Nimlaw Pty Ltd v Scott

Case [2024] FedCFamC2G 647

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Nimlaw Pty Ltd v Scott, in the matter of Scott [2024] FedCFamC2G 647

File number(s): ADG 382 of 2023
Judgment of: JUDGE CAMERON
Date of judgment: 4 July 2024
Catchwords: BANKRUPTCY – Review of registrar’s decision to make a sequestration order – hearing de novo – decision confirmed.  
Legislation:

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), rr 21.02, 21.04

Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth), r 7.05

Bankruptcy Act 1966 (Cth), s 52
Cases cited:

Nimlaw Pty Ltd v Scott [2023] SADC 42

Scott v Nimlaw Pty Ltd [2023] FCA 1420

Scott v Nimlaw Pty Ltd (No 2) [2023] FCA 1472

Scott v Nimlaw Pty Ltd (No 3) [2024] FCA 26

In the matter of an application by Susan Jane Scott for leave to issue or file [2024] HCASJ 23

Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132
Division: General
Number of paragraphs: 17
Date of hearing: 2 July and 4 July 2024
Place: Sydney
Counsel for the Applicant: Mr J. Stewart Rattray
Solicitor for the Applicant: Stewart-Rattray Lawyers
Counsel for the Respondent: The applicant appeared in person

ORDERS

ADG 382 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF SUSAN JANE SCOTT
BETWEEN:

NIMLAW PTY LTD

Applicant
AND:

SUSAN JANE SCOTT

Respondent

ORDER MADE BY:

JUDGE CAMERON

DATE OF ORDER:

4 JULY 2024

THE COURT ORDERS THAT:

1.The application for review of the registrar’s decision of 13 March 2024 to make a sequestration order be dismissed.

2.The registrar’s sequestration order of 13 March 2024 be confirmed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

JUDGE CAMERON

INTRODUCTION

  1. On 1 December 2023, Nimlaw Pty Ltd (Nimlaw) filed a creditor’s petition following Dr Susan Jane Scott's failure to comply with a bankruptcy notice (Bankruptcy Notice) issued on 20 July 2023.  The underlying debt arises out of a District Court of South Australia judgment for $20,446.82 in respect of professional fees owed by Dr Scott to Nimlaw: Nimlaw Pty Ltd v Scott [2023] SADC 42.

  2. On 15 November 2023, Charlesworth J dismissed Dr Scott's application to set the Bankruptcy Notice aside: Scott v Nimlaw Pty Ltd [2023] FCA 1420 (Bankruptcy Notice Judgment).  On 19 November 2023, Dr Scott filed an interlocutory application in the same proceeding seeking leave to appeal Charlesworth J’s decision as well as a stay of execution or operation of any proceedings on the Bankruptcy…

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AGLC
Nimlaw Pty Ltd v Scott [2024] FedCFamC2G 647
Case
[2024] FedCFamC2G 647
Decision Date

CaseChat Overview and Summary

In the case of Nimlaw Pty Ltd v Scott, the court was tasked with reviewing a decision by the registrar to make a sequestration order against the estate of Dr Susan Scott. The dispute arose from a judgment debt entered in favour of Nimlaw Pty Ltd in the District Court of South Australia, which led to a bankruptcy notice being served on Dr Scott. Dr Scott challenged the notice and subsequently the sequestration order, arguing that she had not committed an act of bankruptcy. The primary legal issue before the court was whether Dr Scott had demonstrated sufficient cause for the court not to make a sequestration order against her estate. The court had to consider Dr Scott's allegations, including her claims of procedural unfairness and the contention that she had not committed an act of bankruptcy. The court concluded that Dr Scott had indeed committed an act of bankruptcy, and her challenges to the decision did not provide a legally sufficient basis to set aside the sequestration order. The court's reasoning hinged on the established procedural history of the case and the lack of any legal error in the previous decisions made by the Federal Court. The court dismissed the application for review and confirmed the registrar's decision to make a sequestration order against Dr Scott's estate.

The court emphasised that Dr Scott's grievances, while genuine, did not affect the private rights and obligations between her and Nimlaw Pty Ltd. The court found that Dr Scott's subsequent appeals and applications for judicial review, including an application to the High Court, did not identify any legal error in the decision to make the sequestration order. The court held that Dr Scott's complaints were generalised and lacked any legally intelligible basis, and thus the application for review was both frivolous and vexatious. The court's decision was grounded in the principle that the registrar's decision to make a sequestration order was properly made and should stand.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Rule 7.05 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) relevantly provides: Review of Registrar's decision(1)This rule applies in relation to an application under subsection 256(1) of the Act for review of a decision by a Registrar to make a sequestration order against the estate of a debtor (the bankrupt).(2) The application must be served on the trustee at least 7 days before the date fixed for the hearing of the application.(3) The applicant must give notice of the application to each person known to the applicant to be a creditor of the bankrupt.(4) The notice must be in accordance with Form B12(5) The applicant must serve the notice on each creditor at least 7 days before the date fixed for the hearing of the application. The Bankruptcy Act 1966 (Cth) (Act) relevantly provides:52 Proceedings and order on creditor’s petition(1) At the hearing of a creditor’s petition, the Court shall require proof of:(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);(b) service of the petition; and(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.(1A) If the Court makes a sequestration order, the creditor who obtained the order must give a copy of it to the Official Receiver before the end of the period of 2 days beginning on the day the order was made.Penalty: 5 penalty units.(1B) Subsection (1A) is an offence of strict liability.(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:(a) that he or she is able to pay his or her debts; or(b) that for other sufficient cause a sequestration order ought not to be made;it may dismiss the petition.(3) The Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days.(4) A creditor’s petition lapses at the expiration of:(a) subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or(b) if the Court makes an order under subsection (5) in relation to the petition—the period fixed by the order;unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn.(5) The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor’s petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order.BACKGROUND

Ratio Decidendi

Legal Principle Established

The significance of that inference lies in the fact that the creditor’s petition was presented on 1 December 2023. CONSIDERATION Having had regard to the documents filed in this matter, I am satisfied that the legislative and procedural requirements for the making of a sequestration order have been met. The matter remaining for decision is whether Dr Scott has shown sufficient cause why such an order should not be made. In her notice stating grounds of opposition to the creditor’s petition, Dr Scott alleged:1. The opponent has not committed an act of bankruptcy. The Application of set aside of bankruptcy notice is under Appeal to the Full Court of the Federal Court, on the grounds stated in Affidavit, 31 January 2024, paragraph 4.2. The grounds of appeal encompass the central justiciable matter of dispute, to the Federal Court of the Agreement as equitable estoppel, of action of justice as Claim of Wrongful Acts to cause Death, as cross-claim of third party.3. The grounds of appeal encompass the ongoing actions of set aside of the Judgment and default Judgements arising from the Judgement, in the District and Supreme court of South Australia of substantive equitable off-set as circuity in action.4. The grounds of appeal encompass, the matter of the notice of bankruptcy brought as irregularity, as substantial injustice, section 306 Act5. The grounds of appeal encompass, the jurisdiction to the Federal Circuit Court section 52 of the Act and to the Federal Court, to examine the Judgment on which the bankruptcy notice was brought. Dr Scott swore an affidavit on 31 January 2024 in which she deposed to the procedural history of her matters in the Federal Court up to that point and to her complaints about how her cases had been dealt with. She filed a further affidavit on 12 March 2024 in which she referred to seeking judicial review in the High Court in connection with various of the Federal Court's decisions in her matters and also to the history of her District Court proceedings. In support of the present review application, Dr Scott filed an affidavit sworn on 26 March 2024 which was concerned with proceedings before the registrar and the nature of a review of a registrar's decision. The grounds of opposition largely challenge the fact that Dr Scott has committed an act of bankruptcy, but she did commit an act of bankruptcy at some point between Charlesworth J’s judgment on 15 November 2023 and O'Bryan J’s judgment on 24 November 2023. Subsequent applications to the Federal Court of Australia have not disturbed that outcome, nor has an application to the High Court in its original jurisdiction. The circumstances of that latter case are best understood by quoting passages from the 14 June 2024 judgment of Jagot J sitting alone in In the matter of an application by Susan Jane Scott for leave to issue or file [2024] HCASJ 23:1.On 24 April 2024, Gordon J made a direction under r 6.07.2 of the High Court Rules 2004 (Cth) that the Registrar refuse to issue or file an application by the applicant in this matter for a constitutional or other writ without leave of a Justice first had and obtained. On 10 May 2024, pursuant to r 6.07.3 of the HighCourt Rules, the applicant filed an ex parte application seeking such leave. The ex parte application is supported by an affidavit filed by the applicant on 11 May 2024. These reasons explain why the ex parte application for leave is dismissed.…3.The background to this application concerns a dispute between the applicant and Nimlaw about the liability of the applicant to pay Nimlaw for legal services provided to her. This dispute resulted in a judgment debt being entered against the applicant in favour of Nimlaw in the District Court of South Australia in June 2023 and the service of a bankruptcy notice on the applicant by Nimlaw in July 2023. The applicant subsequently filed an originating application in the Federal Court of Australia seeking to set aside the bankruptcy notice. Charlesworth J dismissed that originating application on 15 November 2023, her Honour stating that although the applicant's "sense of grievance [was] a genuine one ... the grievances to which [the applicant referred were] not grievances that affect[ed] the private rights and obligations as between her and [Nimlaw]". On 19 November 2023, the applicant lodged a notice of appeal against the dismissal of the originating application and sought, in a separate interlocutory application, a stay of the bankruptcy notice until the determination of that appeal. O'Bryan J dismissed the interlocutory application on 24 November 2023 on the basis that the grounds of appeal had "no prospects of success". On 30 November 2023, the applicant lodged a further originating application seeking leave to appeal against O'Bryan J's orders dismissing the interlocutory application for a stay of the bankruptcy notice. On 25 January 2024, McElwaine J dismissed this further originating application on the basis that the applicant’s contentions did "not identify why O'Bryan J erred in his reasoning". On 16 February 2024 McElwaine J also dismissed the applicant's appeal against the earlier decision of 15 November 2023 (which had dismissed the application to set aside the bankruptcy notice).4.In the application for a constitutional or other writ proposed to be filed in this Court, the applicant seeks multiple writs of certiorari, as well as writs of mandamus, quashing these previous decisions. As best as it can be ascertained from the material filed before this Court, the application relies on generalised complaints such as a "denial of [her] legal rights" and a "refusal of procedural fairness… against [her] reasonable and legitimate expectations, against the incompatibility doctrine of the constitutional judicial role and as actual bias". The applicant also describes the decisions below as involving an "abuse of power as errors of fact, law and equity" and asserts that the "actions of the Federal Court [represent] the abrogation of their constitutional role… to uphold the constitution and the [r]ule of [l]aw". None of these contentions, or any of the material in the application or supporting affidavit (which, including its exhibits, totals over 1000 pages), identity any legal error in the decision below or advance any legally intelligible basis for the relief sought. The application, on its face, exposes that it is both frivolous and vexatious and, accordingly, an abuse of process.…6.Consistent with these principles, the ex parte application filed on 10 May 2024 for leave to issue or file an application for a constitutional or other writ must be dismissed.