Phillips v Southage Pty Ltd
[2015] FCCA 223
•13 February 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PHILLIPS v SOUTHAGE PTY LTD | [2015] FCCA 223 |
| Catchwords: BANKRUPTCY – Application to set aside Bankruptcy Notice – Notice served in the Supreme Court of Victoria – whether service should be set aside as a result – whether applicant has cross-claim within meaning of s.40(1)(g) of the Bankruptcy Act application for review dismissed. |
| Legislation: Bankruptcy Act 1966, s.40(1)(g) |
| Re Richard Guildford O’Sullivan Ex Parte: Richard Guildford O’Sullivan v Commonwealth Bank of Australia [1995] FCA 1184 Vidyagauri Hiralal v Nitin Hiralel [2013] NSWSC 984 |
| Applicant: | STEVE PHILLIPS |
| Respondent: | SOUTHAGE PTY LTD |
| File Number: | MLG 2075 of 2014 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 17 December 2014 |
| Date of Last Submission: | 17 December 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 13 February 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hone |
| Solicitors for the Applicant: | Hone Legal |
| Counsel for the Respondent: | Mr Velos |
| Solicitors for the Respondent: | Velos Lawyers |
ORDERS
The orders made by Registrar Caporale on 21 October 2014 are affirmed.
The application for review filed 22 October 2014 is dismissed.
The applicant pay the respondent’s costs to be taxed in default of agreement.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2075 of 2014
| STEVE PHILLIPS |
Applicant
And
| SOUTHAGE PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introductory
On 13 October 2014 the applicant filed an application in which he sought orders setting aside a Bankruptcy Notice served upon him in the Supreme Court at Lonsdale Street, Melbourne, on 22 September 2014. Various grounds were set out including the alleged improper service of the Bankruptcy Notice.
On 21 October 2014 Registrar Caporale dismissed that application. What is presently before the Court is the applicant’s application to review the finding of the Registrar, which itself was filed with the Court on 22 October 2014.
The applicant has articulated both in his various applications and affidavits a substantial number of factual assertions going to support the proposition that the Bankruptcy Notice was either technically invalid and/or that he had a cross-claim worth more than the order upon which the Bankruptcy Notice was based.
Because the applicant was self-represented until trial (at which time he retained counsel to act on his behalf), some of the applicant’s materials are by no means easy to follow. Nonetheless, and for the reasons which follow, I do not think that the applicant’s criticisms are made out and the application will be dismissed.
The proceedings between the parties
It is readily apparent from the materials filed in this case that the parties have been involved in litigation on a wide series of fronts over a considerable period of time. The most recent iteration of the applicant’s grievances is set out in a statement of claim annexed together with a purported writ to the affidavit of Mr Phillips filed on 10 December 2014. Whether the writ has or has not been filed is immaterial. What is material is that it sets out the gravamen of the applicant’s claims against the respondent. The statement of claim was clearly drawn by the applicant personally, but it indicates, in essence, a claim to a life interest in a property at 29 Brunswick Street, Fitzroy, formerly the property of the applicant’s deceased mother. The statement of claim seeks damages from 22 November 2012, apparently the date upon which the sheriff took possession of the property, until November 2014, and on a continuing basis until the applicant’s death. The statement of claim also raises several other matters which were touched on by counsel for the applicant and which I will deal with in terms.
In order to understand the history of the matter it is appropriate to commence with the decision of Vickery J dated 6 May 2013, which is annexed to the most recent affidavit of the applicant filed on 6 November 2014. It concerned an application by the respondent in this case seeking removal of caveats lodged by the applicant and various members of his family in respect of not only 29 Brunswick Street, but also 27 Brunswick Street, Fitzroy. The four caveats were lodged in respect of 29 Brunswick Street. His Honour noted at paragraphs 21 to 24:
“21. The First Defendant, Beijing Garden Resort Pty Ltd, is a company incorporated on 13 April 1994. The Second Defendant was appointed a director from 13 April 1994. From 14 November 1996 he became its sole director and remained as such until 27 June 2006. The current director and sole secretary of the First Defendant is Tanya Belaj, who was appointed to these roles following the bankruptcy of the Second Defendant.
22. On 17 December 1996, the First Defendant was registered as the sole proprietor of the Land. This occurred pursuant to a transfer of land dated 16 December 1996 which was executed by the Second and Sixth Defendants in their capacity as legal personal representatives of the estate of their mother, Angeliki Phillipou. The consideration expressed in the transfer was $250,000.
23. The Second Defendant claimed that the First Defendant was a trustee of a fixed trust in which his children, the Third, Fourth, and Fifth Defendants, were the beneficiaries.
24. The transfer of the Land to the First Defendant occurred in breach of Angeliki Phillipou’s will dated 2 July 1992 and the trust created under that will as later described in these reasons. Nevertheless, no proceeding has been taken to set aside the transfer. Consequently, as from 17 December 1996, the Land ceased to be an asset of the estate.”
His Honour went on to note that the proceeding taken for possession by the respondent in this case against Beijing Garden Resort Pty Ltd (“Beijing Garden”) and noted that the caveats were lodged shortly thereafter. His Honour noted the bankruptcy of the applicant from 2006 to 2012, and interrelated proceedings in VCAT designed, it would appear, to prevent the sheriff obtaining possession.
His Honour has set out an extract of the will of Angeliki Phillipou (which is an accurate reproduction of the will itself annexed to Mr Phillips’ affidavit) and it is clear that the devise to the applicant to have use of 29 Brunswick Street, Fitzroy, was until the earlier either of his death or his son Kristopher turning 25, an event that will occur in 2016.
His Honour went on to dismiss all the caveats.
What happened thereafter is illustrated by the judgment of the High Court, which disposed of the applicant’s special leave application on 2 April 2014. Crennan and Hayne JJ relevantly said:
“1. The applicant seeks special leave to appeal against orders of the Court of Appeal of the Supreme Court of Victoria, refusing the applicant extensions of time for leave to appeal against orders by the Supreme Court of Victoria in two separate proceedings: the first about four caveats lodged over land described in Certificate of Title Vol 8215 Folio 206 (“the Property”), and the second about possession of the Property.
2. The applicant and his brother inherited the property and, in 1996, sold it to Beijing Garden Resort Pty Ltd (“Beijing Garden”). Beijing Garden was the trustee of a family trust of which the applicant’s children were specified beneficiaries. The applicant was a general beneficiary under the trust. He was also a director of Beijing Garden until June 2006. On 28 August 2006, the applicant was declared bankrupt.
3. In September 2006, Beijing Garden granted a mortgage over the property. In May 2010, it granted a second mortgage in favour of the respondent to secure a loan of $150,000. Beijing Garden defaulted on the loan. On 30 May 2010, the Supreme Court (Mukhtar AsJ) made orders by consent that Beijing Garden pay the respondent $189,445.14 by 2 July 2012. After Beijing Garden failed to pay, the respondent obtained a warrant for possession of the Property. Following an unsuccessful application brought by the applicant in the Victorian Civil and Administrative Tribunal, the respondent entered into possession on 22 November 2012.
4. Between default by Beijing Garden and the date the respondent took possession, four caveats were lodged over the property. On 6 May 2013, Vickery J ordered the removal of the caveats, finding that none of the claims asserted supported a caveatable interest in the property. On 10 May 2013, Hargrave J made orders requiring the applicant and his agents to leave the Property, not to re-enter and not to otherwise interfere with the respondent’s right to possession. The Court of Appeal (Hansen and Tate JJA) refused the applicant extensions of time for leave to appeal against the orders made by Vickery and Hargrave JJ.”
The Court went on to find that the application for special leave should be refused as an appeal would not enjoy sufficient prospects of success.
It seems reasonably clear that the costs order upon which the Bankruptcy Notice is based, namely an order that the applicant pay the respondent’s costs of $18,881.74, followed a taxation of the costs of antecedent proceedings ordered by Hansen and Tate JJA.
Against this background I come to deal with the particular criticisms advanced and emphasised by counsel for the applicant.
Service of the bankruptcy notice within the precincts of the Supreme Court
Counsel strongly submitted that the fact that the Bankruptcy Notice was served inside the Supreme Court constituted an abuse of process and ought to lead to the Bankruptcy Notice being set aside. It was strongly submitted that such service was opportunistic and should not be encouraged.
The affidavit of Mr Velos dated 20 October 2014 (which I note erroneously asserts that the orders made by Hansen and Tate JJA are fully reproduced when they are not), relevantly asserts at paragraphs 7 and following:
“7. Steve Phillips having been evicted in November 2012 from 29 Brunswick Street, Fitzroy, moved and commenced residing at 25 Brunswick Street, Fitzroy. However, as a result of the death of his sister in November 2013, who owned 25 Brunswick Street, Fitzroy, the property was sold and Steve Phillips would not provide me with a street address which I could serve documents upon him.
8. It was not until Friday 19 September 2014, that I received a telephone call from Anthony Purcell, solicitor of Purcell & Purcell in Werribee, who advised me that he acted on behalf of Steve Phillips’ nephew who was involved in Supreme Court of Victoria litigation on behalf of the Estate of his late mother.
9. Steve Phillips’ nephew is Leon Bagas. Steve Phillips was attempting to make a claim on his sister’s property at 25 Brunswick Street, Fitzroy, claiming that he had a life interest. I was advised by Mr Bagas that that was the claim that Mr Phillips was making against his late sister’s property at 25 Brunswick Street, Fitzroy, and that a hearing was taking place at the Supreme Court of Victoria at Melbourne on 22 September 2014.
10. I made an application for a Bankruptcy Notice against Steve Phillips.
11. I then attended at the Supreme Court of Victoria where a hearing had been set down between Steve Phillips and his late sister’s estate. There were several proceedings listed for hearing in Court Room No. 2, Supreme Court at Melbourne on 22 September 2014.
12. I saw that Mr Steve Phillips was sitting in the Court, however, his proceeding had not been commenced. I left the Court Room and waited outside. I spoke to the solicitor Anthony Purcell acting for Leon Bagas who was sitting outside the court who advised me that the proceeding had not commenced.
13. Steve Phillips exited Court Room No.2 and at that point in time, I served the Bankruptcy Notice.”
In an earlier affidavit filed on 24 October 2014 as to service Mr Velos had relevantly deposed (at paragraph 2):
“2. I identified the person I served as the debtor as I have had several court proceedings against him and have known him for a period of two years. When he left the Court he personally came up to me, addressed me and shook my hand. I explained the purpose of my attendance and handed him the documentation. I asked him for an address to send future correspondence to and as he did not reply, I asked if I could send all communication by email. The debtor responded, “I no longer have access to the email address.” I asked him to provide an address that I can send correspondence to and he handwrote his personal address being “PO Box 1040, Collingwood 3066”. I asked for a street address to serve future documents and the Debtor replied, “No way will I give you my address, everything is to be sent to the postal box.”
When Mr Velos, who appeared for the respondent, made submissions about this matter, he took the Court to the case of Re Richard Guildford O’Sullivan Ex Parte: Richard Guildford O’Sullivan v Commonwealth Bank of Australia [1995] FCA 1184. That decision involved service of a bankruptcy notice in the foyer of barristers’ chambers adjoining the law courts building. Nonetheless, Lindgren J traversed in considerable detail the issue of service within the precincts of the Court. I respectfully refer to and adopt, without setting out a lengthy extract, Lindgren J’s observations at [46]-[64]. It is sufficient for these purposes to note the following extracts. At [55], his Honour said:
“55. Similarly, the twentieth century cases seem to be uniformly against a general proposition that service of process in the precincts of a court will, ipso facto, be set aside: see R v Jones; Ex parte McVittie (1931) 1 KB 664; Re Janet Mary Tole: Ex parte George Edmund Tole (“Re Tole”) (1933) 50 WN (NSW) 216 (NSW/Long Innes J); Baldry v Jackson (1976) 1 NSWLR 19 (NSW/Yeldham J); Ex parte Brantschen, unreported, “The Times” 7 December 1990. In McVittie’s case, supra, a judgment creditor had been frustrated over a long period in attempting to serve successive judgement summonses on the judgment debtor. The creditor’s solicitor eventually managed to effect service in the corridor of a court where the judgment debtor was waiting for a case in which he was plaintiff to be called on. Service was effected some 15 minutes before the court’s business was due to commence. The case is a strong authority against the general proposition for which the Debtor here contends, since the judgment debtor was actually in a corridor of the court building waiting for his case to be called on.”
At [60]-[61] Lindgren J continued:
“61. In my view, it is not the law that service of any process within the precincts of a court constitutes a contempt of that court, and even if it were, it would not follow that service would be set aside. Whether conduct constitutes contempt of the court by reason of its being calculated to interfere with the administration of justice by a court is to be determined by reference to matters of greater substance than the general proposition contended for by the Debtor would allow. No doubt the physical proximity of conduct to a court may be a factor of substance to be taken into account when a contempt of court of a relevant kind is alleged. It cannot be said that service of process within the precincts of a court can never with other circumstances, constitute a contempt. But this is hardly a useful statement: analysis shows that it signifies only that service within the precincts of a court is not precluded from being part of contemptuous conduct.
62. The general proposition for which the Debtor contends depends on the notions of “process” and “precincts”. A bankruptcy notice is issued by the Registrar in bankruptcy, requires the debtor to do something within a stated time after service, and warns that in default the debtor will have committed an act of bankruptcy on which bankruptcy proceedings may be taken. The service of such a notice after the debtor has left the court building after conclusion of his business there is far removed from a case such as Cole v Hawkins, in which process requiring immediate attention was served on the steps of the court just before the recipient’s business at court was to begin.”
Lindgren J’s decision has been followed as Mr Velos submitted by the Supreme Court of New South Wales in Vidyagauri Hiralal v Nitin Hiralel [2013] NSWSC 984.
Applying the gravamen of Lindgren J’s judgment here, it is clear that Mr Velos became aware through contact from the third party that the applicant would be likely to be in court. It is true of course that he could have sought substituted service orders, but it is easy to see why that was unattractive in circumstances where direct service was plainly practicable.
It is clear that Mr Velos did not seek to interfere with Mr Phillips’ conduct of his case and it seems equally clear from Mr Velos’ affidavit material that the applicant was not so far as the materials show in any way inhibited in his conduct of his proceeding by the service of the Bankruptcy Notice, which was of course wholly unrelated to the proceeding then underway.
Examination of the authorities in the lengthy analysis by Lindgren J to which I have referred shows that a very pertinent consideration is whether the party whose service is impugned has in some fashion misconducted themselves, for example by enticing the person into Australia solely for the purpose of service or improperly, as in that case, seeking a continuation of proceedings to compel the applicant to attend courts simply to be further served.
In the circumstances obtaining here, it seems to me that the service should not be set aside. While of course legal practitioners should think long and hard about serving documents in court and whether such service may interfere with the administration of the business of that court, on the facts as they appear here no such interference appears to have occurred and it is therefore as I have said not appropriate to set service aside.
Whether the respondent was entitled to loan monies and seek their repayment
The gravamen of this issue as set out in the applicant’s materials including his affidavit refers to the matters set out more particularly at paragraph 3 of the applicant’s proposed statement of claim in the County Court. It is suggested that the parties who lent monies (and I note from the decisions of the High Court and Vickery J that the money appears to have been lent not to Mr Phillips but to a family trust company) were not relevantly licensed to lend the monies.
I note that consent orders were entered into for the repayment of monies lent by the respondent in this case and it was the failure of Beijing Garden to repay those monies that grounded the orders for possession that ultimately issued.
It is readily apparent that Mr Phillips’ assertion that he has a cross-claim within the meaning of s.40(1)(g) of the Bankruptcy Act1966 (“the Bankruptcy Act”) is misconceived. Any claim that might have been set up was a claim to be made by Beijing Garden and not by him as the monies were not lent to him. Although this puts the matter shortly, I believe it completely disposes of this argument.
Whether Vickery J was misled
The applicant has asserted fraudulent conduct on the part of the respondent and its agents from time to time. Counsel has submitted that Vickery J was misled in arriving at the conclusion expressed in paragraph 57 of his judgment that the applicant might once have had a defeasible life interest in the land which was to end upon his son attaining the age of 25 years.
It is quite apparent that that submission is wholly erroneous. The applicant’s mother’s will clearly gave him, on its face, an interest for so much of his life until his son attained the age of 25 years. There is no possible misleading of Vickery J in this regard.
Accounting for the proceeds of sale of 29 Brunswick Street, Fitzroy
This complaint is articulated at paragraph 11 of the proposed statement of claim and asserts that the sale price of $1,600,000 was never properly accounted for. At paragraph 16 it is asserted that there is a surplus of over $600,000 which is unaccounted for.
This difficulty faces the same problem as that of the asserted cross-claim for the life interest. The fact is the property was sold to Beijing Garden, albeit in breach of Ms Phillippou’s will, in 2006 and the applicant had no legal interest in it thereafter. The applicant could never have set this matter up as a cross-claim against the respondent because it is not he who would have any such claim but rather Beijing Garden.
Other matters
The applicant’s original application raised a number of other technicalities. It is asserted that no Creditors’ Petition was attached to the Bankruptcy Notice when it was served, that the Bankruptcy Notice was “not executed”, that there was no proceeding number on the notice and no Creditors’ Affidavit. It was further asserted that because the respondent is a corporation it was required to exhibit a copy of the relevant ASIC extract in relation to the company.
If I understand the matter correctly, none of these items were pressed by counsel for the applicant. They are in my view in any event misconceived.
Conclusion
For the above reasons the various matters advanced by the applicant are not in my view made out and it follows that the application for review will be dismissed. I will make the necessary orders, bearing in mind that this is a hearing de novo, to affirm the Registrar’s decision and dismiss the proceeding with costs.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 13 February 2015
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