Malouf Solicitors v Sudath
[2006] FMCA 1782
•23 November 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MALOUF SOLICITORS v SUDATH | [2006] FMCA 1782 |
| BANKRUPTCY – Application for review – seeking to set aside orders made by the Registrar – application filed out of time – application dismissed. |
| Evidence Act 1995 (Cth), s.160 Family Law Rules 2004 (Cth), r.19.38 Federal Court Rules 2001 (Cth) Federal Magistrates Court Rules 2001 (Cth), rr.20.01, 20.02 |
| Applicant: | ANTHONY MARK MALOUF T/A MALOUF SOLICITORS |
| Respondent: | KONDASINGHE AARON SUDATH |
| File Number: | SYG3757 of 2005 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 23 November 2006 |
| Delivered at: | Sydney |
| Delivered on: | 23 November 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr R W Tregenza |
| Solicitors for the Applicant: | Mr L Myers of Malouf Solicitors |
| Respondent: | No appearance by or on behalf of the respondent |
ORDERS
The Application for Review filed on 2 June 2006 is dimissed.
The respondent debtor to pay the applicant creditor’s costs for 29 August 2006 on an indemnity basis as agreed or taxed in accordance with the Federal Court Rules 2001 (Cth).
The respondent debtor to pay the applicant creditor’s costs for
23 November 2006 as agreed or taxed in accordance with the Federal Court Rules 2001 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG3757 of 2005
| ANTHONY MARK MALOUF t/as MALOUF SOLICITORS |
Applicant
And
| KONDASINGHE AARON SUDATH |
Respondent
REASONS FOR JUDGMENT
The Proceedings
This is an Application for Review by Dr Kondasinghe Aaron Sudath, the respondent debtor, filed on 2 June 2006. The application for review seeks to set aside the orders made by Registrar Kavallaris on 12 May 2006.
The respondent debtor (the applicant in these proceedings) claims that the orders made by Registrar Kavallaris on 12 May 2006 were made in the Dr Sudath’s absence. It is claimed that Malouf Solicitors deliberately delayed service of the letter notifying Dr Sudath of the hearing of the creditor’s petition listed on 12 May 2006. The notification letter from Malouf Solicitors was dated 8 May 2006 and received by Dr Sudath on 17 May 2006. Dr Sudath also claims that he never received an email dated 8 May 2006 from Malouf Solicitors with the notification details.
For the purpose of this Application for Review, Malouf Solicitors tendered and applied for the following affidavits to be admitted into evidence:
(a) affidavit of Lawrence John Myers of Malouf Solicitors, sworn on
3 October 2006 and filed on 4 October 2006.(“affidavit of Lawrence Myers”)
Background
Mr Tregenza of counsel provided the Court with written submissions setting out the extensive background information in respect of this matter. I adopt that submissions for Malouf Solicitors the purpose of this judgment, and set out that material with small additions to establish the background of the present application before the Court.
Dr Sudath owed Malouf Solicitors an amount of $19,020.17 pursuant to a costs assessment order in the sum of $32,950.99, obtained by Malouf Solicitors against him in the Family Court of Australia at Parramatta on 19 October 2005. The sum was in relation to monies owing with respect to professional legal services provided to Dr Sudath by Malouf Solicitors, together with interest totalling $66.18. Dr Sudath has made payment of $400,000 of the order.
A Bankruptcy Notice NN4240/05, was issued on 3 November 2005 claiming an amount of $19,020.17. Dr Sudath was required to comply with the Bankruptcy Notice within 21 days.
At the time the Bankruptcy Notice was issued and served, there was an order for the payment of the costs against Dr Sudath in favour of the Malouf Solicitors. The failure of Dr Sudath to comply with the Bankruptcy Notice resulted in an act of bankruptcy sufficient to issue a Creditors Petition.
No application was made to extend time for compliance with the Bankruptcy Notice. There was no order that the execution of the order of the Family Court made on 19 October 2005 be stayed and no evidence that an application for a stay was made.
Dr Sudath failed to comply with the Bankruptcy Notice despite the warnings in it. Those warnings related to consequences of a failure to comply with the requirements of the Notice or a failure to obtain an extension of time for compliance.
The application to set aside the order of 19 October 2005 was filed out of time. The time prescribed for such an application is 14 days: Family Law Rules 2004 (Cth), r.19.38. The purported application to set aside the costs assessment order was not filed until 21 days after the order was made. If and until there is an extension of time granted by the Family Court, there is no valid application to set aside the costs order of 19 October 2005.
A Creditor’s Petition was filed on 20 December 2005 in the Federal Magistrates Court of Australia claiming an amount of $19,020.17, the details of which are set out at [4] above. The Petition also contains the following information:
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.
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 12 December 2005 with the requirements of a Bankruptcy Notice duly served by post on Kondasinghe Aaron Sudath on 21 November 2005 which Bankruptcy Notice was issued pursuant to an Order obtained in the Family Court of Australia at Parramatta on 19 October 2005, being an Order the execution of which has not been stayed.
The basis of that Creditor’s Petition was that Dr Sudath failed to comply with the Bankruptcy Notice, which was issued pursuant to the Family Court costs assessment order. Mr Sudath failed to comply with the order on or before 12 December 2005 as required by the Notice. Until the order of 19 October 2005 is set aside, there is a valid and enforceable order for the payment of money by Dr Sudath.
The order made 19 October 2005 in the Family Court was set aside only after the presentation of the Creditor’s Petition.
The circumstances by which Dr Sudath became entitled to defend the Petition arose only upon the setting aside of the costs order. Up to that time, the respondent was, prima facie, entitled to succeed in having a sequestration order made against Dr Sudath.
Having incurred expenses in filing the Creditor’s Petition, Malouf Solicitors was entitled to made a claim for those costs and was entitled, prima facie, to succeed in that application.
On 10 February 2006, the first return date of the Creditor’s Petition, Malouf Solicitors appeared but Dr Sudath did not because he was unwell.
The dismissal of the Creditor’s Petition occurred after Malouf Solicitor’s application set aside the costs order, was dismissed.
On the first return date of the application to review the setting aside of the costs order, Dr Sudath again did not appear.
On 5 May 2006, Malouf Solicitors moved the Court to dismiss the Creditor’s Petition. This was the appropriate thing to do and the appropriate time at which to do it.
This was when the Court should have been in a position to deal with the question of costs but, in the absence of Dr Sudath, it was appropriate for the matter to be adjourned to 12 May 2006. Having given notice of this date to Dr Sudath using three different email addresses previously supplied by him to Malouf Solicitors, Dr Sudath did not appear on 12 May 2006. Accordingly, an order for costs was made by Registrar Kavallaris in favour of Malouf Solicitors as follows:
1. The Respondent Debtor pay the Applicant Creditor’s costs (including reserved costs, if any) as agreed or taxed (in accordance with the Federal Court Rules 2001 (Cth))
The conduct of Malouf Solicitors was reasonable and they should be entitled to their costs of the Creditor’s Petition.
The application for review was filed by Dr Sudath on 2 June 2006 and returnable on 20 June 2006, objecting to the orders of the Registrar.
A letter was faxed from Dr Sudath to Malouf Solicitors on 17 June 2006. The letter is dated 9 June 2006 and purports to enclose an application for review. It did not. The fax was sent at 21:18 (approximately 9.00pm on Saturday night). There is little rationale in posting a letter on 9 June 2006, then faxing eight days later (in the absence of any reasons) without the document which it purports to enclose.
Service of the application for review was required to be effected on or before 9 June 2006: Federal Magistrates Court Rules 2001 (Cth), r.20.02(3). Even if it had been posted on that date, service of the application for review was late, the rebuttable presumption of time for service by post being on the fourth business day: Evidence Act 1995 (Cth), s.160.
As a result, Dr Sudath did not appear on 20 June 2006.
The matter was then listed on 29 August 2006. However the letter from the Registrar of the Federal Magistrates Court dated 21 June 2006 did not inform Malouf Solicitors of that date.
The letter from Dr Sudath enclosing the application for review and advising of the return date of 29 August 2006 was not received until on or about 28 August 2006. Therefore, there was insufficient time for the matter to be in a position to proceed on 29 August 2006. Rules 20.02(2) and 20.02(3) of the Federal Magistrates Court Rules clearly stipulate that a respondent to such an application for review have at least seven days prior to the return date.
The matter was listed before Registrar Hedge on 29 August 2006. At that hearing, the parties sought to have the matter transferred to a Federal Magistrate and it was transferred to my docket. On that date, I was assisted by Wilson FM who heard the matter and adjourned it to final hearing on 23 November 2006 at 10.15am before myself. Federal Magistrate Wilson also made orders requiring both parties to file and serve any further affidavit material on which they intended to rely in relation to the application. The parties were also required to notify each other in writing as to which (if any) deponents were required for cross-examination and both parties were to exchange brief outline of facts of the matters in contention in relation to the application for review.
On 14 November 2006, Dr Sudath advised the Court that he had been involved in a serious motor vehicle accident in Columbo, Sri Lanka and that he could not attend the hearing of 23 November 2006. My chambers sent letters to the parties noting Dr Sudath’s accident and advised him to either:
a)Obtain legal representation for the hearing date; or,
b)Provide an affidavit to the Court outlining the reason for his absence, along with any supporting medical evidence.
There was no response from Dr Sudath and on 23 November 2006 there was no appearance by or on behalf of Dr Sudath.
Reasons
On 23 November 2006, the matter was formally called before the Court and in the vicinity of the court room but there was no appearance by or on behalf of Dr Sudath. Mr Tregenza indicated that his instructing solicitors had received some communication from Dr Sudath referring to the accident, but he did not specify his injuries. Mr Tregenza indicated that this was of particular concern to his clients because on the first occasion the Petition was returnable before the Court,
Dr Sudath had contacted both the Court and his client saying that he was unable to attend. Dr Sudath had said he was ill, and the medical certificate he relied upon contained a handwritten diagnosis. That medical certificate is before the Court and has on it in handwriting stating that Mr Sudath had a “variety of diseases” or “variety for diseases” (affidavit of Mr Myers, Annexure D).
Mr Tregenza then raised what was to happen to the application for review filed by Dr Sudath on 2 June 2006. It was submitted that under the Federal Magistrate Court Rules, a review must proceed by way of a hearing de novo. Mr Tregenza indicated that in anticipation that Dr Sudath would not appear, he had prepared a detailed chronology of the history of this matter to assist the Court. That material is the basis of the background set out above.
Mr Tregenza submits that r.20.01 of the Federal Magistrates Court Rules states:
20.01 Time for application for review
(1) For subsection 104 (2) of the Act, application for review of the exercise of a power by a Registrar must be made within:
(b) for the exercise of a power of the Court under the Family Law Act mentioned in paragraph 20.00A (1) (b) — 28 days; and
(c) otherwise - 7 days.
(2) A time prescribed under subrule (1) may be extended in a proceeding:
(a) by the Court or a Registrar on any terms as the Court or Registrar thinks fit; or
(b) with the consent of the parties to the proceeding.
The Federal Magistrates Court Rules commenced on 30 July 2001, with the most recent compilation prepared on 6 February 2006. The orders of Registrar Kavallaris were made on 12 May 2006 and
Dr Sudath’s application for review of those orders was filed on 2 June 2006. Mr Tregenza submits that Dr Sudath’s application is greater than the seven days of the Registrar’s orders and therefore out of time.
Mr Tregenza submits that in respect of costs, Dr Sudath was obliged to serve within seven days the notice of review, which was simply not done. Mr Tregenza referred the Court to Annexure Q of the affidavit of Mr Myers, which shows that Malouf Solicitors were in receipt of a letter on or about 21 August 2006 containing notification of the proceedings before this Court scheduled for 29 August 2006. The application for review the subject of that correspondence was not received by Malouf Solicitors until 28 August 2006, being one day prior to the hearing. Dr Sudath asserted at the hearing on 29 August 2006 before Federal Magistrate Wilson that he had forwarded certain material to Malouf Solicitors which contained details of the hearing date. The affidavit of Mr Myers includes copies of incoming facsimile transmission reports of Malouf Solicitors for the dates in question. There is nothing on the transmission reports to suggest that Dr Sudath faxed any material to Malouf Solicitors. Mr Tregenza submits that Malouf Solicitors were still receiving faxed documents during the morning of the hearing before Wilson FM. Mr Tregenza submits that due to the failure by Dr Sudath to provide documents in the appropriate manner, he seeks an order for costs of the adjournment of 29 August 2006 on an indemnity basis. In addition, I order costs for today’s proceedings to be paid by Dr Sudath.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
Date: 22 December 2006
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