Maxwell-Smith v S & E Hall Pty Limited, in the matter of Maxwell-Smith [2006] FCA 825
BANKRUPTCY – application to set aside bankruptcy notice – whether cross claim, set off or cross demand – whether any claims have reasonable prospects of success
BANKRUPTCY – power to set aside bankruptcy notice – discretion to set aside for abuse of process - whether bankruptcy notice constitutes abuse of process – collateral purpose – undue pressure – inference of collateral purpose
INGE MAXWELL-SMITH v S & E HALL PTY LIMITED IN THE MATTER OF INGE MAXWELL-SMITH NSD 924 of 2006
JACOBSON J 3 JULY 2006 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 924 of 2006
BETWEEN:
INGE MAXWELL-SMITH APPLICANT
AND:
S & E HALL PTY LTD RESPONDENT
JUDGE:
JACOBSON J
DATE OF ORDER:
3 JULY 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The bankruptcy notice be set aside.
2.There be no order as to costs
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 924 of 2006
BETWEEN:
INGE MAXWELL-SMITH APPLICANT
AND:
S & E HALL PTY LTD RESPONDENT
JUDGE:
JACOBSON J
DATE:
3 JULY 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Introduction
On 30 November 1999, Mr and Mrs Maxwell-Smith made an application for special leave to appeal to the High Court from a judgment and order of the New South Wales Court of Appeal. On the same day, the High Court refused special leave with costs.
On 26 October 2000, the second respondent to the special leave application, S & E Hall Pty Limited,…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Maxwell-Smith v S & E Hall Pty Ltd [2006] FCA 825
Case
[2006] FCA 825
Decision Date
CaseChat Overview and Summary
The case of Maxwell-Smith v S & E Hall Pty Ltd involved a dispute between Mr and Mrs Maxwell-Smith and S & E Hall regarding the construction of a residential home on the Maxwell-Smith's property. The dispute originated from a building agreement dated 3 August 1995, where S & E Hall was contracted to construct the home. The agreement was signed by Mr Maxwell-Smith, who represented himself and his wife. The construction was completed in 1996, but the Maxwell-Smiths alleged that it was not done in a proper and workmanlike manner. They pursued proceedings against S & E Hall in the Consumer Claims Tribunal, which resulted in a decision that favoured S & E Hall, ordering the Maxwell-Smiths to pay a sum of $6,745.55 by 1 April 1998. This decision was upheld through various judicial review attempts by the Maxwell-Smiths, culminating in a refusal of special leave to appeal to the High Court.
The primary legal issues the court had to address were whether Mrs Maxwell-Smith, who did not sign the original building agreement, was bound by the subsequent costs order and whether the bankruptcy notice served on her was valid. The court had to consider the validity of the building contract and whether Mrs Maxwell-Smith's failure to sign it could exempt her from the liability for the costs order. Additionally, the court examined whether the bankruptcy notice was properly served and whether it was valid given the annulment of the previous bankruptcy orders.
The court reasoned that Mrs Maxwell-Smith's appearance, alongside her husband, in the special leave application to the High Court was sufficient to establish her as a party to the proceedings. This participation was deemed enough to counter any argument that her failure to sign the building contract should exempt her from the costs order. Furthermore, the court found that the bankruptcy notice was not valid because it did not comply with the requirements of the Bankruptcy Act, and thus it ordered the bankruptcy notice to be set aside. Given that Mrs Maxwell-Smith appeared in person without representation, the court made no order regarding her costs.
In conclusion, the court set aside the bankruptcy notice served on Mrs Maxwell-Smith and made no order as to her costs. This decision was based on the premise that her participation in the special leave application to the High Court was sufficient to establish her as a party to the proceedings, thereby binding her to the costs order. The court's ruling effectively protected Mrs Maxwell-Smith from the enforcement of the bankruptcy notice, which was deemed invalid.
Orders
Orders of the court
1. The bankruptcy notice be set aside.
2. There be no order as to costs
Background
Background to the litigation
The history of the matter is relevant to a consideration of each of the issues which I have identified. I will therefore set out so much of the history as is relevant before turning to the issues which I have identified.Background Facts By an agreement dated 3 August 1995, S & E Hall agreed with Mr and Mrs Maxwell-Smith to construct a residential home for them on their land at Surf Circle, Tura Beach. The agreement was not signed by Mrs Maxwell-Smith, but only by Mr Maxwell-Smith who appears to have signed on behalf of himself and his wife as the owners of the land on which the house was to be built. The building work appears to have been completed in 1996, although Mrs Maxwell-Smith contends that it was not carried out in a proper and workmanlike manner. As a result, Mr and Mrs Maxwell-Smith brought proceedings against S & E Hall in 1996 and 1997 in the Consumer Claims Tribunal concerning the construction of the house. On 25 February 1998, the Consumer Claims Tribunal handed down its decision and ordered that Mr and Mrs Maxwell-Smith pay to S & E Hall the sum of $6,745.55 by 1 April 1998. In its reasons for decision, the Consumer Claims Tribunal found that, subject to a number of minor exceptions, the building work had been completed in a workmanlike fashion and that all the work was properly accounted for. The Consumer Claims Tribunal made allowances against the amount claimed to cover the items of poor workmanship or incorrect accounting. In 1998 Mr and Mrs Maxwell-Smith made an application for judicial review of the decision of the Consumer Claims Tribunal in the Administrative Law Division of the Supreme Court of New South Wales. The application was heard by Greg James J. On 8 December 1998, his Honour ordered that the summons be dismissed. He ordered Mr and Mrs Maxwell-Smith to pay S & E Hall’s costs on an indemnity basis. On 7 April 1999, the New South Wales Court of Appeal refused leave to appeal from the judgment of Greg James J. The reason why leave was refused was that Powell JA and Giles JA were satisfied that there was no jurisdictional error in the decision of the Consumer Claims Tribunal. Special leave to appeal to the High Court was refused by McHugh and Kirby JJ on 30 November 1999. Mr and Mrs Maxwell-Smith appeared in person on the special leave application. On 15 September 2003, a Registrar of the Federal Court made sequestration orders against Mr and Mrs Maxwell-Smith. The debt which gave rise to the orders was the certificate of assessment of the costs order made by the Supreme Court of New South Wales on 8 December 1999. However, on 2 July 2004 Moore J annulled the bankruptcies of Mr and Mrs Maxwell-Smith under s 153B of the Act; see Maxwell-Smith v S & E Hall, in the matter of Maxwell-Smith [2004] FCA 840. His Honour was satisfied that the sequestration orders ought not to have been made, on the basis of an “unwitting” denial of procedural fairness before the Registrar; see [20]. Moore J observed at [24] that the annulment application was not made upon the basis that Mr and Mrs Maxwell-Smith were solvent when the orders were made. Nevertheless, his Honour recorded an acknowledgment of counsel for the Trustee that “probably” Mr and Mrs Maxwell-Smith were solvent when the sequestration orders were made. His Honour also noted that counsel for S & E Hall did not dispute this proposition.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
JACOBSON J
The judgment debt arose from the costs order of the High Court. Mrs Maxwell-Smith appeared, in person with her husband, to seek special leave. She was named as a party to the special leave application. That is sufficient to meet any suggestion that her failure to sign the building contract avoids liability for the costs order.Conclusion and Orders I will order that the bankruptcy notice be set aside. Mrs Maxwell-Smith was not represented and accordingly there will be no order as to her costs.I certify that this and the preceding fifty six (56)paragraphs are a true copy of the Reasons forJudgment of the Honourable Justice Jacobson.Associate:Date: 3 July 2006The Applicant appeared in person.