Morrow v Goldberg - [2004] FMCA 605

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MORROW v GOLDBERG

[2004] FMCA 605

BANKRUPTCY – Creditors Petition – whether any basis to refuse to make sequestration order – judgment debt arising from costs order – allegation of fraud.

Goldberg v Morrow [2004] FMCA 531

Applicant:

DAVID MORROW

Respondent:

DAVID GOLDBERG

File No:

MLG 866 of 2004

Delivered on:

6 September 2004

Delivered at:

Melbourne

Hearing Date:

6 September 2004

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr K Baker

Solicitors for the Applicant:

Victorian Government Solicitor

Respondent:

In person

ORDERS

A sequestration order be made against the estate of David Goldberg.
The Applicant Creditor’s costs, including reserved costs, be taxed in accordance with Order 62 of the Federal Court Rules and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.

The Court notes that the date of the act of bankruptcy is 1 April 2004.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 866 of 2004

DAVID MORROW

Applicant

and

DAVID GOLDBERG

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

Before the court today is a creditor's petition by David Morrow (the applicant creditor) seeking a sequestration order against David Goldberg (the respondent debtor). The petition asserts that the respondent debtor owes the applicant creditor an amount of $3468.85 for taxed legal costs for which sum an order was obtained in the Supreme Court of Victoria at Melbourne on 14 November 2003 arising from an order of the Honourable Gillard J made on 24 July 2003.
The petitioning creditor relies upon a bankruptcy notice which attached a general form of order from the Supreme Court to which reference has been made. It is of some significance to note that in terms of bankruptcy proceedings the dispute between these parties was previously subject to an application to set aside the bankruptcy notice. Those proceedings were heard and determined by the court in the matter of Goldberg v Morrow [2004] FMCA 531. In a decision of His Honour Phipps FM on 17 June 2004 the court dismissed the application to set aside the bankruptcy notice and otherwise ordered the applicant debtor to pay the respondent creditor's costs of the application.
Some of the history of this matter is set out in his Honour's decision and in the reasons for judgment in that matter which I do not propose to repeat in detail before the court this day.
In support of the creditor's petition the creditor has relied upon the usual affidavits and in court today was granted leave to further rely upon affidavits of debt and of search, those affidavits both sworn respectively 6 September 2004 and when taken together with the other affidavit material on file, satisfactorily comply with the requirements of the Bankruptcy Act and in particular I am satisfied comply with s.52 of the Act. It is clear to me on a proper reading of the affidavit material that there are no technical deficiencies in the material and that the applicant creditor was entitled to rely upon to the judgment attached to the bankruptcy notice in the way it has been claimed. I note for the sake of completeness that it would seem to be the case, subject to any further submissions that might be heard, that the date of act of bankruptcy, having regard to that material, would appear to be 1 April 2004.
However, the respondent debtor in a notice of intention to oppose the application or petition filed 29 July 2004 asserts that the order, that is, the order which is the basis upon which the bankruptcy notice is founded, which in turn has provided the foundation for the creditor's petition, was in fact obtained, he claims, by fraud. He refers to the orders made in the Supreme Court on 24 July 2003. He refers not only to the order being obtained by fraud, but refers to it being obtained by collusion with what he refers to in his notice of intention to oppose the application as secret police known as ASIO according to the rules of ASIO, not according to the rule of law. He otherwise refers to there being a miscarriage of justice and refers to the order of the Supreme Court not being a final order. On that basis he claims the petition cannot be based upon that order.
Dealing with the last of those matters first, it is clear and there is authority for the proposition that an order of this kind can indeed provide a basis for a bankruptcy notice and in turn a creditor's petition (see s.40(1)(g) of the Act).
When asked to highlight those parts of his affidavits which it might be said provide evidence of the alleged fraud or miscarriage of justice the respondent has referred to two affidavits; first an affidavit sworn by him on 29 July 2004, and secondly, an affidavit sworn 24 August 2004.
In the first of those affidavits I was taken to paragraphs 6 and 10 as providing some evidence of what was claimed in the notice of opposition to be evidence of fraud. I have carefully read both of those paragraphs and indeed the whole of the affidavit. In the second affidavit reference was made to further allegations of what I take to be miscarriage of justice and again was referred specifically to paragraph 5(i) of that affidavit. Looking at both affidavits as a whole and considering the specific paragraphs to which my attention has been drawn, I can see no evidentiary basis upon which the allegations of fraud have been made. I reject entirely the suggestion that there is evidence of fraud or miscarriage of justice.
It is clear to me that these proceedings between the parties have had a somewhat lengthy and chequered history. At present, I understand from the affidavit of David Anthony Ryan that there are a number of current outstanding appeals and/or applications between the parties namely:- an appeal to the Court of Appeal against the decision of Nettle J of the Supreme Court made on 6 November 2003. There is an application for special leave to appeal to the High Court against the decision of Phillips and Batt JJ of the Court of Appeal made on 30 April 2004. An application for special leave to appeal to the High Court against a decision of Chernov and Nettle JJ of the Court of Appeal made on 1 July 2004 an appeal pending in the Federal Court of Australia against the decision of his Honour Phipps FM made on 17 June 2004.
The appeal from the decision of his Honour Phipps FM was a matter which initially caused me some concern given that it is common ground that that appeal is subject to a first mention or hearing before the Federal Court on Friday, 10 September 2004. However, it is noted there has been no stay sought or granted in relation to the order by his Honour Phipps FM to refuse the application to set aside the bankruptcy notice. In the circumstances I am satisfied it is proper for me to proceed to determine the issue of whether or not I should be satisfied that it is appropriate to make the sequestration order sought in the creditor's petition.
I have otherwise noted that the chronology of bankruptcy proceedings set out in the Ryan affidavit recites the fact that on 21 November 2003 a bankruptcy notice was issued by the Insolvency Trustee Service Australia, ITSA, against Goldberg on behalf of Morrow in relation to the costs order of Gillard J made on 28 July 2003 and taxed by the Master in the sum of $3468.85. It is further noted that on 30 December 2003 the debtor filed in the Federal Magistrates Court the application to set aside the bankruptcy notice in proceedings MZ 1525 of 2003. On 2 March 2004 a deputy registrar of the court granted the application on the ground that the order of Gillard J had not been annexed to the bankruptcy notice in addition to the order of Master Bruce. The court made no order as to costs.
On 5 March 2004 a second bankruptcy notice was issued by ITSA against the respondent debtor on behalf of the creditor in relation to the costs order of Gillard J as taxed by Master Bruce. On 31 March 2004 the respondent debtor filed the application to set aside the bankruptcy notice which is the matter heard before his Honour Phipps FM to which I have already referred. As indicated, there is a notice of appeal pending in relation to that matter in the Federal Court of Australia.
It is significant to note, however, that the application by way of appeal to the Federal Court of Australia against the decision of his Honour Phipps FM was filed on 5 July 2004 which post-dates the filing of the creditor's petition in this matter which was filed on 30 June 2004. Accordingly, as a matter of law I cannot see any reason why this court should be prevented from considering and determining the creditor's petition this day. Having considered the material carefully, and in particular the affidavit material relied upon by the respondent debtor, and particularly having regard to the grounds of objection set out in the notice of intention to oppose the application or petition filed by the respondent debtor on 29 July 2004, I am satisfied for the reasons given that there is no basis upon which any of those grounds can be sustained as a matter of either evidence or law.
I am satisfied in the circumstances, having regard to the appropriate affidavit material in compliance with the Bankruptcy Act that has been filed and relied upon by the applicant creditor a sequestration order should be made in the usual form against the respondent debtor. I will make the usual order in relation to costs including reserved costs, if any, and note, subject to any further submissions, that the date of act of bankruptcy is 1 April 2004. The Court notes that despite the fact that the allegation of fraud was to be made without any evidentiary basis no application was made for indemnity or solicitor/client costs and hence only the usual order will be made.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 6 September 2004