LOMBE (TRUSTEE) IN THE MATTER OF RAHMAN (BANKRUPT)
[2017] FCCA 750
•20 April 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LOMBE (TRUSTEE) IN THE MATTER OF RAHMAN (BANKRUPT) | [2017] FCCA 750 |
| Catchwords: PRACTICE AND PROCEDURE – Leave to be heard granted to bankrupt – recusal application by bankrupt – grounds for disqualification not established. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.27,109, 146 Bankruptcy Regulations 1996 (Cth), reg.3.07 |
| Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Attorney-General of New South Wales v Rahman [2014] NSWSC 42 British American Tobacco Australia Services Limited v Laurie (2011) 242 CLR 283; [2011] HCA 2 Dubs v Rahman [2012] FMCA 664 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 Helljay Investments Pty Ltd v Deputy Commissioner of Taxation (Cth) (1999) 166 ALR 302; [1999] HCA 56 Rees (Trustee) Re Stubberfield v Stubberfield (Bankrupt) [1999] FCA 1862 Roufeil (Trustee), In the Matter of Jarvie (Bankrupt) [2015] FCA 232 Warren McKeon Dickson Pty Ltd v Adorni [2013] FCCA 2267 |
| Applicant: | DAVID JOHN FRANK LOMBE AS TRUSTEE OF THE BANKRUPT ESTATE OF MOHAMMAD TABIBAR RAHMAN |
| File Number: | SYG 3132 of 2016 |
| Judgment of: | Judge Barnes |
| Hearing date: | 6 March 2017 |
| Delivered at: | Sydney |
| Delivered on: | 20 April 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Golledge |
| Solicitors for the Applicant: | TressCox Lawyers |
| Mohammad Tabibar Rahman (Bankrupt): | Self-represented in relation to recusal application Non-appearance in relation to s.146 application |
ORDERS
The application by Mr Rahman that I recuse myself from hearing this matter be refused.
Pursuant to s.146 of the Bankruptcy Act 1966 (Cth) the Applicant, as Trustee of the bankrupt estate of Mohammad Tabibar Rahman (the Bankrupt), distribute a dividend to those creditors who have proved their debts in the bankrupt estate of the Bankrupt in accordance with Division 5 of Part VI of the Act as if the Bankrupt had filed a statement of affairs and those creditors had been stated to be creditors in it.
The interim application by Mr Rahman filed on 30 December 2016 be dismissed.
The Trustee’s costs of and incidental to this application are to be paid out of the Bankrupt’s estate in accordance with s.109 of the Bankruptcy Act 1966 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3132 of 2016
| LOMBE AS TRUSTEE OF THE BANKRUPT ESTATE OF MOHAMMAD TABIBAR RAHMAN |
Applicant
REASONS FOR JUDGMENT
Background
On 14 November 2016 David John Frank Lombe (the Trustee) filed an application seeking an order pursuant to s.146 of the Bankruptcy Act 1966 (Cth) (the Act) that distribution of dividends amongst the creditors of the bankrupt estate of Mohammad Tabibar Rahman (the Bankrupt) who had proved their debts should proceed in accordance with Division 5 of Part VI of the Act as if the Bankrupt had filed a statement of his affairs and those creditors had been stated to be creditors in it. Mr Lombe sought such an order as Trustee of Mr Rahman’s bankrupt estate. His application was supported by an affidavit sworn by him on 11 November 2016.
Section 146 of the Act is as follows:
Where a bankrupt has failed to file a statement of his or her affairs as required by this Act, the Court may, on the application of the trustee, upon such terms as it thinks fit, order that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with this Division as if the bankrupt had filed a statement of his or her affairs and those creditors had been stated to be creditors in it.
Consistent with the fact that there is no requirement under the Act that any party be named as a respondent to such an application (see Roufeil (Trustee), In the Matter of Jarvie (Bankrupt) [2015] FCA 232 at [12]) the Application did not name a respondent. Accordingly there was no obligation on the Trustee to serve the application on the Bankrupt, on any known creditors of the bankrupt estate or on any other person (see Roufeil at [12] per Gleeson J and Sampson (Trustee), In the Matter of Condon (Bankrupt) [2016] FCA 312 at [12]). The participation of a bankrupt is not “necessary” for the Court to determine all matters in dispute in a proceeding commenced by a trustee in bankruptcy seeking an order under s.146 of the Act such as to enliven r.11.01(1) of the Federal Circuit Court Rules 2001 (Cth) (the Rules) (and note r.11.01(4)). However it is appropriate that the bankrupt be notified of any s.146 application. As pointed out in Roufeil and Sampson, the purpose of such notification is to give a bankrupt a reasonable opportunity to be heard on the issue of whether he or she has failed to file a statement of affairs as required by the Act (see Rees (Trustee) Re Stubberfield v Stubberfield (Bankrupt) [1999] FCA 1862). Under r.2.03 of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) (the Bankruptcy Rules) the Court may grant leave to be heard in a proceeding to a person who is not a party to the proceeding.
On 12 December 2016 a Registrar of this court made directions allocating the matter to my docket, listing it for directions before me on 8 February 2017 and for the Trustee to file and serve further evidence. Mr Lombe filed an affidavit sworn on 12 December 2016 on 20 January 2017.
Although no party was named as a respondent in the Application the Registrar also made an order for the “Respondent” to file any evidence on which “it” (sic) intended to rely on or before 1 February 2017. There was no order made including Mr Rahman as a party or requiring him to file a response.
It is apparent that the application was brought to Mr Rahman’s attention. On 30 December 2016 Mr Rahman filed a document entitled “Interim Application, Notice of Filing and Hearing” which sought a range of orders, many of which were not relevant to the s.146 application, as well as purporting to seek “review” of the directions made by the Registrar. He did not expressly seek leave to be heard (cf. r.2.03(6) of the Bankruptcy Rules) or apply to be included as a party (although he named himself “Respondent”). He did not file an affidavit in support of such interim application, however it is apparent that he sought to be heard in these proceedings.
In these somewhat unusual circumstances, when the matter came before me for directions on 8 February 2017 I addressed Mr Rahman’s “review” application (bearing in mind that only a party to proceedings in which a registrar has exercised powers of the Court has standing to seek review of the exercise of a power under s.104(2) of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act)) by making fresh directions listing the s.146 application for hearing on 6 March 2017. I also gave Mr Rahman the opportunity to file written submissions and affidavit evidence by 27 February 2017. I did so on the basis that Mr Rahman could also make oral submissions at the hearing so that any matters he had raised that were relevant to the s.146 application could be addressed at the hearing. In this sense he was granted leave to be heard, consistent with r.2.03(2) of the Bankruptcy Rules and the principles referred to at [3] above.
Mr Rahman filed written submissions and an affidavit (that was in essence a further submission) on 20 February 2017.
I did not, and do not, consider it necessary or appropriate to make an order including Mr Rahman as a party to these proceedings (see r.11.01 of the Rules). I am satisfied that he was given a real and practical opportunity to be heard and that no injustice was done to him in this respect, notwithstanding that, as discussed below, he did not participate in the proceedings after I refused his application that I recuse myself from hearing the Trustee’s application. Despite his withdrawal, I considered his submissions and interim application in relation to whether the orders sought by the Trustee should be made.
The Recusal Application
On 1 March 2017 Mr Rahman filed two copies of a further untitled document (referred to for convenience as the recusal submission). He appeared at the start of the hearing on 6 March 2017 and confirmed that he sought that I recuse myself from hearing this matter.
Both Mr Rahman and counsel for Mr Lombe addressed the recusal application. I proceeded on the basis that Mr Rahman had standing to make such an application. I declined to recuse myself and indicated that reasons would be provided at a later date. These reasons are now given at [12]-[37] below.
The recusal submission was somewhat lacking in clarity. It commenced as follows:
NO Confidence and Exclusion against Hon. BRANES J [FM]] FCC, Sydney in the Proceedings above made orders pursuant to Respondent’s Hearing of Interim Application- Notice of Filing on 30/12/2016 and Hearing on 08 February 2017 and made Orders 1. The Application under s146 of the Bankruptcy Act be adjourned for hearing at 10.15 am on Monday 6 March 2017 and 2. Mr. Rahman may file and serve any written submissions and affidavit evidence on or before 27 February 2017’ are gross violations and Crimes against the administrations of justice under Criminal Code Act (cth) 1995 , Crimes Act (Cth) 2014 –but to protect the White collar Criminal Offenders of Mafia Gangs David Lombe, Applicant in this Proceedings and Cohorts of High Court Case No.S31/2015 Rahman V Peter Blair & ORS [19 Respondents ] and S282/ 2015 Rahman v Guy Moloney, D.Lombe & ORS [Four ] Respondent and subsequent decisions against Respondents] as God Mother similarly protecting by God Father Gregory Smith AG, [Ousted] Liberal Regimes’ Attorney General (s) as Hon. BRANES protecting made decisions in proceedings since appointment initially Magistrates and later Justice in 2013 submitted statute enactments below at for prohibition Docket Justice for Hearing on 06 .March 2017 for upheld justice as per submissions made on 20 February 2017 (errors and emphasis in original).
It may be that the reference to the former Attorney-General of New South Wales is related to the fact that the Attorney-General successfully sought orders pursuant to s.8 of the Vexatious Proceedings Act 2008 (NSW) prohibiting Mr Rahman from instituting proceedings in New South Wales without first obtaining leave of the Supreme Court (see Attorney-General of New South Wales v Rahman [2014] NSWSC 42). If this is Mr Rahman’s concern, it does not provide or support any proper basis on which I should disqualify myself from hearing the Trustee’s s.146 application.
Beyond such contentions, it would appear that Mr Rahman’s concerns mainly related to the directions I made at the directions hearing on 8 February 2017, insofar as the recusal submission addressed several issues which Mr Rahman considered should have been heard and determined by this court in these proceedings prior to and separately from any consideration of the Trustee’s s.146 application.
I endeavoured to explain to Mr Rahman the test for apprehended bias on the part of a judge. However when I then asked him why I should recuse myself, he said: “No bias. You have done the crimes. Simple things. No bias.” He proposed that I should be replaced by a “neutral” judge, that is, someone he perceived as not dishonest and not corrupt. In this context Mr Rahman suggested that I, and various judges of other courts, including the High Court, the Federal Court and the Supreme Court, who had made decisions in matters in which he had been involved, had committed “serious offences”.
The principles in relation to apprehended bias are well-established. In Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63, Gleeson CJ, McHugh, Gummow and Hayne JJ set out the test as follows at [6]:
…a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide…
(and see Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [31]).
This principle was further explained in Ebner at [8]:
The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
Hence, as pointed out by Heydon, Kiefel and Bell JJ in British American Tobacco Australia Services Limited v Laurie (2011) 242 CLR 283; [2011] HCA 2 at [139], it is “the perception of the hypothetical observer that provides the yardstick”.
Mr Rahman was not legally represented. His oral and written submissions were at times confusing and difficult to follow. I have nonetheless endeavoured to ascertain and consider the basis on which he sought that I recuse myself.
In essence, Mr Rahman’s primary submission appeared to be that the directions I made on 8 February 2017 listing the Trustee’s s.146 application for hearing and giving him the opportunity to file affidavit evidence and to make written and oral submissions were in themselves affected by bias or apprehended bias or were such as to give rise to an apprehension of bias in relation to the conduct of the hearing or to amount to corruption and/or commission of a criminal offence on my part. What is in issue for the purposes of the recusal application is whether the matters raised by Mr Rahman might lead a reasonable independent observer to conclude that I might not bring an impartial mind to the resolution of the questions I am required to decide in this case or are otherwise such as to establish a proper basis for recusal.
Mr Rahman took particular issue with the fact that I did not accede to his desire have the issues raised in his interim application dealt with in these proceedings on a date prior to and separately from the hearing of the s.146 application. Mr Rahman raised issues about the jurisdiction of this court to hear the s.146 application, whether he was bankrupt, and Mr Lombe’s standing. He also appeared to be of the view that this court should consider afresh matters that had been determined in other courts and that I should find that criminal offences had been committed by various people.
I have had no involvement in any of the past litigation, in this court or elsewhere, involving Mr Rahman. To the extent that Mr Rahman's submission was to the effect that no judge of this court (or of the Federal Court or the Supreme Court) is entitled to hear his case, that is plainly fanciful. At the time of the recusal application, my only involvement in this matter had been the making of directions on 8 February 2017. These were confined to procedural matters and involved no consideration of the substantive s.146 application or, indeed, of any of the substantive issues raised by Mr Rahman. At the directions hearing I indicated to Mr Rahman that issues such as jurisdiction and standing would be considered in the context of hearing argument in relation to the s.146 application, at which time he could also raise any other issue relevant to the s.146 application.
I am not satisfied that his disagreement with the case management procedure adopted (in circumstances where he was being given the opportunity to be heard and the issues he wished to raise were to be considered as objections to the appropriateness of making the order sought by the Trustee) would justify a conclusion that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of the matters before the Court.
Insofar as Mr Rahman also contended that I erred in some way in unrelated past matters, this would not of itself support a contention of apprehended bias (see Szepesvary v Weston (Trustee), in the matter of Szepesvary (Bankrupt) [2016] FCA 1464 per Bromberg J). His concern in this respect appeared to be based on the fact that I have previously considered bankruptcy matters and, in that context, addressed jurisdictional and/or “constitutional” issues not dissimilar to those which he seeks to raise in the present proceedings. He referred to decisions I made in 2005, including one cited by Raphael FM in rejecting a “constitutional” argument raised by Mr Rahman in opposing the creditor’s petition (see Dubs v Rahman [2012] FMCA 664 referring to Australian Litigation Fund Pty Ltd v Mearns (No 3) [2005] FMCA 1870). However these concerns are not such as to establish an apprehension of bias. As pointed out in Helljay Investments Pty Ltd v Deputy Commissioner of Taxation (Cth) (1999) 166 ALR 302; [1999] HCA 56 by Hayne J at [12]:
The principles about apprehension of bias must be understood in the context of a judicial system founded in precedent and directed to establishing, and maintaining, consistency of judicial decision so that like cases are treated alike and principles of law are applied uniformly. The bare fact that a judicial officer has earlier expressed an opinion on questions of law will therefore seldom, if ever, warrant a conclusion of appearance of bias, no matter how important that opinion may have been to the disposition of the past case or how important it may be to the outcome of the instant case. Fidelity to precedent and consistency may make it very likely that the same opinion about a question of law will be expressed in both cases. But that stops well short of saying that the judicial officer will not listen to and properly consider arguments against the earlier holding…
In addition to asserting generally that I previously made wrong and unlawful decisions said to be in violation of s.77(iii) of the Constitution and to amount to “crimes against the humanity and liable for justice” (sic), Mr Rahman took issue with decisions of various named judges of the Supreme Court, the Federal Court and the High Court, suggesting that they had also in some way violated s.77(iii) of the Constitution and committed offences involving a miscarriage of justice and crimes against humanity. He referred to various judgments of other courts. These concerns are not a proper basis for recusal.
I have also borne in mind that, as Flick J explained in Kennedy v Secretary, Department of Industry (No. 2) [2016] FCA 746 at [19], “a judge should not recuse himself or herself from hearing a particular case without there being a proper and substantial reason for doing so” and “it has been said that the “case law demonstrates that appeasement is not an appropriate ground for recusal.”” Mason J made clear in Re JRL; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342 at 352 that:
[a]lthough it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.
Mr Rahman also asserted that he was not bankrupt and did not owe a debt to anybody, that the claims made by Mr Lombe and others were fraudulent, that various named persons were “white-collar economic criminals” and that this court should have pronounced legitimate his endeavours to establish in other proceedings in other courts that such persons had made unlawful claims and had committed various criminal offences.
The fact that I did not accede to Mr Rahman’s desire to have determined a wide range of issues as a preliminary matter in the present proceedings (some of which were outside the jurisdiction of this court and some of which were not properly the subject of these proceedings) is not such that a fair-minded lay observer, properly informed about the nature of the proceedings, might reasonably apprehend that I might not bring an impartial mind to the resolution of the questions I am required to decide in these proceedings.
One can accept that the directions hearing did not proceed as Mr Rahman expected, or at least hoped, in that the Court did not adopt his desired position of addressing his concerns about constitutional issues, jurisdiction, locus standi, the “legitimacy” of numerous cases in which he had been involved in both State and Federal courts and his assertions of criminal behaviour on the part of his Trustee in bankruptcy and others, including members of the legal profession, prior to consideration of the s.146 application. However not only is apprehended bias to be assessed from the perspective of the hypothetical fair-minded lay observer, but also, as Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ pointed out in Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 at 493, the reasonableness of an apprehension of bias is to be considered in the context of “ordinary judicial practice”. This includes the reality that trial judges must respond to the need for active case management to facilitate the just, efficient and economical resolution of proceedings, bearing in mind the obligation to resolve the real issues in proceedings and to ensure that proceedings are not protracted (see s.42 of the FCCA Act and see generally the principles considered in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27).
I acknowledge that Mr Rahman appears to believe that the case management approach I adopted in these proceedings favoured Mr Lombe at his expense, reflecting some asserted interest on my part in protecting what Mr Rahman described (in scandalous terms) as “white collar criminals” such as his Trustee in bankruptcy and various respondents in proceedings in the High Court in which Mr Rahman is involved. His general assertion that in making the directions of 8 February 2017 I acted corruptly, committed a crime and/or acted to protect white collar criminals and/or mafia gangs, appears to be based on the fact that he has been unsuccessful in claims referred to in his interim application against his Trustee in bankruptcy, the Official Trustee in Bankruptcy and various other respondents to proceedings in other courts. The recusal submission complained that I failed to pronounce any “defence of legitimacy” in relation to Mr Rahman’s concerns about his claims against other parties in various proceedings or in relation to actions of the Trustee and others concerning the administration of his bankrupt estate. He also complained that various such persons had committed crimes. He appeared to submit that this court should have determined the legitimacy of various actions taken by Mr Lombe and others before considering the s.146 application. In addition, Mr Rahman submitted that in failing to “validate the offences of and crimes of miscarriages of justice”, I had demonstrated that I was a “tyrant and despot” by “upholding” the Registrar’s orders and “negate[ing] the interim notice and issues submitted.”
It is the case that in his interim application of 30 December 2016 Mr Rahman appeared to seek review of the procedural orders made by the Registrar which allocated the matter to me as the docket judge, listed the matter for directions before me, and gave Mr Lombe and (it appears) Mr Rahman the opportunity to file affidavit evidence. However, at the directions hearing in February 2017 Mr Rahman agreed that I should make directions listing the matter for hearing. I did so, including giving him the opportunity to file evidence and submissions and to be heard. In this way, even if, contrary to my view, Mr Rahman ought to be regarded as a party to the proceedings with standing to seek review under s.104(2) of the FCCA Act, I considered afresh the appropriate directions to be made in this matter.
Mr Rahman also contended that in making the directions on 8 February 2017, rather than dealing with the issues he wished to have addressed in the manner he proposed, I had engaged in “judicial racism” and favoured my “social class - the offenders White Collars Economic Criminals” (sic) who were said to be “liable for penalty” and that I was a transgressor who had demonstrated contempt for constitutional provisions and The Universal Declaration of Human Rights, that I had violated the Criminal Code Act and the Crimes Acts of New South Wales and the Commonwealth, “and procedural protections under the USA (sic) Constitution”. Mr Rahman equated the directions I made listing the s.146 application for hearing with the executive order made by the President of the United States of America banning the entry into the United States of citizens of certain nations.
Mr Rahman’s disagreement with the procedural directions I made and these assertions, including that I committed criminal offences and/or engaged in corruption and acted to protect “white collar criminal offenders of mafia gangs” (including the Trustee), are not such as to give rise to an apprehension of bias or otherwise such as to constitute a proper basis for recusal.
Mr Rahman also took issue with the fact that in the directions hearing of 8 February 2017, in response to his loud and insistent disagreement with the fact that I made directions for a hearing at which the matters he wished to raise could be considered as objections to the s.146 application (rather than directions for a preliminary hearing for determination of all the issues he wished to have determined), I asked him not to yell at me and to lower his voice for the purposes of the transcript. He also claimed that in making the directions I made I had discriminated against him on the basis that he was not a legal practitioner.
There was a need to control the manner in which the directions hearing was conducted. I confirmed with Mr Rahman (who claimed that he was “supposed to be” a barrister with expertise in particular areas of law) that he was not admitted. I did not make the orders sought by Mr Rahman. However I do not think that a reasonable independent observer might have concluded from this, or otherwise from the conduct of the directions hearing, that I had already decided to make the s.146 order sought by the Trustee or to disregard any matters raised by Mr Rahman in opposition to such order. I have had regard to what occurred in the directions hearing, but do not think that anything that was said by me, the orders that I made or the conduct of the directions hearing generally might give rise to the requisite reasonable apprehension from the perspective of the fair-minded lay observer that I might not bring an impartial mind to resolution of the questions I am required to decide in the present proceedings or otherwise establish a proper basis for recusal.
I am not satisfied that, viewed from the perspective of the fair-minded lay observer, the matters raised by Mr Rahman, considered individually and cumulatively, might give rise to a reasonable apprehension that I might not bring an impartial mind to bear on the matters to be decided in this case.
The matters raised by Mr Rahman were not such as to establish proper grounds for recusal. For these reasons, on 6 March 2017 I refused the application to recuse myself, indicated that reasons would be provided electronically at a later date and that the hearing of the s.146 application would proceed.
The Section 146 Application
At that point in the hearing on 6 March 2017 Mr Rahman stated that, as he had earlier foreshadowed would occur if I did not recuse myself, he would not stay for the hearing of the s.146 application. Despite this, he then interrupted counsel for the Trustee to repeat some of the claims he had made in his interim application, in particular that he was not bankrupt; that he did not owe anybody money; that various people, including at least 19 respondents to proceedings in which he was involved before the High Court, should be brought to justice; that he had issues in relation to what he described as “white-collar economic offenders”; that money had been wrongly taken out of an account by the Trustee of his bankrupt estate; and that his property had been sold. He reiterated his contention that Australian judges were involved with Mafia gangs supporting such white collar criminals. He tendered a bundle of documents, including documents apparently related to real and personal property which formed part of his bankrupt estate, a Fraud Report form dated 17 October 2014 referring to the Commonwealth Bank, copies of Local Court order notices relating to him and a letter to him of 11 February 2014 from the University of Technology, Sydney in relation to costs orders against him and readmission requirements. Mr Rahman indicated that he relied on these documents and wished to bring them to the Court’s attention. He then left the courtroom and took no further part in the hearing.
While I allowed the tender by Mr Rahman and have had regard to such documents, the material tendered is either of no relevance to the present proceedings or, as explained below, does not support any contention that the orders sought by the Trustee should not be made.
Notwithstanding Mr Rahman’s decision not to participate in the hearing, I have also had regard to the issues raised in his “interim application” and submissions, insofar as it is possible to discern what is intended, in the context of considering the s.146 application. For the reasons that follow I am not satisfied that any of these matters are such as to warrant exercising my discretion not to make the orders sought by the Trustee. Moreover Mr Rahman has not established any basis on which it is appropriate in these proceedings to make any of the orders sought by him in his interim application. It should be dismissed.
In support of the application for an order under s.146 of the Act Mr Lombe relied on his affidavits of 11 November 2016, 12 December 2016 and 3 March 2017 (which was filed, with leave, on 7 March 2017).
Section 146 of the Act provides for a trustee in bankruptcy to seek an order of the Court for the distribution of dividends to creditors where a bankrupt has failed to file a statement of affairs. Hence, the first question that arises in an application of this nature (see Roufeil at [5]) is whether Mr Rahman failed to file a statement of his affairs as required by the Act.
If the bankrupt has failed to file a statement of affairs, then it is necessary to determine whether the Court should, in the exercise of its discretion, order the distribution of dividends amongst the creditors.
Under s.54(1) of the Act, where a sequestration order is made, the person against whose estate it is made is required within 14 days from the day on which he or she is notified of the bankruptcy to make out and file with the Official Receiver a statement of his or her affairs and to furnish a copy of the statement to his or her trustee in bankruptcy.
As pointed out by Spender J in Rees & Stubberfield, in support of a s.146 application the trustee should adduce evidence not only of the failure by the bankrupt to file a statement of affairs but also of attempts by the trustee to obtain the statement of affairs, the response of the bankrupt, if any, to any such requests, evidence that the bankruptcy administration is all but complete, except for distribution of a dividend to creditors who have proved their debts, details of creditors known to the trustee, the amounts of debts that have been proved, and the delay in the administration of the estate occasioned by the absence of a statement of affairs, as well as a statement to the effect that the delay is causing prejudice to creditors.
Mr Rahman did not dispute that, as attested to by Mr Lombe, he has not filed a statement of affairs.
Mr Lombe’s unchallenged affidavit evidence is that on 19 July 2012 Federal Magistrate Raphael made a sequestration order against the estate of Mr Rahman (see Dubs v Rahman [2012] FMCA 664). The petitioning creditor was the Registrar of the University of Technology. Sydney. The debt relied on was based on judgments that came about as a result of the costs assessment process as explained in Dubs v Rahman at [14]. On the date of the sequestration order the Official Trustee in Bankruptcy was appointed trustee of Mr Rahman’s bankrupt estate, as evidenced by a copy of a certificate of appointment of trustee.
On 16 August 2012 the Insolvency and Trustee Service of Australia (ITSA) wrote to Mr Rahman and required him to complete and file a statement of affairs, a copy of which was provided. Annexed to Mr Lombe’s affidavit of 11 November 2016 is a statutory declaration of John Vitanza as to personal service of this correspondence on Mr Rahman on 20 August 2012.
On 8 September 2012 Mr Rahman was served with a notice pursuant to s.77CA of the Act requiring him to file a statement of affairs.
On 19 October 2012 Mr Lombe replaced the Official Trustee as Trustee of Mr Rahman’s estate pursuant to s.181A of the Act. A copy of a certificate of appointment of Mr Lombe as Trustee on 19 October 2012 is in evidence before the Court.
Mr Rahman failed to comply with the notice served on 8 September 2012. Mr Lombe caused the fact of non-compliance to be referred to ITSA (as it was then known) for consideration of prosecution.
In addition, on 22 October 2012 Mr Lombe caused a letter to be sent by registered post to Mr Rahman which, among other things, required him to complete and file a statement of affairs, advised him of the potential consequences of failing to do so, of the time from which his bankruptcy would run, and of the fact that it was open to him to apply to the Court for an extension of time within which to file a statement of affairs. Mr Rahman was also advised that if he needed assistance with the statement of affairs, this could be provided at an interview he was to arrange with Mr Lombe’s office. Annexed to Mr Lombe’s affidavit is a delivery confirmation advice receipt dated 25 October 2012 in the name of Mr Rahman in relation to this letter. Mr Rahman did not subsequently file a statement of affairs or seek an extension of time.
On 4 February 2013 Mr Lombe sent a further letter to Mr Rahman which again required him to complete and file a statement of affairs. The letter also pointed out that in the absence of a statement of affairs, the Trustee was uncertain as to the exact quantum of liabilities of Mr Rahman’s estate and that this had hindered the process of distributing a dividend to creditors. The letter explained that one of the options available to the Trustee in the absence of a statement of affairs was to seek an order under s.146 of the Act in order to proceed with distribution of a dividend to creditors. It was also pointed out that any such further avenues that the Trustee had to pursue in the absence of a statement of affairs may result in incurring further fees in the administration of the estate, thus reducing the amount of funds available to creditors. In addition, the letter stated that as the Trustee was uncertain of the exact quantum of Mr Rahman’s liabilities, he could not speculate on whether an annulment in full could be achieved, but that if he did not receive a statement of affairs, he would assume that Mr Rahman’s liabilities were greater than the asset realisation as at that date and that this would result in him taking possession of two properties in Holsworthy and realising them for the benefit of creditors, with any surplus after annulment being refunded to Mr Rahman. Mr Lombe indicated he would prefer not to resort to such a forced sale which would incur substantial and unnecessary legal costs and reduce any potential surplus entitlement once creditors were paid.
Despite being given this information, Mr Rahman did not file a statement of affairs.
Mr Lombe attested to various steps taken by him thereafter in the administration of Mr Rahman’s estate and explained the circumstances in which he had been engaged in legal proceedings involving Mr Rahman, including proceedings Mr Rahman unsuccessfully initiated in 2013 in the Supreme Court seeking various forms of relief against Mr Lombe in connection with the bankruptcy and the Trustee’s dealing with properties forming part of the bankrupt estate (see for example Rahman v Lombe [2013] NSWSC 1416, Rahman v Lombe [2013] NSWSC 1942 and Lombe v Rahman [2013] NSWSC 1944). There is also evidence that Mr Rahman commenced (or sought to commence) further proceedings in which Mr Lombe was named as respondent, including an application for removal to the High Court of Australia. Such proceedings were unsuccessful.
I accept that in light of these matters Mr Lombe formed the opinion, which was reasonable in all the circumstances, that Mr Rahman was aware of the fact of his bankruptcy and his obligation to file a statement of affairs and that he was unlikely to assist the Trustee to settle a list of his creditors.
In order to be satisfied that Mr Rahman has failed to file a statement of his affairs as required by the Act, it is not necessary to be satisfied that it has been established that there was a wilful refusal or neglect to file a statement of affairs (see Re Sturt; Ex parte Official Trustee in Bankruptcy (2001) 117 FCR 1; [2001] FCA 1649 at [13] per Sackville J explaining that a mere omission to file would suffice). In this case I am satisfied on the basis of the evidence before the Court that Mr Rahman was made aware of his obligation to provide a statement of affairs from early in his bankruptcy, but that he has failed to do so.
Mr Rahman was put on notice of the present proceedings and had the opportunity to address the issues arising in relation to these proceedings. He did not dispute that he had failed to file a statement of affairs and did not seek to do so. The only way in which he addressed his failure to file a statement of affairs was in his claims that he was not bankrupt and did not accept the legitimacy of Mr Lombe's status as Trustee of his bankrupt estate.
On the evidence before the Court I am satisfied that all reasonable steps were taken to notify Mr Rahman of his obligation to provide a statement of affairs and that it is unlikely that he will provide assistance to the Trustee to settle a list of his creditors or file a statement of his affairs.
I am also satisfied on the basis of the evidence before the Court that the Trustee has made appropriate attempts to identify creditors of the estate, notwithstanding the absence of a statement of affairs, by making what may be described as the usual inquiries and searching publicly available information for entries in relation to the bankrupt, including seeking access to his credit file from Veda Advantage Information Service. As a result of such investigations, only two other creditors were identified in addition to the petitioning creditor.
I have also had regard to the fact that, as attested to in his most recent affidavit, the Trustee has now adjudicated each of the proofs of debt lodged in the administration of Mr Rahman’s bankrupt estate. I note in that respect that the proof of debt lodged by the petitioning creditor was disallowed in part.
On the basis of the existence of these creditors and the extent to which their proofs of debt have been allowed, the estate would, as counsel for Mr Lombe pointed out, be a solvent estate, such that on present figures (and assuming no unforeseen future administration expenses), it may be that 100 cents in the dollar may be paid to creditors. In any event, it is clear on the material before the Court that there is money available in the estate to pay dividends. In these circumstances, the delay in the process of distributing dividends gives rise to prejudice to creditors. This prejudice arises from the absence of a statement of affairs. As stated in Official Trustee in Bankruptcy, Re Shaw [1999] FCA 968 (and referred to in Warren McKeon Dickson Pty Ltd v Adorni [2013] FCCA 2267 at [23]), the purpose of s.146 of the Act is:
…to give the Court the means of ensuring that the absence of a statement of affairs does not prejudice those with an interest in the bankrupt’s affairs.
Furthermore, the absence of a statement of affairs in circumstances where the value of the estate’s assets exceeds the value of the debts that have been allowed, also means that it is in the interests of the Bankrupt that the Trustee distribute dividends amongst creditors who have proved their debts with “all convenient speed” (see s.140(1) of the Act) in order to reduce future costs of the administration of the bankruptcy and enable the Trustee to declare and distribute a final dividend such that the bankruptcy may ultimately be annulled pursuant to s.153A(1) of the Act (see Dickson v Adorni at [25]).
At the same time, I also accept that, as submitted for the Trustee, the fact that Mr Rahman’s estate is a solvent estate does not have any negative bearing on the making of the present application, because whatever rights may arise on that basis remain available to be exercised. As pointed out by counsel for Mr Lombe, an order under s.146 of the Act is of limited effect. This application involves no diminution or overriding of rights given by the Bankruptcy Act (for example to have proofs determined in accordance with the Act or to pursue avenues of relief such as annulment). Such rights are not affected by a s.146 application which merely seeks to overcome what may be described as a “roadblock” in relation to the conduct of the administration of a bankrupt estate, namely the absence of a statement of affairs.
I have also had regard to all the matters raised by Mr Rahman in considering whether to make the order sought by the Trustee, insofar as it is possible to do so on the material before the Court. It has to be said that Mr Rahman’s contentions are difficult to comprehend. Many of the issues he wished to raise and to have this court determine appear to relate to matters the subject of proceedings in other courts in which he has been unsuccessful.
As discussed above, in his interim application filed on 30 December 2016 Mr Rahman sought “review” of the directions made by a registrar of this court on 12 December 2016, despite not being included as a party to the proceedings. He sought to rely on ss.104(2) and 102(2) of the Federal Circuit Court of Australia Act 1999 (Cth). However, insofar as Mr Rahman disagreed with the directions made by the Registrar, when the matter came before me on 8 February 2017 he conceded that it was appropriate for this court to make directions listing the Trustee’s application, albeit he wanted the Court to hear and determine the issues he wished to raise in advance of and separately from the s.146 application.
As also discussed above, Mr Rahman appeared to be of the view that before the Trustee’s application could be heard the Court must determine other matters, including whether he was a bankrupt and whether Mr Lombe had standing to bring an application under s.146 of the Act, as well as the “legality” of orders made by the Supreme Court that the Trustee could sell his property. At the same time, he appeared to suggest that this court had no jurisdiction.
There is no basis for Mr Rahman’s suggestion that a sequestration order was not made against his estate so that he is not a bankrupt. His contention that he is not bankrupt is unsustainable. He unsuccessfully appealed to the Federal Court against the sequestration order made by this court (see Rahman v Dubs (No. 2) [2012] FCA 1081) and was also unsuccessful in an application for special leave to appeal to the High Court (see Rahman v Dubs [2013] HCASL 23).
Insofar as Mr Rahman sought to contend that this court does not have jurisdiction in bankruptcy matters, that the Commonwealth Parliament could not enact the Bankruptcy Act or that there was some inconsistency with a law of a State, he unsuccessfully raised such issues in the bankruptcy proceedings in this court, the Federal Court and the High Court.
At first instance Federal Magistrate Raphael rejected such contentions (at [3] and [7]-[12] and see s.27 of the Bankruptcy Act). In the Federal Court (see Rahman v Dubs (No 2)) Flick J found that the confusing manner in which grounds of appeal and orders sought were expressed by Mr Rahman were such that it was preferable to consider the reasons for decision afresh, as well as those arguments that could be discerned from the notice of appeal and written submissions. In that context his Honour noted that the Bankruptcy Act was an exercise of the legislative power conferred on the Parliament by s.51(xvii) of the Constitution (at [11]) and referred to the acceptance in R v Federal Court of Bankruptcy; Ex parte Lowenstein (1938) 59 CLR 556; [1938] FCA 10 at 574-575 per Starke J that the power of the Parliament with respect to bankruptcy extended (among other things) to providing for the “distribution among creditors” and to creating courts with jurisdiction in bankruptcy. Flick J also rejected (at [13]) any argument founded upon any perceived inconsistency between federal and state law having regard to the “supremacy” of the Commonwealth law and concluded at [14]) that no question arose as to the constitutional competence of the Commonwealth Parliament to enact the Bankruptcy Act or to make provision for the issue of a bankruptcy notice or the making of a sequestration order.
In refusing special leave to appeal to the High Court, Kiefel and Gaegler JJ saw no reason to doubt the correctness of the decision of the Federal Court (which I am bound to follow). Further, in Simandl v Deputy Commissioner of Taxation (2008) 167 FCR 501; [2008] FCA 450 Cowdroy J rejected the contention that the Federal Magistrates Court was not a court within Chapter III of the Constitution.
Insofar as any such matters were intended to be re-agitated by Mr Rahman in these proceedings, such contentions do not establish that this court has no jurisdiction or that there is otherwise a “constitutional” obstacle to the making of an order under s.146 of the Act. I am satisfied that this court has power to consider the s.146 application and to make the orders sought (and see ss.27 and 30 of the Bankruptcy Act). Further, and contrary to what appeared to be Mr Rahman’s contention, the fact that the Bankruptcy Act does not deprive State courts of their ordinary jurisdiction in matters arising under the general law to which the trustee in bankruptcy or a bankrupt may be a party, does not alter the fact that this court has jurisdiction under the Bankruptcy Act to make the orders sought by the Trustee in these proceedings (and see Dubs v Rahman at [12]).
Mr Rahman also submitted generally that Mr Lombe had no standing to bring these proceedings. It appears that he disputed whether Mr Lombe was in fact the trustee of his bankrupt estate. Insofar as this was based on the argument that Mr Rahman was not in fact bankrupt it is without merit for the reasons outlined above. Beyond this, a copy of the certificate of appointment of Mr Lombe as Trustee of Mr Rahman’s bankrupt estate is in evidence. It records that the information therein was extracted from the National Personal Insolvency Index, certifies such information as correct as at the date of issue and states, correctly, that pursuant to reg.3.07 of the Bankruptcy Regulations 1996 (Cth) the document can be used as evidence in any proceedings without further proof.
I am satisfied on the evidence before the Court that Mr Lombe is the Trustee of Mr Rahman’s bankrupt estate and hence that he has standing to seek an order under s.146 of the Act.
Mr Rahman also contended that the whole of the present proceedings should be “rescinded”, not only because he was not bankrupt and did not owe any money as alleged, but also on the basis of completely unsubstantiated allegations of perjury, criminal offences and production of false documents by the Applicant, his solicitors and others. Mr Rahman suggested that this court should, of its own motion “make orders for imprisonment” in relation to various persons who appear to have had some involvement in the extensive litigation in which Mr Rahman has previously engaged.
Mr Rahman unsuccessfully challenged in the State courts the costs orders and assessments which founded the bankruptcy notice. He has exhausted his appeal rights in relation to the sequestration order. The present proceedings are not an opportunity to revisit issues he raised unsuccessfully in those proceedings. Insofar as Mr Rahman’s assertion that he is not bankrupt rests on his assertion that this court had no jurisdiction to make the sequestration order, as set out above that claim was rejected on appeal and there is no basis for such an assertion. If his contention that he did not owe any money as alleged may be seen as relating to the debt claimed to be owed to the petitioning creditor, again, that issue was determined in the proceedings in which the sequestration order was made. In any event, there is no evidentiary basis in the material filed or tendered by Mr Rahman for the proposition that he did not owe a debt to the petitioning creditor.
Mr Rahman is a bankrupt. He has not sought annulment of his bankruptcy. His claim that he does not owe any money is not made out. The documents he tendered about debts claimed to be owed by the University of Technology, Sydney and in relation to his exclusion from the University do not assist. There is detailed evidence from Mr Lombe as to creditors (including the petitioning creditor) who have lodged proofs of debt. Mr Lombe has adjudicated the proofs of debt. While part of the debt claimed by the petitioning creditor was disallowed (as relating to costs orders made after the date of bankruptcy), the balance of this debt and the debts of two other creditors have been admitted. There has been no application for review of the Trustee’s decisions in this respect and no annulment application commenced or foreshadowed. Mr Rahman’s general assertion that he does not owe any money is without foundation.
Mr Rahman takes issue with proceedings in other courts which are the basis for some of the creditors’ debts which have been accepted by the Trustee. There is no basis on which to challenge such liability in these proceedings.
Mr Rahman’s concern appears to relate in part to the conduct of his Trustee in bankruptcy (and others) in connection with the realisation of property he owned. Some of the issues he raises appear to have been the subject of various unsuccessful proceedings or applications, including in the Supreme Court of New South Wales. There is no basis on which to challenge the approach taken in such other proceedings. His contentions about the conduct of the Trustee are generally expressed and unsubstantiated and provide no basis on which I should decline to make an order allowing distribution of dividends to creditors.
While Mr Rahman contended that this court should consider the “legality” of decisions made by other courts (notably the Local Court, the Supreme Court and the High Court), these concerns also provide no basis on which it is appropriate not to make the s.146 order sought by the Trustee.
Mr Rahman made complaints about the conduct of various persons (including members of the judiciary, legal practitioners and others). His submissions included unsubstantiated and scandalous assertions as to criminal conduct, without any arguable basis. Such contentions provide no basis on which to dispute the appropriateness of the s.146 order sought by Mr Lombe. In any event, such complaints and assertions about a need to impose criminal sanctions are not matters within the jurisdiction of this court. In particular, while Mr Rahman takes issue (in very strong terms) with the approach taken in proceedings in other courts or by other judges, this Court does not have jurisdiction to make orders in some way “validating” Mr Rahman’s claims or contentions in those other proceedings.
It is notable that, as in these proceedings, in the Supreme Court proceedings that Mr Rahman instituted against Mr Lombe, referred to at [55] above, he sought to argue that he was not bankrupt, that the decision that he was made a bankrupt was wrong and constitutionally invalid and in some manner illegal, that Mr Lombe could not act as his trustee and that what he had done as Trustee was invalid and perhaps fraudulent. Mr Rahman also claimed there was a constitutional issue in relation to the relationship between Federal and State courts.
Lindsay J summarily dismissed Mr Rahman’s proceedings which were described as basically a complaint disputing the validity of the sequestration order. Rein J then dismissed a motion to set aside Lindsay J’s judgment. In the course of his judgment, Rein J stated that as the Federal Court had determined finally that Mr Rahman was a bankrupt, it followed that Mr Lombe was validly appointed as his trustee, and as trustee he was entitled by law to have real property in Mr Rahman’s bankrupt estate transferred to him in order to set about satisfying the creditors of Mr Rahman’s bankrupt estate ([2013] NSWSC 1942 at [21]). His Honour described Mr Rahman’s contentions that Mr Lombe was acting illegally and was fraudulent as “entirely erroneous” and suggested that Mr Rahman was seeking to relitigate matters on which he had failed in other courts.
The same may be said in the present proceedings in which Mr Rahman again seeks to relitigate matters on which he has failed in other proceedings and makes similar allegations about Mr Lombe. This is not a basis on which to exercise the discretion not to make the order sought by the Trustee.
In particular, insofar as Mr Rahman purports to challenge the actions of Mr Lombe as Trustee and to make unsubstantiated allegations of illegality and fraud, such unsupported allegations do not provide any basis for declining to make an order under s.146 of the Act.
None of the issues raised by Mr Rahman provide any basis for the Court to decline to make the orders sought by Mr Lombe. I have had regard to the limited nature of the present proceedings. As indicated, this application involves no diminution or overriding of any rights of Mr Rahman or of creditors under the Bankruptcy Act, whether in relation to proofs of debt or otherwise. There is no evidence of any present or proposed exercise of such rights relevant to the discretion to make the order sought by the Trustee.
More generally, insofar as Mr Rahman seeks declarations in some way reopening various proceedings in which he has been involved in both State and Federal courts for what he describes as “nullity and new trials”, this court has no power to make such orders. Nor is there any basis in the material before the Court to support Mr Rahman’s claim for $1.85 million for what he describes as property and compensatory damages, including costs.
On the evidence before the Court, I am satisfied that I should make the orders sought by the Trustee and that to delay the administration of the estate further would serve no useful purpose.
Given the matters discussed above and having regard to Mr Rahman’s withdrawal from the hearing, I also consider it appropriate to dismiss his interim application.
I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Date: 20 April 2017
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