Lowbeer v De Varda

[2016] FCCA 2967

FEDERAL CIRCUIT COURT OF AUSTRALIA

LOWBEER v DE VARDA [2016] FCCA 2967

Catchwords:
BANKRUPTCY – Bankruptcy Act 1966 (Cth) – creditors petition lapsing – contested argument over costs – no order as to costs.

Legislation:

Bankruptcy Act 1966, s.52(4)

Cases cited:

Vakuta v Kelly (1989) 167 CLR 560

Smits v Roach (2006) 227 CLR 423

Applicant: JOHN JOSEPH LOWBEER

Respondent: JOSEPH DE VARDA

File Number: SYG 2482 of 2015

Judgment of: Judge Dowdy

Hearing date: 11 November 2016

Date of Last Submission: 11 November 2016

Delivered at: Sydney

Delivered on: 11 November 2016

REPRESENTATION

Counsel for the Applicant: Mr B Skinner

Solicitors for the Applicant: Austin Legal

The Respondent appeared in person.

THE COURT ORDERS AS FOLLOWS:

1. Grant leave to Mr Vatche Janoyan to withdraw from the record in this proceeding as lawyer for Mr De Varda and dispense with any form or time requirements in that regard.

2. Order that there be no order as to costs with respect to the Creditors Petition herein filed on 9 September 2015 to the intent that each party pay and bear their own costs.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2482 of 2015

JOHN JOSEPH LOWBEER

Applicant

And

JOSEPH DE VARDA

Respondent

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

1. I have before me two creditors petitions brought by the same petitioning creditor, Mr Lowbeer, against in the first instance, Mr De Varda, the respondent in this proceeding and in the second instance, Rabbi Tov Lev in SYG2590/2015.  The creditors petition against Mr De Varda in this proceeding was filed on 9 September of last year, and the creditors petition against Mr Tov Lev was filed on 21 September of last year. 

2. This matter came back to Court and for the first time before me on 23 September.  On that occasion Mr Austin, the solicitor for the petitioning creditor appeared, as did Mr De Varda and I permitted him to speak and make submissions on behalf of Rabbi Tov Lev in his absence from the Court.

3. Mr Austin frankly informed the Court that both petitions had lapsed because it was 23 September and each petition had been brought more than a year before that date, namely as I have stated, on 9 September and 21 September 2015 respectively.  So he accepted the inevitability that the petitioning creditor could not proceed on the respective creditors petitions.  What then transpired in debate was that Mr Austin was prepared to accept and was seeking that there be no order as to costs, whereas Mr De Varda wanted his costs and asserted to the Court that he had incurred legal costs for which he wanted indemnity.  In these circumstances, I felt that I ought to hear proper submissions rather than just deal with the matter on the run in the directions list, that is the Friday directions list that I was conducting on 23 September 2016.

4. Accordingly I set the matter down for today and gave the opportunity to Rabbi Tov Lev to appear.  Each of Mr De Varda and Rabbi Tov Lev have made written submissions which I have read and they have made oral submissions here today and I have taken them to be saying to the Court that they continue to want their legal costs in relation to the creditors petitions which will now, in the circumstances which I have just stated, not proceed to a hearing on the merits.

5. Today for the petitioning creditor, Mr Skinner of Counsel appeared and he submitted, consistently with what Mr Austin had told the Court on 23 September, that the petitioning creditor did not seek costs and was happy that each party bear its own costs, and that there should be no order as to costs.  I have considered the circumstances in relation to each petition and the history of the petitions since they were presented, and it seems to me that most of the year which has transpired since the filing of the petitions has been taken up with the Court and the petitioning creditor dealing with a variety of complaints about service and about subpoenas, which led to a contested argument before Registrar Ng on 6 June 2016, when the subpoenas that had been issued by Mr De Varda and Rabbi Tov Lev and another associated debtor were set aside by the Registrar, with the costs of that outing being, in effect, the petitioning creditor’s costs on the petition.

6. There were then further opportunities for the matter to come back within the year which would have meant that the matter could have been determined in a timely way, or alternatively, the time and life of the petitions could have been extended by the Court.  However, in the result the petitioning creditor did not inform the Court in a sufficiently timely way that the expiry of the petitions was imminent so the matter was not dealt with and the life of the petitions was not extended past the applicable year.  And it is in those circumstances that the petitioning creditor accepts that he cannot proceed and if he wishes to continue to further proceed against both respondents he will have to issue and serve new bankruptcy notices and petitions.

7. In the result, exercising my discretion and having listened to the submissions today, I have come to the view that there should be no order as to the costs of these petitions.  Certainly, the petitioning creditor would not be entitled to any costs order and the petitioning creditor has understood and accepted that. However, I also do not consider that Mr De Varda and Rabbi Tov Lev should have the advantage of a costs order where in the circumstances a significant cause of the delay in the hearing of the petitions within the allowed period has resulted from either their lawyer seeking that the petitioning creditor and the Court convenience his personal availability to appear and much time was taken up by the argument over subpoenas (commencing on 16 December 2015) and ultimately ending when the Court on 6 June 2016 found as to two subpoenas that they were not maintainable and did not have a legitimate forensic purpose and as to three subpoenas they were withdrawn by the respondents themselves.

8. I take the view that this is not a case where there is any need to make a declaration that the petitions have lapsed. In my view, this judgment will stand for the position, as I find, that by force of law and section 52 (4) of the Bankruptcy Act, both petitions have lapsed.

9. There will be no order as to costs in relation to either of the petitions. 

10. I go on to note this. During the course of their oral submissions, and in the written submissions of Mr De Varda and Rabbi Tov Lev respectively dated 21 September 2016, 27 October 2016 and 7 November 2016, both Mr De Varda and the Rabbi have urged me to report these proceedings, and, in particular, the conduct of Mr Austin and of a Mr Neumann to various public bodies such as the Director of Public Prosecutions or the Australian Federal Police or NSW Police or like bodies.  I refuse to do so.  There is nothing before me or in the files that would indicate that Mr Austin has acted in any other way than properly as the solicitor for the petitioning creditor in relation to these matters.  And I have not the slightest intention of referring any aspect of the proceedings to any organisation.

Post Judgment Application for Recusal

1. I record that almost immediately after I had delivered the above judgment in relation to the costs of the creditors petitions Mr De Varda asked me to recuse myself on the grounds of apprehension of bias, conflict of interest and favouritism, arising out my alleged friendship and professional relationship and involvement in a New South Wales Bar Association Professional Conduct Committee with Mr Skinner, who as I have said appeared as Counsel for the petitioning creditor. I took Mr De Varda as also making his recusal submission on behalf of Rabbi Tov Lev.

2. I took the view that it was too late for any application for recusal to be made because Mr De Varda had waived any right he had to make an objection upon the ground of bias or such, consistent with such authorities in the High Court of Australia as Vakuta v Kelly (1989) 167 CLR 560 and Smiths v Roach (2006) 227 CLR 423.

3. The transcript of the hearing before me on 11 November 2016 will speak for itself, but it was clear to me at the time that when at TP 29.36-41 Mr De Varda made his assertion of the basis of his recusal application that he had already prepared himself to make such an application before the hearing commenced at 2.15pm. Indeed he had a written submission ready seeking that relief, which he sought to have me receive and read.

4. Accordingly, it seemed clear to me that Mr De Varda, whilst contemplating a recusal application, had adopted a deliberate course of initially not taking any objection to my sitting as a Judge before the hearing but rather took his chance of a successful judgment and only after he realized that the judgment I had delivered was not favourable to him, did he then make his recusal application.

5. I further record that I informed Mr De Varda that his application for recusal was made too late and also that I would have rejected any application to recuse myself, even if it had been made before the commencement of the hearing. This was because, whilst I had known Mr Skinner as a member of the Bar for some thirty years or so and had always had cordial and affable relations with him and had known him reasonably well, as members of the Bar who are in contact with each other from time to time, he had never been a friend and nothing in terms of my professional dealings with Mr Skinner over the years would have justified recusing myself from hearing the applications before me for determination.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Dowdy

Date:     17 November 2016