Miller v Ghosh (No 3)
[2016] FCCA 2491
•30 September 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MILLER v GHOSH (No.3) | [2016] FCCA 2491 |
| Catchwords: BANKRUPTCY – Application for sequestration order made by substituted creditor – whether debt owed to substituted creditor as at the date of act of bankruptcy – whether grounds for sequestration order established – whether there is any sufficient cause for not making a sequestration order – sequestration order made. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.39(2)(b), 40(1)(g), 44(1), 47, 49, 60 |
| Cases cited: 2000 Olympic Games Pty Ltd v Daly [2000] FCA 1286 |
| Applicant: | RODNEY MILLER |
| Respondent: | RATNA GHOSH |
| File Number: | SYG 235 of 2015 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 20 July 2016 |
| Delivered at: | Sydney |
| Delivered on: | 30 September 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr M W E Maconachie |
| Solicitors for the Applicant: | Higgins & Dix |
| Solicitors for the Supporting Creditor: | Mr T Sutherland of Mark O’Brien Legal |
The respondent appeared in person
ORDERS
The estate of Dr Ratna Ghosh is sequestrated under the Bankruptcy Act 1966 (Cth).
The applicant creditor’s costs be paid from the estate of Dr Ratna Ghosh in accordance with the Bankruptcy Act 1966 (Cth).
Mr Scott Anthony Newton be appointed trustee of the estate of Dr Ratna Ghosh.
The official trustee be notified of these orders within 2 business days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 235 of 2015
| RODNEY MILLER |
Applicant
And
| RATNA GHOSH |
Respondent
REASONS FOR JUDGMENT
Introduction
On 11 May 2016, pursuant to s.49 of the Bankruptcy Act 1966 (Cth) (Act), I made an order substituting Mr Rodney Miller for Baycorp Collections PDL (Australia) Pty Limited (Baycorp) as the petitioning creditor, and ordered that the petition may be proceeded with as if Mr Miller has been the petitioning creditor. I also made a sequestration order against the estate of Dr Ratna Ghosh.[1] I made the sequestration order on the basis of an amended creditor’s petition in which Mr Miller claimed Dr Ghosh owed him $7,000. That represents the amount of a judgment Mr Miller recovered against Dr Ghosh in the District Court of New South Wales on 17 September 2014.
[1] Miller v Ghosh [2016] FCCA 1191
On 17 May 2016 I set aside the sequestration order.[2] I did so because I made the sequestration order in the absence of Dr Ghosh, and without addressing what I found to be an arguable ground of opposition to the making of the sequestration order. The arguable ground I identified is that Dr Ghosh was the undisputed beneficiary of a costs order for $3,300 made against Mr Miller, and this order was arguably available as a set off to the $7,000 debt Dr Ghosh owed to Mr Miller, which would therefore have reduced the amount of Mr Miller’s debt to less than $5,000.[3]
[2] Miller v Ghosh (No. 2) [2016] FCCA 1192
[3] Miller v Ghosh (No. 2) [2016] FCCA 1192 at [12]
As I noted in my reasons for judgment of 17 May 2016, Mr Miller had deposed to the existence of three additional judgments he had recovered against Dr Ghosh in the Local Court on 6 August 2014 for $1,444.48, $956, and $5,833.84;[4] and that it was likely Mr Miller would seek leave to file an amended creditor’s petition which would include the three additional judgment debts.[5] Mr Miller did apply for leave to file an amended creditor’s petition, and, on 26 May 2016, I granted Mr Miller leave to do so. On that day, I also set down for hearing on 20 July 2016 the further amended creditor’s petition, and made directions for the preparation of that hearing. That included directing Dr Ghosh to file a notice of grounds of opposition to the making of a sequestration order.
[4] Miller v Ghosh (No. 2) [2016] FCCA 1192 at [10]
[5] Miller v Ghosh (No. 2) [2016] FCCA 1192 at [16]
On 20 July 2016 I heard Mr Miller’s application for a sequestration order. In these reasons for judgment, therefore, I consider whether Mr Miller has established the necessary grounds for the making of a sequestration order and, if so, whether there is any reason why I should not make a sequestration order. Before I consider those matters, it would be useful to set out the principles that should guide me in determining Mr Miller’s application.
Section 49 of the Act
Section 49 of the Act provides:
Where a creditor’s petition is not prosecuted with due diligence or where for any other reason the Court considers it proper to do so, the Court may permit to be substituted as petitioner or petitioners another creditor or other creditors to whom the debtor is indebted in the amount required by this Act in the case of a petitioning creditor, and the petition may be proceeded with as if the substituted creditor or creditors had been the petitioning creditor.
The object of s.49 of the Act “is to enable the substituted creditor to continue the proceedings commenced by the petition of the petitioning creditor”.[6] As a general proposition, that means that, to a large extent, the substituting creditor must rely on proof of the matters on which the original creditor relied. That, at the very least, would include proof of the commission of the act of bankruptcy on which the original creditor’s petition relied. In 2000 Olympic Games Pty Ltd v Daly,[7] Burchett J quoted with apparent approval the following statement from McDonald, Henry and Meek, Australian Bankruptcy Law and Practice:[8]
A deficiency in some requirement relating to the original petitioning creditor alone (for example the tender and acceptance of the amount of that creditor's debt) will not invalidate the petition, but a fundamental deficiency in the bankruptcy proceeding itself (such as a defective act of bankruptcy or a fundamentally flawed petition), or a deficiency relating to the substituted creditor, will invalidate it.
[6] Re Buckley; Ex parte James Hardie & Co Pty Ltd (1976) 27 FLR 496 at page 501
[7] [2000] FCA 1286 at [4]
[8] 5th edition, vol 1, p 2852 (update 17)
For a creditor to be substituted as petitioning creditor, the debt the creditor claims is owed to him or her must be for an amount required by s.44(1) of the Act. That means that the debtor must owe the substituting creditor a debt of $5,000 or two or more debts that amount in the aggregate to $5,000 or more. Further, the debt on the basis of which the substituting creditor seeks to be substituted as petitioning creditor must have existed at the time of the act of bankruptcy alleged in the creditor’s petition.[9]
[9] McNamara v Langford [1931] HCA 27; (1931) 45 CLR 267
There is a distinction between an order substituting a person as petitioning creditor, and the making of a sequestration order after the person has been substituted. The significance of that distinction was explained in Hyams v Elder Smith Goldsbrough Mort Ltd.[10] In that case, an order for substitution was made under s.49 of the Act. The debtor appealed against the order to the High Court pursuant to s.39(2)(b) of the Act (as it then stood), but the appeal was challenged as incompetent. Whether it was incompetent turned on whether the substitution order indirectly involved a claim to property or a civil right of the value of $3,000 or more. The High Court held it did not involve any such claim. One of the grounds on which the High Court so held is that it is at the hearing of the creditor’s petition, not at the hearing in which the substituting creditor applies to be substituted as petitioning creditor, that the substituted creditor must prove that his or her debt existed at the relevant time:[11]
Although a creditor seeking an order of substitution must claim the existence of a debt of the required amount as at the date of the act of bankruptcy, it is not necessary, in my opinion, that that creditor should establish, as part of his application, that his debt was in fact in existence at that time. Of course, if it appears on the face of the material he produces in support of his application that his debt was not in existence at the appropriate time the Court should not order the substitution… Whether or not the substituted petitioning creditor's debt is sufficient in point of time to support the petition will be decided when the petition is heard.
[10] [1976] HCA 18; (1976) 133 CLR 637
[11] Hyams v Elder Smith Goldsbrough Mort Ltd[1976] HCA 18; (1976) 133 CLR 637 at [2] (Barwick CJ)
This distinction between an order substituting a person as petitioning creditor, and the making of a sequestration order after the person has been so substituted, is relevant because my having ordered on 11 May 2016 that Mr Miller be substituted as petitioning creditor has not relieved Mr Miller of the burden of proving that Dr Ghosh is indebted to Mr Miller in an amount of at least $5,000, that the act of bankruptcy on which Baycorp relied occurred, and that Dr Ghosh’s indebtedness to Mr Miller existed on the date on which the act of bankruptcy occurred.
Before I can make a sequestration order against the estate of Dr Ghosh on the application of Mr Miller, therefore, I must at the very least be satisfied of the following matters:
a)Dr Ghosh owes Mr Miller a debt that amounts to $5,000, or she owes Mr Miller two or more debts that amount in the aggregate to $5,000; and
b)Dr Ghosh committed an act of bankruptcy; and
c)the debt or debts on which Mr Miller relies existed at the time of the act of bankruptcy.
Further, even if these matters are established, there must be no matters that satisfy me there is a sufficient cause for me not to make a sequestration order.
Debts on which Mr Miller relies
In the further amended creditor’s petition, Mr Miller claims Dr Ghosh owes him $15,234.32.[12] That is the sum of four judgments. One is a judgment for $7,000 entered in the District Court of New South Wales. Dr Ghosh accepts that judgment has been entered against her.[13] The other three judgments are for amounts of $5,833.84 (proceeding no. 2014/00231144), $956 (proceeding no. 2014/00231304), and $1,444.48 (proceeding no. 2014/00231292), all of which are said to have been entered against Dr Ghosh in the Local Court of New South Wales on 6 August 2014. These amounts represent assessments of costs made pursuant to orders that Dr Ghosh pay the costs of Mr Miller. There is, as will become apparent later in these reasons, a great deal of confusion in the evidence about the proceeding or proceedings in which the costs orders were made, and the orders for costs pursuant to which the assessments were made. That confusion does not affect the assessment of whether the judgments exist; but it does affect the assessment of the question whether the judgments are payable.
[12] Further Amended Creditor’s Petition, 30.05.2016, [1]
[13] Notice stating grounds of opposition to application, interim application or petition (Notice of Opposition), 04.07.2016, [2]
Mr Miller sought to prove the three Local Court judgments by an affidavit made by Mr Miller’s solicitor, Mr Maher, on 11 May 2016.[14] That affidavit annexed, among other things, a registration of certificate of judgment or order acknowledgement for each of the three judgments.[15] There was no evidence that the affidavit has been served on Dr Ghosh, and, during the hearing, Dr Ghosh objected to my reading that affidavit for that reason. During the course of the hearing, however, my associate, at my request, accessed the “NSW Online Registry Portal” and downloaded and printed the registration of certificate of judgment or order acknowledgement in relation to each of the three judgments. These documents were marked as exhibit 2 (Certificates of Judgment).
[14] Affidavit of A P Maher, 11.05.2016
[15] Affidavit of A P Maher, 11.05.2016; Annexure C; Annexure E; Annexure G
Dr Ghosh accepted the Certificates of Judgment were what they purported to be, namely, three registrations of certificates of judgment or order acknowledgements. She submitted, however, that they were unsealed, and unsigned, and they do not contain a schedule of interest calculations. None of these matters, however, lead me to doubt that the documents comprising exhibit 2 are what they purport to be. For that reason, I am satisfied Mr Miller is the judgment creditor of the three judgments in the Local Court entered on 6 August 2014 evidenced by the Certificates of Judgment, and that debts for the amounts of those judgments arose at the time they were entered. I also find that Dr Ghosh remains indebted to Mr Miller in relation to those judgments, and the judgment for $7,000.[16] I will consider later in these reasons, however, whether, those judgments are currently payable.
[16] Affidavit of debt of R J Miller, 19.07.2016
Act of bankruptcy
The act of bankruptcy on which Baycorp relied was Dr Ghosh’s failure to comply with a bankruptcy notice. The relevant bankruptcy notice is that issued on 28 October 2014. The bankruptcy notice demanded payment of $11,265.01. On 11 May 2016 I found that the bankruptcy notice was served on Dr Ghosh by email and by post on 28 October 2014. I also found Dr Ghosh did not comply with the bankruptcy notice within 21 days of service, that Dr Ghosh, therefore, committed an act of bankruptcy within the meaning of s.40(1)(g) of the Act, and the act of bankruptcy occurred on 18 November 2014.[17]
[17] Miller v Ghosh [2016] FCCA 1191 at [18]
I made these findings on the basis of affidavits that were read at the hearing of 11 May 2016 at which Dr Ghosh did not appear.[18] In response to my inviting counsel for Mr Miller to again read the affidavits that had been read at the hearing of 11 May 2016, counsel submitted it was unnecessary to do so because the affidavits had already been read; Dr Ghosh had the opportunity to object to my reading the affidavits had she appeared at that hearing; and my setting aside on 17 May 2016 the sequestration order I made on 11 May 2016 did not have the effect of rendering the affidavits I had read as unread.
[18] The same affidavits had been read at the hearing of 17 December 2015 – see Baycorp Collections PDL (Australia) Pty Ltd v Ghosh [2016] FCCA 131
I invited Dr Ghosh to make submissions in response to counsel’s submissions. Dr Ghosh submitted that Mr Miller should not be permitted to rely on the act of bankruptcy based on Baycorp’s bankruptcy notice because Mr Miller “has not proven any act of bankruptcy in the last six months”.[19] That is not a submission to the effect that Mr Miller cannot rely on the affidavit on which I based my finding on 11 May 2016 that Dr Ghosh had committed an act of bankruptcy on 18 November 2014; it is a legal submission to which I will return later. I did not understand Dr Ghosh otherwise to submit that she was not served with the bankruptcy notice on 28 October 2014 as I had found in my reasons for judgment of 11 May 2016, or that she had not complied with the bankruptcy notice, as I also had found.
[19] T34.5
Perhaps counsel might have adopted a more cautious approach by again reading the affidavits I read at the hearing of 11 May 2016. I nevertheless propose to accept counsel’s submission that I may proceed on the basis that the evidence previously read was evidence that was before me at the hearing of 20 July 2016. Nothing, however, turns on this. Dr Ghosh has not included as a ground for opposing the making of a sequestration order that she was not served, and had not complied with, the bankruptcy notice. In an affidavit made on 1 July 2016, Dr Ghosh asserts that the bankruptcy notice was set aside in January 2016 after she paid the amount demanded in the bankruptcy notice to Baycorp in full.[20] Dr Ghosh did pay the amount demanded in the bankruptcy notice. Her payment, however, did not undo the act of bankruptcy she committed by failing to comply with the bankruptcy notice by 18 November 2014. As Burchett J had accepted in 2000 Olympic Games Pty Ltd v Daly, a “deficiency in some requirement relating to the original petitioning creditor alone (for example the tender and acceptance of the amount of that creditor's debt) will not invalidate the petition…”.[21]
[20] Affidavit of R Ghosh, 01.07.2016, [3]; Notice of Opposition, [13]
[21] [2000] FCA 1286 at [4]
Dr Ghosh further submits that she has committed no act of bankruptcy after 2014, and that Mr Miller’s application by which he was substituted as petitioning creditor did not occur within six months after Dr Ghosh had committed an act of bankruptcy based on her not complying with the requirements of the bankruptcy notice Baycorp served on her. That, however, does not matter. As I have already noted, the substituting creditor is entitled to rely on the act of bankruptcy on which the original petitioning creditor relied. What the substituting creditor must establish is that the debts he or she is owed by the debtor existed at the time of the act of bankruptcy.
Given that I have found that Dr Ghosh committed the act of bankruptcy on which Baycorp relied, and on which Mr Miller now relies, and that that act of bankruptcy occurred on 18 November 2014, it follows that, as at the date of her act of bankruptcy, Dr Ghosh owed the four debts I have found Dr Ghosh now owes Mr Miller. Further:
a)for the reasons I have given elsewhere,[22] I am satisfied the creditor’s petition filed by Baycorp on February 2015 was in the prescribed form, and that it was served on Dr Ghosh on 18 September 2015 together with the affidavit required by r.4.04(1)(a) of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules), and the affidavit of service of the bankruptcy notice made by Mr L Wiggins;[23]
b)I am satisfied the further amended creditor’s petition was served on Dr Ghosh, as deposed by Mr Maher in his affidavit of 12 July 2016;
c)I am satisfied that, in his affidavit of search of 20 July 2016, Mr Maher has deposed to the matters required by r.4.06(3) of the Bankruptcy Rules; and
d)I am satisfied Mr Miller has filed an affidavit of debt made on 19 July 2016 in relation to all four judgments, as required by r.4.06 of the Bankruptcy Rules.
[22] Miller v Ghosh [2016] FCCA 1191 at [19]-[20]
[23] Affidavit of service of bankruptcy notice of L Wiggins, 30.01.2015
I am satisfied, therefore, that a sequestration order should be made, unless, for any one of the grounds on which Dr Ghosh relies for opposing the making of a sequestration order, I am satisfied there is a sufficient cause that a sequestration order should not be made.
Grounds of opposition
Dr Ghosh has filed a Notice stating grounds of opposition to application, interim application or petition (Notice of Opposition) in which she sets out a number of grounds.
Debts not payable
Dr Ghosh accepts the judgment of $7,000 is payable, but claims she has a cross claim for $3,300 against Mr Miller which represents a costs order she holds against Mr Miller. Mr Miller does not dispute Dr Ghosh has such a costs order; and I will assume that, for the purposes of these reasons, that that costs order is available to Dr Ghosh as a set off to the four judgments on which Mr Miller relies. Dr Ghosh, however, claims that the three Local Court judgments are not payable. First, relying on r.42.7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), Dr Ghosh claims that such costs, insofar as they are interlocutory, are not recoverable until the conclusion of the proceedings.
Rule 42.7 of the UCPR provides:
(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including:
(a) costs that are reserved, and
(b) costs in respect of any such application or step in respect of which no order as to costs is made,
are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.
(2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.
There is evidence which satisfies me that Mr Miller is entitled to enforce the three Local Court judgments; and that evidence is to be found in the affidavit of Mr Maher made on 12 July 2016.[24] In that affidavit, Mr Maher, who is Mr Miller’s solicitor, deposes as follows:
a)On 15 August 2014 Dr Ghosh filed with the Newcastle registry of the District Court a summons seeking leave to appeal against the costs assessments Mr Miller registered as the judgments on which Mr Miller relies in the further amended creditor’s petition.[25] That proceeding was assigned no. 2014/247066.
b)On 16 September 2014 Olsson DCJ made an order transferring proceeding no. 2014/247066 to the Local Court.[26]
c)On 3 November 2014 Local Court Magistrate Atkinson refused Dr Ghosh leave to appeal against the cost assessments.[27] That order was made in proceeding no. 2014/247066.
d)On 27 May 2016 Fullerton J of the Supreme Court of New South Wales, in proceeding no. 2014/00333115, made an order to the following effect:[28]
The order made by Garling J on 9 February 2015 that there be a stay of execution of all costs orders made by the Local Court at Newcastle in proceedings 2014/247066 (including an order for costs made on 8 December 2014) be lifted.
[24] That affidavit was read without objection from Dr Ghosh – see T19.35
[25] Affidavit of A P Maher, 12.07.2016, [5]-[6]
[26] Affidavit of A P Maher, 12.07.2016, [7]
[27] Affidavit of A P Maher, 12.07.2016, [8]
[28] Affidavit of A P Maher, 12.07.2016, [10]-[11]; Annexure E
Evidence of the orders Garling J made is to be found in the affidavit of Mr Maher made on 24 May 2016 (24 May 2016 Affidavit).[29] Dr Ghosh claimed she was not served with this affidavit. There is an affidavit made by Mr Maher on 12 July 2016 in which Mr Maher deposes that he served the 24 May 2016 Affidavit and the amended creditor’s petition in the manner in which, on 26 May 2016, I ordered these documents be served. I find the documents have been served on Dr Ghosh.
[29] Affidavit of A P Maher, 24.05.2016, [39]
Mr Maher exhibited to the 24 May 2016 Affidavit documents which include a copy of orders made by Garling J in proceeding no. 2014/00333115 where his Honour stayed, among other things, “execution of all costs orders made by the Local Court at Newcastle in proceeding 2014/247066 including the costs orders made on 8/12/14”.[30]
[30] Affidavit of A P Maher, 24.05.2016; Exhibit APM-1, page 145
On the basis of this evidence, I am satisfied that proceeding no. 2014/00333115 is the number that was assigned to the proceeding in the Supreme Court by which Dr Ghosh sought to challenge the costs assessments which had been registered as judgments in the Local Court, three of which are the Local Court judgments referred to in the amended creditor’s petition. Given the lifting of the stay of execution, I am satisfied there is no impediment to Mr Miller enforcing the Local Court judgments on which Mr Miller relies in the further amended creditor’s petition.
Dr Ghosh also claims that “[m]y litigation against all parties is not finalised, but continues in Case 2013/238215 in the Supreme Court”.[31] It is not entirely clear, however, to which proceeding Dr Ghosh intends to rely. In her oral submissions, Dr Ghosh submitted that a differently numbered proceeding, proceeding no. 2013/00235153, is an appeal from all three Local Court judgments.[32] That is not correct. As I have already noted, the proceeding by which Dr Ghosh sought to appeal the costs determinations was assigned proceeding no. 2014/247066 in the District Court, and 2014/00333115 in the Supreme Court. It appears, however, that Dr Ghosh submits that proceeding no. 2013/00235153 is an appeal against the orders for costs pursuant to which costs assessments have been made, and which were registered as the Local Court judgments referred to in the further amended creditor’s petition.
[31] Notice of Opposition, [9]
[32] T76.35
When I asked Dr Ghosh what evidence she had for submitting that proceeding no. 2013/00235153 is an appeal from all three Local Court judgments, Dr Ghosh referred me to page 3 of her affidavit of 19 July 2016.[33] In that affidavit, Dr Ghosh asserts the following:
a)The three Local Court judgments stemmed from an “interlocutory costs order in case 2013/238215, that has not concluded”.[34]
b)On 10 October 2013 Judge Gibson “merged case 2013/76771 with case 2013/238215”.[35] In support of the latter assertion, Dr Ghosh annexes what appears to be a record of proceedings in District Court matter 2013/00238215 that took place on 13 October 2013.[36] From that document it appears proceeding no. 2013/00238215 is a defamation proceeding Dr Ghosh commenced against Mr Miller. The document records that on 10 October 2013 there was before the Court a notice of motion filed by Dr Ghosh to which Mr Miller did not appear. One of the orders was that “Local Court matter 2013/76771” be transferred to the District Court of New South Wales “forming part of District Court matter 2013/238215, by reason of the Local Court having no jurisdiction in defamation proceedings”.
c)Proceeding no. 2013/238215 was transferred to the Supreme Court by consent on 21 March 2013.[37]
d)Judgment in proceeding no. 2013/76771, from which the Local Court judgments stem from, was appealed to the Supreme Court.[38]
[33] T81.10
[34] Affidavit of R Ghosh, 19.07.2016, [6]
[35] Affidavit of R Ghosh, 19.07.2016, [7]
[36] Affidavit of R Ghosh, 19.07.2016, [7]; Annexure B
[37] Affidavit of R Ghosh, 19.07.2016, [8]; Annexure D
[38] Affidavit of R Ghosh, 19.07.2016, [12]
None of these documents disclose that any of the proceedings relate to the three Local Court judgments. During the hearing, Dr Ghosh tendered a notice of listing dated 25 March 2014 from the Supreme Court of New South Wales.[39] It was issued in relation to “Case number 2013/00235153” in a matter titled “Dr Ratna Ghosh v John Bee”. There is nothing in this document that supports the assertion Dr Ghosh made in her affidavit that the Local Court judgments are the subject of proceeding no. 2013/238215.
[39] Exhibit 3
In response to Dr Ghosh’s affidavit on this question, counsel for Mr Miller read an affidavit made by Mr Maher that attaches a notice of appearance and notice of change of solicitor filed in proceeding 2013/238215.[40] Neither document shows that Mr Miller is a party.
[40] Affidavit A P Maher 19.07.2016
At the end of the hearing, I granted Dr Ghosh liberty to file and serve by 22 July 2016 the originating process that was filed in proceeding no. 2013/00235153. Dr Ghosh did file a copy of a summons filed with the Supreme Court of New South Wales on 2 August 2013 in which Mr Miller is one of six defendants. The summons was assigned proceeding no. 2013/235153. It appeals the orders of Local Court Magistrate Cheetham made on 11 July 2013 in proceeding no. 2013/76771. The only evidence of the orders Local Court Magistrate Cheetham made on that day is the assessment for costs issued on 18 December 2013 by Mr John Sharpe, costs assessor.[41] The assessment refers to Local Court Magistrate Cheetham striking out on 11 July 2013 a statement of claim Dr Ghosh filed in the Local Court alleging defamation, and ordering that Dr Ghosh pay Mr Miller’s costs of the notice of motion by which Mr Miller applied to strike out the statement of claim, and the notice of motion Dr Ghosh filed to have the matter transferred to the District Court. Mr Sharpe assessed Mr Miller’s costs at $5,496.94 and determined that Dr Ghosh should meet the costs of the assessment, which Mr Sharpe assessed to be $870. The amount of this assessment is not included in the amended creditor’s petition.
[41] Exhibit 4.The assessment was tendered by Dr Ghosh
I am prepared to assume for the purposes of the application before me that Dr Ghosh has filed an appeal with the Supreme Court of New South Wales from the orders of Local Court Magistrate Cheetham, and that Mr Miller is a party to the appeal. There are, however, a number of matters to note:
a)First, the appeal does not directly relate to the three Local Court judgments on which Mr Miller relies in his further amended creditor’s petition. As I have already noted, Dr Ghosh sought, but failed to obtain from Magistrate Atkinson, leave to appeal from the three costs assessments, although I also note that in Supreme Court of New South Wales proceeding no. 2014/00333115, it appears Dr Ghosh has sought to challenge Magistrate Atkinson’s decision not to grant leave.
b)Second, it is not apparent from the summons, or from the orders Local Court Magistrate Cheetham made on 11 July 2013, that the three Local Court judgements included in the further amended creditor’s petition represent assessments of the costs Local Court Magistrate Cheetham ordered on 11 July 2013 Dr Ghosh to pay. The more likely inference is that the three Local Court Judgments on which Mr Miller relies do not relate to the costs Local Court Magistrate Cheetham ordered on 11 July 2013 Dr Ghosh to pay. That is so because Mr Sharpe assessed those costs to be $5,496.94 together with $870 for the costs of the assessment. These amounts, however, whether alone or together, do not match the amounts of any of the three Local Court judgments on which Mr Miller relies in the further amended creditor’s petition.
c)Even if the three Local Court judgments on which Mr Miller relies represents the assessment of the costs Local Court Magistrate Cheetham ordered Dr Ghosh pay on 11 July 2013, there is no evidence of any stay of execution. On the contrary, as I have already noted, a stay had been ordered in relation to the Local Court judgments but, on 27 May 2016, Fullerton J ordered that such stay be lifted.
d)The proceedings in which Local Court Magistrate Cheetham made the order have been finalised by the orders that were made on 11 July 2013. Dr Ghosh’s statement of claim was struck out. The proceedings were later transferred to the District Court by order of the District Court. That is, the proceeding, in the Local Court, was concluded. Rule 42.7(2) of the UCPR, therefore, does not prevent Mr Miller from recovering the costs Local Court Magistrate Cheetham ordered that Dr Ghosh pay.
e)Further, even if r.42.7 of the UCPR applied to the judgments on which Mr Miller relies, given the orders Fullerton J made on 27 May 2016 lifting a stay, I am satisfied the Court has “otherwise ordered” that the costs ordered to be paid on 11 July 2013 may be recovered before the proceeding is concluded.
I am satisfied, therefore, that the three Local Court judgments on which Mr Miller relies are due and payable.
Other grounds stated in Notice of Opposition
Dr Ghosh relies on a number of other grounds. First, she submits Mr Miller has not served on her “any bills or costs orders”, but that service of sealed copies of such orders are required to be served to satisfy the requirements of a creditor’s petition.[42] Dr Ghosh relies on reg.4.01 of the Bankruptcy Regulations 1996 (Cth). There is no such requirement; and the regulation on which Dr Ghosh relies deals with bankruptcy notices.
[42] Notice of Opposition, [7]
Second, Dr Ghosh submits that Mr Miller’s costs orders on the basis of which Mr Miller obtained judgment are not final.[43] For the reasons I have given, those costs, assuming they relate to the orders made by Local Court Magistrate Cheetham on 11 July 2013, were made at the conclusion of the proceeding before the Local Court. If the cost orders relate to another proceeding, there is no material that identifies the proceeding in which the orders were made or whether the proceedings have been concluded. Further, given the orders Fullerton J made on 27 May 2016 lifting a stay, I am satisfied that a court has “otherwise ordered” that the costs may be recovered before the proceeding is concluded
[43] Notice of Opposition, [7]
Third, Dr Ghosh refers to an application for a lump sum costs order she claims to have against Mr Miller which Dr Ghosh says has not been determined but, when determined, will offset any claim Mr Miller has against Dr Ghosh.[44] There is no evidence to support that contention.
[44] Notice of Opposition, [8]
Fourth, Dr Ghosh submits Mr Miller has attempted to “force a sequestration order against” Dr Ghosh by failing to disclose stay orders and instalment orders from the Supreme Court, unpaid cost orders against Mr Miller in favour of Dr Ghosh, and without issuing a bankruptcy notice.[45] I do not accept this submission. Mr Maher, in his affidavit of 12 July 2016, disclosed the stays that had been ordered in relation to the Local Court judgments. He also referred to Dr Ghosh’s application in proceeding no. 2014/247066 for the stay of the certificates of determination that resulted in the three Local Court judgments on which Mr Miller relies.
[45] Notice of Opposition, [10]
Fifth, Dr Ghosh claims she has been the victim of malware and spyware attacks that are sourced to Mr Miller, and these are the subject of a police investigation.[46] There is no evidence to support these claims; and, in any event, the claims are irrelevant to whether a sequestration order should be made.
[46] Notice of Opposition, [11]
Sixth, Dr Ghosh claims “[a]ll of the Channel Nine creditors . . . costs orders” have not been assessed, and, therefore, cannot be enforced and are subject to an automatic stay.[47] That claim is irrelevant to whether a sequestration order should be made on the basis of Mr Miller’s further amended creditor’s petition.
[47] Notice of Opposition, [12]
Seventh, Dr Ghosh submits she has already paid Baycorp, that Mr Miller and other creditors are trying to “‘piggyback’ for free” without paying court fees; that Mr Miller cannot rely on Dr Ghosh’s act of bankruptcy of 18 November 2014; and that Dr Ghosh has not committed an act of bankruptcy within six months before Mr Miller presented his petition.[48] These do not afford grounds against the making of a sequestration order on the basis of Mr Miller’s further amended creditor’s petition. As I have already noted, Dr Ghosh’s payment of the amount demanded by Baycorp’s bankruptcy notice did not extinguish Dr Ghosh’s act of bankruptcy, and Mr Miller is entitled to rely on Dr Ghosh’s act of bankruptcy, provided Mr Miller was owed debts amounting to $5,000 or more as at the date on which Dr Ghosh committed an act of bankruptcy.
[48] Notice of Opposition, [13]
In addition to these grounds, Dr Ghosh seeks a stay of these proceedings under s.60 of the Act “pending determination of my litigation against all remaining parties”.[49] Section 60 of the Act applies to proceedings brought against a person against whom a creditor’s petition has been presented; it does not apply to the proceedings that have been commenced by the creditor’s petition itself.
[49] Notice of Opposition, [14]
Dr Ghosh also seeks an order that she be removed from the “National Personal Insolvency Index”, and to dismiss and set aside the bankruptcy notice issued on the application of Baycorp.[50] Given I have found that Mr Miller is entitled to rely on Dr Ghosh’s act of bankruptcy, there is no basis on which I can make such orders.
[50] Notice of Opposition, [15]
Additional grounds stated in affidavits
Dr Ghosh relies on additional grounds in affidavits she has filed. First, Dr Ghosh asserts Mr Miller “breached service requirements of a creditor’s petition”.[51] Dr Ghosh relies on r.4.05 of the Bankruptcy Rules, which requires that, unless the Court otherwise orders, a creditor’s petition must be served at least five days before the date fixed for hearing.
[51] Affidavit of R Ghosh, 01.07.2016, [2]
According to the affidavit of Mr Maher made on 12 July 2016, on 30 May 2016 he served on Dr Ghosh the further amended creditor’s petition and the affidavit of Mr Maher made on 24 May 2016, together with the exhibit referred to in that affidavit, both by email and by post. These were the methods of service I ordered be adopted on 26 May 2016. I made those orders at a directions hearing at which Dr Ghosh appeared by telephone. At the hearing on 20 July 2016 Dr Ghosh said Mr Miller did not have her permission to serve documents on Dr Ghosh’s email address. As I informed Dr Ghosh at the hearing, I made the order that the further amended creditor’s petition be served by email at the directions hearing at which she appeared by telephone, yet Dr Ghosh raised no objection. Dr Ghosh submitted she could not open the attachments. Whether that is so or not (and I am not inclined to accept that it was so), I find that the amended creditor’s petition was served both by email and by post, as Mr Maher deposed in his affidavit of 12 July 2016.
Second, Dr Ghosh asserts that the further amended creditor’s petition does not satisfy s.47 of the Act because Mr Miller “had no knowledge of the primary creditor’s petition or bankruptcy notice”, and that “Mr Miller was never listed (nor were any other supporting creditors) on Baycorp’s creditor’s petition that was dismissed”.[52] Baycorp’s creditor’s petition has not been dismissed. The creditor’s petition filed by Baycorp remains alive with Mr Miller, rather than Baycorp, now being the petitioning creditor as a result of the orders I made on 11 May 2016.
[52] Affidavit of R Ghosh, 01.07.2016, [12]
Third, Dr Ghosh refers to orders made on 23 February 2015 by Hulme J of the Supreme Court of New South Wales staying garnishee orders directed to Strathfield Partner Pty Ltd that Mr Miller obtained.[53] Dr Ghosh submits that these garnishee orders “can’t be enforced in a bankruptcy court”. As I have already noted, on 26 May 2016 Fullerton J lifted the stay of execution in relation to the Local Court judgments. I am not satisfied that the orders made by Hulme J, when read in the light of the later orders of Fullerton J, has the consequence that the Local Court judgments on which Mr Miller relies are not now due and payable and liable to be enforced by execution.
[53] Affidavit of R Ghosh, 19.07.2016, [2]
Fourth, Dr Ghosh submits r.4.06 of the Bankruptcy Rules has not been satisfied.[54] As I have already noted, Mr Miller did file and rely on an affidavit of debt made on 19 July 2016 and he has, therefore, complied with r.4.06 of the Bankruptcy Rules.
[54] Affidavit of R Ghosh, 19.07.2016, [3]
Fifth, Dr Ghosh submits an act of bankruptcy has not been proved because the operation of the garnishee orders against Strathfield Partners Pty Ltd was stayed.[55] That submission is irrelevant because the act of bankruptcy on which Mr Miller relies is Dr Ghosh’s failure to comply by 18 November 2014 with the bankruptcy notice issued on the application of Baycorp.
[55] Affidavit of R Ghosh, 19.07.2016, [5]
Finally, Dr Ghosh asserts as follows: [56]
[56] Affidavit of R Ghosh, 19.07.2016, [19]-[22]
I have obtained bankruptcy notices ... against two debtors who owe me judgment debt, that will be enforced in this court. . .
I request a Stay of these proceedings for 12 months to allow final determination of litigation continuing against all remaining supporting creditors, as they do not have any final judgment.
If granted the Stay, I will offer as security my win against debtors in the same court . . .
I also need the time to sell my share of asset to pay any remaining debts.
These matters do not afford a reason for not making a sequestration order. If anything, they demonstrate Dr Ghosh is not in a position to pay her debts as and when they fall due.
Conclusion and disposition
I am satisfied Dr Ghosh owes Mr Miller debts that total more than $5,000, and that Dr Ghosh was liable to pay these debts on 18 November 2014 when Dr Ghosh committed an act of bankruptcy by failing to comply by that date with the requirements of a bankruptcy notice issued on the application of Baycorp. I am satisfied that Mr Miller has otherwise complied with the requirements of the Act and of the Bankruptcy Rules, and that the requirements for the making of a sequestration order have been met. I am not satisfied that any of the grounds on which Dr Ghosh has relied for the Court not making a sequestration order constitute a sufficient cause for me not to make a sequestration order.
I propose therefore to make a sequestration order against the estate of Dr Ghosh, and I also propose to make an order that Mr Miller’s costs be paid from the estate of Dr Ghosh in accordance with the Act.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 30 September 2016
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