Kurschinsky v Queensland Law Society - [2023] FCA 1682

FEDERAL COURT OF AUSTRALIA
Kurschinsky v Queensland Law Society [2023] FCA 1682

File number: QUD 195 of 2023

Judgment of: LOGAN J

Date of judgment: 8 November 2023

Catchwords:
PRACTICE AND PROCEDURE – where a creditor’s petition is filed in the Federal Circuit and Family Court of Australia (Division 2) (Circuit Court) following an earlier, ancillary, determination by a registrar of the Federal Court of Australia (this Court) concerning the dismissal of an application to set aside a bankruptcy notice – where, in response to the creditor’s petition, the debtor files an application for review in the Circuit Court of the registrar’s decision in this Court to dismiss an application to set aside the bankruptcy notice – where the review application was out of time – where the Circuit Court has no jurisdiction to review an order by a registrar of this Court and the Circuit Court registry failed to identify the jurisdictional and limitation issues – further, where this Court, failing a transfer from the Circuit Court does not have jurisdiction to hear and determine the creditor’s petition – where, in the interests of justice, the review application filed in the Circuit Court with supporting affidavits are deemed applications in this Court – where the creditor’s petition must be heard in the Circuit Court

BANKRUPTCY – where a review of an exercise of power by a registrar under s 35A(1) of the Bankruptcy Act 1966 (Cth) is a hearing afresh on the evidence and law at the time of the review hearing Bechara v Bates (2021) 286 FCR 166 and Totev Sfar (2008) 167 FCR 193 applied – where the debtor submits that the bankruptcy notice should be set aside under s 40(1) (g) of the Act on the basis of a counter-claim set-off equal to or exceeding the amount of the judgment debt of which the bankruptcy notice is founded – where the debtor alleges the judgment debt founding the bankruptcy notice was obtained by fraud – where, in any event, the application is out of time – where the debtor submits that the registrar’s decision to dismiss the application to set aside the bankruptcy notice, in his absence, amounts to a denial of procedural fairness - where the Court considers the merits of the substantive application for review in determining whether an extension of time should be granted – where the debtor must satisfy the standard proof in s 34A of the Act – where indirect proof will not satisfy the standard when grave allegations are involved Briginshaw v Bringinshaw (1938) 60 CLR 336 – where the court finds there is no evidence to support the cross claim and alleged set off – application to set aside the bankruptcy notice is dismissed

Legislation:
Bankruptcy Act 1966 (Cth) s 34A

Family Law Act 1975 (Cth)

Federal Court of Australia Act 1976 (Cth) ss 35A, 40

Limitation of Actions Act 1974 (Qld) s 10AA

Uniform Civil Procedure Rules (Qld) r 2.92

Cases cited:
Bechara v Bates (2021) 286 FCR…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] FCA 1682
Decision Date: 8 November 2023

CaseChat Overview and Summary

The case of Kurschinsky v Queensland Law Society involved a dispute between Alexander Kurschinsky, the debtor, and the Queensland Law Society, the creditor. The matter originated from an earlier determination by a registrar of the Federal Court of Australia concerning the dismissal of an application to set aside a bankruptcy notice. Following this, the creditor filed a petition in the Federal Circuit and Family Court of Australia (Division 2) (Circuit Court). In response, the debtor lodged an application for review of the registrar's decision in the Circuit Court, which was ultimately deemed out of time. The Circuit Court lacked jurisdiction to review the order made by a registrar of the Federal Court, and the Circuit Court registry did not identify the relevant jurisdictional and limitation issues.

The primary legal issues in this case revolved around the jurisdiction of the Circuit Court to review the registrar's decision, the timing of the debtor's application, and the appropriate forum for hearing the creditor's petition. Additionally, the court needed to determine whether the creditor's petition should be heard in the Circuit Court, and whether the debtor's application for review could be treated as an application in the Federal Court. The case also involved the substantive merits of the debtor's application to set aside the bankruptcy notice, including the validity of the debtor's claims of fraud and set-off.

The Federal Court determined that the Circuit Court did not have jurisdiction to review the registrar's decision, and that the debtor's application for review was out of time. The court found that the creditor's petition must be heard in the Circuit Court, and that the debtor's application for review, along with the supporting affidavits, would be treated as applications in the Federal Court. The court held that the debtor had not met the standard of proof required to set aside the bankruptcy notice under section 40(1)(g) of the Bankruptcy Act 1966 (Cth), particularly in light of the gravity of the allegations of fraud. Consequently, the application to set aside the bankruptcy notice was dismissed, and the debtor's application for review was also dismissed.

The court made several orders to formalise the outcome of the case. The debtor's application for review was treated as an application in the Federal Court, and the registrar was directed to place a copy of the application and supporting affidavits on the court file. The order of the registrar dismissing the application to set aside the bankruptcy notice was affirmed, as were the associated costs orders. The court further provided that if a sequestration order were made against the debtor, the creditor's costs of the review application would be treated as petitioning creditor's costs. If no sequestration order was made, the debtor was to pay the creditor's costs as agreed or taxed. The entry of these orders was governed by Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The application for review of a Registrar’s orders of 24 May 2023 in this proceedings filed in BRG387/2023 in the Federal Circuit and Family Court (Division 2) Registry (Circuit Court Registry) on the 27 October 2023 be treated as an application in this proceeding.

2. A Registrar, forthwith, place a copy of the application for review on the court file in this proceeding, together with copies of the following affidavits filed in the Circuit Court proceeding BRG387/2023, each of which is to be treated as an affidavit filed in this proceeding:

(a) both affidavits of Alexander Kurschinsky dated 27 October 2023;

(b) Matthew Benjamin Rodgers dated 3 November 2023;

(d) Matthew Benjamin Rodgers dated 7 November 2023;

3. The review application be dismissed.

4. For the avoidance of doubt:

(a) the order of Registrar Buckingham dated 24 May 2023 dismissing the application to set aside the bankruptcy notice be affirmed; and

(b) the orders for costs in that order be affirmed.

5. If a sequestration order is made against the applicant founded upon an act of bankruptcy by a failure to comply with a bankruptcy notice, then the respondent’s costs of this application for review are to be treated as if they were petitioning creditor’s costs in accordance with section 109(1)(a) of the Bankruptcy Act 1966 (Cth).

6. If no sequestration order is made, the applicant is to pay the respondent’s costs of this application for review as agreed or taxed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File number:	QUD 195 of 2023
Judgment of:	LOGAN J
Date of judgment:	8 November 2023
Catchwords:	PRACTICE AND PROCEDURE – where a creditor’s petition is filed in the Federal Circuit and Family Court of Australia (Division 2) (Circuit Court) following an earlier, ancillary, determination by a registrar of the Federal Court of Australia (this Court) concerning the dismissal of an application to set aside a bankruptcy notice – where, in response to the creditor’s petition, the debtor files an application for review in the Circuit Court of the registrar’s decision in this Court to dismiss an application to set aside the bankruptcy notice – where the review application was out of time – where the Circuit Court has no jurisdiction to review an order by a registrar of this Court and the Circuit Court registry failed to identify the jurisdictional and limitation issues – further, where this Court, failing a transfer from the Circuit Court does not have jurisdiction to hear and determine the creditor’s petition – where, in the interests of justice, the review application filed in the Circuit Court with supporting affidavits are deemed applications in this Court – where the creditor’s petition must be heard in the Circuit Court BANKRUPTCY – where a review of an exercise of power by a registrar under s 35A(1) of the Bankruptcy Act 1966 (Cth) is a hearing afresh on the evidence and law at the time of the review hearing Bechara v Bates (2021) 286 FCR 166 and Totev Sfar (2008) 167 FCR 193 applied – where the debtor submits that the bankruptcy notice should be set aside under s 40(1) (g) of the Act on the basis of a counter-claim set-off equal to or exceeding the amount of the judgment debt of which the bankruptcy notice is founded – where the debtor alleges the judgment debt founding the bankruptcy notice was obtained by fraud – where, in any event, the application is out of time – where the debtor submits that the registrar’s decision to dismiss the application to set aside the bankruptcy notice, in his absence, amounts to a denial of procedural fairness - where the Court considers the merits of the substantive application for review in determining whether an extension of time should be granted – where the debtor must satisfy the standard proof in s 34A of the Act – where indirect proof will not satisfy the standard when grave allegations are involved Briginshaw v Bringinshaw (1938) 60 CLR 336 – where the court finds there is no evidence to support the cross claim and alleged set off – application to set aside the bankruptcy notice is dismissed
Legislation:	Bankruptcy Act 1966 (Cth) s 34A Family Law Act 1975 (Cth) Federal Court of Australia Act 1976 (Cth) ss 35A, 40 Limitation of Actions Act 1974 (Qld) s 10AA Uniform Civil Procedure Rules (Qld) r 2.92
Cases cited:	Bechara v Bates (2021) 286 FCR…