Nand v Fuji Xerox Australia Pty Limited

[2014] FCCA 1300

FEDERAL CIRCUIT COURT OF AUSTRALIA

NAND v FUJI XEROX AUSTRALIA PTY LIMITED [2014] FCCA 1300

Catchwords:
BANKRUPTCY – Application to set aside sequestration order – whether court has power stay sequestration order indefinitely – where judgment upon which bankruptcy notice is based subject to unsuccessful appeal – where further notice of appeal filed – whether reasonable prospect of success in further appeal – whether to set aside sequestration order.

Legislation:  

Bankruptcy Act 1966 (Cth), s.52(3)

Fuji Xerox Australia Pty Limited v Print Media & Publishing Group (Australia) Pty Limited [2014] NSWSC 112

Reinehr Industrial Lease & Finance Pty Ltd v Jordan (Court of Appeal (NSW), Street ACJ, Hardie and Glass JJA, 4 June 1974 (unreported))
Petelin v Cullen (1974) 132 CLR 355
Kakavas v Crown Melbourne Ltd (2013) 87 ALJR 708

Applicant: SHARDA NAND AKA PADMA NAND AKA PADMA ALAIS SHARDA NAND

Respondent: FUJI XEROX AUSTRALIA PTY LIMITED

File Number: SYG 397 of 2014

Judgment of: Judge Raphael

Hearing date: 16 June 2014

Date of Last Submission: 16 June 2014

Delivered at: Sydney

Delivered on: 16 June 2014

REPRESENTATION

For the Applicant: In Person

Solicitors for the Respondent: Polczynski Lawyers

ORDERS

1. Application dismissed.

2. Applicant to pay the respondent’s costs in the same priority as the costs of the petition.

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT SYDNEY

SYG 397 of 2014

SHARDA NAND AKA PADMA NAND AKA PADMA ALAIS SHARDA NAND

Applicant

And

FUJI XEROX AUSTRALIA PTY LIMITED

Respondent

REASONS FOR JUDGMENT

1. There comes before the court today an application for review of a sequestration order made by Registrar Tesoriero on 28 April 2014.  The factual matrix in respect of which the application is made is as follows.  The bankrupt, Ms Nand, was persuaded to enter into a guarantee agreement with the creditor, pursuant to which she guaranteed the obligations of a company known as Print Media & Publishing Group (Australia) Pty Ltd in respect of the purchase of a printing machine.  It seems that Ms Nand was intending to become a shareholder in that company which was being run by a Mr Raju.

2. She tells that Mr Raju met her one evening in a fast food restaurant and asked her to sign a blank document which he said was the share certificate for the investment in the company.  But it did not appear to be that; it appeared to be a guarantee of the applicant creditor.  The printer was delivered to the company which, very shortly afterwards, ceased to make payments under the financing arrangements and proceedings were commenced against the company, Mr Raju and Ms Nand.  Those proceedings were commenced on 9 December 2011.  After considerable correspondence between those acting on behalf of the creditor and Ms Nand and Mr Raju, judgment by default was entered on 23 August 2012.

3. Ms Nand, who up to that time had been unrepresented, obtained some representation for herself and commenced proceedings in the Supreme Court of New South Wales to set aside the judgment.  Those proceedings were heard before Nicholas J of that Court on 3 and 4 February 2014.  On 25 February 2014, his Honour handed down his judgment: Fuji Xerox Australia Pty Limited v Print Media & Publishing Group (Australia) Pty Limited [2014] NSWSC 112. He refused to set aside the default judgment. At [34] to [37] his Honour gives his reasons for declining to set aside the judgment. These are:

   “Mrs Nand attributed her failure to file her defence and for her delay in moving to set aside the judgment to her continued reliance upon Raju to resolve the proceedings without her involvement.

   Analysis of the evidence demonstrates that, in the circumstances, her continued reliance upon Raju was unreasonable, and provided no basis upon which her failure to act and delay should be excused. It was not disputed that Mrs Nand understood the significance of the plaintiff's claim, and the warnings repeatedly conveyed to her in the communications from its solicitors which, relevantly, began with the letter of 24 April 2012. Early on she was made fully aware that objection was made to Raju acting for her, and of the desirability of her having legal representation. Indeed, her evidence was that months before judgment was entered she knew that the matter was serious, and of the need for legal representation, yet she did nothing about it. The failure of Raju to resolve the matter, or otherwise assist, was plainly evident from the plaintiff's persistence with the claim against her.

   In my assessment, Mrs Nand, who appeared to be an intelligent woman, simply chose to ignore the claim, and to take no step to protect her interests. She provided no explanation for continuing to rely upon Raju when it was obvious that it was detrimental to her interests to do so. Furthermore, no rational explanation was proffered for the failure to comply with the Court's directions as to filing a defence, or for the failure to take advantage of the opportunities provided over a long period to do so. Contrary to her obligation under s 56(3) of the Act, she failed altogether to participate in the Court's process and to comply with its orders and directions.

   In my opinion, the inevitable conclusion is that Mrs Nand deliberately chose to take her chances with Raju. Her choice exposed her to the risk, of which she had been made aware, that judgment would be entered against her for a substantial sum. The risk eventuated. In the circumstances, I do not think the interests of justice require that the Court should excuse, or relieve, her from the consequences of her failure to defend the claim.”

4. At [44] to [47] his Honour provides the legal basis for the conclusion that he has come to, referring to the decision of Street ACJ in Reinehr Industrial Lease & Finance Pty Ltd v Jordan (Court of Appeal (NSW), Street ACJ, Hardie and Glass JJA, 4 June 1974 (unreported)); he refers to the decision of the High Court in Petelin v Cullen (1974) 132 CLR 355 in regard to the claim of non est factum raised by Ms Nand; and finally relied upon the High Court decision of Kakavas v Crown Melbourne Ltd (2013) 87 ALJR 708 where the court said at [20]:

   “Secondly, equitable intervention does not relieve a plaintiff from the consequences of improvident transactions conducted in the ordinary and undistinguished course of a lawful business. A plaintiff who voluntarily engages in risky business has never been able to call upon equitable principles to be redeemed from the coming home of risks inherent in the business. The plaintiff must be able to point to conduct on the part of the defendant, beyond the ordinary conduct of the business, which makes it just to require the defendant to restore the plaintiff to his or her previous position.”

5. Ms Nand has now sought to appeal the decision of Nicholas J and a Notice of Appeal and grounds of appeal have been filed in the Supreme Court.  A copy of the notice of appeal is annexed to an affidavit of David John Edney, affirmed on 13 June 2014 in these proceedings.  Ms Nand is self-represented in that appeal.  The grounds it actually sets out are:

   i)that she never entered into the agreement with the respondent;

   ii)that she is not the person the respondent should pursue for any damages or for liabilities under the agreement;

   iii)that she could bring witnesses to court to satisfy the court that the machine was not brand new and was refurbished [a matter not raised before Nicholas J so far as a reading of his judgement would indicate].

6. Ms Nand appeared before the court today.  She told me that she seeks a stay of the sequestration order, but it was explained to her that this court is unable to grant general stays of such orders longer than a period of 21 days [s.52(3) Bankruptcy Act 1966 (Cth)[1]] and that all the court could do for her was to consider whether or not it was appropriate to set aside the sequestration order in the circumstances.

   [1] The Act.

7. Having heard Ms Nand, and giving the matter its consideration, the court is not of the view that it should set aside the sequestration order.  The judgment upon which the bankruptcy notice was founded still exists.  One attempt to have it set aside has been unsuccessful after a substantial hearing.  Nothing that Ms Nand has told the court or is contained in the notice of appeal convinces this court that there is a reasonable prospect that the appeal will be successful.  Whilst the court accepts that it may have been the case that Ms Nand was misled by Mr Raju, that is not something for which the applicant could be held responsible.  It is clear from Ms Nand’s own evidence before Nicholas J that she intended to have some financial interest in this company and was therefore someone who the applicant might be considered able to rely upon as a guarantor of the company’s obligations.

8. Whilst the court appreciates that it is unlikely that the trustee in bankruptcy will voluntarily take on the conduct of this appeal, it is not impossible that he may do so or that he may be persuaded by Ms Nand’s associates to allow them to take on the process on her behalf.  There are ample opportunities for an application such as that to be made to the trustee under the Act.

9. In all the circumstances, the application must be dismissed and the applicant shall pay the respondent’s costs in the same priority as the costs of the petition.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Associate: 

Date:  19 June 2014