Macquarie Leasing Pty Ltd v Culleton
[2015] FCCA 524
•12 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MACQUARIE LEASING PTY LTD v CULLETON | [2015] FCCA 524 |
| Catchwords: PRACTICE AND PROCEDURE – Whether non-lawyer to appear – where lawyer on the record – where non-lawyer a family friend – consideration of factors relating to appearance by a non-lawyer. PRACTICE AND PROCEDURE – Venue – application for transfer to another registry – consideration of factors relevant to transfer. PRACTICE AND PROCEDURE – Discovery – non-party discovery – failure to personally serve application on non-party – where no affidavit accompanying application. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.43, 44, 47, 52(1) & (2) Federal Circuit Court (Bankruptcy) Rules2006 (Cth), rr.4.02, 4.04, 4.05, 4.06 Federal Circuit Court of Australia Act 1999 (Cth), ss.44, 66, 67, 68, 69 |
| Australian Competition and Consumer Commission v Internic Technology Pty Ltd & Anor (1998) 42 IPR 225 Australian Steel Co (Operations) Pty Ltd v Steel Foundations Ltd & Anor (2003) 58 IPR 69; [2003] FCA 374 Clyne v Deputy Commissioner of Taxation (1985) 5 FCR 1 Culleton v Macquarie Leasing [2015] FCA 188 Damjanovic v Maley (2002) 55 NSWLR 149; [2002] NSWCA 230 Deputy Commissioner of Taxation v Debaugy (2012) 263 FLR 193; [2012] FMCA 451 Goodall v Nationwide News Pty Ltd [2007] FMCA 218 No Groundwater v Territory Insurance Office (2004) 183 FLR 437; [2004] FMCA 381 Macquarie Leasing Pty Limited v Culleton [2014] FCCA 1714 McIlwain v Ramsey Food Packaging Pty Ltd & Ors (2005) 221 ALR 785; [2005] FCA 1233 Melaleuca of Australia and New Zealand Pty Ltd v Duck [2005] FCA 1481 National Mutual Holdings Pty Ltd & Ors v The Sentry Corporation & Anor (1988) 19 FCR 155 Omiros Pty Ltd v PM Developments Pty Ltd & Ors (No. 2) [2005] FMCA 234 Picos v HeathEngine Pty Ltd & Anor [2014] FCCA 640 PM Developments Pty Ltd v Omiros Pty Ltd [2005] FCA 1090 Reynolds v Minister for Health & Anor (2010) 247 FLR 425; [2010] FMCA 843 Re Sanders (2003) 1 ABC(NS) 408; [2003] FCA 1079 Sanders v Knudsen & Yates trading as the Hargreaves Practice [2004] FCAFC 305 Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 The Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962 Verge & Anor v Devere Holdings Pty Ltd & Ors (No. 3) [2008] FMCA 1220 WG & B Manufacturing Pty Ltd v Telsa Farad Pty Ltd [1999] FCA 859 WH Books Ltd & Ors v Miller & Anor (1998) 41 IPR 364 |
| Applicant: | MACQUARIE LEASING PTY LTD |
| Respondent: | RONALD NORMAN CULLETON |
| File Number: | SYG 3244 of 2013 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 18 December 2014, 12 February 2015 |
| Date of Last Submission: | 12 February 2015 |
| Delivered at: | Perth |
| Delivered on: | 12 March 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms K Lendich |
| Solicitors for the Applicant: | Douros Jackson Lawyers |
| For the Respondent: | No appearance |
| Solicitors for the Respondent: | McIntyres Lawyers |
ORDERS
That the respondent’s application:
(a)to appear by a non-lawyer;
(b)for a change of venue; and
(c)for non-party discovery,
be dismissed.
A Sequestration Order issue against the estate of the respondent debtor, Ronald Norman Culleton.
The costs of the Creditor’s Petition be paid to the applicant creditor in the sum of $14,661.66 from the bankrupt estate of Ronald Norman Culleton in accordance with the provisions of the Bankruptcy Act 1966 (Cth).
AND THE COURT NOTES THAT the date of the act of bankruptcy is 26 October 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
SYG 3244 of 2013
| MACQUARIE LEASING PTY LTD |
Applicant
And
| RONALD NORMAN CULLETON |
Respondent
REASONS FOR JUDGMENT
Application
On 23 December 2013 the applicant creditor, Macquarie Leasing Pty Ltd[1] filed a Creditor’s Petition under the provisions of the Bankruptcy Act 1966 (Cth)[2] against the respondent debtor, Ronald Norman Culleton.[3] The Creditor’s Petition was verified by affidavit. The Creditor’s Petition relevantly asserted the following:
[1] “Macquarie Leasing”.
[2] “Bankruptcy Act”.
[3] “Mr Culleton”.
1.The Respondent Debtor owes the Applicant Creditor the amount of $94,529.78. The debt is pursuant to a judgment in the District Court of Western Australia made on 19 October 2012 in the amount of $95,604.80. The judgment was entered in default in the Perth Registry of the District Court of Western Australia proceedings number 2720/2012 for breach of a Chattel Mortgage Agreement. The debt also includes interest.
2.The applicant creditor does not hold security over the property of the respondent debtor.
3.At the time when the act of bankruptcy was committed, the Respondent Debtor:
* was personally present in Australia
* was ordinarily resident in Australia
* had a dwelling house in Australia or place of business in Australia
4.The following act of bankruptcy was committed by the Respondent Debtor within 6 months before the presentation of this petition:
The Respondent Debtor failed to comply on or before 27 October 2013 with the requirements of a bankruptcy notice deemed served on 5 October 2013 pursuant to the Affidavit of service of the Bankruptcy Notice sworn 10 October 2013 or to satisfy the Court that he had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.
Background
13 May 2014
On 13 May 2014 a Registrar of this Court in the Sydney Registry made the following orders and note:
THE COURT ORDERS THAT:
1.On the application of the Respondent, the Petition be adjourned until 2.00pm on Tuesday, 10 June 2014 at Law Courts Building, Queens Square, Sydney.
2.The Respondent to file and serve Affidavit evidence in relation to Mr Ronald Norman Culleton’s mental capacity by Thursday, 5 June 2014 at 2.00pm.
3.Costs be reserved.
THE COURT NOTES THAT:
4.If the Applicant is ready to proceed on the next occasion, and provided the formal requirements under the Bankruptcy Act 1966 is proven by the Applicant, a Sequestration Order will be made unless the debt has been repaid in full.
The Court notes that no evidence in relation to Mr Culleton’s mental capacity was served by 5 June 2014 as ordered on 13 May 2014.
23 June 2014
On 23 June 2014 the matter went before a Judge of this Court in the Sydney registry who made an order transferring the proceedings to the Perth registry of this Court for further hearing. There are no Reasons for Judgment in relation to the transfer order, but the transfer order bears a notation as follows:
UPON HEARING MR BARTLETT FOR THE APPLICANT AND MS GARTON FOR THE SUPPORTING CREDITOR, RX PLASTICS LIMITED, THE RESPONDENT NOT APPEARING, AND UPON BEING ADVISED THE RESPONDENT IS LIVING IN WESTERN AUSTRALIA, THE COURT ORDERS THAT:
and proceeded to make the transfer order referred to above.
11 September 2014
The proceedings were subsequently transferred to the Perth Registry of the Court and on 11 September 2014 the Court made the following orders:
1. The matter be adjourned to 10.15am on 13 November 2014 for the hearing of the Creditor’s Petition.
2. The applicant creditor be relieved of any further requirement to serve documents and affidavits in compliance with s.52 of the Bankruptcy Act 1966 (Cth) and Part 4 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth).
3. By 25 September 2014 a copy of this order be served on the Respondent by Registered Post at each of the following addresses:
a) 13061 McKenzie Road
WILLIAMS WA 6391
b) 6 View Court
PEPPERMINT GROVE BEACH WA 6271
4. There be liberty to apply.
5. Costs of today be reserved.
13 November 2014
On 13 November 2014 Macquarie Leasing moved the Court to make a sequestration order on the basis that it had provided proof of all of the matters required to satisfy the Court that a sequestration order ought to issue on the basis that Mr Culleton was unable to pay his debt to Macquarie Leasing. Before hearing from Rodney Norman Culleton,[4] who was granted leave to appear for Mr Culleton, on the basis that he has Mr Culleton’s power of attorney (even though it had not been produced to the Court at that stage) the Court indicated to Mr Culleton Jnr that:
a)it appeared that Macquarie Leasing had made out its case for a sequestration order to issue against Mr Culleton on the basis that proof of the matters required under the Bankruptcy Act had been met; and
b)Mr Culleton was not solvent and that there was no other sufficient cause not to issue the sequestration order.
[4] “Mr Culleton Jnr”.
On 13 November 2014 the Court also adverted to the fact that it might be arguable that Mr Culleton Jnr had not been exercising the power of attorney diligently for the purposes of s.107(1)(a) of the Guardianship and Administration Act 1990 (WA)[5] because no material had been filed in opposition to the Creditor’s Petition. Mr Culleton Jnr sought to explain the background saying to the Court that his father had dementia, was 79 years of age and that Mr Culleton Jnr had taken over Mr Culleton’s affairs. Mr Culleton Jnr indicated that there had been litigation concerning a patent decision, and that “they” had been successful in that case and that as a consequence of various proceedings a multi-million dollar sum was “coming back”, and that Mr Culleton and Mr Culleton Jnr were not insolvent. Queried as to why there was no evidence of this before the Court Mr Culleton Jnr said that he did not know and did not think that it was a requirement. At this point, Ms Lendich, who appeared as Counsel for Macquarie Leasing, objected to Mr Culleton Jnr giving evidence from the bar table. The Court indicated that none of what was being said was evidence, and that that was why the Court was asking where the evidence was, but in the Court’s view if there was arguable evidence of solvency which could be put before the Court, the Court did not consider it proper to proceed to make someone bankrupt, either from the point of view of the person sought to be made bankrupt, or the creditor.[6] The Court indicated that the proper course, particularly in circumstances where Mr Culleton had indicated that “my barrister has been away in Norfolk. He is flying in on tonight’s plane”,[7] might be to simply adjourn the matter for two weeks and allow affidavit evidence to be put on. Mr Culleton indicated that “… we had no problems about presenting – demonstrating to the court that we are not insolvent and nor should we be put into bankruptcy ….”[8] Consequently, the Court made the following orders on 13 November 2014:
1. The respondent file and serve:
a) a notice of grounds of opposition to the application; and
b) any affidavits in support of the notice of grounds of opposition;
by 27 November 2014.
[5] “GA Act”.
[6] Transcript, 13 November 2014, pages 4-6.
[7] Transcript, 13 November 2014, page 4.
[8] Transcript, 13 November 2014, page 6.
2. The applicant file and serve any responsive affidavits to those filed with respect to order 1(b) by 11 December 2014.
3. The respondent file and serve an outline of submissions by 12 December 2014.
4. The applicant file and serve an outline of submissions by 16 December 2014.
5. The matter be adjourned to 10.15am on 18 December 2014 for hearing.
6. Costs reserved.
Mr Culleton did not cause to be filed either a notice of grounds of opposition to the application or any affidavits in support of the notice of grounds of opposition by 27 November 2014 as ordered. Mr Culleton did file an affidavit, late and without leave, on 17 December 2014.[9] Mr Culleton has not caused to be filed an outline of submissions by 12 December 2014, or at all. Macquarie Leasing consequently, did not file any responsive affidavits before the 18 December 2014 Hearing. The Court also notes that notwithstanding what had been said by Mr Culleton Jnr to the Court on 13 November 2014, and notwithstanding the apparent involvement of a lawyer for Mr Culleton in the period leading up to the 18 December 2014 Hearing, no legal representative filed a notice of appearance or appeared for Mr Culleton at the 18 December 2014 Hearing.
[9] “Mr Culleton’s December 2014 Affidavit”.
18 December 2014
When the matter came on for hearing on 18 December 2014 Mr Culleton Jnr, who sought to appear on behalf of his father, purported to hand up a notice of appearance enabling Mr Culleton Jnr to appear on behalf of Mr Culleton. Also handed up was a notice of grounds of opposition. Macquarie Leasing’s Counsel, Ms Lendich, was not made aware by Mr Culleton (or Mr Culleton Jnr) of Mr Culleton’s December 2014 Affidavit or the other documents until immediately before the hearing. In the circumstances, and given the unavailability of Macquarie Leasing’s Counsel’s instructing solicitors, proximity to Christmas, and Christmas holiday arrangements, the Court refused to accept Mr Culleton Jnr’s purported notice of appearance and notice of grounds of opposition as being filed in Court, but determined that further steps ought to be taken to put the matter on a proper footing to enable it to be heard early in 2015.
Mr Culleton Jnr also sought orders on behalf of Mr Culleton that certain assets be frozen or protected. As the Court pointed out there was no evidence before it to justify the making of such orders, and nothing in Mr Culleton’s December 2014 Affidavit which would warrant the making of such orders, the precise nature and status of the assets not being properly in evidence before the Court.
As a consequence of the above matters the Court made the following orders:
1.The respondent file and serve a copy of the power of attorney granted to Rodney Norman Culleton by 24 December 2014.
2.The respondent file and serve a notice of appearance by 24 December 2014.
3.The respondent file and serve a notice of grounds of opposition by 24 December 2014.
4.The respondent file and serve an outline of submissions by 24 December 2014.
5.The applicant file and serve any affidavits in response to the affidavit of Ronald Norman Culleton filed 17 December 2014 by 6 February 2015.
6.The applicant file and serve any outline of submissions by 6 February 2015.
7.The hearing of the matter be adjourned to 12 February 2015 at 10.15am.
8.Costs of today be reserved.
24 December 2014
On 24 December 2014 Mr Culleton filed:
a)a Notice of appearance;[10]
b)a Notice stating grounds of opposition to petition;[11] and
c)an affidavit of Mr Culleton Jnr.[12]
[10] “Notice of Appearance”.
[11] “Notice of Opposition”.
[12] “Mr Culleton Jnr’s December 2014 Affidavit”.
The Notice of Appearance was for a solicitor named John Terence Brown from Norfolk Island with the address for service being McIntyres, Lawyers, The Strand, Norfolk Island, 2899. A Perth firm, Hotchkin Hanley, were listed as town agents for the solicitors appearing on the record.
The Notice of Opposition to the petition indicated an intention to oppose the Creditor’s Petition on the following grounds:
1.The Respondent is able to pay his debts.
2.The Respondent is willing and able to pay the debt claimed by the Applicant subject to assignment to him or his nominee of the securities held by the Applicant in relation to the finance facility which is gave rise to the proceedings herein.
3.The Applicant did not provide the Respondent with the opportunity to pay the debt and receive assignment of the securities.
4.The Applicant claims to have sold part of the security, but has not accounted to the Guarantors, and continues to claim the full judgment debt.
5.A sequestration order ought not to be made because the Respondent has been sued as a guarantor, but the Applicant has refused to assign to the Respondent the securities which are held by the Applicant in return for payment.
6.Accordingly there is other sufficient cause to not make a sequestration order.
7.Such further or other grounds as may be advanced at the hearing.[13]
[13] Transcribed from the Notice stating grounds of opposition to petition without amendment.
Mr Culleton Jnr’s December 2014 Affidavit is sufficiently short to enable the relevant admissible parts to be set out in full, as follows:
1.I am the Attorney under Power for my father, Ronald Norman Culleton, who is the Respondent herein. Attached hereto and marked RNC1 is a true copy of the Power of Attorney by which I was appointed.
…
3.My father is 78 years of age.
4.My father executed a guarantee herein.
5.[Struck out].
6.The Plaintiff claimed, in the Bankruptcy Notice and Creditors Petition herein, payment of $94,529.78.
7.The Plaintiff also claims costs in relation to the Bankruptcy Petition.
8.[Struck out].
9.[Struck out].
10.My father will produce evidence of our family friend’s ability to make the payment at the hearing herein. He can do so by producing a bank cheque for that amount.
11.My father seeks dismissal of the Bankruptcy Petition herein, conditional on payment of the $94,529.78 and conditional on my father undertaking to pay the costs of the Bankruptcy Petition on a party and party basis as agreed or taxed.
12.To date, the plaintiff has refused to agree to subrogate my father or his nominee (the person who will make the payment) to the plaintiff’s rights in relation to the security which was granted to the plaintiff herein.
13.My father asks this Honorable Court to accept that such refusal is a sufficient cause for a sequestration order to not be made herein.[14]
[14] Transcribed from the original without amendment.
An enduring power of attorney under the GA Act dated 1 November 2013 is annexure RNC1 to Mr Culleton Jnr’s December 2014 Affidavit. The ensuring power of attorney is granted by Mr Culleton to Mr Culleton Jnr. The power of attorney is only “on (or during) the occurrence of the following events or circumstances”, which are described in the enduring power of attorney as follows:
Is unable to act due to lack of cognitive capacity in his role as director of companies & or personal.[15]
Furthermore, there are conditions or restrictions placed on the authority of the attorney as follows:
No restrictions other than matters concerning duties of directorship & or legal matters.[16]
[15] Transcribed from the original without amendment.
[16] Transcribed from the original without amendment.
The power of attorney is therefore only operative in circumstances where Mr Culleton is unable to act due to a lack of cognitive capacity, and then only in his capacity as a director of companies, or personal matters, but restricted to exclude duties of directorship and legal matters.
The obvious inconsistency with respect to the issue of Mr Culleton’s directorships is not relevant for present purposes. The power of attorney is, however, not applicable for the purposes of these proceedings, for two reasons:
a)there is no evidence of a lack of cognitive capacity in Mr Culleton at relevant times; and
b)the power of attorney does not extend to legal matters in any event.
Also attached to Mr Culleton Jnr’s December 2014 Affidavit is an annexure marked RNC2, which although not referred to in the body of the Affidavit, indicates that a “john brown” filed two documents with the Court on 24 December 2014.
5 February 2015
On 5 February 2015 Mr Culleton Jnr, seemingly purporting to act on behalf of Mr Culleton, filed an application in a case seeking orders as follows:
1. Full discovery from Manheim Auctions (Eagle Farm, Queensland) in all correspondence between Manheim Auctions and Macquarie Leasing in relation to the chattel mortgage being the Kenworth truck, - sold or otherwise.
2. The matter be adjourned and heard at the corresponding time of the hearing of Rodney Norman Culleton set for March 2015 at the Federal circuit Court Sydney and both Rodney and Ronald be represented by barrister Mr Peter King.
It is unnecessary to deal with proposed order 2 in its terms. No listing for a matter involving Mr Culleton was before this Court in Sydney in March 2015. An appeal against a judgment of this Court making a sequestration order against Mr Culleton Jnr was dismissed by the Federal Court on the day it was heard, 9 March 2015, by reason of Mr Culleton Jnr’s failure to comply with directions and failure to attend a directions hearing.[17]
[17] Culleton v Macquarie Leasing [2015] FCA 188.
On 5 February 2015 Mr Culleton Jnr also filed a further affidavit,[18] in support of the application in a case. Much of the content of the Affidavit is either irrelevant or argumentative, but arguably relevant are the following passages:
5.However, I take a different view of my father … and I will not stand by and have him ruined without a proper representing legal counsel as is his legal right.
6.Peter King of Sydney will be our barrister handling this legal matter that will be paid from a third party provided that it is held in Sydney as the funder(s) are not prepared to pay the air flights for the barrister to attend court in WA. Hence our reasonable request for this matter to be transferred to Sydney and out of WA. Procedural and Judicial Fairness is what we are requesting here so as to not be further penalised in this matter.
7.We also want our Counsel to further argue as it has come to our attention that the chattel mortgage in question (the Kenworth truck) was stolen (repossessed) after (2 years after) the finished date of the contract ie the truck was stolen two (2) years after the finish date of the contract.[19]
[18] “Mr Culleton Jnr’s February 2015 Affidavit”.
[19] Mr Culleton Jnr’s February 2015 Affidavit, paras.5-7.
10-11 February 2015
Macquarie Leasing filed an outline of submissions on 10 February 2015. Mr Culleton did likewise on 11 February 2015, with the outline of submissions indicating that they were prepared by John Terence Brown from McIntyres Lawyers on Norfolk Island, and were seemingly signed by Mr Brown in his capacity as “Solicitor for the Respondent Debtor”.
Appearance by a non-lawyer
When the hearing of the creditor’s petition came on for a third time on 12 February 2015 no lawyer appeared for Mr Culleton, but, rather, a Mr Francis Peter Bertola asked for leave to represent Mr Culleton in his capacity as a family friend. Mr Bertola said he was unaware that there was already a lawyer on the record. When the Court enquired of Counsel for Macquarie Leasing as to whether Macquarie Leasing were aware that Mr Bertola would be seeking leave to appear Ms Lendich indicated that her instructing solicitors had been advised on 11 February 2015 by Mr Brown, the lawyer on the record for Mr Culleton, that a family friend, then unnamed, might be attending. The advice given to Ms Lendich’s instructing solicitors would appear to be a copy of advice actually forwarded to the associate of the presiding Judge on 11 February 2015 which was in the following terms:
Dear Associate,
This is to advise that Mr Ronald Culleton will not be legally represented when this matter comes before the Court tomorrow, Thursday 12 February 2015.
As Mr Culleton’s son, Rodney, has been declared bankrupt, he will not seek to speak for his father tomorrow.
I am instructed that a family friend (I do not yet know the identity of that friend) will seek leave to speak for Mr Ronald Culleton.
Yours sincerely
John Brown.
Solicitor for Ronald CulletonPhone 1800 194 100[20]
[20] Email to [email protected], 11 February 2015 10:41am.
Ms Lendich opposed leave for Mr Bertola to appear, particularly in circumstances where there was a lawyer on the record with a town agent and no reasonable explanation was given as to why, for example, junior Counsel from the Western Australia Bar could not have been briefed on behalf of Mr Culleton.
The Court then made certain enquiries of Mr Bertola, and established that:
a)he thought that an affidavit had been filed containing material prepared by him in relation to a bid on the chattel mortgage, the Kenworth prime mover in Brisbane, but was told by the Court that no such affidavit had been filed;
b)he was only present in Court to present material, not to argue a case, and expanded on that by saying that he was present to “supervise” the situation;
c)he was unaware of any reason why a lawyer from a well-known firm of solicitors named as town agents, or junior Counsel from the Western Australian Bar briefed by either the town agents or the Norfolk Island solicitors, was not able to attend;
d)there was no reason that he was aware of why an application had not been made for either Counsel or solicitors or both to appear either by telephone or video-link if necessary;
e)he had no legal qualifications;
f)he had not appeared in a federal court in proceedings of a commercial or bankruptcy type, either at all or as an advocate; and
g)he had no form of insurance which would protect Mr Culleton if he made negligent errors or omissions.[21]
[21] Transcript, 12 February 2015, pages 2-5
At hearing the Court indicated that it would not grant leave for Mr Bertola to appear, and would provide Reasons in due course. Those Reasons now follow.
Section 44 of the Federal Circuit Court of Australia Act 1999 (Cth)[22] prohibits a party from being represented before the Court by a person unless that person is:
a)entitled to practise as a barrister or solicitor, or both, in a federal court;
b)taken to be an authorised representative; or
c)authorised to represent the party under another law of the Commonwealth.
[22] “FCCA Act”.
The Judiciary Act 1903 (Cth)[23] allows parties in federal courts to appear:
a)personally; or
b)by a person admitted as a barrister or solicitor, or as both, in a State or Territory Supreme Court, who is entitled to practise in a federal court, the entitlement to practise being subject to the person’s name being entered on the High Court Register of Practitioners, but also subject to any other provisions of the Judiciary Act and laws and rules regulating the practice of the federal courts.[24]
[23] “Judiciary Act”.
[24] Judiciary Act 1903, ss.55B(3), 55C and 78; Deputy Commissioner of Taxation v Debaugy (2012) 263 FLR 193 at 200 per Lucev FM; [2012] FMCA 451 at para.23 per Lucev FM.
The general restriction on appearances, allowing only individuals who are parties or qualified legal practitioners to appear, seeks to ensure that the Court has assistance from either parties who know their case, or from qualified legal practitioners, and in the case of the latter, who can make informed submissions and assist the Court, and who have duties to their clients and to the Court, which duties unqualified persons do not have.[25]
[25] Groundwater v Territory Insurance Office (2004) 183 FLR 437 at 445 per Brown FM; [2004] FMCA 381 at para.40 per Brown FM (“Groundwater”); Reynolds v Minister for Health & Anor (2010) 247 FLR 425 at 429 per Lucev FM; [2010] FMCA 843 at para.7 per Lucev FM (“Reynolds”).
When deciding whether to exercise discretion to grant leave to allow a non-lawyer to appear on behalf of a party, courts generally take into account the following principles:
a)the complexity of the matter;
b)the genuine difficulties of a self-represented party;
c)the unavailability of disciplinary measures against, and the absence of any duty to the Court by, lay advocates;
d)protection of the client and the opponent from the actions of an unqualified person;
e)whether lay advocates ought to appear in inferior courts and tribunals; and
f)the interests of justice.
These principles were enunciated after an extensive review of authority in Damjanovic v Maley,[26] and have been applied in Melaleuca of Australia and New Zealand Pty Ltd v Duck;[27] Groundwater;[28] and Reynolds.[29]
[26] (2002) 55 NSWLR 149 at 162-164 per Stein JA; [2002] NSWCA 230 at para.69-86 per Stein JA.
[27] [2005] FCA 1481 at para.14 per Bennett J.
[28] FLR at 445-446 per Brown FM; FMCA at paras.42-46 per Brown FM.
[29] FLR at 429 per Lucev FM; FMCA at para.8 per Lucev FM.
The primary reason for not granting Mr Bertola leave to appear was that he was not a lawyer, and that Mr Culleton had lawyers on the record, who chose not to appear, and who did not seek to appear by video or telephone.
The reason given for the non-appearance was that Mr Culleton wanted the matter heard in Sydney, and an unnamed litigation funder was not prepared to pay for a lawyer (seemingly the barrister, Mr King) to fly to Perth. That, with respect, is not a good reason not to appear, and not to argue Mr Culleton’s case, especially where the issue of a change of venue (which is determined hereunder) had been raised. There was no application made, and no reason given for the failure to do so, for a lawyer (be it a barrister or solicitor or both) to appear by telephone or by video-link. The FCCA Act allows the Court to grant leave to a party who has made an application to appear, make submissions and give testimony by video-link or by telephone subject to certain discretionary considerations.[30] In circumstances where the Court had before it a procedural application in a case by Mr Culleton for discovery and change of venue, and a substantive application for the hearing of the Creditor’s Petition, and minimal affidavit evidence of any relevance from Mr Culleton, this would have been a case most likely suited to a video-link, or possibly even a telephone, hearing, noting, in particular, that if the application for change of venue was successful, then the Creditor’s Petition hearing would not have proceeded. That no application for a hearing by video-link or telephone was made, was surprising given that if successful it would have overcome the alleged difficulty with funding airfares for a barrister or solicitor or both to fly to Perth. Instead a clearly loyal, but, in the circumstances, hapless family friend was sent to front the Court, not to argue the matter, about which he appeared to know very little, but to “supervise”.
[30] FCCA Act, ss.66, 67, 68 and 69; Goodall v Nationwide News Pty Ltd [2007] FMCA 218 (“Goodall”); contrast Picos v HeathEngine Pty Ltd & Anor [2014] FCCA 640 at para.71 per Judge Lucev (five day case with all evidence sought to be heard by video-link, with lengthy and complex cross-examination, not suitable for video-link hearing)
The failure of a lawyer to appear for Mr Culleton is inexplicable when considered against the relevant background, in particular:
a)the statements made by Mr Culleton Jnr, both to the Court and in Mr Culleton Jnr’s February 2015 Affidavit, concerning the involvement and availability of lawyers to argue the case;
b)the earlier adjournments, twice granted on the basis that Mr Culleton, and the Court, might be assisted by a lawyer appearing for Mr Culleton; and
c)the fact that lawyers for Mr Culleton prepared and filed a Notice of Appearance and the Notice of Opposition on 24 December 2014, and an outline of submissions in relation to the Creditor’s Petition (but interestingly not the application in a case for discovery and change of venue) on 11 February 2015.
The fact that there is a lawyer on the record means that the Court is not required to consider the genuine difficulties of a self-represented party, because Mr Culleton was not self-represented.
On its face, this is not a complex Creditor’s Petition application. As is often the case, it involves a default judgment of a court for repayment of a sum of money has given rise to a debt which, despite demand in the form of a Bankruptcy Notice, remains unpaid.
This matter is made more complex by the Notice of Opposition which raises issues as to:
a)whether the applicant is willing and able to pay the debt;
b)assignment to the applicant or his nominee of securities held by Macquarie Leasing in relation to a finance facility;
c)assignment of securities, and the alleged sale of part of a security for which account has not been made to the guarantors (including Mr Culleton);
d)refusal of Macquarie Leasing to assign securities held by Macquarie Leasing to Mr Culleton upon payment of the debt.
The matter is also made procedurally more difficult by the very late application in a case for discovery and change of venue by Mr Culleton.
Having regard to all of the circumstances, and the facts set out above, including the fact that Mr Bertola says that his role was not that of an advocate but of a supervisor, it is plain that both the issues arising on the Creditor’s Petition application and the procedural issues arising on the applications in a case by Mr Culleton are such that they are too complex for Mr Bertola to deal with.
In the Court’s view Mr Bertola does not, with respect, have the experience necessary to appear in a federal court in circumstances where Mr Culleton seeks to make a substantively simple Creditors Application more complex, both procedurally and substantively, as outlined above.
Because Mr Bertola is a lay person he has no duty to the Court, and no relevant disciplinary measures can be taken against him (absent contempt of court, which having seen Mr Bertola, would appear to be highly unlikely). Mr Bertola has no insurance for acts of negligence or incompetence.
Mr Bertola is not an “authorised representative” or “authorised to represent … [Mr Culleton] under another law of the Commonwealth” within the meaning of those words under s.44 of the FCCA Act.
In all of the above circumstances, the Court considers that Mr Bertola ought not be granted leave to appear for Mr Culleton in these proceedings.
Change of venue
At hearing the Court indicated that it would not grant the change of venue application, and would provide Reasons in due course. Those Reasons now follow.
Section 52 of the FCCA Act allows the Court to sit anywhere in Australia, including its external Territories, and, by order, in relation to all or any part of a proceeding, and at any stage of a proceeding, conduct or continue a proceeding at a place specified in the order, subject to any conditions that the Court or a Judge may impose. Section 52 of the FCCA Act must be read in conjunction with r.8.01 of the FCC Rules 2001, and in particular, r.8.01(2) of the FCC Rules, which sets out factors to which the Court must have regard in determining change of venue applications.
In National Mutual Holdings Pty Ltd & Ors v The Sentry Corporation & Anor[31] the Full Court of the Federal Court dealt with an application that a proceeding commenced in Melbourne should be tried at Sydney as that was the “proper place” of the proceedings. In determining whether there was a sound reason to direct that the proceeding be conducted or continued elsewhere, other than Melbourne where it was commenced, the Full Court of the Federal Court said:
Ultimately the test is: where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court. It cannot and should not, in our opinion, be defined more closely or precisely.[32]
[31] (1988) 19 FCR 155 (“Sentry Corporation”).
[32] Sentry Corporation at 162 per Bowen CJ, Woodward and Lockhart JJ.
In applying the test identified as correct in Sentry Corporation the Full Court of the Federal Court identified a number of factors which might be taken into account, including:
a)residence of the parties;
b)residence of the witnesses;
c)expense to the parties;
d)the place where the cause of action arose; and
e)the convenience of the Court itself.[33]
[33] Sentry Corporation at 162 per Bowen CJ, Woodward and Lockhart JJ.
The Federal Court has identified other factors which warrant consideration when applying the test identified in Sentry Corporation. Those factors include:
a)that the choice of venue should not be capricious;[34]
b)whether a party might receive a legitimate juridical advantage (such as the ability to claim damages or additional damages, or to be awarded pre-judgment interest) in one venue and not the other;[35]
c)the governing law of any contract;[36]
d)the size and nature of any businesses concerned;[37]
e)the degree of connection with the respective venues, and in particular the subject matter of the litigation (especially where a view or inspection might be required by the Court);[38]
f)the location of counsel, solicitors and other advisers, particularly those with actual knowledge and relevant experience;[39]
g)case and docket management considerations, particularly whether a case can or ought to be managed and heard in one registry, or managed in one registry and heard in another, which might include considerations of what steps have been taken in the litigation, and if steps have been taken, the nature of those steps and how many steps;[40]
h)that the Court can sit, take evidence and hear witnesses anywhere in Australia;[41] and
i)whether witness statements or affidavits have already been taken, and whether a change of venue might render them redundant.[42]
The abovementioned factors have been applied in Omiros Pty Ltd v PM Developments Pty Ltd & Ors (No. 2)[43] (from which an appeal was dismissed in PM Developments Pty Ltd v Omiros Pty Ltd)[44] and Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd.[45]
[34] Sentry Corporation at 162 per Bowen CJ, Woodward and Lockhart JJ.
[35] Sentry Corporation at 167 per Bowen CJ, Woodward and Lockhart JJ.
[36] Australian Steel Co (Operations) Pty Ltd v Steel Foundations Ltd & Anor (2003) 58 IPR 69 at 91 per Kenny J; [2003] FCA 374 at para.87 per Kenny J (“Australian Steel”).
[37] WH Books Ltd & Ors v Miller & Anor (1998) 41 IPR 364 at 366 per Emmett J (“WH Books”).
[38] Australian Steel IPR at 90-91 per Kenny J; FCA at paras.79-89 per Kenny J; WH Books at 365 per Emmett J.
[39] Australian Competition and Consumer Commission v Internic Technology Pty Ltd & Anor (1998) 42 IPR 225 at 232 per Lindgren J (“Internic Technology”).
[40] WG & B Manufacturing Pty Ltd v Telsa Farad Pty Ltd [1999] FCA 859 at para.2 per Finkelstein J; Australian Steel IPR at 92 per Kenny J; FCA at para.92 per Kenny J.
[41] Internic Technology at 233 per Lindgren J.
[42] Internic Technology at 235 per Lindgren J.
[43] [2005] FMCA 234 at para.16 per McInnis FM.
[44] [2005] FCA 1090.
[45] [2008] FMCA 495 (“Jaymac”).
The factors set out in r.8.01(2) of the FCC Rules require that the Court “must have regard to” the following:
a)the convenience of the parties;
b)the limiting of expense and the cost of the proceeding;
c)whether the matter has been listed for final hearing; and
d)any other relevant matter.
Consideration of the factors in r.8.01(2) of the FCC Rules is mandatory.[46]
[46] Jaymac at para.21 per Lucev FM.
Consideration – change of venue
The reasons for the change of venue are set out in the application in a case made by Mr Culleton read in conjunction with Mr Culleton Jnr’s February 2015 Affidavit,[47] and are limited to:
a)the fact that an unidentified funder of the litigation will not pay for selected Sydney Counsel to fly to Perth; and
b)that the matter should be adjourned to be heard at the same time as a hearing concerning Mr Culleton Jnr set for an unspecified date in March 2015 in this Court in Sydney. For reasons set out above it is unnecessary for the Court to deal with this latter point.
[47] Mr Culleton Jnr’s February 2015 Affidavit, para.6.
The first reason sits oddly with the submission by Mr Culleton Jnr to the Court on 13 November 2014 that his barrister “was flying in … [to Perth] on tonight’s plane”. Although the choice of Counsel and solicitor is a matter for each individual litigant, it is not apparent why Sydney Counsel and a Norfolk Island solicitor have been briefed in this matter by Mr Culleton. There was no explanation given by Mr Culleton, and no evidence tendered to explain that choice. It is not apparent from the evidence that there is any connection between the choice of barrister and the funding to be provided by the alleged litigation funder. Nor was any explanation given as to why it was not possible to brief Western Australian Counsel, or Western Australian solicitors. That is pertinent given that:
a)a firm of Western Australian solicitors were named as town agents, but did not appear at the hearing; and
b)the Notice of Appearance by a solicitor for Mr Culleton was only filed on 24 December 2014.
Furthermore, for reasons set out above, it is not apparent why, if a Sydney barrister and a Norfolk Island solicitor must appear for Mr Culleton, no application for leave to appear by video-link or telephone was made, thus achieving the object of being represented by a Sydney barrister and limiting the expense and cost of the proceeding to the cost of the video-link or a telephone call.
The Court notes that Mr Culleton is resident at Peppermint Grove Beach, approximately two hours south of Perth. It is not immediately apparent, and there is no evidence to support the contention (if it had been made) that it would be more personally convenient for Mr Culleton for the hearing to be in Sydney rather than Perth.
Counsel for Macquarie Leasing, Ms Lendich, conceded that a hearing of this matter in Sydney would not ordinarily have inconvenienced Macquarie Leasing. She indicated that on her instructions no application was made to transfer the proceedings to the Perth Registry when the Court made the order on 23 May 2014 to transfer the matter to the Perth Registry. Indeed, such an application could not have been made by Mr Culleton on 23 May 2014 as he did not appear on that date. The matter, however, having been transferred to the Perth Registry, Ms Lendich indicated that she had been briefed, and on each of the prior two occasions on which the matter had been listed for final hearing, and on this occasion, Macquarie Leasing had been ready to proceed, and it was only the matters raised by Mr Culleton, or on his behalf, which had led to adjournments. If the matter were to be transferred to Sydney, new Counsel would have to be briefed in Sydney for Macquarie Leasing. Alternatively, Ms Lendich would have to appear by video-link or travel to Sydney, having had to get the matter up for a fourth final hearing. The Court notes that in those circumstances the cost of the video-link would have to be paid by Mr Culleton having regard to the fact that the matter had been transferred to Sydney at his request following three final hearings set down in Perth. There would, thus, be additional expense for Mr Culleton in any event. Mr Culleton did not lead any relevant evidence on the change of venue application which would make it possible to determine whether, in the circumstances, flight costs would be more or less expensive than the costs of a video-link for the purposes of final hearing.
The Court notes that this is the third occasion on which the matter has been listed for final hearing. There has been no previous application for a change of venue, and the change of venue application in a case came only a week before the matter was listed for the third time for final hearing, and more than five weeks after the filing of the Notice of Appearance by lawyers for Mr Culleton. The fact that the matter had been listed for a third time for final hearing, and the delay in making the application in a case for change of venue, both overall, and in relation to the timing of the filing of a notice of appearance by Mr Culleton’s solicitors, is a significant factor in the Court’s view in favour of the venue for the proceedings not being changed.
The Court further notes that:
a)Mr Culleton is a resident of Western Australia, and there is no evidence as to the residence of any other witnesses (if there be any) who might appear at the final hearing of the proceedings, noting that Mr Culleton has filed no evidence in relation to the merits of the substantive application other than Mr Culleton Jnr’s December 2014 Affidavit, which indicates that Mr Culleton Jnr also lives in Western Australia;
b)there is no evidence as to the expense to the parties of a change of venue, and no analysis of the respective costs of airfares as against a video-link hearing for the purposes of final hearing;
c)there is no particular evidence as to where the cause of action arose, but it can be inferred that it was in Western Australia, and certainly the judgment debt is a judgment of the District Court of Western Australia;
d)the Court notes that the reason the matter was initially transferred to Perth was because the applicant was resident in Western Australia;
e)the governing law of any relevant contract is that of the State of Victoria;[48] and
f)there is no evidence as to the size or nature of any of the businesses concerned in the events that led to the guarantee being called upon, and judgment being awarded against Mr Culleton, which is now relied upon om the Creditor’s Petition application.
[48] See the Particulars to the Chattel Mortgage Agreement (“Agreement”), read with cl.17 – Proper Law and the definition of “State” in cl.1.1(11) of the Agreement.
In light of the circumstances above it cannot be said that the existing venue, namely the Perth registry of this Court, is capricious, it being the closest registry of the Court to the residence of the party sought to be made bankrupt on the application, and the closest registry to the events which have given rise to the judgment debt, that judgment debt arising as a consequence of a decision of the Western Australian District Court.
Finally, the Court notes that this is the third listed final hearing of this matter, and that this is the first occasion on which an application for change of venue has been made, and that no change of venue application has previously been foreshadowed by Mr Culleton. Given that Macquarie Leasing has been twice previously required to get the matter up for final hearing, the Court’s view is that it is not in the interests of justice, in what otherwise, on the evidence, appears to be a straightforward Creditor’s Petition application, for the matter to be further adjourned by reason of a change of venue. In the absence of any lawyer appearing for Mr Culleton, or indeed anybody other than the family friend sent to appear, but for whom leave has not been granted to appear, and in the absence of any cogent evidence as to almost all of the material factors for consideration, and in the absence of submissions from Mr Culleton with respect to the factors, concerning change of venue, the Court is not persuaded that it is in the interests of justice, or of the administration of justice, that there be a change of venue at this late and final stage of the hearing of the Creditor’s Petition application.
For the above reasons the application for a change of venue is dismissed.
Discovery
At hearing the Court indicated that it would not grant the application for discovery from a non-party and would provide Reasons in due course. Those Reasons now follow.
The order sought with respect to discovery of documents from Manheim Auctions Pty Ltd[49] is effectively an order sought for non-party discovery. Discovery from a non-party is not addressed in the FCC Rules.[50] This Court has power, however, to order non-party discovery in an appropriate case, and to do so under r.20.23 of the Federal Court Rules 2011 (Cth).[51]
[49] “Manheim Auctions”.
[50] FCC Rules, r.14.02 provides for discovery from a party only.
[51] “FC Rules”. See FCC Rules, r.1.05(2) and Verge & Anor v Devere Holdings Pty Ltd & Ors (No. 3) [2008] FMCA 1220 at paras.30-31 per Lucev FM.
Rule 20.23 of the FC Rules provides as follows:
(1) If a party believes that a person who is not a party has or is likely to have, or has had or is likely to have had, in the person's control, documents that are directly relevant to an issue raised on the pleadings or affidavits, the party may apply to the Court for an order that the person make discovery of the documents to the party.
(2) An application under this rule must:
(a) be served personally on the person; and
(b) be accompanied by an affidavit:
(i) stating the facts on which the applicant relies; and
(ii) identifying, as precisely as possible, the documents, or categories of documents to which the application relates.
(3) A copy of the accompanying affidavit for an application must be served on each person on whom the application is served.
(4) In subrule (1), a reference to an affidavit is a reference to:
(a) an affidavit accompanying an originating application; and
(b) an affidavit in response to the affidavit accompanying the originating application.
There is no evidence of service of the application on Manheim Auctions. Further, the application, being the application in a case, although accompanied by an affidavit of Mr Culleton Jnr, is not accompanied by an affidavit which states the facts on which the applicant relies with respect to the non-party discovery application, or which identifies in the affidavit, as precisely as possible, the documents to which the application relates. In those circumstances the provisions of r.20.23(2) and (3) of the FC Rules have not been complied with with respect to an application for discovery from a non-party.
The Court notes that there was an assertion made by Mr Bertola that he had prepared an affidavit concerning a bid on the chattel mortgage, namely the Kenworth Prime Mover,[52] but no affidavit sworn or affirmed by Mr Bertola in relation to that matter has been filed in these proceedings. Furthermore, the submissions filed on behalf of Mr Culleton by his solicitors do not address the issue of non-party discovery.
[52] “Prime Mover”.
In the above circumstances, the application for a non-party discovery order directed to Manheim Auctions must fail, and will be dismissed.
Making a sequestration order
The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act, subject to the jurisdiction to make sequestration orders under s.43 of the Bankruptcy Act and the conditions on which a creditor may petition under s.44 of the Bankruptcy Act being met.
Macquarie Leasing, as petitioning creditor, is obliged to put before the Court affidavits:
a)verifying the Creditor’s Petition;[53]
b)as to search of the records of this Court and the Federal Court as to any application in relation to the bankruptcy notice;[54]
c)of service of the bankruptcy notice;[55]
d)of service of documents required to be served;[56]
e)of search of the National Personal Insolvency Index no earlier than the day before the hearing date for the Creditor’s Petition;[57] and
f)of debt on which the creditor still relies as owing.[58]
[53] Bankruptcy Act, s.47(1); Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (“FCC (Bankruptcy) Rules”), r.4.02.
[54] FCC (Bankruptcy) Rules, r.4.04(1)(a) and (2).
[55] FCC (Bankruptcy) Rules, r.4.04(1)(b).
[56] FCC (Bankruptcy) Rules, rr.4.05 and 4.06(2).
[57] FCC (Bankruptcy) Rules, r.4.06(3).
[58] FCC (Bankruptcy) Rules, r.4.06(4).
The Court may decline to issue a sequestration order if:
a)it is not satisfied with the proof of any of the above matters;[59] or
b)it is satisfied by Mr Culleton that:
i)he is able to pay his debts;[60] or
ii)for other sufficient cause a sequestration order ought not be made.[61]
[59] Bankruptcy Act, s.52(2).
[60] Bankruptcy Act, s.52(2)(a).
[61] Bankruptcy Act, s.52(2)(b).
The following affidavits have been filed by Macquarie Leasing:
a)an affidavit of Gregory Angus McCulloch, sworn 20 December 2013 verifying the Creditor’s Petition;[62]
[62] “Mr McCulloch”.
b)an affidavit of service of the bankruptcy notice and search of the National Personal Insolvency Index and Court records affirmed by Katsuaki Saikawa on 20 December 2013;
c)an affidavit of service of the bankruptcy notice issued 19 August 2013 sworn by Michael George Leedham on 10 October 2013;
d)an affidavit of service of the Creditor’s Petition on Mr Culleton on 2 April 2014 sworn by Lindsey Caddy on 23 April 2014;[63]
[63] “Caddy Affidavit”.
e)an affidavit of debt sworn by Mr McCulloch (being an affidavit of final debt) on 12 May 2014;
f)a further affidavit of searches of Court records and the National Personal Insolvency Index by Jonas Bartlett,[64] affirmed 12 May 2014;
[64] “Mr Bartlett”.
g)a further affidavit of Mr Bartlett annexing:
i)a letter advising Mr Culleton of the 11 September 2014 court date;
ii)a further letter to Mr Culleton providing a copy of the notice of listing for 11 September 2014; and
iii)another letter to Mr Culleton in relation to an affidavit affirmed by Mr Culleton on 28 April 2014[65] in differently numbered proceedings in the Sydney Registry of the Court in which Mr Culleton indicated he had no recollection or memory of being served with any paperwork concerning the Creditor’s Petition;
[65] “Mr Culleton’s April 2014 Affidavit”.
h)an affidavit of debt (being a further affidavit of final debt) sworn by Mr McCulloch on 10 September 2014;
i)a further affidavit of searches by Mr Bartlett of searches of Court records and the National Personal Insolvency Index affirmed on 10 September 2014;
j)a second further affidavit of Mr Bartlett annexing:
i)a letter to Mr Culleton, addressed to 13061 McKenzie Road Williams, WA 6391, serving a copy of the Court’s orders of 11 September 2014, and notifying him of the date of the hearing of the Creditor’s Petition on 13 November 2014;
ii)a letter to Mr Culleton, addressed to 6 View Court Peppermint Grove Beach, WA 6271, serving a copy of the Court’s orders of 11 September 2014, and notifying him of the date of the hearing of the Creditor’s Petition on 13 November 2014;
iii)an email sent to Macquarie Leasing’s lawyers by Rodney Norman Culleton[66] on 3 October 2014 stating he had left phone messages with Macquarie Leasing’s lawyers which had not been returned, that Mr Culleton was “dementing”, and that Mr Culleton Jnr is Mr Culleton’s power of attorney and if a matter is required to go before the courts he needs to be informed. Attached to that email was a letter from a Dr Mark Stieler, Mr Culleton’s General Practitioner, indicating that formal assessment shows Mr Culleton to have advanced cognitive impairment in keeping with dementia and that Mr Culleton is not capable of attending court;
[66] “Mr Culleton Jnr”.
iv)the orders of 31 October 2014 of Judge Altobelli of this Court making a sequestration order against Mr Culleton Jnr; and
v)an email sent on 10 November 2014 by Macquarie Leasing’s lawyers to Mr Culleton Jnr informing him of the date and venue of the hearing of the Creditor’s Petition, and requesting a copy of his power of attorney;
k)an affidavit of debt (being a second further affidavit of final debt) affirmed by Ryan Crow[67] on 12 November 2014;
[67] “Mr Crow”.
l)a second further affidavit of searches by Mr Bartlett of searches of court records and the National Personal Insolvency Index affirmed on 12 November 2014;
m)an affidavit of debt (being a third further affidavit of final debt) affirmed by Mr Crow on 16 December 2014;
n)a third further affidavit of searches by Mr Bartlett of searches of court records and the National Personal Insolvency Index affirmed 16 December 2014, which revealed that Mr Culleton had not made application to set aside the Creditor’s Petition and was not bankrupt;
o)another affidavit of Mr Bartlett, sworn 16 December 2014[68] annexing exchanges of email correspondence between 1 and 11 December 2014 with a lawyer acting for Mr Culleton. That correspondence indicated that:
[68] “Mr Bartlett’s Second 16 December 2014 Affidavit”.
i)a Mr John Brown of McIntyre’s Lawyers of Norfolk Island had been in communication with Mr Bartlett indicating that he confirmed that he was instructed to act for Mr Culleton in this matter, and requested copies of various documents from Mr Bartlett;[69]
[69] Mr Bartlett’s Second 16 December 2014 Affidavit, Annexure JB-1.
ii)there were emails from Mr Bartlett to Mr Brown, acknowledged by Mr Brown, in relation to various documents forwarded by Mr Bartlett to Mr Brown;[70]
[70] Mr Bartlett’s Second 16 December 2014 Affidavit, Annexures JB-2 – JB-5.
iii)Mr Bartlett had requested advice from Mr Brown as to when Mr Culleton might file notice of grounds of opposition and affidavits in support, which were due to be filed by 27 November 2014, in order for Mr Bartlett to obtain instructions from Macquarie Leasing;[71]
[71] Mr Bartlett’s Second 16 December 2014 Affidavit, Annexures JB-3 and JB-5.
iv)there was an email from Mr Brown, on 3 December 2014, indicating that he would do his best to obtain sufficient instructions to respond to Mr Bartlett that day;[72]
[72] Mr Bartlett’s Second 16 December 2014 Affidavit, Annexure JB-6.
v)there was advice from Mr Bartlett to Mr Brown that, in view of the failure of Mr Culleton to file and serve notices of grounds of opposition and support due to be filed by 27 November 2014 that Macquarie Leasing intended to proceed as planned with the hearing of the Creditor’s Petition on 18 December 2014, and reserved its rights;[73] and
[73] Mr Bartlett’s Second 16 December 2014 Affidavit, Annexure JB-7.
vi)on 11 December 2014 Mr Brown indicated to Mr Bartlett that he was awaiting instructions and hoped to have them that day;[74] and
[74] Mr Bartlett’s Second 16 December 2014 Affidavit, Annexure JB-8.
p)another affidavit of Mr Crow affirmed 10 February 2015[75] in which he says that:
[75] “Mr Crow’s February 2015 Affidavit”.
i)on 5 August 2008 Macquarie Leasing entered into a chattel mortgage agreement[76] with Elite Grains Pty Limited ACN 091 599 941,[77] and that under the Agreement Macquarie Leasing lent Elite Grains $199,000[78] payable over 60 months in monthly instalments for the purchase of a 2005 Kenworth T604, being the Prime Mover, and that as security for repayment of the Secured Monies Elite Grains transferred to Macquarie Leasing by way of mortgage all its present and future right, title and interest in the Prime Mover;[79]
[76] “Agreement”.
[77] “Elite Grains”.
[78] “Secured Monies”.
[79] Agreement, cl.2.1.
ii)on 5 August 2008 Macquarie Leasing also entered into a guarantee and indemnity with Mr Culleton and Mr Culleton Jnr under which they jointly and severally guaranteed Elite Grains performance of the Agreement;[80]
[80] Agreement, cll.1.5 and 21.
iii)Elite Grains failed to pay instalment payments in accordance with the Agreement and Macquarie Leasing issued a default notice of demand to Elite Grains on 27 January 2012;
iv)on 6 March 2012 Macquarie Leasing sent a notice of termination to Elite Grains terminating the Agreement and advising of possible repossession without notice;[81]
[81] Mr Crow’s February 2015 Affidavit, Annexure RC-1.
v)proceedings were commenced in the Western Australian District Court on 10 September 2012 against Mr Culleton and Mr Culleton Jnr for breach of the Agreement and breach of the guarantee and indemnity, as well as for unpaid sums in relation to two trailers also financed by Macquarie Leasing under a separate chattel mortgage agreement, to which proceedings Elite Grains were added as a third defendant;[82]
[82] Mr Crow’s February 2015 Affidavit, para.15.
vi)on 8 March 2013 judgments were entered separately against Elite Grains and Mr Culleton Jnr in favour of Macquarie Leasing;[83]
[83] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 23-26.
vii)on 19 October 2012 judgment was entered against Mr Culleton in favour of Macquarie Leasing in an amount of $95,604.80 (with amended orders issued on 26 November 2012 and 20 June 2013 correcting the amount of the judgment);[84]
[84] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 27-28.
viii)a liquidator was appointed to Elite Grains and the liquidator disclaimed the Prime Mover;[85]
[85] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 29-33.
ix)on 2 April 2014 Mr Culleton was served with the Creditor’s Petition;[86]
[86] Mr Crow’s February 2015 Affidavit, para.20.
x)on 24 June 2014 agents for Macquarie Leasing repossessed the Prime Mover at Stanthorpe in Queensland, and it was subsequently sold on 6 August 2014 by public auction by agents for Macquarie Leasing, namely Manheim Auctions;
xi)on 31 October 2014 sequestration orders were made against Mr Culleton Jnr, and an appeal has been filed in relation to those sequestration orders;[87]
[87] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 34-35.
xii)save for a payment of $5,500 on or around 21 November 2012 the judgment against Mr Culleton remains outstanding, as do the judgments against Elite Grains and Mr Culleton Jnr;[88]
[88] Mr Crow’s February 2015 Affidavit, para.25.
xiii)Mr Culleton has not proffered to Macquarie Leasing a bank cheque or made any form of payment of the judgment debt, or any other amount, save for the $5,500 referred to above;[89]
[89] Mr Crow’s February 2015 Affidavit, para.25.
xiv)the Prime Mover was sold to the highest bidder at auction on 6 August 2014, the buyer’s bid of $57,500 being accepted by Macquarie Leasing;[90]
[90] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 37-37.
xv)following the close of the auction on 6 August 2014 a Mr Frank Bertola attended at Manheim Auctions’ premises and sought unsuccessfully to bid for the Prime Mover;[91]
[91] Mr Crow’s February 2015 Affidavit, para.29.
xvi)the sale of the Prime Mover has not yet settled, and therefore no accounting for the proceeds is as yet possible;[92]
[92] Mr Crow’s February 2015 Affidavit, para.31.
xvii)the sale of the Prime Mover was unable to be settled because a company called DEQMO Pty Limited[93] registered a security interest in the Prime Mover on 7 August 2014;[94]
[93] “DEQMO”.
[94] Mr Crow’s February 2015 Affidavit, para.32(d).
xviii)Mr Culleton Jnr was a director and secretary of DEQMO;[95]
[95] Mr Crow’s February 2015 Affidavit, para.32(b).
xix)in order to guarantee clear title to the Prime Mover, a requirement of Manheim Auctions pursuant to the Property Agents and Motor Dealers Act 2000 (Qld) and pursuant to the terms of Manheim Auctions’ dealer’s licence, Macquarie Leasing filed a summons in the Supreme Court of New South Wales seeking orders for the removal of the DEQMO registration;[96]
[96] Mr Crow’s February 2015 Affidavit, para.32(e).
xx)that summons was heard on 17 October 2014, and Mr Culleton appeared at the hearing of the summons, which commenced at approximately 10.30am and continued until approximately 12.00noon, at which stage it was stood down until 3.00pm for judgment, following which judgment was delivered by Justice Rein who declared the security interest in favour of DEQMO void and of no effect, ordered the security interest be set aside and directed the Registrar of the PPSR to amend the register to remove DEQMO’s security interest, and to restrain DEQMO and Mr Culleton Jnr from registering or causing to be registered on the PPSR any finance statement claiming an interest in the Prime Mover until further order of the Court;[97]
[97] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 52-53.
xxi)the Registrar of the PPSR duly removed the DEQMO registration in accordance with the orders of the Supreme Court of New South Wales;[98]
[98] Mr Crow’s February 2015 Affidavit, para.32(g).
xxii)on 17 October 2014 at 2.18pm, during the Supreme Court’s adjournment pending delivery of judgment, Australian Keg Company Pty Ltd[99] registered a security interest over the Prime Mover. Mr Culleton and Mr Culleton Jnr are directors and shareholders of the Australian Keg Company;[100]
[99] “Australian Keg Company”
[100] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 57-61.
xxiii)on 20 October 2014 Pro-Act Australia Pty Ltd[101] registered a security interest over the Prime Mover. It appears that neither Mr Culleton nor Mr Culleton Jnr are directors or shareholders of Pro-Act Australia, but a Mr James Ron Culleton with an address, 6 View Court, Peppermint Grove Beach WA 6271, identical to that of Mr Culleton is a shareholder according to ASIC records, and a Mr Frank Bertola is recorded as the director and secretary of Pro-Act Australia;[102]
[101] “Pro-Act Australia”.
[102] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 58-64.
xxiv)because of the Australian Keg Company and Pro-Act Australia registrations of a security interest Macquarie Leasing could not settle the sale of the Prime Mover;[103]
[103] Mr Crow’s February 2015 Affidavit, para.32(j).
xxv)on 13 November 2014 Macquarie Leasing filed a further summons in the Supreme Court of New South Wales seeking the removal of the Australian Keg Company and Pro-Act Australia registrations, that summons being granted on 25 November 2014 by Justice Stevenson of the New South Wales Supreme Court who made orders declaring the security interests of the Australian Keg Company and Pro-Act Australia to be void and of no effect and to be set aside, and requiring the Registrar of the PPSR to remove the Australian Keg Company and Pro-Act Australia registrations, and restraining the Australian Keg Company and Pro-Act Australia whether by themselves, or by their agents or on behalf of any other person or corporate entity from registering or causing to be registered on the PPSR any statement claiming an interest in the Prime Mover;[104]
[104] Mr Crow’s February 2015 Affidavit, Annexure RC-1 at pages 67-68.
xxvi)the Registrar of the PPSR duly removed the Australian Keg Company and Pro-Act Australia registrations;[105]
[105] Mr Crow’s February 2015 Affidavit, para.32(m).
xxvii)on 25 November 2014, after the New South Wales Supreme Court had handed down judgment, a secured party identified by Organisation Identifier 497669218 registered a security interest over the Prime Mover, with the security interest recorded on the PPSR being identified by its Organisation Identifier as the Australian Keg Company;[106] and
[106] Mr Crow’s February 2015 Affidavit, para.32(o) and (q).
xxviii)Macquarie Leasing cannot complete the sale of the Prime Mover without removal of this further registration of a security interest.[107]
[107] Mr Crow’s February 2015 Affidavit, para.32(r).
q)another affidavit of Mr Bartlett, sworn 10 February 2015[108] which annexes exchanges of email correspondence between 1 December 2014 and 10 February 2015 between Mr Bartlett and Mr Brown, but more relevantly dealt with ongoing issues in relation to security interests registered in respect of the Prime Mover, and said that:
i)at a hearing on 9 February 2015 Justice Bergen in the Supreme Court of New South Wales made an order that the registration in the name of “ACN 497 669 218” be removed, but that as at the date of swearing the affidavit the registration had not been removed;[109]
ii)the balance of the motion before Justice Bergen was adjourned to 12 February 2015 and related to orders restraining the PPS Registrar from allowing any further registrations to be placed on the register from the issuing of the order until the same of the Prime Mover can ultimately be settled;[110] and
iii)consequently, the settlement of the sale of the Prime Mover had not yet resolved as it was dependent upon the removal of the existing registration and the granting of orders sought in relation to restraining further registrations;[111]
r)an affidavit of debt (being a fourth further affidavit of final debt) affirmed by Mr Crow on 11 February 2015;
s)a fourth further affidavit of searches by Mr Bartlett of court records and the National Personal Insolvency Index affirmed 11 February 2015, which revealed that Mr Culleton was not bankrupt and had not made an application to set aside the Creditor’s Petition;
t)an affidavit of debt (being a fifth further affidavit of final debt) affirmed by Mr Crow on 11 March 2015; and
u)a fifth further affidavit of searches by Mr Bartlett of searches of court records and the National Personal Insolvency Index affirmed 11 March 2015, which revealed that Mr Culleton had not made application to set aside the Creditor’s Petition and was not bankrupt.
[108] “Mr Bartlett’s February 2015 Affidavit”.
[109] Mr Bartlett’s February 2015 Affidavit, para.20.
[110] Mr Bartlett’s February 2015 Affidavit, para.21.
[111] Mr Bartlett’s February 2015 Affidavit, para.22.
In relation to service of the Creditor’s Petition the Court notes that the Caddy Affidavit is specific. Mr Caddy:
a)recounts a conversation with Mr Culleton in which he was asked whether he was Ronald Norman Culleton and in which he replied “Yes, I am”; and
b)says he then served Mr Culleton by hand with various documents including the Creditor’s Petition.
In circumstances where Mr Culleton’s Affidavit does not assert that he was not served, and says no more than that he has no recollection of being served, the Court is satisfied on the basis of the Caddy Affidavit that Mr Culleton was served with the Creditor’s Petition by hand on 2 April 2014 at about 3.55pm in the manner indicated in the Caddy Affidavit.
On the basis of the various affidavits filed by Macquarie Leasing, the Court accepts that there are affidavits:
a)verifying the petition;
b)of search of court records;
c)of service of the bankruptcy notice;
d)of search of the National Personal Insolvency Index; and
e)of debt still owed.
The Court is therefore satisfied on the basis of Macquarie Leasing’s affidavits as to the matters required to be proved for the making of a sequestration order.[112]
[112] Bankruptcy Act, s.52(1).
The submissions for Mr Culleton assert that he is able to pay his debts and therefore the Creditor’s Petition ought to be dismissed. The submissions make various assertions concerning an unidentified third party funder prepared to make payment of the judgment debt, upon certain conditions in relation to subrogation and assignment of the rights of Macquarie Leasing as lender. There is, however, no evidence from any person indicating that they are prepared to fund the payment of the judgment debt owed by Mr Culleton. Nor has any payment of the judgment debt, in whole or part, been proffered on the evidence before the Court (save for a sum of $5500). There is no evidence before the Court of Mr Culleton’s actual financial position, that is, of his assets and liabilities. In those circumstances the Court concludes that there is no evidence that Mr Culleton is able to pay the judgment debt, and that Mr Culleton is insolvent.
Mr Culleton also submits that there is other sufficient cause for the Court to refuse to make a sequestration order. It is the case that the circumstances constituting other sufficient cause are extremely variable and it is not appropriate to attempt to catalogue or circumscribe them.[113]
[113] Clyne v Deputy Commissioner of Taxation (1985) 5 FCR 1 at 5 per Fisher, Morling and Wilcox JJ.
Mr Culleton submits that the Prime Mover has been sold at a considerable undervalue in a sale which was not bona fide. Mr Culleton submits that the Prime Mover has a market value of $130,000 and was sold for $54,000. Mr Culleton also submits that at the auction Mr Frank Bertola was the highest bidder, with a bid of $65,000, and that there has not been a genuine arms-length sale of the Prime Mover. Of each of these matters, namely the proper market value of the Prime Mover, the circumstances of the sale of the Prime Mover at auction, including the alleged bid by Mr Bertola, and the allegation of a non-genuine arms-length sale, there is no evidence led by Mr Culleton. By contrast, Macquarie Leasing has led evidence of an auction bona fide held at which a bid of $57,500 was put and accepted. Macquarie Leasing also give evidence that Mr Frank Bertola later attended Manheim Auctions’ premises and sought unsuccessfully to bid for the Prime Mover. Macquarie Leasing has also submitted evidence as to the terms of sale which indicate that the sale was one at arms-length, made after a properly conducted auction. In those circumstances, the factual basis for the assertion that there is other sufficient cause for the Court not to make a sequestration order is not made out.
Mr Culleton’s submissions also advert to the fact that there was a problem with the title to the Prime Mover. That is undoubtedly the case. It is the case because Mr Culleton and parties seemingly associated with him, including his son Mr Culleton Jnr and Mr Bertola, and another Mr Culleton living at the same address as Mr Culleton, have all registered security interests which have prevented the sale of the Prime Mover, with each of those security interests subsequently being ordered to be removed by the Supreme Court of New South Wales. What is perhaps striking about this case is that there was a failure to disclose the actions in relation to the registration of security interests against the Prime Mover, either by Mr Culleton, or by his solicitors if they were aware of the registration of the security interests.
The Court has also considered whether or not Mr Culleton has the capacity to have been involved in the conduct of these proceedings and whether or not a litigation guardian was required.[114] The Court notes that the only evidence of Mr Culleton’s alleged dementia is a copy of a Doctor’s certificate dated 3 October 2014 indicating that Mr Culleton was not capable of attending court at that time. There is no specialist’s report on Mr Culleton’s medical condition. Relevantly, there is no evidence that Mr Culleton was under a disability at the time the Creditor’s Petition was served on 2 April 2014. Also relevant is the fact that after October 2014 Mr Culleton has sworn an affidavit in these proceedings. Further, the submissions made by Mr Culleton in the proceedings have not sought to rely upon his dementia as a basis for the Court to find that there was other sufficient cause not to make a sequestration order, or to argue, as was argued in Temelkovski, that the Creditor’s Petition was not served in accordance with r.11.15(1) of the FCC Rules. The Court also notes that the Court’s orders of 23 May 2014 provided for evidence to be filed in relation to any mental incapacity of Mr Culleton, and no such evidence was filed. Further orders have since been made by the Court with respect to the filing of affidavits and submissions, and no affidavits or submissions placing reliance on Mr Culleton’s alleged mental incapacity or dementia have been filed, and no application for the appointment of a litigation guardian has been made. In the above circumstances, the Court has concluded that there is no, or no sufficient or proper evidence, for it to draw any conclusions with respect to Mr Culleton’s mental capacity, and no basis for it to find that service of the Creditor’s Petition was not properly effected.
[114] FCC Rules, r.11.08; The Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962 (“Temelkovski”).
A petitioning creditor who has made out the requirements set out above has a prime facie right to a sequestration order unless very special circumstances are shown to justify the Court departing from its usual practice.[115] For the reasons set out above, no special circumstances arise in this case.
[115] Re Sanders (2003) 1 ABC(NS) 408; [2003] FCA 1079, affirmed on appeal in Sanders v Knudsen & Yates trading as the Hargreaves Practice [2004] FCAFC 305 at para.14 per Whitlam, Branson and Sackville JJ.
In the above circumstances there is no proof before the Court that Mr Culleton is able to pay the debt referred to in the Creditor’s Petition, and no other sufficient cause proven not to issue a sequestration order. There is therefore a basis for making a sequestration order, and no basis for not making a sequestration order.
Orders
For the reasons set out above there will be orders that:
a)Mr Culleton’s application:
i)to appear by a non-lawyer;
ii)for a change of venue; and
iii)for non-party discovery,
be dismissed;
b)a sequestration order issue against the estate of Ronald Norman Culleton, noting that the date of the act of bankruptcy is 26 October 2013; and
c)the costs of the Creditor’s Petition be paid to the applicant creditor in the sum of $14,661.66 from the bankrupt estate of Ronald Norman Culleton in accordance with the provisions of the Bankruptcy Act 1966 (Cth).
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 12 March 2015
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