadpekar says, that the Court has power to go behind the judgment and, as I have indicated previously, I am satisfied that that is the case.

   27. It is conceded in fact on the part of the Kowanyama Aboriginal Council that the Court may go behind the judgment.  However, it is also submitted on their part, that it is a situation where the Court will not lightly inquire into the validity of a judgment debt and will do so, only if there is evidence, that the judgment has been obtained by fraud or collusion or that there has been some miscarriage of justice.

   28. All of those matters are clearly put by Ms Khadpekar, as a basis upon which the Court should properly inquire, in relation to this matter.  The fact is, however, that I find myself clearly in a position where the allegations of fraud, of collusion, of conspiracy and of miscarriage of justice, all stem directly and only, from the material that has been generated by Ms Khadpekar.

   29. It is the case, where she has been unable to convince anyone else in relation to the matter, and I must say, that she has not convinced me.  Ms Khadpekar clearly is of the view, and perhaps understandably so, in light of the consequences of what has occurred over the last six or seven years, that there has been collusion and actions taken against her.

   30. I am not satisfied, however, that there is any proper basis upon which it would be appropriate for me, to take any step in relation to going behind the judgment.  I indicated many months ago, when the application to set aside the bankruptcy notice was before the Court, and then at the time of decision, that there should be proper steps taken by Ms Khadpekar, in relation to the matter.  She has failed to do so.  To then say, that it becomes the obligation of the Court, to make some determination in that regard is, in my view, misguided and simply a wrong application of the law. 

   31. I am required also to give consideration to the allegation made in paragraph 10 of the grounds as to whether there have been criminal offences committed by the respondent in both the Federal Court and the Federal Magistrates Court, during hearings in both 1999 and 2003.

   32. The allegations have been made long and hard by Ms Khadpekar and she has filed considerable amounts of documentation as well as, as I have indicated, referring same to the Federal Police and no doubt, to the State authorities as well.  The fact is, however, that apart from the allegations made by her and the theories that she has with regard to a conspiracy, not only on the part of the legal representatives but by many and varied senior public servants, there is not one skerrick of evidence in relation to this matter, nor in my view, is it a proper basis upon which I could or should make any determination in respect of the proceedings.

   33. The final matter that I wish to turn to, however, is that which relates to whether in fact there is a proper basis for a bankruptcy to be obtained, when it is submitted that the application was based on the admission of the petitioner, that there has been an abuse of process.  It is submitted that the respondent, Ms Khadpekar, has no assets to distribute.  She says, as I indicated before, that she is a pensioner, so that the principal purpose of bankruptcy, will not be realised, by bankrupting her.

   34. She goes on to make reference, as I have already touched upon, to a longstanding conspiracy and to other actions taken in relation to the matter.  In particular, Ms Khadpekar suggests, that there has been a rejection by the Kowanyama Aboriginal Council of an offer of settlement, worth several times more, than the value of the judgment.

   35. In reading the material that was filed, I note that there was a proposal put forward in relation to providing various documents including architectural diagrams and the like, which were of considerable value.  The fact is, and I am using the colloquial here, that it is a situation of comparing apples and oranges.  There is a debt owing and judgment for that debt.

   36. To make some offer, of something of greater value but different, is not an offer upon which there can be any basis for suggesting that the judgment creditor should accept it, in payment.  I am not satisfied that that is a proper basis to consider, not proceeding under the bankruptcy laws. The real consideration here, is whether there are assets for distribution.

   37. In that regard, the legal representative for the Kowanyama Aboriginal Council indicated, that there must be consideration given to the evidence that is before the Court. I was referred particularly to re Lennard ex parte Lennard (1896) 1 QB 473 as quoted by the High Court in Bayne v Clark (1909) 9 CLR 360 at 364.  There the quotation referred to was as follows:

   But there must be evidence before the Court that there are no assets.  Usually the case is that when a petition is presented it is impossible to say whether there will prove to be any assets or not.  All the petitioning creditor then knows or need know is that a debt is owing to him and that after taking the necessary steps to procure payment of that debt he cannot get payment of it and therefore he asks that the debtor may be made bankrupt.

   38. Quite clearly it is the case here that Ms Khadpekar has the obligation to show her own financial circumstances.  In that regard she has certainly produced a Commonwealth concession card indicating that she is in receipt of a pension or benefit.  There is, however, no other evidence whatsoever as to her financial circumstances.

   39. I am satisfied that it is proper that if sequestration of her estate were ordered that the trustee in bankruptcy would be empowered to properly investigate the matter and of course if there are no assets, then there is no real effect upon the applicant, other than of course, the bankruptcy.

   40. I have given serious consideration to the petition that is filed by Ms Khadpekar.  In the end I found that there is no real or proper basis upon which the petition that is sought by Ms Khadpekar could be and should be upheld.  Accordingly, the notice of intention to oppose the petition which is, dated 30 January 2004, is dismissed.

   41. I am then required obviously, to consider the position in relation to the application, for sequestration of the estate. All the matters that are required, pursuant to the provisions of the Bankruptcy Act, have been complied with. The respondent to the sequestration, Ms Khadpekar, has failed to discharge her onus of satisfying the Court, that a sequestration order should not be made.

   42. I am satisfied beyond any doubt that the appropriate course to follow in relation to this matter, is that a sequestration order be made in terms of the draft that has been provided to the Court and is initialled and dated by me today, 3 February 2004.[40]

   [40] Kowanyama – FMC 2004 at paras.17-42 per Coker FM. The Court has searched for Reasons for Judgment in relation to the 2003 bankruptcy notice judgment referred to in Kowanyama – FMC 2004 but it would appear that if reasons were delivered, which it appears they were from Kowanyama – FMC 2004, that they were not subsequently reduced to writing and published.

1. Consequently, the Court made orders as follows:

   (1) That the notice of intention to oppose the petition dated 30 January 2004 be dismissed.

   (2) That a sequestration Order be made against the Respondent Debtor, Mangala Khadpekar.

   (3) That the Applicant Creditor’s costs be taxed and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.

   and noted that the date of the act of bankruptcy was 30 September 2003.[41]

   [41] Ms Khadpekar’s 1 October 2007 Affidavit, Annexure MK-84.

The request to the Official Trustee

1. On 19 July 2007, Ms Khadpekar, by her solicitors (she was then represented), sought the Official Trustee’s consent to appeal against the Summary Judgment.[42] The 19 July 2007 Letter referred to potential grounds of appeal based on defects in the process whereby the Summary Judgment was obtained in Ms Khadpekar’s absence. Further, the Trustee was supplied with affidavits which referred to Ms Khadpekar's ill health at the time the Summary Judgment was entered. The 19 July 2007 Letter also stated that Ms Khadpekar accepted that she may be required to provide an indemnity as to the Trustee’s costs of prosecuting the application for leave to extend time to appeal and any subsequent appeal.

   [42] “19 July 2007 Letter”.

2. The Trustee was urged to give a favourable response to the request to elect to prosecute the Proposed Appeal so as to allow:

   a)the bringing of the Proposed Appeal;

   b)if successful, the legal dispute to be heard and determined in the Cairns Action; and

   c)for Ms Khadpekar ultimately to be able to make application to have the Sequestration Order annulled.[43]

   [43] Affidavit of John Andrew Johnstone sworn 1 October 2007 (“Mr Johnstone’s Affidavit”), para.2 and Exhibit JAJ-1.

3. The Official Receiver responded to the letter from Ms Khadpekar’s solicitor on 27 July 2007, advising that “the Official Trustee in Bankruptcy will not be lending its name to the appeal” and advising as follows concerning the factors that were taken into account when evaluating Ms Khadpekar’s request:

   a)as a result of the bankruptcy your client has no standing to prosecute an appeal,

   b) there is no property in defending an action of this kind which is capable of vesting in the trustee, therefore the Official Trustee is unable to assign any right to prosecute the appeal, (see the decision in Cummings v Claremont Petroleum),

   c) it is the view of ITSA that the bankrupt in these circumstances is not an “other party to the action” as per s60(3) and therefore is unable to compel the trustee to make the election,

   d)there is no possibility of a realisation in the estate that would benefit creditors if the trustee were to seek the appeal in its own name, and

   e)the ultimate purpose of this action seems to be to overturn the sequestration order made against your client, so in taking this action the trustee would effectively be acting on behalf of the bankrupt against the petitioning creditor. This action would be inconsistent with the trustee’s role to act impartially.[44]

   [44] Mr Johnstone’s Affidavit, Exhibit JAJ-2 (“Official Receiver’s Letter”).

4. The Official Receiver also advised that if Ms Khadpekar was dissatisfied with the decision of the Official Trustee she may apply to a court in accordance with s.178 of the Bankruptcy Act.[45]

   [45] Mr Johnstone’s Affidavit, para.4 and Exhibit JAJ-2.

5. On 19 September 2007 Ms Khadpekar’s solicitors wrote to the Official Receiver requesting that the Official Trustee reconsider the decision made on 27 July 2007. No response was received from the Official Trustee prior to the filing of the Application on 1 October 2007.[46]

   [46] Mr Johnstone’s Affidavit, paras.6-7 and Exhibit JAJ-3.

Litigation history of this Application

1. On 1 October 2007, Ms Khadpekar filed the Application in this Court.[47] There followed a series of directions hearings and mentions until the matter came on for hearing in Brisbane on 23 May 2008. At that time, Ms Khadpekar applied for an adjournment on the basis, broadly, that she required more time to prepare her application and to secure medical reports from a clinical psychologist and a forensic cognitive psychologist. The Court dismissed the application for an adjournment,[48] and in dealing with the substantive application found that it ought also be dismissed.[49]

   [47] Khadpekar – Federal Court (No 2) FCR at 248-250 per Siopis J; FCA at paras.5-14 per Siopis J.

   [48] Khadpekar v Official Trustee in Bankruptcy [2008] FMCA 700 at para.48 per Burnett FM (“Khadpekar – FMC 2008”).

   [49] Khadpekar – FMC 2008 at paras.49-54 per Burnett FM.

2. This Court’s orders in Khadpekar – FMC 2008 were appealed to the Federal Court, following the granting by the Federal Court of an application by Ms Khadpekar to extend time in which to file and serve a Notice of Appeal from Khadpekar – FMC 2008.[50] The application for extension of time, and the subsequent appeal – Khadpekar – Federal Court 2009 (No 2) – were filed in the Western Australian Registry of the Federal Court as Ms Khadpekar had, at some point, moved to Western Australia from Queensland.

   [50] Khadpekar v Official Trustee in Bankruptcy [2008] FCA 1888 (“Khadpekar – Federal Court 2008”).

3. In Khadpekar – Federal Court 2009 (No 2) the Federal Court allowed Ms Khadpekar’s appeal against the dismissal of the application by this Court in Khadpekar FMC – 2008.[51]

   [51] See especially Khadpekar – Federal Court 2009 (No 2) FCR at 253-257 per Siopis J; FCA at paras.35-54 per Siopis J.

4. Because:

   a)Ms Khadpekar had moved to Western Australia subsequent to this Court’s judgment in Khadpekar – FMC 2008; and

   b)of the strength of the views of the presiding federal magistrate in Khadpekar – FMC 2008 as to why Ms Khadpekar’s application ought be dismissed,

   the Federal Court, in ordering that the matter be remitted to this Court, also indicated that it was appropriate that it be remitted to a different federal magistrate for re-hearing.[52]

   [52] Khadpekar – Federal Court 2009 (No 2) FLR at 257 per Siopis J; FCA at paras.55-56 per Siopis J.

5. As to costs the Federal Court subsequently ordered that:

   1.The respondent [Trustee] pay the appellant’s [Ms Khadpekar’s] disbursements reasonably incurred in the application for leave to appeal and the appeal, to be taxed.

   2.The question of costs of the proceedings before the Federal Magistrate in Queensland is remitted to the Federal Magistrates Court.

   3.The respondent [Trustee] is not entitled to an indemnity against the appellant’s [Ms Khadpekar’s] estate in respect of costs incurred in defending the appellant’s [Ms Khadpekar’s] application for leave to appeal.[53]

   [53] Khadpekar v Official Trustee in Bankruptcy (No 3) [2009] FCA 495 (“Khadpekar – Federal Court 2009 (No 3)”).

6. Following four directions hearings in this Court the Application came back before this Court again on 10 September 2009. The Court observed that the matter had been remitted,[54] and went on to say:

   3. Since then Ms Khadpekar’s attitude to the prosecution of these proceedings appears to have varied, affected significantly it seems by the fact that not long ago she was discharged from bankruptcy. The matter was listed today to consider whether the proceedings should be dismissed or whether Ms Khadpekar should be granted leave to discontinue them.

   4. Today she elected not to seek leave to discontinue the proceedings so the question now is whether the proceedings should be dismissed.[55]

   [54] Khadpekar v Official Trustee in Bankruptcy [2009] FMCA 936 at para.2 per Cameron FM (“Khadpekar – FMC 2009”).

   [55] Khadpekar – FMC 2009 at paras.3 and 4 per Cameron FM. Ms Khadpekar had been discharged from bankruptcy on 4 July 2009: see para.142 below.

7. The Court went on to observe that the Application required the Court to exercise a discretion with regard to the justice and equity of the case and the interests of Ms Khadpekar, and with regard to the obligations and duties required to be discharged by the Trustee. The Court observed that it was a question of judgment, and that the Court, as then constituted, was not in a position to predict how another member of the Court might ultimately determine the matter, and therefore refused to summarily dismiss the Application.[56]

   [56] Khadpekar – FMC 2009 at paras.17-19 per Cameron FM.

8. The matter was subsequently the subject of hearing by the Court on three separate dates in November 2009, February 2010 and January 2013.

Consideration of Issues

1. It is convenient to consider the issues largely by reference to the framework of Ms Khadpekar’s Submissions filed on 23 November 2009. Although Ms Khadpekar’s Submissions were made prior to the abandonment of the first three grounds relating to the Proposed Appeal, it is still necessary to consider much of what was put in Ms Khadpekar’s Submissions, as much of it is relied upon in relation to the claim for an inquiry into the Official Trustee’s conduct.

2. In large part, the Court has reproduced Ms Khadpekar’s Submissions with minimal change. The Court has done so because it does not wish it to be subsequently asserted that what was put by Ms Khadpekar was not considered. Also, the drafting style and sense of some of Ms Khadpekar’s Submissions make it very difficult for them to be sensibly redrafted. One unfortunate consequence of the Court adopting that course is that these Reasons for Judgment are consequently much longer than they might ordinarily be.

Part IA – the obtaining of Summary Judgment and the Set Aside Dismissal Order

1. Much of what Ms Khadpekar submits in relation to the Application relates to matters set out in this part of her submissions, namely:

   a)that the Summary Judgment was obtained:

   i)irregularly;

   ii)without a trial; and

   iii)without Ms Khadpekar’s knowledge;

   and that the above occurred even though the combined value of Ms Khadpekar’s detailed Defence and Counterclaim exceeded the judgment sum;

   b)the Set Aside Dismissal Order was obtained because Kowanyama “defeated her by ambush and obscure arguments”;

   c)Kowanyama based two bankruptcy actions on the Summary Judgment, in 1999 and 2003, after rejecting a favourable offer of settlement; and

   d)Kowanyama prevented this Court going behind the Summary Judgment and secured Ms Khadpekar’s bankruptcy in 2004 without a trial on the merits at any stage.

2. There is nothing irregular about the Summary Judgment which was obtained by Kowanyama against Ms Khadpekar. Ms Khadpekar had not complied with the Discovery Order, and upon the application of Kowanyama for judgment as a consequence of that failure, an order was made that Kowanyama be at liberty to enter judgment, which it did. Ms Khadpekar’s subsequent application to set aside the Summary Judgment failed. Ms Khadpekar now appears to concede the Set Aside Dismissal Order was correctly made.[57] It is not unusual for summary judgment to be granted without a hearing. The fact that Summary Judgment was granted without Ms Khadpekar’s knowledge would appear to be as a consequence of her having shifted address on multiple occasions, but as the Federal Court observed in Khadpekar – Federal Court 1999, she had filed an address for service, had not changed that address for service, and there was no obligation on Kowanyama to make inquiries concerning any change of address.[58]

   [57] Ms Khadpekar’s 1 October 2007 Affidavit, para.17.4.

   [58] Khadpekar – Federal Court 1999 at paras.2-4 per Kiefel J.

3. Ms Khadpekar also asserts that Summary Judgment was obtained even though the combined value of her detailed Defence and Counterclaim exceeded the judgment sum. Ms Khadpekar’s assertion in this regard is not made out by an examination of the Appearance, Defence and Counterclaim, for no additional sum is claimed in the Defence, and the Counterclaim is for damages in the sum of $8,839.85 for the cost of fees and disbursements incurred for which payment had allegedly not yet been made.[59] The claim, and the Summary Judgment, was for a sum of $39,970.80, plus costs, plus interest.[60]

   [59] Ms Khadpekar’s 1 October 2007 Affidavit, Annexure MK-5.

   [60] Ms Khadpekar’s 1 October 2007 Affidavit, Annexure MK-18.

4. The argument that the Set Aside Dismissal Order was obtained because Kowanyama “defeated” Ms Khadpekar “by ambush and obscure arguments” does not accord with Ms Khadpekar’s assertion that the Set Aside Dismissal Order is “correct”.[61]

   [61] Ms Khadpekar’s 1 October 2007 Affidavit, para.17.4.

5. The fact that a “favourable offer of settlement” was rejected by Kowanyama during the currency of the bankruptcy proceedings in 1999 and 2003 is neither helpful nor relevant to a determination of the issues in this Application. The offer of settlement was not like with like. It was not actually an offer to pay the judgment debt.[62] A creditor is not under an obligation to accept a debtor’s offer of settlement.

   [62] Kowanyama – FMC 2004 at paras.35-36 per Coker FM.

6. The Court was not prevented from going behind the Summary Judgment when it made the Sequestration Order in 2004. As is apparent from the judgment in Kowanyama – FMC 2004 set out above:

   a)the Court was satisfied that it could go behind the Summary Judgment;[63]

   b)Kowanyama conceded that the Court was able to go behind the Summary Judgment, at least to the extent that it was said to have been obtained by fraud or collusion, or that there was a miscarriage of justice;[64] and

   c)the Court was prepared to go behind the Summary Judgment because of allegations of fraud, collusion, conspiracy and miscarriage of justice made by Ms Khadpekar,[65] but was not satisfied that those allegations were made out, nor that there was “any proper basis” for going behind the Summary Judgment, and “not one skerrick of evidence” to support allegations of criminality.[66]

   [63] Kowanyama – FMC 2004 at para.26 per Coker FM.

   [64] Kowanyama – FMC 2004 at para.27 per Coker FM.

   [65] Kowanyama – FMC 2004 at para.28 per Coker FM.

   [66] Kowanyama – FMC 2004 at paras.29-30 (the quote is from para.30) per Coker FM.

7. It is thus not the case that this Court was prevented from, or even not prepared to, go behind the Summary Judgment when the Sequestration Order was made in 2004. Rather, it was the case that this Court was not satisfied, on the evidence produced by Ms Khadpekar, that it was appropriate to do so.

8. Consistent with the Federal Court judgment in Khadpekar – Federal Court 1999, and this Court’s judgment in Kowanyama – FMC 2004, the Court is not persuaded that there is anything irregular about the means by which the Summary Judgment was obtained, or the Set Aside Dismissal Order was obtained. Likewise, with respect to the bankruptcy proceedings both the Federal Court and this Court found no cause for setting aside or going behind any aspect of those proceedings, or the Summary Judgment giving rise to those proceedings. Ms Khadpekar now tries again to upset the Summary Judgment, the Set Aside Dismissal Order and the bankruptcy proceedings giving rise to the Sequestration Order. In that regard, there has been no relevant change in any of the relevant factual circumstances since Ms Khadpekar argued those matters before the Federal Court and this Court in 1999 and 2004. For that reason alone, but also because this Court is bound by judgments of the Federal Court in the same matter on the same facts, and for reasons of comity in relation to judgments of this Court, the Court finds:

   a)no irregularity, error or other fault with respect to the manner in which the Summary Judgment was obtained;

   b)no irregularity, error or other fault with respect to the manner in which the Set Aside Dismissal Order was obtained;

   c)that the offer of settlement made by Ms Khadpekar in relation to the two bankruptcy actions was not “favourable”, and in any event, was not an offer that the creditor was obliged to accept; and

   d)this Court was correct in refusing to go behind the Summary Judgments, for the reasons given in Kowanyama – FMC 2004.

9. Nothing in this aspect of Ms Khadpekar’s Submissions gives rise to any reason or basis upon which to make an order that there be an inquiry into the Official Trustee’s conduct of Ms Khadpekar’s bankruptcy.

Part IB – the applicant’s illness

1. The applicant’s illness looms large in her version of events, and particularly as a reason for her failure to institute various proceedings, including the Proposed Appeal.

2. Medical evidence was relied upon by Ms Khadpekar in support of a submission that as at the time of the Summary Judgment she was suffering from a mental disability which inhibited her from exercising her legal rights, seemingly both at that time and thereafter.[67]

   [67] Khadpekar – Federal Court 2009 (No 2) FCR at 255-256 per Siopis J; FCA at paras.43-45 and 48-49 per Siopis J.

3. The relevance of Ms Khadpekar’s illness does not fall away because she is no longer seeking orders with respect to relief on the Proposed Appeal, because the issue of the Official Trustee’s conduct with respect to Ms Khadpekar’s illness is raised in Ms Khadpekar’s Submissions below with respect to the conduct of the Official Trustee.

4. Although the Federal Court in Khadpekar – Federal Court 2009 (No 2) suggested that it might be appropriate for Ms Khadpekar to have a tutor (a litigation guardian in this Court) appointed for these proceedings,[68] no litigation guardian was ultimately appointed for these proceedings. There were a number of reasons for no litigation guardian being appointed. First, Ms Khadpekar at a directions hearing said that she did not want a litigation guardian to be appointed. Second, whether a litigation guardian is appointed is a matter within the discretion of the Court, having regard to whether a person understands the nature and possible consequences of the proceedings, or is not capable of adequately conducting the proceeding.[69] Third, the Court considered, on the basis of Ms Khadpekar’s presentation in Court, that Ms Khadpekar’s medical condition did not affect her ability to inform the Court of the issues she wished the Court to consider, and put submissions on those issues, both orally, and in writing, and in most cases exhaustively, as to both relevant and irrelevant issues. Finally, in the Court’s view, Ms Khadpekar had:

   a)conducted litigation in a number of federal and State courts over more than a decade in relation to these issues, and was far more familiar with the issues than a litigation guardian might be;

   b)by reason of her experience in litigation Ms Khadpekar was not, as some self-representative litigants are, unfamiliar with the Court environment and processes; and

   c)the manner in which Ms Khadpekar had presented and conducted herself before the Court in directions hearing prior to hearing did not indicate to the Court that there was any need for her to have a litigation guardian appointed. Whilst Ms Khadpekar adverted to some difficulties with her presentation in Court, and some incompleteness in her documents, the combination of her presentation in Court and the documents upon which she relied (which were voluminous), was sufficient to fully inform the Court of the issues, and Ms Khadpekar’s submissions with respect to those issues.

   [68] Khadpekar – Federal Court 2009 (No 2) FCR at 257 per Siopis J; FCA at para.57 per Siopis J.

   [69] Federal Magistrates Court Rules 2001 (Cth), rr.11.08(1) and 11.11(1) (“FMC Rules”).

Part IC – correlations in timing between actions by Kowanyama and other government entities

1. Ms Khadpekar asserts that each discrete legal action commenced by Kowanyama coincided in its commencement with other actions to her detriment by other Queensland Government entities, and that the correlation in timing means that it is improbable that the correlations are coincidental, and she observes that “[i]ndigenous organisations can be and are influenced by funding bodies in unrelated areas by actual or implied threats of funding withdrawal.”[70] Ms Khadpekar points to the following correlations in timing:

   a)Kowanyama’s claim in October 1997 coincided with an Aboriginal and Torres Strait Island Commission report in November 1997 dismissing a complaint by her about long term official conduct to her detriment, and with Queensland State Departments intensifying their activities to her detriment after she won an Affordable Housing Award and delivered cost-effective housing;

   b)Kowanyama’s first bankruptcy action in 1999 coincided with other actions to Ms Khadpekar’s detriment, including an alleged “quasi criminal action commenced … for a matter with which she had no connection, in an apparent ‘payback’ for … [Ms Khadpekar] complaining to the … [Queensland] Minister of Works and Housing, about intensified Departmental activity to her detriment since [the] end [of] 1995.”;[71] and

   c)Kowanyama’s second bankruptcy action in 2003 which coincided with the commencement of the Architects Act 2002 (Qld)[72] which enabled an architect “affected by a bankruptcy action”[73] to be denied renewal of their registration.

   [70] Ms Khadpekar’s Submissions, para.44.

   [71] Ms Khadpekar’s Submissions, para.42.

   [72] “Architects Act”.

   [73] Architects Act, s.11.

1. Allegations akin to conspiracy, fraud and misfeasance in public office require particularised allegations of complaint, whether made in a formal pleading such as a statement of claim, or in a less formal manner in the course of proceedings which are not the subject of pleadings. In this case, not only is there a failure to properly or adequately particularise such claims, they are not based on any independent evidence, but assumptions as to the timing of various actions, including the bankruptcy proceedings which found this Court’s jurisdiction in this matter. Those assumptions, without any evidence other than alleged timing, do not provide a sufficient basis to draw any adverse inference as to the conduct of those instituting such actions. There is no evidence, other than assertions made by Ms Khadpekar, that there was some concerted course of action engaged in by Kowanyama, and the other parties alleged to instituted the other actions. In this regard, the Court is minded to repeat the observations made by this Court, differently constituted, in 2004, when Ms Khadpekar alleged criminal offences by Kowanyama in both the Federal Court and this Court during hearings in both 1999 and 2003:

   The fact is, however, that apart from the allegations made by her and the theories that she has with regard to a conspiracy, not only on the part of the legal representatives but by many and varied senior public servants, there is not one skerrick of evidence in relation to this matter, nor in my view, is it a proper basis upon which I could or should make any determination in respect of the proceedings.[74]

   [74] Kowanyama – FMC 2004 at para.32 per Coker FM.

2. Likewise here, no proper basis has been put, and no relevant evidence led, which would enable the Court to make any findings with respect to the allegations made by Ms Khadpekar concerning the alleged action. The matter is perhaps highlighted by her suggestion that Kowanyama’s second bankruptcy action in 2003 coincided with the commencement of the Architects Act enabling an architect affected by a bankruptcy action to be denied renewal of registration. For the asserted correlation in timing in relation to the commencement of the Architects Act and Kowanyama’s second bankruptcy action to be effective would require a conspiracy between Kowanyama, the members of the Queensland Parliament, and those members of the Queensland Executive Council responsible for obtaining the Queensland Governor’s consent to the legislation and its consequent proclamation. Ms Khadpekar’s Submissions in this regard are the stuff of nonsense. Finally, and in any event, whether there was co-related timing between various events is irrelevant. What is relevant is that Summary Judgment was ordered by the Magistrates Court of Queensland. That gave rise to a judgment debt which Ms Khadpekar did not satisfy. Kowanyama then took bankruptcy proceedings, which it was entitled to do, as a consequence of which this Court made the Sequestration Order. At the time at which it was made, and on the evidence presented, this Court had jurisdiction and power to make the Sequestration Order, and given the evidence presented, cannot be said to have improperly exercised its discretion in making the Sequestration Order.

3. Nothing in this aspect of Ms Khadpekar’s Submissions gives rise to any reason or basis upon which to make an order that there be an inquiry into the Official Trustee’s conduct of Ms Khadpekar’s bankruptcy.

Part ID – Kowanyama’s admission that the bankruptcy was being pursued at the behest of a government entity

1. Ms Khadpekar refers to an exchange between the Federal Court and Kowanyama’s lawyer at a hearing on 7 September 1999, as follows:

   “HER HONOUR [JUSTICE KIEFEL]: ... I notice there has been a warrant of execution against Ms Khadpekar’s property which has been returned unexecuted....I just wondered about the utility of these proceedings. It’s obviously a matter for your client, but is there some view held that Ms Khadpekar may nevertheless have some property....the cost associated in attempting to pursue what might turn into a rather protracted litigation might not be in their best interests.

   MR QUINN: Well, not that I can refer to your honour, no. We have fairly firm instructions to pursue the matter…some consideration was given to discontinuing the matter, however, the moneys involved here…were moneys which have some connection with Government bodies, and I understand that there’s been some indication from those government bodies as to the attitude that should be taken in the matter.”[75]

   [75] Ms Khadpekar’s Affidavit, Exhibit MK-48 (Transcript of proceedings in the Federal Court on 7 September 1999, page 3, lines 1-25).

2. Ms Khadpekar submits that on the basis of the above exchange Kowanyama’s lawyer “would appear to admit to the bankruptcy being pursued for collateral purposes at the behest of a government entity”,[76] and goes on to make assertions concerning advice, not the subject of evidence, that no government department has the power to direct a local government to pursue a bankruptcy. Even if that be true, it does not, however, provide any support for the submission that there was an admission by Kowanyama’s lawyer that the bankruptcy was being pursued at the behest of some other government entity. What Kowanyama’s lawyer indicated to the Federal Court was that:

   a)he “had fairly firm instructions to pursue the matter”; and

   b)certain government bodies have given “some indication” as to “the attitude that should be taken in the matter”.

   [76] Ms Khadpekar’s Submissions, para.45.

3. There is no indication that the abovementioned instructions had come from anyone other than Kowanyama, and what was said does not amount to an admission that the bankruptcy proceedings were being pursued at the behest of somebody other than Kowanyama. Nor does the passage quoted indicate that the bankruptcy proceedings were being pursued other than by, and on the instructions of, Kowanyama. And, even if there had been “some indication” from government bodies about their attitude towards the bankruptcy proceedings being pursued, that does not constitute a direction to Kowanyama (on the evidence before the Court), nor does it prove that Kowanyama was pursuing the bankruptcy “for collateral purposes at the best of a government entity”. This serious allegation is simply not supported by the evidence. As with the evidence required of fraud, conspiracy or misfeasance in public office, an allegation of this type, which is an allegation of a deliberate abuse of process by Kowanyama, would require proper proof. No proof of the alleged collateral purpose, or the behest of a government entity, has been established by Ms Khadpekar. The Court is not prepared to draw any adverse inference from, or to treat as an admission, Kowanyama’s lawyer’s submission to the Federal Court that there had been some indication from unnamed government bodies as to the attitude that Kowanyama should take toward the matter. Ultimately, there is no evidence that any body, other than Kowanyama, instituted, or caused to be instituted, the bankruptcy proceedings in the Federal Court (and subsequently in this Court). Notably, the alleged admission evinced no reaction from:

   a)Ms Khadpekar; or

   b)the presiding Federal Court judge,

   at the time of the hearing. If there was an admission as asserted by Ms Khadpekar it would be most surprising that the possibility, at the very least of the statement being an admission, would not have been raised by the Federal Court in the course of the hearing.

4. In this case, no proper basis has been put, and no relevant evidence has been led, to enable the Court to make findings with respect to the allegation that Ms Khadpekar’s bankruptcy was pursued by Kowanyama at the behest of a government entity. Further, and in any event, even if that be the case, it is irrelevant. In this case, there was a judgment debt, which Ms Khadpekar did not satisfy, and as a consequence Kowanyama took bankruptcy proceedings, which it was entitled to do, and as a consequence this Court made the Sequestration Order, which, as the Court has observed above, on the evidence presented, this Court had jurisdiction and power to make, and in respect of which it cannot be said to have improperly exercised any discretion in making.

5. Nothing in this aspect of Ms Khadpekar’s Submissions gives rise to any reason or basis upon which to make an order that there be an inquiry into the Official Trustee’s conduct of Ms Khadpekar’s bankruptcy.

Part IIA

The judgment founding the bankruptcy

1. Ms Khadpekar submitted that the Summary Judgment was an undeclared nullity which should be set aside as of right in the interests of justice because it was:

   a)irregular being based on the Discovery Order which failed to specify a time for compliance; and

   b)obtained without Ms Khadpekar’s knowledge, and without a hearing, despite there being a detailed Defence and Counterclaim filed, the combined value of which exceeded the Summary Judgment sum; and

   c)was obtained due to:

   i)repeated failures of service, deposed to by non-complying affidavits which failed to disclose a mode of service, but led to an inference that service had been effected by post; and

   ii)repeated failures of Australia Post’s standard operational safeguards intended to prevent undelivered post going undetected.

2. Ms Khadpekar’s also suggested that the Summary Judgment was further flawed as:

   a)there was no real debt underlying the Summary Judgment because the Defence and Counterclaim were not able to be tried due to the litigation strategy adopted by Kowanyama; and

   b)the Summary Judgment being entered under a rule which did not allow a final judgment to be entered, and which further included, on its face, interest prior to the Summary Judgment, though neither the interest rate applicable nor the date from which interest should apply have ever been adjudicated.

3. In order to deal with the assertion that the Summary Judgment was irregularly obtained it is necessary to set out in further detail the chronology with respect to this aspect of the proceedings in the Magistrates Court of Queensland. That chronology is as follows:

Date	Issue
13 February 1997	Plaint and Summons issued by Kowanyama
18 March 1997	Ms Khadpekar enters Appearance, Defence and Counterclaim
19 June 1997	Application by Kowanyama for Order for discovery by Ms Khadpekar
17 July 1997	Discovery Order made
21 July 1997	Kowanyama’s solicitors send letter to Ms Khadpekar allowing 14 days to make discovery pursuant to the Discovery Order
5 August 1997	Kowanyama makes application for judgment by reason of Ms Khadpekar’s failure to provide discovery
11 September 1997	Order made granting Kowanyama liberty to apply to enter judgment by reason of Ms Khadpekar failing to appear and failing to otherwise take any steps in the matter
16 September 1997	Judgment entered
9 December 1997	Application to set aside judgment filed by Ms Khadpekar
12 December 1997	Set Aside Dismissal Order entered

1. The Magistrates Court Rules 1960 (Qld)[77] at that time relevantly provided as follows:

   a)rule 160 provided that the Magistrates Court of Queensland may order a party to make discovery, but does not specify within the rule a time for making discovery;

   b)rule 161(2) provided that the affidavit of documents is to be filed within the time specified in the order made under r.160; and

   c)rule 171 provided that if a party fails to comply with an order for discovery then the Magistrates Court of Queensland may order that the party be debarred from defending the proceedings.

   [77] “QMC Rules”.

2. Ms Khadpekar asserts that the 11 September 1997 Order should not have been made because the Discovery Order made did not specify a time within which discovery had to be given, and it could not therefore be said that it had not been complied with. In this respect Ms Khadpekar points to an irregularity, or non-compliance with rr.160 and 161(2) of the QMC Rules, insofar as the Discovery Order did not specify a time for compliance.

3. Rule 8 of the QMC Rules provides as follows:

   Non-compliance with any of these rules shall not render void the proceedings in which the non-compliance has occurred, unless it is expressly so provided in these rules; but the proceedings may be set aside, either wholly or in part, as irregular or amended or otherwise dealt with on such terms as to costs and otherwise as a Court thinks fit.

4. The Discovery Order remains valid until set aside under r.8 of the QMC Rules. The Discovery Order has never been set aside, and was not set aside by the Queensland Magistrates Court when Ms Khadpekar applied to have it set aside in December 1997. It therefore remains valid.

5. As discussed above,[78] the Defence and Counterclaim filed by Ms Khadpekar do not have a combined value exceeding the Summary Judgment sum, and therefore, even if, for example, the Counterclaim had been made out, the sum owing on Kowanyama’s claim would have exceeded that necessary to found a bankruptcy. There is no foundation for the suggestion that the Magistrates Court of Queensland was unable to make the Summary Judgment. Were there such a basis then no doubt Ms Khadpekar’s set aside application would have been successful, but it was not.

   [78] See para.47 above.

6. The complaints concerning the Summary Judgment being obtained without Ms Khadpekar’s knowledge due to issues associated with the failure of service and matters relating to her postal address, were matters the Federal Court dealt with in Khadpekar – Federal Court 1999, where it said:

   2. Ms Khadpekar's principal contention was that the judgment in the Magistrates' Court was improperly obtained because the Council's solicitors deliberately withheld service of documents upon her between May and September 1997, as a result of which she was unaware of steps she was obliged to take in the proceedings. It was as a result of those defaults that judgment was entered against her. If that argument were accepted, it could not be said to be established, on the present material, that there was a debt owing to the Council in the sum claimed.

   3 In the proceedings brought by the Council before the Magistrates' Court, it was alleged that Ms Khadpekar had received payment for professional services which had not been provided by her to the Council. Ms Khadpekar was personally served with the plaint on 21 February 1997, and she filed an entry of appearance and defence and counterclaim. She did not serve it, but the Council's solicitors obtained a copy. An address for service was provided by her in that document, her then residential address at Holloway's Beach. Shortly afterwards, in April 1997, she moved to another address. Between May and September 1997 she resided at Smithfield Heights. She did not advise the Magistrates' Court or the Council about her change of address. Affidavits of service, by post, to her old residential address are annexed to her affidavits. She points out that her postal address, at a post office box, remained the same; that she had organised for telephone and facsimile messages to be redirected to a new number; and that her new residential address appeared in the new phone book soon after she moved. It remains the case, however, that the Council's solicitors were not aware of her change of address for service, so that alternative means of notifying Ms Khadpekar could not have been considered necessary. Correspondence by Ms Khadpekar to the Council in May 1997 contained only a reference to her post office box, even if they had thought to check current addresses. I do not accept the assertions that they knew that she was no longer at her old address. Ms Khadpekar refers to a phone call, which she says occurred sometime in early May, when she was telephoned by someone in the solicitor's office and asked for her current address. This allegation was also raised in the Magistrates' Court, in the application to set aside the judgment. There is, however, nothing to suggest why the solicitors would make such an enquiry. They had obtained a copy of the entry of appearance of defence and, consistently thereafter, served documents by post to that address. The solicitors had an interest in bringing documents to Ms Khadpekar's attention, if further steps were to be taken by them, on behalf of their client, if they received information concerning a change of address.

   4 Ms Khadpekar also alleges that service by the Council's solicitors at her previous address was not attempted. In this respect, she relies upon a document which is said to have been signed by the tenant of the premises at Holloway's Beach between May and September 1997. That document contains a statement that no mail was received which required redirection to the applicant. It is somewhat elliptical. I do not, however, accept the assertion as evidence. Other evidence, adduced by Ms Khadpekar from the postal authorities, tends to suggest the mail forwarded was likely received.[79]

   [79] Khadpekar – Federal Court 1999 at paras.2-4 per Kiefel J.

7. This Court is bound to follow the decisions of the Federal Court, and particularly so where, as here, the judgment of the Federal Court is in relation to the very issue in contest, and which is not plainly wrong.[80] There was, therefore, for reasons given by the Federal Court as long ago as 1999, no deficiency in the service on Ms Khadpekar of relevant documents in relation to the Summary Judgment.

   [80] Suh & Ors v Minister for Immigration & Citizenship & Anor (2009) 175 FCR 515 at 522 per Spender, Buchanan and Perram JJ; [2009] FCAFC 42 at para.29 per Spender, Buchanan and Perram JJ.

8. For the same reasons it is not open to this Court to reconsider the issue of a misstatement of interest, for as the Federal Court observed in Khadpekar – Federal Court 1999, the amount due and claimed under the Bankruptcy Notice was not such that Ms Khadpekar could have been reasonably misled.[81]

   [81] Khadpekar – Federal Court 1999 at para.13 per Kiefel J.

9. The Federal Court went on to dismiss Ms Khadpekar’s application to set aside the Bankruptcy Notice.[82] In so doing, the Federal Court observed that Ms Khadpekar had listed a number of defects which she said rendered the Bankruptcy Notice invalid, and which had been discussed with Ms Khadpekar during the course of the hearing. Save for the question of identification of the interest claimed in the Bankruptcy Notice, the Federal Court declined to deal with each of the matters raised as they “were not all matters of substance”.[83]

   [82] Khadpekar – Federal Court 1999 at para.15 per Kiefel J.

   [83] Khadpekar – Federal Court 1999 at para.6 per Kiefel J.

10. The assertion that the Defence and Counterclaim could not be tried due to the litigation strategy adopted by Kowanyama, is contrary to the fact of the Summary Judgment and the Set Aside Dismissal Order, which is dealt with in more detail below.[84]

    [84] See paras.84-88 and 142 below.

11. Nothing in this aspect of Ms Khadpekar’s Submissions gives rise to any reason or basis upon which to make an order that there be an inquiry into the Official Trustee’s conduct of Ms Khadpekar’s bankruptcy.

Part IIB – the Set Aside Dismissal Order

1. Ms Khadpekar submits that Kowanyama defeated the application to set aside the Summary Judgment by preventing a fair trial by ambushing her by:

   a)serving her with documents in the Magistrates Court of Queensland at Cairns with submissions which obscured the rule under which the Summary Judgment was entered; and

   b)the overwhelming presence of four legal representatives for Kowanyama, in circumstances where she appeared on her own behalf and was still “shell shocked” by the Summary Judgment.

2. Ms Khadpekar also submits that the Magistrates Court of Queensland failed to give reasons for refusing to set aside the Summary Judgment, which she says should have been set aside “as of right” in the interests of justice, and that this was a fact commented on by Justice Kiefel in the Federal Court.

1. In any event, the Court as presently constituted, agrees with the reasons of the Court, differently constituted, in Kowanyama – FMC 2004 and Khadpekar – FMC 2008 that the prospects of success on the Proposed Appeal, at least insofar as it goes to an extension of time in which to appeal, are poor, for the reasons there set out.

2. As to prejudice there is no evidence that the Official Trustee failed to take into account possible prejudice to the applicant. In any event, for reasons set out in the preceding paragraph, there would be prejudice to Ms Khadpekar if the Proposed Appeal were to proceed. For the above reasons, Ms Khadpekar’s Submissions in relation to the above matters found no ground for the Court to order an inquiry into the Official Trustee’s conduct.

Part VIID – the Official Trustee’s decision is potentially ultra vires for unreasonableness

1. Ms Khadpekar argues that the Official Trustee’s decision is potentially ultra vires for unreasonableness for the following reasons:

   a)she does not dispute ground 1 of the Grounds of Opposition as evidenced by her request to the Official Trustee for it to pursue the matter on her behalf or to permit her to pursue it;

   b)ground 2 of the Grounds of Opposition is potentially unreasonable in that it fails to take into account:

   i)the circumstances underlying the Summary Judgment and the subsequent bankruptcy;

   ii)the fact that the Official Trustee is the sole entity with the power to appeal the Summary Judgment which is its “property”; and

   iii)the Official Trustee’s duty to act honestly and impartially in discharging its duties which are owed not just to the petitioning creditor, but also to other creditors, to the bankruptcy and to the public at large in preventing the abuse of the institution of bankruptcy;

   c)the Official Trustee’s first and second Grounds of Opposition when viewed in combination, lead to the unreasonable outcome that a bankrupt who is made a bankrupt based on a Summary Judgment which is bad has no recourse but to “cop it sweet”. Ms Khadpekar asserts that the unreasonableness of this argument verges on perversion and would appear to fall within the definition of abuse of powers, and that the unreasonableness of the Official Trustee’s position is demonstrated by an extract from the transcript of the hearing before the Federal Court on 19 September 2008 on the argument in the appeal from Khadpekar – FMC 2008:

   HIS HONOUR:  The question I raise with you … is whether it is more beneficial to persist in this Application or whether it might be more beneficial for the Trustee to reconsider his decision and appeal …

   MR RODGERS:  After coming to Claremont Petroleum, it seems to me…the right of Appeal… It’s not something to vest in the Trustee. It’s not one for us to pursue and the issue of whether Ms Khadpekar can pursue it, with or without our consent, also seems to be closed off by the High Court as well…

   HIS HONOUR: So you’re saying that a bankrupt is simply stuck with a bad decision, notwithstanding that the bankrupt is made bankrupt based on that bad decision?

   HIS HONOUR: So your contention will be that, notwithstanding that there might be grounds of appeal, that the trustee is simply not able to appeal and nor is Ms Khadpekar.

   MR RODGERS:  Yes, that’s right. That is correct.

   …

   MR RODGERS:  It’s just that I am not aware of any other explanation that the Applicant has given in trying to bring herself within the Cummings case.

   HIS HONOUR:  Well, she’s bankrupt…She says that in respect of this particular debt she does not owe it because she has a counterclaim.

   MR RODGERS:  Well, because she’s bankrupt she has no further financial interest in it...Insofar as the Judgment gives rise to our claim against her, that is a credible debt…

   HIS HONOUR: ...the debt is not due because there was a counterclaim which was not considered by the Court and the bankruptcy has had the effect of causing her to lose her profession.[163]

   d)Ms Khadpekar also refers to the judgment in Khadpekar – Federal Court 2009 (No 2) regarding the Official Trustee’s first and second Grounds of Opposition.

   [163] Transcript, 19 September 2008, page 3, line 12 - page 4, line 35 and page 19, lines 30-45.

2. For reasons otherwise set out above, there is no substance in Ms Khadpekar’s criticism of the process by which the Summary Judgment was obtained, or of the Official Trustee’s defence or view of that process.

3. The extract cited from the argument in the Federal Court on the appeal from Khadpekar – FMC 2008 is not especially helpful in the determination of the issue now before the Court. In the judgment on the appeal – Khadpekar – Federal Court 2009 (No 2) – the Federal Court determined to remit the matter to this Court because the Court, as previously constituted, had failed to properly consider that Ms Khadpekar’s mental illness or disability was arguably a factor in relation to the exercise of the Court’s discretion when considering whether the Magistrates Court of Queensland might extend time for the Proposed Appeal.[164]

   [164] Khadpekar – Federal Court 2009 (No 2) FCR at 256 per Siopis J; FCA at paras.49-51 per Siopis J.

4. The Federal Court transcript extracted above does not evince any conduct of concern on the part of the Official Trustee. The lawyer arguing on behalf of the Official Trustee, and the Official Trustee, may have taken a wrong view on the law, but that is not unusual, and does not justify an inquiry into the conduct of the Official Trustee. Nor does the issue of whether or not the Summary Judgment is bad, and whether if not allowed to pursue the Proposed Appeal Ms Khadpekar will have to “cop it sweet”. For reasons otherwise set out in these Reasons for Judgment, the Official Trustee has, in this Court’s view properly considered whether or not the Proposed Appeal ought to be pursued, and arrived at a determination that it ought not be pursued. In the Court’s view there is nothing unreasonable about that consideration by the Official Trustee, and it is certainly not ultra vires for unreasonableness. That reinforces the view reached above that there is no basis on these grounds for an inquiry into the Official Trustee’s conduct.

Part VIIE – the Official Trustee’s decision is potentially ultra vires on the basis that there is no evidence to support its contentions in grounds 3, 4(b) and 4(c) of the Grounds of Opposition

1. Ms Khadpekar asserts that there “is not a shred of evidence of probative value to support the … [Official Trustee’s] contention”[165] that:

   a)in ground 3 of the Grounds of Opposition, that the Cairns Orders (which include the Summary Judgment) were not irregular;

   b)the assertion in ground 4(b) of the Grounds of Opposition, that the Cairns Orders were regular; and

   c)the assertion in ground 4(c) of the Grounds of Opposition, that if there had been non-compliance with the relevant QMC Rules the Magistrates Court of Queensland when making the Cairns Orders had waived non-compliance.

   [165] Ms Khadpekar’s Submissions, para.113.

2. For reasons otherwise set out above, there is evidence to support the contentions of the Official Trustee in the Grounds of Opposition as set out above, and the Official Trustee’s decision not to pursue the Proposed Appeal is not ultra vires on the grounds that there is no evidence to support the above contentions. There is therefore no reason on the basis of the above matters for an inquiry into the conduct of the Official Trustee.

Part VIIF – the Official Trustee’s decision is potentially ultra vires on grounds of inflexible application of policy

1. Ms Khadpekar refers to correspondence from the Official Trustee which indicates that it has arrived at its decision after consulting with its Legal Support Branch. Ms Khadpekar says that this “reasonably suggests an inflexible application of policy without any consideration being given to its constructive knowledge of the circumstances of this bankruptcy.”[166]

   [166] Ms Khadpekar’s Submissions, para.116.

2. Ms Khadpekar goes on to assert that an “opening of floodgates” argument could not possibly be sustained in this case given the statistical improbability of too many bankruptcies of this nature, at least outside of Queensland, but that the position in Queensland may be different due to the passing of the Architects Act, and the Professional Engineers Act 2002 (Qld).[167] Ms Khadpekar refers to the fact that it is a ground to refuse, or refuse to renew, the registration of an architect or engineer under both the Architects Act and the Professional Engineers Act if the architect or engineer is affected by bankruptcy action. Ms Khadpekar says that registration is controlled by a Board under both Acts, and though nominally independent, they operate under the umbrella of the Queensland Minister for Public Works, and are comprised of seven members of whom five are Ministerial nominees. Ms Khadpekar notes that the Department of Public Works also operates as a consultant competing with private consultants for projects funded by it, especially in the area of indigenous public works, at undocumented fees, but stated by indigenous communities to verge between approximately 25% and 40% of capital cost. Ms Khadpekar asserts that this creates the potential, in Queensland, for an architect or engineer to be de-registered by merely serving them with a bankruptcy notice, regardless of whether or not the bankruptcy notice withstands legal challenge, and of the abuse of bankruptcy, including as a potential instrument of malice or of extreme anti-competitive conduct.

   [167] “Professional Engineers Act”.

3. The fact that the Official Trustee has consulted its Legal Support Branch does not sustain the suggestion made by Ms Khadpekar of an inflexible application of policy without consideration of the circumstances of the bankruptcy. The submission is not further particularised, and it is not said otherwise how it is that any application of any policy, and, if so, what policy, was inflexible. In the circumstances, there is no factual support for the assertion made. In any event, even if the Official Trustee had inflexibly applied a policy, there is nothing in that fact which would of itself, or otherwise in combination with the issues arising in these proceedings, justify an inquiry into the conduct of the Official Trustee.

4. In relation to Ms Khadpekar’s assertions about the potential for adverse effects on architects or engineers employed in Queensland arising from the Architects Act and the Professional Engineers Act, those are matters which give rise to no reason to inquire into the conduct of the Official Trustee. Nor, in fairness to Ms Khadpekar, is any such reason suggested in the submission. Whatever the reason might be for making such a submission, it is not a submission which goes to the merits of any order relating to an inquiry into the conduct of the Official Trustee in relation to Ms Khadpekar’s bankruptcy.

Part VIIIA – the Official Trustee’s conduct creates an apprehension of bias

Part VIIIB – the Official Trustee’s conduct creates an apprehension of bias

1. These two parts of Ms Khadpekar’s Submissions can be dealt with together.

2. Ms Khadpekar asserts that an apprehension of bias is created by the Official Trustee’s conduct prior to its claiming jurisdiction over her, in its administration of the estate prior to and collaterally with the litigation, and in its conduct in and incidental to the litigation.

3. Ms Khadpekar says that:

   a)on or about 13 August 2006 she met with the Official Receiver Queensland, Mr Ross, in his office to request a letter from him to the Commercial and Credit Tribunal[168] explaining that the bankruptcy was based on a Summary Judgment obtained without a trial;

   b)she gave Mr Ross a CD containing documentary evidence of the means used to secure the Summary Judgment and the bankruptcy, and of the concurrent actions to Ms Khadpekar’s detriment by a Queensland Department which also controls the Board of Architects;

   c)the purpose of the letter and CD was to save Ms Khadpekar’s registration as an architect, she having been de-registered by the Board of Architects solely as a result of the bankruptcy;

   d)Mr Ross refused to send the said letter, and later sent the CC Tribunal a letter saying that Ms Khadpekar was an undischarged bankrupt;

   e)as he was seeing her into the lift, Mr Ross said words to the effect that “I know of you before this…Your name comes up from time to time in the context of affordable housing…I wear many hats”; and

   f)there were no witnesses to this conversation, though Mr Rafi Landicho, whose name appears on behalf of the Official Trustee on the originating document commencing the Official Trustee’s action against her met with her earlier that afternoon, and directed her to Mr Ross’ office.

   [168] “CC Tribunal”.

4. Some weeks later Ms Khadpekar asserts that the Official Trustee commenced a criminal action against her under the signature of Mr Landicho.

5. Ms Khadpekar asserts that Mr Ross’ statement reasonably raises the spectre of a conflict of interest. Ms Khadpekar asserts that a conflict of interest, if it exists, might help to explain:

   a)the Official Trustee’s conduct in its criminal action against Ms Khadpekar, which it commenced just weeks after her meeting with Mr Ross;

   b)the Official Trustee’s administration of the bankruptcy which departs from the prescribed standards of conduct for bankruptcy Trustees;

   c)the Official Trustee’s conduct of this litigation, which, in Ms Khadpekar’s view as a lay person bears some resemblance to a malicious prosecution or an abuse of process, or both; and

   d)explains a potential collateral purpose.

6. To assert an apprehension of bias requires evidence of a cogent kind. An apprehension of bias can be said to exist where a reasonable properly informed bystander (or fair-minded lay observer) might reasonably apprehend that the decision-maker might not bring an impartial and unprejudiced mind to the resolution of the question which the decision-maker is required to decide.[169]

   [169] NADH of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 214 ALR 264 at 267 per Allsop J; [2004] FCAFC 328 at para.13 per Allsop J, quoting Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 per Gleeson CJ, McHugh, Gummow and Hayne JJ; [2000] HCA 63 at para.7 per Gleeson CJ, McHugh, Gummow and Hayne JJ.

7. There is simply nothing in the comment alleged to have been made by Mr Ross which gives rise to an apprehension of bias. On the face of it is simply a statement saying that he has already heard of Ms Khadpekar in the context of affordable housing wearing another hat. There is nothing in the statement made which in the mind of a fair-minded lay observer would give rise to an apprehension of bias. Indeed, a fair-minded lay observer might take the view that all that Mr Ross was doing was being pleasant and passing the time of day as he showed Ms Khadpekar to the lift. Nor is there any reason to suspect that Mr Ross had a conflict of interest. The evidence simply does not support that suggestion in the mind of a fair-minded lay observer, as opposed to someone prepared to invent a conspiracy like scenario on the barest of threads. Likewise, the suggestion that such a statement might help to explain the subsequent “criminal action”, presumably a reference to the action with respect to Ms Khadpekar’s failure to file a Statement of Affairs, cannot be justified. Ms Khadpekar’s failure to file a Statement of Affairs was, as the Court has indicated above, a serious and prolonged failure. Otherwise, there is nothing in the conduct of the Official Trustee in this matter which indicates a departure from the prescribed standards of conduct for bankruptcy or that there has been some form of malicious prosecution or an abuse of process of Ms Khadpekar, either in relation to the sending of the letter to the CC Tribunal, or the overall conduct of the Official Trustee in relation to Ms Khadpekar bankruptcy.

8. There is, therefore, no basis in the Court’s view on which to order that an inquiry into the Official Trustee’s conduct be made on the basis of this aspect of Ms Khadpekar’s Submissions.

Part IXA – orders sought – costs

1. Ms Khadpekar asserts that the Court has discretion in respect of costs orders, and is able to take into account considerations of justice and equity.

2. Ms Khadpekar says that the request to the Official Trustee to initiate the process was triggered by the Official Trustee’s potentially flawed and oppressive administration of her bankrupt estate. Ms Khadpekar says that the Official Trustee’s decision, which forced this application, was potentially in excess of power, rendering the decision void or voidable, and that this makes the Official Trustee liable for all costs incurred and thrown away.

3. Ms Khadpekar asserts that the Official Trustee knew that the bulk of its Grounds of Opposition had no merit, as evidenced by its solicitor’s failure to depose to any grounds other than security for costs. Ms Khadpekar says that despite this the Official Trustee has failed to follow the cost effective path of seeking directions from the Court, and has elected instead to pursue a strategy of protracting litigation and incurring costs and pursuing costs orders against Ms Khadpekar unethically and unjustifiably. It is said that in recklessly incurring costs, and then drawing them from the estate, despite losing the Appeal in Khadpekar – Federal Court 2009 (No 2), the Official Trustee has exhausted and exceeded Ms Khadpekar’s bankrupt estate, thus placing Ms Khadpekar at risk of a further bankruptcy for challenging the injustice of the first bankruptcy.

4. Ms Khadpekar’s costs incurred have been thrown away due to the Official Trustee’s conduct for which Ms Khadpekar should in justice and in equity be indemnified.

5. Ms Khadpekar says that the totality of the Official Trustee’s conduct, including its solicitor’s repeated attempts to ambush her, to potentially mislead the Court, and its strategic sustained non-compliance with rules and orders and other breaches of the Official Trustee, and its solicitor’s, duty to the administration of justice:

   a)potentially evidences bad faith, abuse of process and improper purpose;

   b)potentially enlivens the discretion to award costs on a basis other than party and party, namely on an indemnity or solicitor – own client basis; and

   c)potentially justifies awarding costs against the Official Trustee on an indemnity or solicitor – own client basis, with the costs to be borne personally by the Official Trustee and not drawn from Ms Khadpekar’s estate.

6. Ms Khadpekar submits that there is a public interest dimension to costs orders being made on an indemnity or higher basis given the Official Trustee’s role in relation to bankruptcy, and its potential to cause further harm through its potentially unethical litigation against people who are already in the unfortunate situation of being made bankrupt.

7. Ms Khadpekar further seeks revocation of all costs orders to date in favour of the Official Trustee in this Court.

8. With respect to costs, the Court has determined that it is appropriate to hear further from the parties with respect to costs once the parties have had an opportunity to digest these Reasons for Judgment. For that reason there will be orders requiring the parties to file and serve written submissions with respect to costs, and costs schedules, before a short hearing on costs in several weeks time.

Discretionary considerations

1. The power to order an inquiry under s.179 of the Bankruptcy Act into the conduct of an official trustee in respect of a bankrupt estate calls for the exercise of a discretion by the Court. In the matter presently before the Court there are further considerations which favour the dismissal of the Application, as follows:

   a)that Ms Khadpekar’s bankruptcy has been discharged, and was in fact discharged on 4 July 2009, more than four and a half months prior to the first day of the substantive hearing of the Application by the Court as presently constituted, and now more than three and a half years ago. The Court’s power under s.179 of the Bankruptcy Act to order an inquiry into the conduct of an official trustee survives the discharge of a bankruptcy.[170] In this case there is however no utility in the Court making an order in circumstances where, in the Court’s view, the administration of the estate does not warrant criticism, but even if it did, it is doubtful that any useful purpose would now be served by ordering an inquiry into the conduct of the Official Trustee; and

   b)the purpose of the inquiry into the conduct of the Official Trustee, as it appears to be sought by Ms Khadpekar, appears to involve a significant overlap with the alleged conduct of Kowanyama and its solicitors. Kowanyama’s conduct is not something into which the Court can order an inquiry under s.179 of the Bankruptcy Act, and in any event the relevant events preceded the appointment of the Official Trustee by more than six years, and there must be serious doubt as to whether those events could ever be said to constitute “the conduct of a trustee in relation to a bankruptcy”.

   [170] Australian Bankruptcy Law & Practice, para.[179.1.15] and cases there cited.

1. The above discretionary factors do not favour the ordering of an inquiry into the conduct of the Official Trustee in relation to Ms Khadpekar’s estate.

Annulment of Sequestration Order

1. Section 153B of the Bankruptcy Act provides as follows:

   (1)  If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.

   (2)  In the case of a debtor's petition, the order may be made whether or not the bankrupt was insolvent when the petition was presented.

   (3)  The trustee must, before the end of the period of 2 days beginning on the day the trustee becomes aware of the order, give to the Official Receiver a written certificate setting out the former bankrupt's name and bankruptcy number and the date of the annulment.

   Penalty:  5 penalty units.

   Note:          See also section 277B (about infringement notices).

   (4)  Subsection (3) is an offence of strict liability.

2. The Sequestration Order was made as a result of the Court’s consideration of this matter reflected in the Reasons for Judgment in Kowanyama – FMC 2004, which are, in large part, set out above.[171]

   [171] See para.28 above.

3. Although the Court has not granted an amendment in the terms sought by Ms Khadpekar to allow her to seek relief by way of an annulment of the Sequestration Order, the Court indicates that, if such leave had been granted, it would not have made an order annulling the Sequestration Order. It is apparent on the face of the reasons in Kowanyama – FMC 2004 that all relevant considerations were taken into account by this Court in determining whether or not to make the Sequestration Order on that occasion, and there is nothing in the Court’s Reasons for Judgment, which would warrant a conclusion that the Sequestration Order ought not to have been made at that time. Indeed, all of the factors point to the appropriateness of the Sequestration Order which was made, having been made, at that time.

Conclusion and orders

1. These Reasons for Judgment are long. They are long because the Court indicated to Ms Khadpekar that it would, or would endeavour to, deal with all of the substantive issues that she raised. She raised many issues, sometimes in many ways, and with little or no discrimination. The Court chose to address those issues, largely in the manner that they were put, in an endeavour to make it plain that the Application, both in its original form and as amended, could never have succeeded. Furthermore, in the process of dealing with the issues in the manner that it has, the Court has made plain that Ms Khadpekar has fundamentally misunderstood the import of earlier judgments of both the Federal Court and this Court. Had Ms Khadpekar properly understood the import of those judgments it may be that this Application would never have been filed.

2. As indicated in the Reasons for Judgment the Court is of the view that the Application as originally lodged in relation to the Proposed Appeal would not have succeeded.

3. As to the application for an inquiry into the conduct of the Official Trustee the Court has dealt with the substantive issues raised by Ms Khadpekar’s Submissions. None of those issues have been made out, or made out with any sufficiency, to warrant an inquiry into the conduct of the Official Trustee. None of the issues raised by Ms Khadpekar give rise to a likelihood that they would reveal misconduct by the Official Trustee. Accordingly, the Court has found that there ought not to be an inquiry into the conduct of the Official Trustee for the reasons put forward by Ms Khadpekar, but also because discretionary factors militate against such an inquiry. That conclusion renders it unnecessary to deal with other orders sought by Ms Khadpekar, except as to costs, which will be the subject of further submissions and hearing.

4. Having regard to all of the foregoing, the Court has determined that the Application, as amended, will be dismissed. There will be an order accordingly.

5. As to costs the Court will order the filing of written submissions and costs schedules and a short hearing on costs at a future date.

I certify that the preceding two hundred and twenty-three (223) paragraphs are a true copy of the reasons for judgment of Lucev FM

Associate: 

Date:  22 March 2012

[132] Khadpekar – FMC 2008 at para.21 per Burnett FM.