Mueller v Smartcard Financial Services Pty Ltd - [2017] FCCA 518

FEDERAL CIRCUIT COURT OF AUSTRALIA

MUELLER v SMARTCARD FINANCIAL SERVICES PTY LTD

[2017] FCCA 518

Catchwords:
BANKRUPTCY – Originating application to set aside Bankruptcy Notice – application for review of order of Registrar refusing adjournment –consideration of application for review as if it were application to review subsequent order of Registrar dismissing originating application.

Legislation:

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 52(2)

Cases cited:

Lahdo v Spearwood Holdings (WA) Pty Ltd [2014] FCCA 2285

Mueller v Smartcard Financial Services Pty Ltd & Anor [2017] HCASL 5
Myers v Myers [1969] WAR 19

Applicant:

KARL PAUL MUELLER

Respondent:

SMARTCARD FINANCIAL SERVICES PTY LTD

File Number:

PEG 607 of 2016

Judgment of:

Judge Lucev

Hearing date:

17 March 2017

Date of Last Submission:

17 March 2017

Delivered at:

Perth

Delivered on:

17 March 2017

REPRESENTATION

For the Applicant:	In person
Counsel for the Respondent:	Mr J Burke

Solicitors for the Respondent:

MDS Legal

ORDERS

The applicant’s application for review filed 22 December 2016 be dismissed.
The applicant pay the respondent’s costs in the sum of $900.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PERTH

PEG 607 of 2016

KARL PAUL MUELLER

Applicant

And

SMARTCARD FINANCIAL SERVICES PTY LTD

Respondent

REASONS FOR JUDGMENT

(Delivered orally and revised)

Introduction

On 1 December 2016 the originating application in these proceedings was filed seeking to set aside a bankruptcy notice. There were a variety of grounds put forward in the originating application and it was supported by two affidavits, one of which set out a new address for the applicant, Karl Paul Mueller (“Mr Mueller”), and another which repeated the grounds of the application and annexed various court documents, including a judgment of the District Court of Western Australia (“District Court”) against Mr Mueller in a sum slightly exceeding $500,000.
On 19 December 2016, the originating application came before a Registrar of this Court and orders were made for time for compliance with the bankruptcy notice to be extended to 4 pm on 20 February 2017 and for the application otherwise to be adjourned to 20 February 2017 at 2.30 pm. On 22 December 2016 Mr Mueller filed an application for review of the Registrar’s order of 19 December 2016. The application was for review of the decision to extend time for compliance and to adjourn the hearing of the originating application.
On 20 February 2017, the matter came back before a Registrar of this Court and it is common ground that for reasons which the Court does not need to go into, Mr Mueller did not attend before the Registrar. Before the Registrar, there was an affidavit of the lawyer for the respondent, Joseph Michael Burke (“Mr Burke”), either tendered or before the Court, and it is appropriate to read some of the relevant factual legal context from paragraphs 4 through to 7 of that affidavit:
4. On 29 January 2015, the District Court of Western Australia entered judgment in CIV 3634/2010 against the applicant in favour of the respondent (judgment).
5. On 10 November 2016, the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] FCCA 518
Decision Date: 17 March 2017

CaseChat Overview and Summary

Mueller (the applicant) sought to set aside a statutory demand issued by Smartcard Financial Services Pty Ltd (the respondent) under s 459G of the Corporations Act 2001 (Cth). The applicant alleged that there was a genuine dispute about the existence of the debt, or that there was a substantial injustice if the demand were not set aside. The application was heard in the Supreme Court of Western Australia.

The primary legal issue before the Court was whether the applicant had established a "genuine dispute" regarding the existence of the debt claimed in the statutory demand, or whether there was a "substantial injustice" that warranted setting aside the demand. This required the Court to consider the nature and strength of the applicant's defence to the alleged debt.

Judge Lucev found that the applicant had failed to demonstrate a genuine dispute about the existence of the debt. The applicant's defence relied on allegations of misleading and deceptive conduct and breach of contract by the respondent, but these claims were found to be unsubstantiated and lacking in sufficient particularity to raise a real question as to the respondent's entitlement to the debt. The Court applied the principles established in cases such as *Southern Cross Commodities Pty Ltd v. Kwinana Pty Ltd* and *Hale v. Worrell*, which require a defence to be more than a mere assertion and to have some factual or legal basis. As no genuine dispute was established, the Court did not need to consider the substantial injustice limb of s 459G(1)(b).

The application to set aside the statutory demand was dismissed.

Orders