Kirkpatrick v Walker - [2001] FMCA 77

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KIRKPATRICK v WALKER [2001] FMCA 77

BANKRUPTCY – Application to set aside Bankruptcy Notice – going behind judgment.

Wren v Mahony (1972) 126 CLR 212;
Corney v O'Brien (1951) 84 CLR 343.
Longo, Ex parte Longo (1995) 57 FCR 523.

Applicant:

JAMES DESMOND KIRKPATRICK

Respondent:

CHRISTINE MAREE WALKER

File No:

MZ 241 of 2001

Delivered on:

6 August 2001

Delivered at:

Melbourne

Hearing Date:

6 August 2001

Judgment of:

McInnis FM

REPRESENTATION

Applicant

In Person

Counsel for the Respondent:

Mr M Pegg

Solicitors for the Respondent:

Wighton Lawyers

ORDERS

The notice of motion dated 16 July 2001 be dismissed.
The applicant pay the costs of the respondent including reserved costs to be taxed pursuant to Order 62 of the Federal Court Rules in default of agreement

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MZ 241 of 2001

JAMES DESMOND KIRKPATRICK

Applicant

And

CHRISTINE MAREE WALKER

Respondent

REASONS FOR JUDGMENT

Ex tempore

This is an application by Mr JAMES DESMOND KIRKPATRICK which was filed on 11 April 2000 to set aside the judgment or order in respect of which a bankruptcy notice had been issued; that is bankruptcy notice number VN265 2001, and to set aside the bankruptcy notice on grounds referred to in an affidavit sworn by Mr Kirkpatrick on 9 April 2001.
Before this court today, there is in fact a notice of motion which seeks to review the order made by the registrar in relation to the application. An order was made by the registrar on 2 July 2001 that the application be dismissed. The applicant has sought, by notice of motion dated 16 July 2001, that the matter be re-instated to a date to be fixed, costs be deferred and other orders.
Specifically, the complaint of the applicant is that order made and the judgment entered in the County Court, Geelong on 2 May 2000 should be set aside. Essentially, however, the applicant seeks to set aside the bankruptcy notice which, of course, relies upon that judgment in the County Court. Before this court today, Mr Pegg appears for the respondent and the applicant appears in person. The applicant was also assisted by a family friend and I allowed that course to occur in circumstances where it seemed to me that the applicant, apart from having health problems, did not have necessarily a full grasp of all the issues that might be relevant before this court.
It is appropriate in an application of this kind, because it's a hearing de novo from the decision made by the registrar, to consider the original material relied upon by the applicant in support of his application to set aside the bankruptcy notice. In particular, the applicant has filed and served an affidavit sworn 18 May 2001. In that affidavit, the applicant indicates the reason why he did not attend the County Court at Geelong on 2 May 2000 when an order was made against him in the sum of $76,150 with costs in addition to that amount. In fact, the order made in the County Court on that occasion by his Honour Judge Stott was an order made which included the principal sum of $76,150 together with interest of $7390.51. There were costs ordered against the respondent which included a circuit fee of $144.
The bankruptcy notice it is conceded and is common ground was served upon the applicant on 21 February 2001. In his affidavit, to which I have referred, the applicant indicates that he had in fact expected that at the hearing before Judge Stott he would be represented by solicitors; and that did not occur. He has also indicated that since the date of that judgment he has approached his solicitors and sought the release of the file upon payment of a significant sum for legal costs. He indicates further in that affidavit that he has a complaint against the creditor, Christine Maree Walker, in relation to a payment of livestock and otherwise indicates there is a matter which he believes should properly be agitated, and indeed should have been agitated, before the County Court prior to the default judgment being entered, to which I have referred.
The applicant has indicated that the respondent should have filed a further affidavit in support of the response and, indeed, should also have provided him with a copy of an amended statement of a claim which I am told, and accept by the solicitor for the respondent, was filed and served in the County Court proceedings prior to the date when the solicitors then acting for the Applicant filed a notice of withdrawal. The Applicant insists, however, that he should not only receive a copy of that amended statement of claim but should also receive affidavit material from the respondent creditor.
In my view, those two matters are without substance in the sense that it is a matter for a respondent to file and serve affidavits upon which she intends to rely; which reflects the orders made by the registrar on 4 June 2001 to that effect. The matter of filing and serving further affidavit material is a matter for each party. The non-compliance with that order is simply an expression on the part of the respondent creditor that she did not wish to file and serve any further affidavit material other than that which had already been filed and served in this matter.
In relation to the amended statement of claim, it is my view that although it may be of some relevance and useful for Mr Kirkpatrick to see that document, its production, for reason to which I shall refer to later, does not assist my determination of the issues before this court.
It is useful to also refer to the affidavit of Murray George Pegg sworn 21 May 2001 and relied upon by the respondent. In that affidavit, Mr Pegg deposes to the fact that the proceedings in the County Court were filed by writ on 30 September 1998. A mediation was ordered in that matter and the trial listed for 1 May 2000. Up until 1 December 1999, the solicitor Byrne Jones and Torney of Ballarat acted for and on behalf of the defendant. On 1 December 1999, those solicitors filed and served a notice of withdrawal of practitioner.
The deponent, Mr Pegg, further states in his affidavit that on or about 20 December 1999 he received a letter from the County Court of Victoria confirming the hearing date. On 15 December 1999, he received a letter dated 15 December 99 from Byrne Jones and Torney. In that letter the solicitor who had hitherto acted for and on behalf of the applicant say as follows:
“Should your client to choose to abandon this action against Des Kirkpatrick and to confirm in writing the claim has been abandoned, Mr Des Kirkpatrick is sure he can convince his son, Robert, to abandon his claim for cartage.
Should your client not wish to avail itself of the proposal set out above, we are instructed that Mr Des Kirkpatrick will play no further active part in this matter and your client can proceed at her peril.”
Further in the affidavit from Mr Pegg, to which I have referred, he states, and it is not disputed, that other steps were taken in relation to the proceedings which were before the County Court and dealt with by default on 2 May 2000. They included serving of the plaintiff's court book, serving of the statement of expert evidence.
After the proceedings in the County Court Mr Pegg wrote to the applicant and advised of the outcome. He did that in a letter dated

2 May 2000. In that letter to Mr Kirkpatrick the solicitors for the respondent confirm that the matter came before the judge at the County Court on 2 May 2000 and advised Mr Kirkpatrick that at the conclusion of the hearing an order was made for judgment in the sum of $77,150, that the defendant pay the plaintiff's costs, the proceeding including all reserve costs, and certified for a circuit fee for Geelong totalling $144. Reference was made to the interest accruing and a suggestion that contact be made without delay in order to make arrangements for payment. Mr Pegg, in his affidavit, states:
“The defendant failed to make contact with me and I therefore was served a sealed copy of the authenticated judgment under cover of letter dated 7 July 2000.”
Mr Pegg attended the County Court on 21 May 2001 and indicates that on searching the court file number 4978 of 1998, there was no application pending. Before this court today, it is common ground that as at today's date no application has been made by the applicant to set aside the judgment entered in the County Court on 2 May 2000.
Mr Pegg, for and on behalf of the respondent, has submitted that in the circumstances, whilst the court has a discretion, it should not exercise the discretion in circumstances where there does not appear to be any realistic prospect of the County Court judgment, the basis for the bankruptcy notice, being set aside. He has submitted that I should not go behind the judgment and that I should take into account the application of rule 13 of the Bankruptcy Rules and in particular has referred me to a discussion in relation to the requirements of an affidavit in support which appear in the publication of McDonald Henry Meek, in particular at page 15403. I was referred to the passage where the learned authors state:
“Where there is no basis for setting aside the bankruptcy notice, in any even (eg because the debtor has not appealed against the orders in respect of which the notice was issued, the grounds of the application are unsubstantiated, or the application must fail because it was not made before time for compliance. with the notice expired), the Court's discretion to extend time for compliance under s 51 should not be exercised, because it would serve no useful purpose: Hubner v Australia and New Zealand Banking Group Limited (Unreported, Fed Ct of Aust Dowsett J, 7 December 1998), at pp 10, 13.”

That decision of his Honour was affirmed on appeal in the unreported decision of the Full Court on 14 April 1999.
There can be no doubt that in a case of this kind, where there is an application to set aside a bankruptcy notice that the court has a discretion. It is appropriate particularly where a person is unrepresented to place significant weight on the fact that the person so unrepresented may not have a familiarity with court proceedings and practice. It is also appropriate to make significant allowances in terms of any deficiencies which may exist in relation to the affidavit material and the material before this court. I have indeed made those allowances in this case and extended it to the point where I permitted the applicant to be assisted by a friend in court.
In a matter of this kind, essentially, in setting aside the bankruptcy notice the applicant seeks to persuade the court that it should go behind the judgment, in this case, one entered by default. I am satisfied that where a judgment entered by default there is more reason for the court to carefully scrutinise the facts and circumstances leading up to the entry of the judgment than might otherwise be the case. However, I am also satisfied that in the circumstances of this case it is appropriate to look carefully at correspondence passing between solicitors then acting for the applicant and solicitors for the respondent. It is significant to further note that no application has been made in the County Court to set aside the judgment.
The principles which apply in relation to the suggestion the court should go behind a judgment are well-established. It is accepted the court can go behind a judgment, and indeed, can look to see whether indeed the judgment is conclusive evidence which would in fact be sufficient to found the bankruptcy proceedings. As it stands, the judgment is, of course, only prima facie evidence of a debt and not conclusive evidence. See Wren v Mahony (1972) 126 CLR 212; Corney v O'Brien (1951) 84 CLR 343. Before a court will exercise its discretion, however, to go behind a judgment, it must be established that there are substantial reasons for questioning whether there is in truth and reality a debt owed to the creditor. See Re Longo, Ex parte Longo (1995) 57 FCR 523.
There is no suggestion in the present case that the judgment was obtained by fraud or collusion or that there has been some other miscarriage of justice. Rather, it is suggested by Mr Kirkpatrick that he has a valid counter-claim and/or defence which should be agitated in relation to the issues which were the subject of the judgment entered in the County Court.
On the material before me, in applying the relevant principles, however, it is my view that it would be inappropriate to go behind the judgment. Although the judgment was entered as a default judgment, it is clear that up until the time of judgment there were solicitors then acting for and on behalf of the applicant. It is equally clear, as I have found, that no steps have been taken to set aside that judgment since it was entered on 2 May 2000.
It is further clear from the ongoing nature of orders made in this court in adjournments that an adequate opportunity was given to the applicant to provide on the affidavit sufficient material which would persuade this court to exercise its discretion to go behind the judgment. I cannot find any substance in the material before me that would satisfy me that it is appropriate to exercise my discretion in favour of the applicant, and indeed, to accede to the application to set aside the judgment. In those circumstances, the appropriate order that I should make is that the application, which is by way of notice of motion to this court dated 16 July 2001, be dismissed and that the applicant pay the respondent's costs as agreed in default to be taxed.
The formal orders of the court shall be:
(1)The notice of motion dated 16 July 2001 be dismissed.
(2)The applicant pay the costs of the respondent including reserved costs to be taxed pursuant to Order 62 of the Federal Court Rules in default of agreement.

I certify that the preceding twenty two (22) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 6 August 2001