Naderasa v Nadarajapillai

[2015] FCCA 2171

FEDERAL CIRCUIT COURT OF AUSTRALIA

NADERASA v NADARAJAPILLAI [2015] FCCA 2171

Catchwords:
BANKRUPTCY – Creditor’s petition – opposition – whether the Court should “go behind” the judgment of another Court – no basis to go behind judgment – sequestration order made.

Legislation:

Bankruptcy Act 1966, ss.44, 52(2)(b)

Corney v Brien (1951) 84 CLR 343
Emerson v Wreckair Pty Ltd (1992) 33 FCR 581
Makhoul v Barnes (1995) 60 FCR 572
Nadarajapillai v Naderasa [2015] NSWCA 109
Wolff v Donovan (1991) 29 FCR 480
Wren v Mahony (1972) 126 CLR 212
Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461

Applicant: RAVINDRAN NADERASA

Respondent: PIRAPAKARAN NADARAJAPILLAI

File Number: SYG 2072 of 2014

Judgment of: Judge Smith

Hearing dates: 15 & 17 July 2015

Date of Last Submission: 17 July 2015

Delivered at: Sydney

Delivered on: 17 July 2015

REPRESENTATION

Solicitor for the Applicant: Mr M. Campbell, Solicitor

Solicitor for the Respondent: Mr J.M. Patel, Solicitor

ORDERS

1. A sequestration order be made against the estate of Pirapakaran Nadarajapillai.

2. The applicant creditor’s costs be fixed in the amount of $3,744 and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2072 of 2014

RAVINDRAN NADERASA

Applicant

And

PIRAPAKARAN NADARAJAPILLAI

Respondent

REASONS FOR JUDGMENT

1. On 17 July 2015 I made a sequestration order against the estate of the respondent. These are my reasons for making that order.

2. In January 2013 the applicant brought proceedings in the District Court of New South Wales in respect of two loans made by him to the respondent. The only issue between the parties in those proceedings was whether or not the applicant had given the required period of notice under the loan agreements. After a contested hearing, Kearns ADCJ found that the requisite notice had been given and so gave judgment in favour of the applicant. An appeal to the Court of Appeal of the Supreme Court of New South Wales from that judgment was dismissed: Nadarajapillai v Naderasa [2015] NSWCA 109.

3. A bankruptcy notice was issued to the respondent in respect of the judgment together with interest and the respondent has failed to comply with that notice. On that basis, the applicant now seeks that a sequestration order be made in respect of the respondent. The respondent opposes the making of such an order. It is not easy to understand the grounds of his opposition as both his oral and written submissions were discursive and verging on incomprehensible. However, as best I apprehend those grounds, they are that:

   a)the statement of claim in the District Court was defective in that it relied upon an oral agreement whereas, in particulars provided later, it was asserted that the agreement was partly oral and partly in writing;

   b)the Civil Procedure Act2005 (NSW), the Civil Procedure Rules 2005 (NSW) and the Evidence Act1995 (NSW) were not followed in the conduct of the hearing; and

   c)the applicant did not in fact make loans of the amounts under the contract as pleaded but only dressed up loans earlier made so they appeared to have been made under a contract; and the trial judge’s decision contained a number of errors, including that he ignored the evidence of the parties and based his judgment entirely on admissions apparently contained in the pleadings and concessions made by the defendant’s counsel at the hearing.

4. It appears that very similar arguments were made by the respondent in the Court of Appeal. The judgment of that Court was given by Emmett JA, with McColl JA and Macfarlan JA agreeing. Justice Emmett summarised the proceedings in the District Court as follows:

   7At the commencement of the hearing before the primary judge, counsel for the Lender provided an aide-mémoire to his Honour, setting out matters admitted by the Borrower in the Defence. Counsel for the Borrower raised no objection to the aide-mémoire. After ruling on objections to the affidavit evidence, the primary judge was informed that neither party wished to cross-examine the other. Both parties then addressed his Honour.

   8Counsel for the Borrower referred to a statement of facts and issues filed on behalf of the Borrower (the Borrower’s Issues). The Borrower’s Issues set out the essential facts admitted by the Borrower, which corresponded closely to the admissions set out in the aide-mémoire. The Borrower’s Issues then stated that the issues were as follows:

   ·Was 90 days or three months’ notice given by the Lender?

   ·Could the Lender deposit the cheques without 90 days or three months’ notice and, in particular, could the Lender deposit all the cheques at once or deal with the security without 90 days’ notice?

   ·Could the Lender seek full repayment without 90 days’ or three months’ notice?

   ·What is the effect of the non-service of the notice?

5. Justice Emmett then summarised the primary judge’s findings and the grounds and arguments raised upon the appeal. His reasons for the dismissing the appeal were shortly stated as follows:

   19It is apparent that, apart from the basis on which interest was to be calculated, in respect of which the Borrower was successful, the only issue before the primary judge was whether the Lender was entitled to repayment of the loans prior to giving either 90 days’ or three months’ notice that repayment was required. While, in the Statement of Claim, the Lender also sued on the cheques, it is clear enough that that claim was not pressed before the primary judge, in circumstances where the Borrower admitted that the loans had been made, admitted that an amount of $82,353.67 was owing in respect of the loans, admitted that interest at the rate of 3.5 per cent per month was payable on the outstanding loans, and admitted that demand for repayment had been made in October.

   20Quite clearly, demand had been made more than 90 days before the commencement of the proceedings. It must follow, therefore, that, as at the date of commencement of the proceedings, the principal of the loans was due and owing and there was no reason why the Lender was not entitled to sue for recovery of the principal, together with contractual interest up to the date of judgment.

6. His Honour then made certain comments about the conduct of the appeal some of which are equally applicable to the conduct of this case by the respondent:

   21No written submissions were provided in support of the amended grounds and the oral submissions made on behalf of the Borrower before this Court were quite incomprehensible. More significantly, no attempt was made before this Court by the solicitor for the Borrower to grapple with the fact that, before the primary judge, counsel for the Borrower had indicated that the only issue for determination was that 90 days’ notice had not been given and that the consequence was that the Lender was not entitled to repayment of the loans. The grounds of appeal do not complain about the determination of that question by the primary judge. Rather, they raise questions that were simply not in issue before the primary judge and about which no complaint was made to the primary judge.

   22The complaint now made about the representation of the Borrower before the primary judge is entirely without substance. Indeed, one might compliment the Borrower’s legal representatives for having narrowed the issues in the way that they did. That is not a comment that could be made about the representation of the Borrower before this Court. There is absolutely no substance in any of the amended grounds relied upon by the Borrower, all of which are quite unarguable.

7. In this Court the only evidence relied upon by the respondent was an affidavit affirmed by him on 12 June 2015. In that affidavit he denied any liability to the applicant pursuant to the judgment of the District Court of New South Wales but did not explain why. Under cross-examination he was asked about the defence filed on his behalf in the District Court which contained an admission about the borrowings. His evidence was that he signed the defence and his affidavit on trust, but that he did not know what was in them. I reject that evidence.

8. The respondent was represented by a solicitor and counsel in the proceedings in the District Court and, apart from the complaints made to the Court of Appeal about the quality of the representation, there is no evidence to suggest that they did not act upon the instructions of the respondent in the conduct of those proceedings. Further, the respondent was evasive in giving answers under cross-examination and that, together with the lack of any detail in his evidence as to what he claims to be the true situation, leads me to conclude that he was not truthful in his evidence.

9. As noted by Justice Emmett, the respondent has simply failed to come to grips with the fact that he has conceded both the fact and the amounts of the loans to him from the applicant. There is no evidence before me that would support any conclusion that that concession was not properly made upon legal advice.

10. The respondent asks the Court to go behind the judgment of the District Court. The principles in relation to going behind a judgment were summarised as follows by Robertson J in Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461 at [55]ff:

    ·The Court may, in an appropriate case, go behind a judgment to see whether in truth and reality a debt is due from the judgment debtor to the judgment creditor: Corney v Brien (1951) 84 CLR 343 and Wren v Mahony (1972) 126 CLR 212;

    ·An appropriate case may include a judgment debt that has been obtained by fraud or collusion where there has been some miscarriage of justice: Corney at 347-348 and 352-353 and Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 at 588;

    ·If the judgment in question followed a full an investigation at a trial on which both parties appeared, the Court will not reopen the matter unless a case of fraud or collusion or miscarriage of justice is made out: Corney at 356;

    ·The inquiry involved is a two-stage process enquiry first as to whether there is sufficient reason to question the existence of a real debt behind the judgment and second, if there is, determining that issue. These two steps may be determined together: Makhoul v Barnes (1995) 60 FCR 572 at 584 and Wolff v Donovan (1991) 29 FCR 480.

11. There is no sufficient reason to question the existence of a real debt behind the judgment in this case. In particular, there is not a skerrick of evidence that the concessions and admissions made by the respondent before the District Court were induced by fraud or collusion or that there was a miscarriage of justice in the conduct of the proceedings in that Court.

12. For those reasons, there is no basis on which to go behind the judgment which is the basis for the bankruptcy notice that was issued on 22 May 2014. An application to set aside that notice was dismissed on 1 July 2014 by the Court of Appeal and I find that an act of bankruptcy was committed on that day by the failure of the respondent to pay the applicant the amount of $128,471.72.

13. A creditor’s petition was filed on 24 July 2014, well within the 6 month period prescribed by s.44 of the Bankruptcy Act 1966 and I am otherwise satisfied of the matters set out in the petition on the basis of the affidavit in support of it. The first return date of the petition was 28 August 2014 and the petition was personally served on the respondent on 17 August 2014.

14. On the second day of the hearing, the applicant filed both an affidavit to the effect that the debt is still owing and an affidavit that a search of the National Personal Insolvency Index conducted on the previous day showed no records in relation to the applicant.

15. The respondent did not seek to establish that he was able to pay his debts or that there were other sufficient reasons within the meaning of sub-s.52(2)(b) of the Act.

Conclusion

1. In light of all those circumstances, I made a sequestration order against the estate of the respondent.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Smith

Associate: 

Date:  14 August 2015