FEDERAL CIRCUIT COURT OF AUSTRALIA
| MCNALLY v FAZIO (NO. 3) | [2016] FCCA 215 |
| Catchwords: PRACTICE AND PROCEDURE – Application for adjournment – prior litigation history – previous orders made imposing conditions on application for adjournment – conditions not met. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.43, 44, 47(1), 52(1) and (2). |
| Applicant: | BRIAN MCNALLY |
| Respondent: | ARTURO SALVATORE FAZIO |
| File Number: | PEG 104 of 2014 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 29 January 2016 |
| Date of Last Submission: | 29 January 2016 |
| Delivered at: | Perth |
| Delivered on: | 10 February 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Lennon |
| Solicitors for the Applicant: | Park Linfoot Legal Solutions |
| For the Respondent: | No appearance |
ORDERS
A sequestration order issue against the estate of the respondent debtor, Arturo Salvatore Fazio.
AND THE COURT NOTES THAT the date of the act of bankruptcy is 12 November 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 104 of 2014
| BRIAN MCNALLY |
Applicant
And
| ARTURO SALVATORE FAZIO |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for a sequestration order made on 1 May 2014. A Notice of Grounds of Opposition (“Notice of Opposition”) was filed on 7 January 2015.
The application has some history. It will be necessary to refer to that history shortly.
Most recent orders
When the matter was last before the Court on 27 July 2015 the Court made the following orders:
1. The hearing of the creditor’s petition be listed at 10.15am on 27 January 2016.
2. The applicant file and serve prior to the hearing of the creditor’s petition any further necessary affidavits required to comply with the relevant provisions of the Bankruptcy Act 1966 (Cth) (“Act”) and the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (“Rules”) within the times prescribed within the Act and the Rules.
3. The respondent file and serve any further notice of grounds of opposition and any further affidavits in support of the notice of grounds of opposition by 30 September 2015.
4. If the respondent seeks to have:
a) the creditor’s petition set aside on the basis that any relevant document was not served in accordance with r.11.15(1) of the Rules; or
b) the hearing of the creditor’s petition adjourned on the basis that the applicant is not fit either:
(i) to represent himself at the hearing of the creditor’s petition; or
(ii) to instruct lawyers to appear for him at the hearing of the creditor’s petition,
for any medical or health related reason then the applicant must file and serve a report from the relevant medical or health practitioner which complies with the requirements of the Federal Court of Australia Practice Note CM 7- Expert witness in proceedings in the Federal Court of Australia by 30 September 2015;
c) any person preparing a report which is filed and served by the respondent pursuant to sub-order (b) above may be subpoenaed by the applicant to attend the hearing of the creditor’s petition to be cross-examined.
5. Costs reserved.
6. A copy of this order be served on the respondent by the applicant in accordance with the orders of the Registrar of this Court dated 17 November 2014.
Litigation history
The relevant litigation history to the time of a hearing on 13 July 2015 is set out in the Court’s judgment on 17 July 2015 in McNally v Fazio (No. 2) [2015] FCCA 1935 (“McNally (No. 2)”) at [14]-[21] per Judge Lucev as follows:
14. The application for a creditor’s petition was filed on 1 May 2014, and that is the date of presentation.
15. There were significant difficulties in relation to the service of the creditor’s petition, and up to and including 13 January 2015 there were eight separate appearances before a Registrar of this Court, before the matter was referred to a Judge of the Court by order of a Registrar on 13 January 2015. The Court notes that on 21 October 2014 a Registrar of the Court made orders allowing the creditor’s petition to be served by way of substituted service. A further substituted service order was made by a Registrar of the Court on 17 November 2014. By effect of the substituted service orders made on 21 October 2014 and 17 November 2014 the creditor’s petition was served on 14 December 2014: see order 3 of the orders of 17 November 2014; Affidavit of Ryan Eamonn Lennon, Affidavit of Service, affirmed 24 November at [3]-[4].
16. The matter first came before a Judge of the Court on 10 February 2015, and on that date the matter was adjourned for reasons delivered extemporaneously in McNally v Fazio [2015] FCCA 277 as follows:
1. ….
2. Firstly, … is the relatively recent appointment of the Public Trustee as the plenary administrator of Mr Fazio’s affairs, as a consequence of which the Trustee comes late to this litigation. …
3. Secondly, … the Public Trustee’s role and appointment will remain uncertain, at least until a review of the order appointing the Public Trustee as plenary administrator (which was made on 12 December 2014 by the State Administrative Tribunal) is heard, which the Court is informed will be on 11 March 2015.
4. Thirdly, the Court considers it is appropriate in the circumstances that the Public Trustee be given the opportunity to have the property in which the Respondent resides valued with a view to determining a future course of conduct which might include the sale of the property …, and which the Court has been told is already the subject of an order for possession of the property by Westpac, to whom it would appear the respondent has a debt which exceeds $720,000 ….
5. Finally, the Court also considers it appropriate that the matter be adjourned to allow the parties to consider the judgment of this court in The Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962, which again comes late in the piece, being delivered on 19 December 2014, which raises issues as to the service of a creditors petition on a person suffering from an incapacity. ….
6. It is regrettable, that in the circumstances, a matter which has had a reasonably long history already before Registrars of this Court and in respect of which there appear to have been, a number of difficulties with respect to the issue of service on the respondent, has to be adjourned for the reasons that the Court has given. The matter of adjournment is, of course, a matter in the discretion of the Court: it is a wide discretion that the Court exercises in that regard: Cann v Commonwealth Bank of Australia (No. 3) [2011] FMCA 303 at paras.9-11 per Lucev FM; Myers v Myers [1969] WAR 19 at 21 per Jackson J. In the circumstances of this case, and for the reasons the Court has given, the interests of justice require that an adjournment be ordered.
7. The matter is adjourned for mention to not before 4 pm on 12 March 2015 with the costs of today reserved.
17. On 12 March 2015 the matter was again adjourned, on this occasion to 11 May 2015, because of a scheduled hearing in the State Administrative Tribunal on 28 April 2015, which was a hearing concerning an application by Mr Fazio to revoke the order appointing the Public Trustee as Plenary Administrator of Mr Fazio’s estate.
18. At the hearing on 12 March 2015 the issue of an adjournment arose in the context of a report which was to be prepared by the abovementioned Consultant Psychiatrist, Dr Roberts. The following exchanges occurred at the hearing:
…
MR CHIAT: I think my friend would prefer it if it was 17 April. I would’ve thought the third week in May is probably the more sensible because what is likely to happen procedurally is that the SAT proceedings will only come on for hearing towards the end of April, once SAT has received Dr Roberts’ report. They will be listed before then, but obviously they’re anticipating some delay between the appointment with Dr Roberts and the production of a report. There is also, of course, the possibility that at the ..... SAT proceedings, because Mr Fazio is seeking orders revoking the administration order, that he may be successful in that application. If that is the case, then I think the whole issue of service and capacity falls away completely, and the Public Trustee’s order will be revoked, and Mr Fazio would then, no doubt, represent himself. But the question of whether – raised by the Temelkovski decision will fall away in its entirety.
…
HIS HONOUR: All right. Mr Lennon, I’m inclined to adjourn it to May because I think that if we bring it back in April, we may simply be in essentially the same position. Now, I appreciate that the client that you represent isn’t going to be overly enamoured of that, but I think from a purely practical point of view, in terms of this court progressing it, if we adjourn it to May or not, Mr Fazio’s status, whether he acts for himself or through a lawyer or whether the Public Trustee continues to act for him, and so on and so forth. I just think that’s the practical course, unless you’ve got something to say against it at this stage.
…
HIS HONOUR: All right. All right, gentlemen, there will be an order adjourning the matter to a directions hearing at 9.30 am on 11 May 2015, and depending on what’s happening on that day or that week, and depending on what’s happening generally with respect to the matter, we will try and endeavour to deal with some issue, if there’s some issue to deal with during the course of that week. At this stage, the week looks reasonably clear, so that might be fortuitous. It may be that we simply continue to deal with it on the day of the directions hearing and go into hearing or whatever the case might be. …
…
Transcript, 12 March 2015, pages 3-4.
19. Mr Lennon’s June 2015 Affidavit deals with the hearing on 12 March 2015 and says as follows:
3. On 12 March 2015 I appeared on the Applicant's behalf at a directions hearing in this matter (Hearing).
4. At the Hearing the Respondent's then representative the Public Trustee requested the Court adjourn the Hearing to allow an Application to have it removed as the Respondent's plenary administrator determined by the State Administrative Tribunal.
5. At the Hearing the Court provided 3 alternate times available for the Hearing to be adjourned to, being 13 April 2015, 17 April 2015 or the third week of May 2015.
6. The Public Trustee requested that it be adjourned to the third week of May 2015.
7. I on the Respondent's behalf requested that if the Hearing was adjourned it be adjourned to 17 April 2015, if it would allow the matter to proceed and be finalised. However, [I] accepted that it [would be] more logical to adjourn the Hearing to May 2015 because of the timing of the State Administrative Tribunal hearing.
8. The Hearing was adjourned to 11 May 2015.
9. I did not, on 12 March 2015, turn my attention to the expiry of the Applicant's Creditor's Petition being before 11 May 2015 had I done so I would have made an application for the operation of the Creditor's Petition to be extended.
Mr Lennon’s June 2015 Affidavit at [3]-[9].
20. On 11 May 2015 Counsel for the Public Trustee, Mr Chiat, advised the Court that at the SAT hearing on 28 April 2015 the Public Trustee’s appointment as the Plenary Administrator of Mr Fazio’s estate was revoked by order of the SAT on that day. In those circumstances, the Court ordered that Mr Fazio file and serve a notice of appearance by 25 May 2015, and the Court made orders providing for service by various means at various addresses and for the matter to be adjourned to a further directions hearing at 9.30am on 3 June 2015. The Court then further observed that:
HIS HONOUR: … I have done that, Mr Lennon, because clearly Mr Fazio hasn’t been involved in the proceedings for some time, and it may be that there are matters which he would seek to put on the record, and perhaps have an opportunity to do that, and address the court with respect to that, rather than the court now simply making orders. But I can say to you that, all other things being equal, we will, at that directions hearing, list it in the bankruptcy week in July.
Transcript, 11 May 2015, page 4.
21. When the matter returned to the Court on the morning of 3 June 2015 for directions the Court observed to Counsel for Mr McNally (there being no appearance by Mr Fazio) that there might be an issue with respect to the creditor’s petition having lapsed, the Court having then realised that that might be an issue. The matter was stood down until the afternoon of 3 June 2015, and having heard from Counsel for Mr McNally, the orders set out at [2] above were then made.
The orders made on 3 June 2015, and the subsequent history of the matter to 13 July 2015 are set out in McNally (No. 2) at [2]-[13] per Judge Lucev as follows:
2. On 3 June 2015 the Court made the following orders:
1. The respondent’s letter of 29 May 2015 addressed to the presiding Judge in these proceedings be taken to be his notice of appearance in these proceedings and that the respondent’s address for service in these proceedings be the post office box address given in the letter of 29 May 2015, namely, … [address deleted].
2. The proceedings be adjourned to 2.15pm on 13 July 2015 for an interlocutory hearing on a matter raised on the Court’s own motion, namely, whether time needs to be extended to prevent the creditors petition from lapsing pursuant to s.52(4) of the Bankruptcy Act 1966 (Cth)(“Bankruptcy Act”) and whether time may be extended pursuant to s.52(5) of the Bankruptcy Act, or r.16.05(2) of the Federal Circuit Court Rules 2001 (Cth) or, if applicable, r.39.05 of the Federal Court Rules 2011.
3. In relation to the hearing of the interlocutory issue of the extension of time in order 2:
a. the applicant file and serve any further affidavits and outline of submissions by 17 June 2015;
b. the respondent file and serve any further affidavits and outline of submissions by 3 July 2015; and
c. the applicant file and serve any affidavits in reply and outline of submissions in reply by 10 July 2015,
provided that the affidavits need not be affidavits evidencing further proof pursuant to s.52(1) of Bankruptcy Act or for the purposes of rr.4.04, 4.05 and 4.06 of the Federal Circuit Court(Bankruptcy) Rules 2006 (Cth).
4. That the parties have leave to inspect in the Registry the transcript of proceedings of 10 February 2015, 12 March 2015, 1 May 2015 and today, and to obtain copies of that transcript by payment of any necessary fee for copying of the transcript.
5. The hearing of creditor’s petition be adjourned pending the hearing and judgment of the interlocutory issue raised in order 2.
6. Costs reserved.
The applicant creditor, Mr McNally, subsequently filed:
a) the affidavit of Ryan Eamonn Lennon affirmed 17 June 2015 (“Mr Lennon’s June 2015 Affidavit”);
b) an Outline of Submissions for Extension of Operation of the Creditors Petition filed on 17 June 2015 (“Outline of Submissions”); and
c) an affidavit of Jack Andrew Carroll sworn 19 June 2015 (“Mr Carroll’s Affidavit”), being an Affidavit of Service of the Outline of Submissions and Mr Lennon’s Affidavit.
4. Mr Carroll’s Affidavit attests to service on the respondent debtor, Mr Fazio, of the Outline of Submissions and Mr Lennon’s Affidavit at the address for service specified in order 1 of the Court’s orders of 3 June 2015. The Court accepts that the Outline of Submissions and Mr Lennon’s Affidavit were served upon Mr Fazio at that address as described in Mr Carroll’s Affidavit.
5. Mr Fazio did not file or serve any further affidavits or an outline of submissions by 3 July 2015 as ordered in the Court’s orders of 3 June 2015.
6. In the orders of 3 June 2015 the hearing of the application for an order extending the life of the creditor’s petition was set down for 2.15pm on 13 July 2015.
7. On 10 July 2015 Mr Fazio sent to the Deputy Associate to the presiding Judge, by facsimile, a letter dated 9 July 2015 (“Mr Fazio’s Letter”), annexing a letter dated 8 July 2015 from a Consultant Psychiatrist at the Fremantle Hospital and Health Service, Dr Adam Roberts (“Dr Roberts’ Letter”).
8. Mr Fazio’s Letter was as follows:
PROCEEDINGS PEG 104 OF 2014 FOR HEARING MONDAY 13th July 2015
Please find enclosed a medical report from Dr Roberts only made available this afternoon, explaining Mr Fazio’s inability to deal with the aforementioned application and his inability to attend at the said hearing, on mental health grounds.
Having only seen your letter dated 3 June 2015 and the enclosed orders on the matter, we reasonably expect the court will make the right decision on the issue in Mr Fazio’s absence, especially given the application is of the court’s own motion.
Signed by but prepared for and sent on behalf of
Arturo Fazio
9. Dr Roberts’ Letter was as follows:
To Whom It May Concern
Re: Arturo Fazio
[Address deleted]
DOB: 05/08/64
Mr Arturo Fazio has been a patient at the Alma Street Centre since 2007, suffering from chronic depression and a severe bereavement reaction following the death of his wife.
He has a background history of early childhood trauma and is now estranged from his family or (sic) origin.
Arturo has a number of significant stressors, including housing, financial and physical health issues.
He is currently under my outpatient care in the Melville Community Mental Health Team.
If you require further information, can you please ask Arturo to forward your request to me.
Yours sincerely
Dr Adam Roberts
Consultant Psychiatrist Melville Team
Alma Street Centre
FREMANTLE HOSPITAL AND HEALTH SERVICE
10. ...
11. In its terms, Mr Fazio’s Letter did not seek an adjournment of the hearing for an order extending the life of the creditor’s petition, and was not taken as such by the Court. Nor did Dr Roberts’ Letter indicate that Mr Fazio was incapable of attending the proceedings or dealing with the subject matter of the proceedings. Mr Fazio is a not inexperienced self-represented litigant over many years in a variety of courts: see for example, Fazio v McNally [2014] WASCA 79 (“McNally”); Fazio v Westpac Banking Corporation [2014] WASCA 80 (“Westpac Banking Corporation”); Verge (Trustee), in the matter of Underdown (deceased) (a bankrupt) v Fazio (No. 3) [2014] FCA 92; Fazio (Executor) v Passmore [2011] FCA 273; (2011) 193 FCR 348; (2011) 9 ABC(NS) 75; Fazio v Centrelink [2008] FMCA 594 (“Centrelink”), and one not unfamiliar with the requirements in relation to applications for adjournment on medical grounds: see McNally at [14] per Pullin and Newnes JJA; Westpac Banking Corporation at [9] per Pullin and Newnes JJA; Centrelink at [3]-[25] per Lucev FM. In the above circumstances, the Court proceeded to hear the application for an order extending the life of the creditor’s petition.
12. The Court also notes that since the matter was referred to the Court by a Registrar of the Court Mr Fazio has not appeared, and that on previous occasions Mr Chiat from the Public Trustee’s Office has appeared, the Public Trustee having been appointed Plenary Administrator of the estate of Mr Fazio by the State Administrative Tribunal (“SAT”) on 12 December 2014, an appointment which was subsequently revoked by SAT on 28 April 2015 (as to which see further at [20] below), thereby entitling Mr Fazio to appear personally at the hearing on 3 June 2015.
13. The Court also proceeded to hear the application for an order extending the life of the creditors petition because there was nothing relevant to the law and facts to be applied by the Court in relation to which Mr Fazio could necessarily assist the Court. That is evident from the Court’s consideration of the law and the substance of the matter hereafter.
In McNally (No. 2) the Court gave reasons for making an order extending the life of the creditor’s petition to 24 months commencing on 1 May 2014, which included the following:
30. The reasons that the Court would have extended the life of the creditor’s petition had it been raised with the Court on 12 March 2015 are as follows:
a) there was not a significant period of time in which to have the creditor’s petition listed for hearing, and for a judgment to be prepared and delivered. As is evident from the exchange with the then Counsel for Mr Fazio’s estate on 12 March 2015 there was only one week in April 2015 into which the hearing of the creditor’s petition could be listed prior to 1 May 2015, and given the difficulties with the history of the matter (some of which are otherwise adverted to in these Reasons for Judgment) it is not clear that the creditor’s petition would actually have been heard in that week in April in any event;
b) there had been considerable difficulties with service on Mr Fazio, with service of the creditor’s petition only being effected on 14 December 2014, almost seven and a half months after the creditor’s petition’s presentation;
c) in light of the decision in The Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962 there were, as at 12 March 2015, still doubts as to whether service of the creditor’s petition on Mr Fazio might, or might not, have been properly effected, and that may have been dependent upon the state of Mr Fazio’s capacity as at 20 December 2014; and
d) given the issues with respect to the possible revocation of the SAT order for the appointment a plenary administrator to Mr Fazio’s estate, and the possibility of the revocation of that order on 28 April 2015, there:
i) were doubts as to the effect of Mr Fazio being represented by a plenary administrator under an order the subject of an application for revocation;
ii) was insufficient time to properly deal with the creditor’s petition in the event that the appointment of the plenary administrator to Mr Fazio’s estate was revoked by SAT on 28 April 2015, as it subsequently was; and
iii) was no opportunity, in any event, to list the matter between 28 April 2015 and 1 May 2015, being the date of the revocation hearing before SAT and the date on which the creditor’s petition was due to lapse.
McNally (No. 2) at [30] per Judge Lucev.
On 17 July 2015 the Court made orders:
a)that the period at the expiration of which the creditor’s petition filed in these proceedings would lapse would be 24 months commencing 1 May 2014; and
b)adjourning the matter to a further directions hearing on 27 July 2015 at 4.30pm.
At the directions hearing on 27 July 2015, at which there was no appearance by Mr Fazio, the Court made the orders set out at [3] above, including listing the application for hearing on 27 January 2016. The hearing date was subsequently administratively amended to 29 January 2016, and the parties were advised accordingly by letter dated 21 December 2015.
The letter seeking an adjournment and recusal of the presiding Judge
On 25 January 2016 a letter dated 22 January 2016 was received in the presiding Judge’s Chambers. The letter header bore Mr Fazio’s name and residential address and was addressed to the two members of the presiding Judge’s Chambers’ staff and referred to the court file number and was marked “URGENT ATTENTION REQUIRED”. The text of the letter was as follows:
I write this letter on behalf of Mr Fazio but ultimately signed by him, referring to the above matter and in response to your letter dated 21st December 2015. I am allowed access to his computer and certain files he has availed to me.
Currently bed ridden due to his ischemic heart disease and as one of his ongoing community health care nurses over the period, I am here to provide whatever limited help I can, for which he is in undoubted need of.
He is schedule and being prepped for surgeries under anesthetic on the 3rd and 9th February, whereby given his declining underlying health, unsatisfactory echocardiogram results and his psychological problems, he is at a significantly enhanced risk of complications and or death. He simply does not have the physical and mental capacity to multitask at present and needs to fight his nightmares and remain positive towards the oncoming surgery.
Further the home is littered with dozens of archive boxes and the floors covered throughout with thousands of pages of documents involving a number of court and insurance policy matters he was trying to positively deal with, before his latest myocardial infarction and setbacks.
He was also recently interviewed by police regarding … [a serious criminal matter which it is unnecessary to disclose], which has negatively triggered further psychological stressors.
He also complains of significant monies owed to him for which he has been fighting for, for which if they were paid by now he would not be in this situation and for which alternative resolutions would be proffered.
I am unsure what documentation you have been previously provided with if any, but please find enclosed the following for a better understanding of him and his particular circumstances;
a) Medical Report dated 19 June 2014,
b) Medical Report dated 8 July 2015,c) Court order dated 12 December 2014.
We understand that this matter before the court is a complex one, in which Mr Fazio can not possibly deal with in the current circumstances or on his own.
He respectfully seeks an adjournment for 90 days in order to allow him to gain;
1) Sufficiently sound physical and mental health.
2) Legal Advice and representation on such issues as;
a) Mental Health Capacity both now and in the past including the relevant material times and as to his phobias concerning The Federal Court,
b) Abuse of Process by the applicant,
c) Whether he pays the applicant if it becomes a prejudicial payment now or sometime in the future to the detriment of other possible creditors,
d) Whether Judge Lucev ought to recuse himself from hearing the matter given the history, in particular previous matters involving him and the estate of his late wife Samantha Underdown and the breaking into his home by Protective Services Officers whilst he was in attendance at the court, whereby they unfathomably searched the house and even desecrated Samanthas’ cremains [sic] purportedly in search of a firearm.
Thanking you
Prepared forArturo Fazio
(“Mr Fazio’s January 2016 Letter”).
The Court caused the above letter to be marked as an exhibit, not as evidence of the truth of its contents, but rather of the fact that an “adjournment application” had been made in terms set out in Mr Fazio’s January 2016 Letter.
Adjournment principles
Any application for adjournment must be considered in the relevant statutory, factual and case management context: Aon Risk Services Australia Limited v Australian National University (2009) [2009] HCA 27; (2009) 239 CLR 175; (2009) 83 ALJR 951; (2009) 258 ALR 14 at [30] per French CJ and [97]-[103] per Gummow, Hayne, Crennan, Kiefel and Bell JJ (“Aon Risk Services”); Cann v Commonwealth Bank of Australia (No. 3) [2011] FMCA 303 at [9]-[11] per Lucev FM.
The role and mode of operation of this Court as set out in the Federal Circuit Court of Australia Act 1999 (Cth) (“FCCA Act”) and the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”), as prescribed by the objects of ss.3 and 42 the FCCA Act, and the objects of the FCC Rules: r.1.03, provides for the Court to operate in a manner:
a)as informal as possible in the exercise of judicial power;
b)which is not protracted in its proceedings;
c)which resolves proceedings justly, efficiently and economically;
d)which uses streamlined procedures; and
e)that avoids undue delay, expense and technicality.
The Court must also take into account the following matters when determining whether or not to grant leave to allow an adjournment:
a)that the paramount consideration remains the doing of justice between the parties, but a just resolution must have regard to any relevant legislative purpose or object;
b)modern principles of case management;
c)the avoidance of undue delay; and
d)the wastage of public resources.
Aon Risk Services at [30] per French CJ and [97]-[103] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; Fair Work Ombudsman v Kentwood Industries Pty Ltd [2010] FCA 98 at [2] per McKerracher J.
The requirement to act informally in the exercise of judicial power is no justification for acting without evidence. The Court can only act on evidence having a rational probative force: Pochi v Minister for Immigration & Ethnic Affairs (1979) 36 FLR 482; (1979) 26 ALR 247; (1979) 2 ALD 33; FLR at 492 per Brennan J; Minister for Immigration & Ethnic Affairsv Pochi (1980) 44 FLR 41; (1980) 31 ALR 666; (1980) 4 ALD 139; FLR at 67-68 per Deane J (with whom Evatt J agreed at 57); Re Communication Workers’ Union of Australia Postal and Telecommunications Branch, New South Wales (1996) 67 IR 246 at 275 per Moore J; Lebot v Energetic IT Pty Ltd [2011] FMCA 755 at [9] per Lucev FM. In these proceedings there is no affidavit evidence from Mr Fazio in support of the application for an adjournment, notwithstanding the Court’s orders of 27 July 2015, which availed Mr Fazio of the opportunity to file further affidavits in support of the Notice of Grounds of Opposition, and to file any expert’s report in relation to any medical or health related reason for a further adjournment of the hearing of the creditor’s petition.
These proceedings are already protracted: the period at the expiration of which the creditor’s petition will lapse has already been extended by the Court’s order of 17 July 2015, and it will now lapse on 1 May 2016. An adjournment of 90 days would bring this matter back before the Court on 29 April 2016, that being a Friday and the final working day before the creditor’s petition lapses on 1 May 2016, being the following Sunday. There are already two defended migration matters listed that day at 10.15am and 2.15pm. Whilst it might be possible to squeeze a hearing of the creditor’s petition into the list on 29 April 2016, there is no guarantee, particularly given the history of this matter, that such a hearing would run or be completed on that day, judgment delivered and an order made on that day, before the expiration of the period when the creditor’s petition will lapse.
In terms of case management there is simply insufficient time to allow for the unexpected, particularly in a Registry of this Court where there is only one Judge. In the event of unforeseen circumstances, an adjournment would mean not only would the proceedings have been further protracted, but might also render the application for a sequestration order otiose by reason of unforeseen circumstance, and thereby Mr McNally would have been deprived (arguably unjustly) of the opportunity to have his application for a sequestration order granted.
In terms of resolving the matter justly, efficiently and economically without undue delay and technicality it is also necessary to observe that this matter has had:
a)eight hearing dates before a Registrar of this Court; and
b)eight directions hearings and hearing dates before a Judge of the Court,
at no doubt significant expense to Mr McNally, and all in circumstances where, save for the three occasions on which the Public Trustee appeared as plenary administrator of Mr Fazio’s estate, there has been no appearance by Mr Fazio before either the Registrar or the Court. And that, in the context of an application for a sequestration order in relation to an alleged debt of $18,251.85, has the appearance of inefficiency and lack of economy, which appearance would be further enhanced by a further adjournment of the hearing of the creditor’s petition.
A further adjournment would increase costs, and increase delay, and, for reasons set out above, possibly render the sequestration order application otiose.
The Court must also consider what is just. For reasons set out below Mr McNally, as the applicant creditor, has otherwise made out the requirements for the issuance of a sequestration order. The grounds in the Notice of Grounds of Opposition filed by Mr Fazio are not made out in any respect, and as indicated below, are mere allegations and assertions unsupported by any evidence. In the circumstances the fact that Mr McNally has endured significant delay, and has made out the requirements for a sequestration order to issue, mean that it would be prima facie unjust for there to be a further delay in the hearing of the creditor’s petition.
Although there is no evidence to support Mr Fazio’s “adjournment application” the Court makes the following observations as to the matters referred to in Mr Fazio’s January 2016 Letter:
a)Mr Fazio’s January 2016 Letter is not apparently written by him, but by an unnamed person, who claims to be a community health nurse;
b)there is no evidence before the Court as to Mr Fazio’s alleged illnesses, and certainly nothing which complies with the terms of the Court’s orders of 27 July 2015;
c)if, as is asserted in Mr Fazio’s January 2016 Letter, Mr Fazio is currently being prepared for surgery under anaesthetic, has unsatisfactory echocardiogram results and psychological problems, and is at a significantly enhanced risk of complications or death, and does not have the physical and mental capacity to multi-task at present, the evidence necessary for compliance with the 27 July 2015 orders of the Court ought not to have been difficult to obtain, either by the deadline of 30 September 2015, or an extended deadline if an extension of time application had been made and granted;
d)Mr Fazio was able in April 2015 to obtain from the State Administrative Tribunal (“SAT”) an order revoking the appointment of the Public Trustee as plenary administrator of his estate, and in this respect Mr Fazio’s January 2016 Letter citing medical reports in June 2014 and July 2015 and the SAT order of December 2014 orders appointing the Public Trustee as plenary administrator is arguably misleading insofar as it appears to purport that Mr Fazio was, and remains, unable to deal with this matter;
e)there is no evidence of Mr Fazio being interviewed in relation to any serious criminal offence, or of any psychological stresses arising therefrom;
f)there is no evidence of any monies owed to Mr Fazio, and no evidence:
i)that Mr Fazio is able to pay his debts: Bankruptcy Act, s.52(2)(a); or
ii)that he has sufficient money, either owed to him, or capable of recovery in some form of action, to justify there being a sufficient cause not to presently make a sequestration order: Bankruptcy Act, s.52(2)(b);
g)the medical report dated 19 June 2014 and the “Court”, but actually SAT, order dated 12 December 2014 both pre-date the revocation of the SAT order on 28 April 2015, whilst the medical report dated 8 July 2015 did not indicate that Mr Fazio was incapable of attending proceedings or dealing with the subject matter of these proceedings: McNally (No. 2) at [9]-[10] per Judge Lucev;
h)for reasons set out above there is no evidence that Mr Fazio is not presently of sufficiently sound physical or mental health to participate in these proceedings, or that his physical or mental health has been such as to preclude him from availing himself of the opportunity to file evidence as to any physical or mental health condition that he had, pursuant to the Court’s orders of 27 July 2015;
i)Mr Fazio has had approximately 21 months in which to organise legal advice and representation in relation to these proceedings, and has not done so, and failed to do so even in light of the Court’s orders of 27 July 2015; and
j)there is no evidence on the face of the record of any abuse of process by Mr McNally, either in these bankruptcy proceedings, or in the underlying proceedings in the Magistrates Court of Western Australia and the District Court of Western Australia which gave rise to the debt.
For all of the above reasons, the Court is of the view that it is not in the interests of the administration of justice, and not consistent with the objects of the FCCA Act and the FCC Rules, or modern principles of case management for this matter to be further adjourned. Such an adjournment would, for reasons set out above, have the possible result that the proceedings would be rendered otiose, and that would not be a just resolution in all the circumstances.
In relation to the suggestion that the presiding Judge recuse himself, the Court observes that the only matter, other than the current proceedings, in which the Court as presently constituted has had any involvement with Mr Fazio was in Fazio v Centrelink [2008] FMCA 594 (“Fazio (No. 1)”) and Fazio v Centrelink (No. 2) [2008] FMCA 1389 (“Fazio (No. 2)”).
In Fazio (No. 1):
a)the application being dealt with was an application for summary dismissal made by Centrelink in relation to proceedings brought by Mr Fazio. Mr Fazio did not appear at the hearing of the matter. Notwithstanding the rejection by the Court’s Registry of an application by Mr Fazio to adjourn the summary dismissal application supported by affidavit, the rejection being apparently on the basis of the non-payment of the relevant fees, the Court dealt with the matter on the basis that the affidavits, which were subsequently faxed to Chambers, and treated them as if they were properly filed for the purposes of the adjournment application: Fazio (No. 1) at [2]-[3] per Lucev FM. That course of action by the Court represents the affording of an indulgence to Mr Fazio, which is inconsistent with any suggestion that the Court as presently constituted (and as then constituted) is biased against Mr Fazio;
b)the Court was not prepared to adjourn proceedings on the basis of what was then asserted to be Mr Fazio’s medical condition, but because the Court did grant an application by Mr Fazio for a referral for pro bono assistance, it was necessary to adjourn those proceedings, in any event, so as to allow the pro bono referral to be effective: Fazio (No. 1) at [34]-[37] per Lucev FM;
c)the Court referred to a lack of medical evidence to support the adjournment application on that occasion, and to the Court having previously indicated to Mr Fazio that the Court would not be prepared to adjourn on the basis of simple certificates saying or indicating that Mr Fazio was unwell or unable to attend the hearing: see Fazio (No. 1) at [7]-[15] per Lucev FM;
d)Mr Fazio made claims about being “bombarded” by Centrelink’s lawyers in relation to the provision of various documents, but the Court concluded that those complaints were “exaggerated both as to form and substance” and that in relation to the provision of various documents Centrelink had “acted as model litigant”: Fazio (No. 1) at [26] per Lucev FM. There is nothing in that criticism which could give rise to a basis for recusal in this case;
e)the Court determined that the matter ought to be the subject of a referral for pro bono assistance, in relation to which the Court observed that the summary dismissal application was not complex but that “it is a consuming force in …. [Mr Fazio’s] life. It is the case, and it is clear on the materials that have been filed by … [Mr Fazio], that he neither apprehends nor understands, either because he cannot or does not want to, the nature of a summary dismissal application”: Fazio (No. 1) at [30] per Lucev FM, and observed that “… the principal factor for consideration by the Court and one that has prevailed over all others is the nature and possible complexity of the proceedings as viewed from the point of … [Mr Fazio] and his apparent non-understanding of the proceedings, and the assistance as to the law, procedure and general conduct of the proceedings that counsel would be able to render if pro bono counsel is found to assist … [Mr Fazio]”: Fazio (No. 1) at [34] per Lucev FM. There is nothing in the nature of the referral for pro bono assistance, based as it was upon a consideration of the nature and possible complexity of the proceedings viewed from Mr Fazio’s viewpoint, which would justify recusal in these proceedings; and
f)the Court went on to observe that if the Registrar’s attempts to arrange for pro bono legal assistance for Mr Fazio were unsuccessful, then he would have to run the case himself and that … “the order for referral will not be an excuse for further delay in the proceedings which are already protracted and which the interest of justice and the administration of justice require be heard sooner rather than later.”: Fazio (No. 1) at [37] per Lucev FM.
There is nothing in Fazio (No. 1) which supports the suggestion that the presiding Judge ought to recuse himself.
In Fazio (No. 2) the Court dealt with the application by Centrelink for summary dismissal of the matter, and:
a)the circumstances and nature of the matter were set out by the Court as follows:
1.Sad circumstances surround these proceedings. They were initiated in personal circumstances poignantly described by the applicant, Arturo Fazio - in an affidavit sworn 16 April 2007:[2]
“My lawful wife since 24 March 2006, Samantha Underdown, is terminally ill with metastatic breast cancer whereby she is wheelchair bound and reliant upon extensive life support due to the extent of her cancer in her lungs, liver, throughout her spine and vertebrae and hips.”
2.Mr Fazio’s wife, Samantha Underdown died on 1 July 2007.
3.The application, which, as initially filed sought the payment of alleged unpaid and underpaid social security entitlements and out of pocket disbursements, interest on monies owed and damages, has, following amendment, become an application for payment of allegedly outstanding social security (pension and carer) entitlements, disbursements, and damages for loss of potential wages, stress, physical and mental injury, hardship, loss of earnings and dignity, plus punitive damages and unquantified interest on the basis that the respondent Centrelink, owed Mr Fazio a duty of care. In submissions filed by Mr Fazio he has also alleged misfeasance in public office by Centrelink officials.
4.Centrelink has filed an interim application seeking the summary dismissal of the amended application.
Fazio (No. 2) at [1]-[4] per Lucev FM (footnotes removed);
b)in relation to the claim for breach of a statutory duty of care or a common law duty of care as a consequence of administrative actions under the Social Security Act 1991 (Cth) and the Social Security (Administration) Act 1999 (Cth) the Court found, based on Federal Court precedents that the Court (then the Federal Magistrates Court of Australia) had no jurisdiction to deal with an application seeking damages for alleged breach of a common law duty of care or breach of a statutory duty arising from administrative acts by Centrelink, and Mr Fazio’s claim for damages for breach of a common law duty of care and for breach of statutory duty must therefore be dismissed: Fazio (No. 2) at [80], and see also [63]-[79], per Lucev FM;
c)the Court went on to consider Mr Fazio’s claim of misfeasance in public office, and concluded that the claim of misfeasance in public office was not presently supported by Mr Fazio’s own evidence, and therefore that that claim ought to be summarily dismissed: see Fazio (No. 2) at [84]-[87] per Lucev FM; and
d)costs followed the event, and Mr Fazio was ordered to pay Centrelink’s costs: Fazio (No. 2) at [92] per Lucev FM, but in light of Mr Fazio’s financial position the Court allowed more than one year for those costs (which were $6,104) to be paid: Fazio (No. 2) at [93] per Lucev FM.
There is nothing in the determination made in Fazio (No. 2) that the Court has no jurisdiction to hear a claim, or the dismissal of a claim on the basis that the elements of a claim have not been made out, and an awarding of costs so as to follow the event, but with an indulgence of more than one year to pay, which warrants the recusal of the presiding Judge in these proceedings.
The reference in Mr Fazio’s January 2016 Letter to the activities of the “Protective Services Officers”, presumably from the Western Australian Police Service, is not a matter over which this Court has, or would have had, any control. It is otherwise impossible for the Court to know or understand what is being referred to, and therefore no basis for recusal of the Court as presently constituted exists.
Having regard to the foregoing observations, the Court is of the view that there is nothing in Mr Fazio’s January 2016 Letter which warrants the presiding Judge recusing himself from the hearing of the application for a sequestration order.
Sequestration order
The Court can 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.
Mr McNally, as petitioning creditor, is obliged to put before the Court affidavits:
a)verifying the creditor’s petition: Bankruptcy Act, s.47(1); Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (“FCC (Bankruptcy) Rules”), r.4.02;
b)as to a search of the records of this Court and the Federal Court as to any application in relation to the bankruptcy notice: FCC (Bankruptcy) Rules, r.4.04(1)(a) and (2);
c)of service of the Bankruptcy Notice: FCC (Bankruptcy) Rules, r.4.04(1)(b);
d)of service of documents required to be served: FCC (Bankruptcy) Rules, rr.4.05 and 4.06(2);
e)of search of the National Personal Insolvency Index (“NPII”) no earlier than the day before the hearing date for the creditor’s petition: FCC (Bankruptcy) Rules, r.4.06(3); and
f)of debt on which the creditor still relies as owing: FCC (Bankruptcy) Rules, r.4.06(4).
The Court may decline to issue a sequestration order if:
a)it is not satisfied of the proof of any of the above matters: Bankruptcy Act, s.52(2); and
b)it is satisfied by Mr Fazio that:
i)he is able to pay his debts: Bankruptcy Act, s.52(2)(a); and
ii)for other sufficient cause a sequestration order ought not be made: Bankruptcy Act, s.52(2)(b).
The following affidavits have been filed by Mr McNally:
a)an affidavit of Brian McNally sworn 6 October 2014 verifying the amended creditor’s petition filed on 8 October 2014;
b)an affidavit of Jack Andrew Carroll affirmed 28 January 2016 of search of records of the federal courts and the NPII confirming that there were no relevant records or entries therein;
c)an affidavit of Jack Andrew Carroll affirmed 28 January 2016 of debt, attesting that as at 28 January 2016 the debt of $18,251.85 remained unpaid; and
d)affidavits of service of the Bankruptcy Notice, and other documents required to be served, being:
i)an affidavit of Lynn Wilkinson sworn 22 August 2014;
ii)an affidavit of Douglas Patrick Bowen sworn 7 November 2014; and
iii)an affidavit of Ryan Eamonn Lennon sworn 24 November 2014.
On the basis of the various affidavits filed by Mr McNally, the Court accepts that there are affidavits:
a)verifying the creditor’s petition;
b)of search of court records;
c)of service of the Bankruptcy Notice;
d)of search of the National Personal and Insolvency Index; and
e)of debt still owed.
The Court is therefore satisfied on the basis of Mr McNally’s Affidavits as to the matters required to be proved for the making of a sequestration order: Bankruptcy Act, s.52(1).
Notice of grounds of opposition
As indicated above a Notice of Opposition to the application for a creditor’s petition was filed on 7 January 2015 and indicated that Mr Fazio intended to oppose the creditor’s petition on the following grounds:
1.This petition is founded upon a Fraud by the Applicant and his counsel.
2.This petition is actuated out of malice.
3.Insolvency has not been determined and this petition is otherwise, an Abuse of Process.
Mr Fazio filed an affidavit on 7 January 2015 (sworn by him on 6 January 2015) supporting the Notice of Opposition (“Mr Fazio’s Affidavit”).
Paragraphs 4-6 of Mr Fazio’s Affidavit provide as follows:
4. By order of The State Administrative Tribunal dated 12 December 2014, Mr Fazio has been declared “unable by reason of a mental disability, to make reasonable judgments in respect of matters relating to all of his estate.” A true Copy herein attached as Annexure CD 1 is the said sealed order.
5. Mr Fazio by virtue of mental and physical disabilities at this point in time, and further upon legal advice, is unable to appear in person at the above hearing date.
6. Notwithstanding the above, Mr Fazio reserves his rights at law Res Ipsa Loquitor, to be heard on the matter when capable.
As set out above there is no evidence in these proceedings as to Mr Fazio’s lack of capacity to attend the current hearing in this Court.
Paragraphs 7-10 of Mr Fazio’s Affidavit provides as follows:
7. Notwithstanding the aforementioned issue as to capacity, it appears prima facie that Mr Fazio has a complete threshold defence on the lack of merits of the application by the respondent.
8. Firstly, Mr Fazio veraciously asserts that back in 2011 in conversations between himself and Mr John Park representing the applicant after a court appearance in the foyer of The Perth Magistrates Court, Mr Park confessed to him that he was not charging Mr McNally and Mr McNally was not paying any of Park Linfoots' legal costs in defending the matter against Mr Fazio. Mr Park justified that position to Mr Fazio against the fact that Mr Park repeatedly sent McNally as a process server back to Mr Fazio's property ignoring Trespass signs, despite Mr Park knowing of the Trespass signs and the previous written advisement to The City of Melville and ALL of their agents, against trespassing upon Mr Fazio's property. Mr Fazio veraciously asserts there are contemporaneous written file notes to that effect, written by him in his car upon returning to such on the day.
9. Upon spending 45 minutes searching for his said notes he believes he attached to the later obtained transcript of proceedings, through some 20 or so archive boxes and about ten thousand pages of documents strewn throughout Mr Fazio's entire house, we were unable at the time of preparing these documents, to locate the notes or even the transcript or the main files of the relevant actions. A further more forensic search is to be conducted later, with the intention of adducing the notes.
10. Against that pivotal fact, Mr Fazio believes that this application by the respondent is founded upon Criminal Fraud and actuated by malice and as such, is An Abuse of Process. To that end, again Mr Fazio intends to produce numerous documents by way of cogent annexure evidence to show the Fraud and Malice aspects, of course upon finding his relevant files at a later date.
The Court notes that no notes or documentation relevant to the allegation of non-payment of legal costs, criminal fraud and malice are in evidence.
The applicable standard of proof is on the balance of probabilities: Evidence Act 1995 (Cth), s.140(1) (“Evidence Act”), with the Court being obliged to take into account in deciding whether it is satisfied that the case is proved on the balance of probabilities, the following matters:
a)the nature of the cause of action or defence;
b)the nature of the subject matter of the proceedings; and
c)the gravity of the matters alleged.
See Evidence Act, s.140(2).
The gravity of the issue is a circumstance which the Court must take into account when determining whether or not the burden of proof has been discharged, and the more serious the issue in which proof is required the more cogent and clear the evidence is needed to establish it: Qantas Airways Ltd v Gama [2008] FCAFC 69; (2008) 167 FCR 537; (2008) 247 ALR 273; (2008) 101 ALD 459 at [128]-[129] and [137]-[139] per Branson J; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; (1992) 110 ALR 449; ALJR at 170-171 per Mason CJ, Brennan, Deane and Gaudron JJ; Rejfek v McElroy (1965) 112 CLR 517; (1965) 39 ALJR 177; [1966] ALR 270; CLR at 521 per Barwick CJ, Kitto, Taylor, Menzies and Windeyer JJ.
The allegation in this case is of a combination of fraud and malice, and, seemingly, that the debt relied upon in these proceedings was not a debt at all because Mr McNally’s lawyers were not charging him for costs in relation to the proceedings which gave rise to the costs orders which found the debt in these proceedings.
The allegation of fraud and malice appears to arise from the suggestion that Mr McNally’s lawyers were not charging him for costs in the Magistrates Court of Western Australia in an action against Mr Fazio. An allegation of fraud and malice, particularly one involving the provision of professional services by a lawyer, and one which, it might be inferred, suggests that the Magistrates Court of Western Australia has been misled, would require quite specific particulars and cogent and clear evidence to establish the fraud and malice alleged by Mr Fazio: Federal Court Rules 2011 (Cth), r.16.42; Streeter v Western Areas Exploration Pty Ltd (No. 2) [2011] WASCA 17; (2011) 278 ALR 291; (2011) 82 ACSR 1; (2011) 29 ACLC 11-012 at [605]-[606] per Murphy JA; Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; (2012) 293 ALR 537; (2012) 91 ACSR 89 at [9] per Emmett, Bennett and McKerracher JJ. In this case, the assertion that on an unspecified date there was a conversation in which Mr McNally’s lawyer indicated that he was not charging and Mr McNally was not paying costs in an unspecified action, is insufficient to amount to fraud. It will be noted that the alleged statement by Mr Fazio’s lawyer is internally consistent, on the one hand it being alleged that he was not charging Mr McNally, and on the other hand immediately thereafter, it being alleged that Mr McNally was not paying any of the lawyer’s legal costs in the unspecified matter. Alternatively, it is not clear whether they are intended to be separate allegations, in which case they are inconsistent, or whether they are intended to be cumulative, and all part of one allegation. In any event, there is insufficient particularisation of the allegation of fraud and malice. In the circumstances of this case the evidence led by Mr Fazio has not discharged his burden of particularisation, or of proof by providing cogent and clear evidence of the alleged fraud and malice. There is nothing but an uncorroborated vague and general assertion, unsupported by documents that Mr Fazio himself said he would produce, but has failed to do so, which is inconsistent with the orders of the Magistrates Court of Western Australia and the District Court of Western Australia for costs. Furthermore, no assertion, uncorroborated or otherwise, is made in respect of the costs order made by the District Court of Western Australia which constitutes the most significant part of the debt relied upon, being $11,109.67 of the $18,251.85 in issue.
Paragraph 11 of Mr Fazio’s Affidavit provides as follows:
11. Further to above, Mr Fazio contends in further opposition that it has not been judicially determined or otherwise, that he is unable to discharge any and all of his bona fide debts. He maintains and fully intends to show that the foundation costs orders for which the sequestration orders sought are founded, were fraudulently obtained in his absence at a time when Mr Fazio was mentally impaired and suffering extreme physical and mental hardship. These orders importantly at law, appear to be the only orders underpinning the Bankruptcy Notice. Furthermore, Mr Fazio contends that he is able to pay his debts but does not accept that these costs orders are a bona fide and lawfully enforceable debt in part, for the aforementioned reasoning and for further submissions at law to follow.
For reasons set out above Mr Fazio has not proved that the Magistrates Court of Western Australia or District Court of Western Australia orders were fraudulently obtained, nor that at the relevant time was he suffering from a mental impairment or extreme physical and mental hardship.
Mr Fazio has also not tendered any evidence which would prove that he is able to pay his debts, notwithstanding that he has had approximately 21 months since the commencement of these proceedings, and a period prior to that in relation to the Bankruptcy Notice, in which to do so.
Paragraph 12 of Mr Fazio’s Affidavit provides as follows:
12. It has been explained to him and he appears to understand, that by virtue of section 52 of The Commonwealth Bankruptcy Act 1966, the decision to order a sequestration order is discretionary and not compulsory, by usage of the word may in antithesis to usage of the word must.
Section 52(2) of the Bankruptcy Act provides that:
(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
For reasons otherwise set out in these Reasons for Judgment the Court:
a)is satisfied with proof of the matters required to be proven for the purposes of the making of a sequestration order: Bankruptcy Act, s.52(1) and (2);
b)has not been satisfied by Mr Fazio:
i)that he is able to pay his debts: Bankruptcy Act, s.52(2)(a); and
ii)that there is other sufficient cause for a sequestration order not to be made: Bankruptcy Act, s.52(2)(b).
Paragraph 13 of Mr Fazio’s Affidavit provides as follows:
13. Mr Fazio quite understandably, also wishes and intends to issue court endorsed Notices to Produce and or Subpoenas upon the applicant and their counsel, in order to submit further extant evidence as to the direct issue of fraud. Drafts of the intended proposed Notice to Produce or Subpoenas have yet to been done due to timing and other constraints.
No Notices to Produce or subpoenas of the kind referred to in paragraph 13 of Mr Fazio’s Affidavit have been issued, and it is therefore unnecessary to consider this matter further.
Paragraph 14 of Mr Fazio’s Affidavit provides as follows:
14. It is verily believed upon a cursory glance, that the affidavits of Ms Lynn Wilkinson and Mr Douglas Patrick Bowen filed by the applicant go more to the issues of service than substance, notwithstanding that they both contain what Mr Fazio says are "contrived untruths and deliberate deception." They certainly do not touch upon the issues of defence contained here within.
The affidavits of Ms Wilkinson and Mr Bowen are indeed affidavits of service, and so save for formal proof of service which the Court is satisfied has occurred, nothing further turns on the affidavits of Ms Wilkinson or Mr Bowen.
Paragraphs 15-16 of Mr Fazio’s Affidavit provides as follows:
15. Mr Fazio furthers states verbatim “Having been prescribed Amisulpride, Olanzipine, Stillnox and a cocktail of other shit for my mental health and insomnia issues, I am not taking them as they leave me in a catatonic state. I would rather be prone to psychotic episodes and have a modicum of function and cognitive ability, than be completely fucked in the head.”
16. He also states verbatim " I do carry around with me my Nitrolinguat Pumpspray, in the event I suffer yet another angina or heart attack, for which is a very real possibility given the deleterious effect the carriage of this matter has continually had on me physically, mentally and financially.”
Leaving aside the evidentiary difficulties that arise from what appears to be an unnamed person attributing, in Mr Fazio’s Affidavit, a statement to Mr Fazio, the statements made do not evidence an incapacity on Mr Fazio’s part to attend a hearing more than a year after the Affidavit was made, and more than nine months after Mr Fazio was successful in persuading SAT to revoke an order appointing a plenary administrator to his estate, and thereby revoking an order based upon his alleged incapacity. In those circumstances, and in the absence of any other admissible evidence, there is no evidence before this Court as to any incapacity on Mr Fazio’s part to attend the hearing of the sequestration order application in this Court.
For the reasons set out above Mr Fazio has failed to make out any of the grounds of the Notice of Opposition. In particular, the Court notices that he has been unable to satisfy the Court that he is able to pay his debts, or that there is some other sufficient cause for a sequestration order not to be made: Bankruptcy Act, s.52(2).
Conclusion on sequestration order
A petitioning creditor who has made out the requirements set out above has a prima facie right to a sequestration order unless various special circumstances are shown to justify the Court departing from its usual practice: Sanders v Sanders [2003] FCA 1079; (2003) 1 ABC(NS) 408, affirmed on appeal in Sanders v Knudsen & Yates trading as The Hargreaves Practice [2004] FCAFC 305 at [14] per Whitlam, Branson and Sackville JJ. In this case there are no special circumstances which arise, and no proof before the Court that Mr Fazio was 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 an order that a sequestration order issue against the estate of Arturo Salvatore Fazio, noting that the date of the act of bankruptcy is 12 November 2013.
The Court will hear the parties as to costs.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Date: 10 February 2016
- AGLC
- McNally v Fazio (No. 3) [2016] FCCA 215
- Case
- [2016] FCCA 215
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether Mr Fazio had provided sufficient proof to satisfy the requirements for the making of a sequestration order, specifically whether he had demonstrated an ability to pay his debts or established any other sufficient cause for the court to refrain from making such an order. The court also considered Mr Fazio's attempts to introduce further evidence and his assertions regarding his mental and physical health.
Judge Lucev found that Mr Fazio had failed to establish any of the grounds in his Notice of Opposition. The court noted that Mr Fazio had not issued the proposed notices to produce or subpoenas he had indicated an intention to file, and therefore, these did not constitute extant evidence. Furthermore, the affidavits of Ms Wilkinson and Mr Bowen were considered solely as affidavits of service, with no substantive bearing on the defence. Regarding Mr Fazio's health, the court found that the statements in his affidavit did not evidence an incapacity to attend a hearing, particularly in light of his prior success in having an administrator appointed to his estate revoked based on alleged incapacity. Consequently, the court concluded there was no admissible evidence of incapacity.
As Mr Fazio had failed to satisfy the court that he was able to pay his debts or that there was any other sufficient cause not to make a sequestration order, the court found that the conditions of section 52(2) of the Bankruptcy Act had not been met.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
Decision
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Ratio Decidendi
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