McElligott v Boyce

Case [2013] FCA 804

FEDERAL COURT OF AUSTRALIA

McElligott v Boyce [2013] FCA 804

Citation: McElligott v Boyce [2013] FCA 804
Appeal from: Boyce v McElligott (No 2) [2012] FMCA 909
Parties: LORAIN RONDA MCELLIGOTT v PETER GERARD BOYCE, ALAN WILLIAM CLARKE, SIMONE ELIZABETH PEARCE and GEOFFREY JOHN BARR
File number: QUD 352 of 2012
Judge: COLLIER J
Date of judgment: 13 August 2013
Catchwords: BANKRUPTCY AND INSOLVENCY – application to set aside sequestration order of Federal Magistrate – bankruptcy notice founded on costs order made by Court of Appeal of Queensland in related litigation – allegations of fraud by applicant against respondent creditors – whether genuine dispute in relation to debt – whether Federal Magistrate should “look behind” decision of Court of Appeal
Legislation: Corporations Act 2001 (Cth) ss 109X, 459C, 459E, 459H
Cases cited: McElligott v Boyce [2011] QCA 117 cited
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 cited
Date of hearing: 8 March 2013
Place: Brisbane
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 28
Counsel for the Appellant: The Appellant appeared in person
Counsel for the First, Second, Third and Fourth Respondents: Mr M Jones
Solicitor for the First, Second, Third and Fourth Respondents: Butler McDermott Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 352 of 2012
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN:

LORAIN RONDA MCELLIGOTT
Appellant
AND:

PETER GERARD BOYCE
First Respondent

ALAN WILLIAM CLARKE
Second Respondent

SIMONE ELIZABETH PEARCE
Third Respondent

GEOFFREY JOHN BARR
Fourth Respondent

JUDGE:

COLLIER J

DATE OF ORDER:

13 AUGUST 2013

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

The amended notice of appeal filed in Court on 8 March 2013 be dismissed with costs.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 352 of 2012
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN:

LORAIN RONDA MCELLIGOTT
Appellant
AND:

PETER GERARD BOYCE
First Respondent

ALAN WILLIAM CLARKE
Second Respondent

SIMONE ELIZABETH PEARCE
Third Respondent

GEOFFREY JOHN BARR
Fourth Respondent

JUDGE:

COLLIER J

DATE:

13 AUGUST 2013

PLACE:

BRISBANE

REASONS FOR JUDGMENT

  1. This is an appeal from a decision of a Federal Magistrate (as he then was) in Boyce v McElligott (No 2) [2012] FMCA 909. In that case his Honour made an order sequestrating the estate of the appellant, Ms McElligott, and refused Ms McElligott’s application for a stay pending commencement of proceedings by her in the High Court of Australia. In her amended notice of appeal filed in Court on 8 March 2013 Ms McElligott, who is self-represented, appeals on the following two grounds:

    1.Under ss 5(2) and 23 of the Federal Court of Australia Act (1976) the court may set aside an order at any time if the order was obtained by fraud.

    2.A matter of fraud should rightfully be heard separately and solely in an independent hearing. Ref Judgements Fraudulently obtained: The forgotten equity Geno [sic] Dal Pont:

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AGLC
McElligott v Boyce [2013] FCA 804
Case
[2013] FCA 804
Decision Date

CaseChat Overview and Summary

In McElligott v Boyce, the applicant, Lorain McElligott, sought to set aside a sequestration order made against her estate by a Federal Magistrate. This order was based on a bankruptcy notice founded on a costs order made by the Court of Appeal of Queensland in a related litigation. The respondents were partners at a law firm that had previously provided legal services to McElligott and her company, Westwood Enterprises. The central issue was whether the Federal Magistrate should consider the merits of the costs order when deciding whether to set aside the sequestration order. Additionally, the court had to determine if there was a genuine dispute about the debt, which would prevent the sequestration order from being made.

The court examined whether the Federal Magistrate should "look behind" the Court of Appeal's decision to determine if the costs order was correctly made. The Federal Magistrate concluded that the Court of Appeal was the final appellate court in the state and its decision was unlikely to be overturned. The court found that the Federal Magistrate had correctly followed the legal process and was entitled to make the sequestration order. The court also noted that McElligott's allegations of fraud and misconduct by the respondents were matters for separate proceedings and did not affect the validity of the costs order.

The court dismissed McElligott's application to set aside the sequestration order. The reasoning was that the Federal Magistrate had properly exercised his discretion, and the order was based on the Court of Appeal's costs order, which was unlikely to be overturned. The court held that it was not appropriate to "look behind" the Court of Appeal's judgment, as it would be setting aside a decision of a higher court. Consequently, the sequestration order stood, and the estate of Lorain McElligott remained sequestrated. The appeal was dismissed with costs.

Orders

Orders of the court

The amended notice of appeal filed in Court on 8 March 2013 be dismissed with costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Ms McElligott seeks three orders, namely:1.An order that the sequestration of the estate of Lorain McElligott be set aside.2.An order that an act of bankruptcy occurred on 19 April 12 be set aside.3.That the appointment of the trustee be reversed.Background facts Ms McElligott was a client of a law firm which traded under the name Butler McDermott (“the firm”). The four respondents to the appeal are partners of that firm. It appears that some time ago Ms McElligott and a company of which she was the sole director and shareholder, Westwood Enterprises (Qld) Pty Ltd (“Westwood”), engaged the first respondent, Mr Boyce, to undertake legal work. The firm rendered an account in respect of that work but it was not paid. On 8 July 2009 the respondents served a statutory demand on Westwood under s 459E of the Corporations Act 2001 (Cth) (“Corporations Act”) for the sum of $5,270.62, being the debt claimed. Ms McElligott took the view that the statutory demand was defective because it failed to include a statutory notice, and accordingly no steps were taken to satisfy it. On 17 August 2009 the respondents filed an application in the Supreme Court of Queensland for the winding up of Westwood based on its deemed insolvency resulting from Westwood’s failure to meet the statutory demand in accordance with s 459C of the Corporations Act. After a number of adjournments the winding up application came before Daubney J. Following a short hearing in which Ms McElligott sought to raise a genuine dispute as to the nature of the debt within the meaning of s 459H of the Corporations Act, Daubney ordered that Westwood be wound up. Ms McElligott then brought an application in the Supreme Court of Queensland for an order terminating the liquidation of Westwood. The application was unsuccessful. The matter came before the Court of Appeal of Queensland in McElligott v Boyce [2011] QCA 117. In that case Ms McElligott sought an extension of time in which to appeal against the order of Daubney J that Westwood be wound up. Her grounds of appeal in that Court included:· Late Discovery of a serious defect in the statutory demand and service.·Late discovery of compelling circumstantial evidence leading to linking of delivery of statutory demand on Westwood Enterprises by Peter Boyce at Butler Mcdermott Lawyers with the blacklisting and boycotting actions of ‘all the valuers on the sunshine coast’ against Westwood in 2005 as a result of my complaints to the The Valuers Registration Board of Qld and reports produced by me called Towards Consistency (2002) and a second report called Toward Transparency (2005) in what amounts to perjury and abuse of process and misrepresentation to the court. It is now clear that the statutory demand was bought against Westwood Enterprises by way of a retaliatory action and in order to silence and punish me as a result of my attempts to bring attention to the potential for fraud misdealings and corruption in the valuations and finance industries due to the lack of the transparency and accountability in the relationship between the banks and the valuers.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Subsequently Ms McElligott sought special leave to appeal the decision of the Court of Appeal to the High Court of Australia, however the application was refused. The Federal Magistrate in the judgment the subject of this appeal observed that Ms McElligott had subsequently brought another application to the High Court – out of time – directed specifically against the costs order against her, and relying upon the same factual matters which had been the subject of determination by Courts already (at [19]). The Federal Magistrate considered that the prospect of success of Ms McElligott in respect of this application was very low (at [20]).Decision of the Federal Magistrates Court (now the Federal Circuit Court) The bankruptcy notice issued to Ms McElligott was founded on the costs order made against her by the Court of Appeal in McElligott v Boyce [2011] QCA 117. The Federal Magistrate explained:[22] … There was an application to set aside that bankruptcy notice determined by me. The basis of the argument raised by the respondent then is the same as the argument she raises now. I dismissed the application to set aside the bankruptcy notice. The bankruptcy notice has not been complied with and an act of bankruptcy has been committed as of 16 April, 2012. His Honour continued:[23] A petitioning creditor who proves an act of bankruptcy is prima facie entitled to the making of a sequestration order and subject to the formalities of s.2 of the Bankruptcy Act 1966 being complied with, a sequestration order ought ordinarily be made. The respondent can seek to demonstrate that there are reasons for which a sequestration order ought not be made. One of them is to demonstrate that there is no genuine debt owed by the respondent debtor to the petitioning creditor and the authorities like Wren v Mahony (1972) 126 CLR 212 – and there are many others – demonstrate that a Court exercising bankruptcy jurisdiction has the power to “go behind” a judgment to determine whether a debt is truly owed. While noting that the allegations made by Ms McElligott concerning Mr Boyce’s conduct were the subject of a separate application to the Federal Court, his Honour noted that that application did not appear to reveal a cause of action against Mr Boyce. His Honour continued:[27] To go behind the judgment of a Court of Appeal would be to determine that the costs order made by the Court of Appeal was wrongly made, that there was no reason to make the costs order or a different order as to costs ought to have been made. I am aware that the costs order is the subject of an application to extend time within which to bring an application for special leave to appeal to the High Court. But it seems to me that there is nothing in any of the arguments that have been raised which would suggest that the Court of Appeal’s costs order is wrong. The appeal to the Court of Appeal was unsuccessful. This was ordinary commercial litigation. The ordinary rule is that costs follow the event. The Court of Appeal made such an order and there is nothing to suggest that the order is likely to be set aside, discharged or varied because, for all intents and purposes, the Court of Appeal is the final Court of Appeal in this State subject to applications for special leave.[28] For all of those reasons I am not satisfied I ought to go behind the judgment of the Court of Appeal. I am satisfied of the formal requirements set out in s.52 of the Bankruptcy Act 1966. I am satisfied that I ought to make an order sequestrating the estate of the respondent, Lorain Ronda McElligott, and I so order.

Ratio Decidendi

Legal Principle Established

His Honour then refused to grant Ms McElligott’s application for stay of his orders pending the commencement of proceedings by Ms McElligott in the High Court.Consideration Ms McElligott filed a detailed outline of submissions on 11 February 2013. In summary, she contends:·Fraud must be heard separately and solely in an independent hearing.·There was a conflict of interest in the respondents because:o Ms McElligott had publicly called for more transparency and accountability in the valuations industry;o the second respondent, Mr Clarke, oversaw a clerkship of Mr Terence Boyce, who is the brother of the first respondent and who was involved in the failure of the Boyce Garrick mortgage scheme.·The prescribed warning statement had been omitted from the statutory demand served on Westwood. Accordingly there has been a false statement of a material fact. Butler McDermott has been involved in similar conduct in the Queensland Civil and Administrative Tribunal.·The first respondent, Mr Boyce, falsely stated that he did not know of genuine disputes regarding amounts charged to Westwood for work done by the firm. That Mr Boyce is a solicitor compounds this falsehood.·The decision of the Court of Appeal of Queensland concerning the absence of the prescribed warning statement from the statutory demand sets a dangerous precedent.·A serious error of law and grave injustice occurred as a result of the misleading and deceptive conduct of Mr Boyce and the misrepresentation provided by the removal of the warning statement from the statutory demand.·It was clear that the first respondent was seeking to use the winding up proceedings to coerce Westwood into paying an alleged debt without affording Westwood a reasonable opportunity to ascertain or have it established that the debt was properly payable. In my view Ms McElligott’s grounds of appeal have no merit. Further, her submissions raise matters which are pointless and irrelevant to the claim before me. Issues which are relevant to the claim before me are:·It is not in dispute that the Court of Appeal has heard, and made findings on, a number of factual matters also raised before me, including the alleged fraudulent conduct of Mr Boyce, the omission of the warning statement from the statutory demand served on Westwood, alleged conspiracies and cover-ups, whether Ms McElligott had demonstrated the existence of a genuine dispute concerning her indebtedness to the respondents, and the alleged failure of Daubney J to accord Westwood and Ms McElligott a fair hearing at the hearing of the winding up application. The findings of the Court of Appeal in respect of all of these matters were unfavourable to Ms McElligott.·The Court of Appeal made a costs order against Ms McElligott. The bankruptcy notice served on Ms McElligott was founded on the debt arising from that costs order.·The order made by the Federal Magistrate sequestrating the estate of Ms McElligott followed the service of the bankruptcy notice, the failure of Ms McElligott to comply with that bankruptcy notice, and the petition of the respondents for a sequestration order.