McKinnon v Pattison
[2009] FMCA 695
•19 June 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MCKINNON & ANOR v PATTISON | [2009] FMCA 695 |
| BANKRUPTCY – Whether Federal Magistrate disqualified because heard a previous application involving same applicants – whether there is perceived bias. |
| Bankruptcy Act 1966 (Cth) ss.33(1)(c), 64ZBA, 162 Bankruptcy Regulations 1996 (Cth) r.8.09 |
| McKinnon v Commonwealth Bank (No.1) (2004) FMCA 208 McKinnon v Commonwealth Bank (No.2) (2004) FMCA 209 |
| First Applicant: | JEANETTE BEVERLY MCKINNON |
| Second Applicant: | DONALD NEIL MCKINNON |
| Respondent: | PAUL ANTHONY PATTISON |
| File Number: | MLG 369 of 2009 |
| Judgment of: | Phipps FM |
| Hearing date: | 19 June 2009 |
| Date of Last Submission: | 19 June 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 19 June 2009 |
REPRESENTATION
| The Applicants: | Appearing in person |
| Counsel for the Respondent: | Mr M. Black |
| Solicitors for the Respondent: | TurksLegal |
ORDERS
Application to disqualify the Federal Magistrate is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 369 of 2009
| JEANETTE BEVERLY MCKINNON & DONALD NEIL MCKINNON |
Applicants
And
| PAUL ANTHONY PATTISON |
Respondent
REASONS FOR JUDGMENT
The applicants apply for me to disqualify myself from the hearing of this proceeding. The proceeding is an application to review a decision of a registrar made 25 May 2009. Registrar Moore ordered that the application be dismissed and that the applicants pay the respondent’s costs fixed in the amount of $4710.00. That order was stayed for 30 days.
The proceeding before the Registrar, and therefore the proceeding before me, is an application by Mr and Mrs McKinnon under s.31(1)(c) of the Bankruptcy Act 1966 (Cth) to extend the time under r8.09 of the Bankruptcy Regulations 1996 (Cth) for them to give a taxing officer notice of their desire to have the trustee’s costs and remuneration taxed under r.8.09(1) provides:
Where the trustee of the estate of a bankrupt claims remuneration under section 162 of the act, the bankrupt or a creditor who is dissatisfied with the amount of the claim may, by notice in writing lodged within 28 days of being notified in writing or becoming aware of the amount of the claim, request a taxing officer to tax the claim.
The respondent, Mr Pattison, is the trustee in bankruptcy of both the applicants. He has been appointed pursuant to a sequestration order which was made on 26 August 2005. Mr Pattison gave notice to the creditors under s.64ZBA of the Bankruptcy Act requesting that they resolve to approve his remuneration without the calling of a meeting.
Section 162 of the act provides for the remuneration of a trustee. It provides that remuneration may fixed by resolution of creditors. Section 64ZBA provides a process by which the resolution of the creditors can be made without the calling of a meeting. The affidavit by Mr Pattison shows that there are two creditors: the Commonwealth Bank of Australia and the Commissioner of Taxation. Both have approved the resolution or voted in favour of the resolution approving his remuneration without the need to call a meeting.
The applicants, the bankrupts, having as part of the process, received a letter from Mr Pattison in December 2008 setting out his fees and remuneration, notified Mr Pattison on or about 12 January 2009 that they wished to have the costs taxed. However, under Regulation 8.09, that notice has to be given to a taxing officer. The notice to Mr Pattison was ineffective. They subsequently made inquiries at the office of the Inspector General in Bankruptcy, learnt how they should give that notice, and they have now applied under s.33 of the Bankruptcy Act for an extension of the time in which they may give that notice. Section 33(1)(c) of the Act gives the court power to extend any time limit except the time for complying with a bankruptcy notice.
The current application is an application that I disqualify myself. This matter originally came before Burchardt FM on Monday of this week, that is, 15 June and he adjourned it for hearing until today. I imagine he would have initially adjourned it to hearing before him, given that it would have then been on his docket. Burchardt FM is unavailable and the matter has been assigned to me.
The applicants, Ms McKinnon who speaks for both applicants, has applied on the basis that I have previously heard a case involving them in this bankruptcy matter. I, when she initially raised it, had no recollection. She said it was in 2004. My associate has located two judgments that I delivered on 29 March 2004. I have now read both those judgements and they have both been provided to the applicants and to Mr Black for the respondent.
Before me on 29 March 2004 was an application by the applicants to set aside a bankruptcy notice, a bankruptcy notice based on a judgment obtained by the Commonwealth Bank of Australia in the Supreme Court of Victoria on 27 June 2001 for the sum of $222,985.29 plus interest which had since accrued by statute.
The first of the two judgments on that days deals with an application for adjournment. I refused the application for adjournment. I then dealt with the application to set aside the bankruptcy notice and I dismissed that application. Ms McKinnon has informed me that the applicants appealed my decision which was heard by Gray J in the Federal Court. He dismissed the appeal. They then applied to the High Court for special leave to appeal from Gray J's decision. The High Court refused that application. Subsequently they have been made bankrupt by the sequestration order of the 26 August 2005.
The application for adjournment was based on the fact that there were still appeal proceedings pending in relation to the High Court decision to refuse an application for special leave to appeal against the order which constituted the judgment in the Supreme Court. That judgment was given by Byrne J on 27 June 2001. Clearly the McKinnons appealed his Honour's decision. That appeal must have been dismissed because they then had applied for special leave to appeal to the High Court of Australia. That application for special leave was dismissed on 3 October 2003. The McKinnons claims that there were still proceedings extant in relation to the High Court decision. I will not set out the basis for their saying that. It is contained in my reasons in the first of my decisions on 29 March 2001. That is McKinnon v Commonwealth Bank (No. 1) (2004) FMCA 208. The basis for my decision to refuse the adjournment was that it is not for this court to inquire about the validity of an order of the High Court of Australia. I do not need to say any more than that.
I then dealt with the application to set aside the bankruptcy notice. My decision is contained in McKinnon v Commonwealth Bank (No. 2) (2004) FMCA 209. The applicants challenged the bankruptcy notice first on the basis that the bankruptcy notice had been served separately on each of the applicants: on Mr McKinnon on 28 October 2003 and Ms McKinnon on 24 February 2004. I rejected that argument. They then argued that execution of the judgment of the Supreme Court of Victoria had been stayed, and if that was the case then the bankruptcy notice could not be issued. They based their argument on a letter written by the solicitors for the Commonwealth Bank to the registry of the High Court at a time when the application for special leave to appeal was on foot in the High Court. That letter undertook not to execute the judgment until the application for special leave to appeal had been dealt with. For the same reason that they argued for an adjournment, the applicants then argued that the High Court special leave application had not been dealt with I ruled that it had on 3 October 2003 when the application for special leave was dismissed.
The third argument was that there was an abuse of process based partly on the argument that the judgment had been stayed an argument I had already dealt with. It was partly based on the alleged conduct of the bank. The applicants argued that the applicants were solvent. The reason I gave for not accepting that argument was that that was not a relevant matter in determining whether a bankruptcy notice should be set aside. Solvency might be an issue at the hearing of the creditor’s petition, but it was not a matter that affected the validity of a bankruptcy notice. So the application for setting aside the bankruptcy notice was dismissed.
None of the issues on both the application for the adjournment and the application to set aside the bankruptcy notice involved any contested matters of fact. None of them involved any issues of credit. All of them argued questions of interpretation about circumstances which were not disputed. The attempted challenge to the High Court decision was based on the fact that when the application for special leave to appeal was dismissed, by a court consisting of Gleeson CJ and Gummow J, Hayne J was present on the bench at the same time. Hayne J did not take part in the decision. That was because he held Commonwealth Bank shares. So far as the facts were concerned, it was clear from the transcript what had occurred. The three justices were all present on the bench, but the decision on the special leave application had been made by two justices only, the Chief Justice and Gummow J.
So far as the application to set aside the bankruptcy notice is concerned, they were all arguments based on undisputed facts: The bankruptcy notice had been served at separate times on each applicant. What occurred in the High Court was shown by the transcript. The applicants solvency was irrelevant to the determination of whether or not the bankruptcy notice should be set aside. There is nothing to justify my disqualification. The application, although not expressed in this way, is based on the submission that a reasonable observer might consider that I would not bring an unbiased mind to the application.
In the application before me the facts are not in dispute. It is merely a question of whether the court should exercise its discretion in the circumstances which exist. There is no basis at all for suggesting that a reasonable observer might consider that I would not bring an unbiased mind to the proceeding. The application that I disqualify myself is dismissed.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate: Paul Moss
Date: 22 July 2009
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