Purnell Motors Pty Ltd v Jones
[2014] FCCA 620
•1 April 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PURNELL MOTORS PTY LTD v JONES | [2014] FCCA 620 |
| Catchwords: PRACTICE & PROCEDURE – Application for stay of Sequestration Order – dismissed – Application to set aside a subpoena issued by Applicant Debtor to Counsel for the Creditor – Subpoena set aside – Application for a grant of an extension of time – no order made. |
| Legislation: Bankruptcy Act 1966, ss.52(3), 139ZQ, 153B Federal Circuit Court Act 1999 (Cth), ss.45, 104(2) Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), r.2.03(1). |
| Banque Commerciale SA (in liq.) v Akhil Holdings Limited (1990) 169 CLR 279 Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 Wren v Mahony (1972) 126 CLR 212 |
| Applicant: | PURNELL MOTORS PTY LTD |
| Respondent: | RICHARD JONES |
| File Number: | SYG 1012 of 2012 |
| Judgment of: | Judge Lloyd-Jones |
| Hearing date: | 30 October 2013 |
| Delivered at: | Sydney |
| Delivered on: | 1 April 2014 |
REPRESENTATION
| Counsel for the Applicant: | S. Gregory |
| Solicitors for the Applicant: | J. Bamford of Bamford Lawyers |
| The Respondent: | The Respondent appeared in person |
ORDERS
Leave is granted for the Amended Application in a Case to be filed.
Leave is granted for the Amended Application in a Case to be returnable instanter.
Prayer 3 of the Amended Application in a Case was consented to by Mr Jones.
Mr Jones is not permitted to call Simon Gregory to give evidence on its application, in Mr Jones’ case.
The subpoena issued by the Mr Jones to Simon Gregory dated 15 October 2013 be set aside pursuant to Regulation 15A.09 of the Federal Circuit Court Rules 2001.
Mr Jones’ Application for a Stay of the Sequestration Order is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1012 of 2012
| PURNELL MOTORS PTY LTD |
Applicant
And
| RICHARD JONES |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court is an Application for Review filed on 26 April 2013 (the “First Review Application”) of the decision of a registrar of this Court filed making a sequestration order against the estate of the respondent, Richard Jones (“Jones”). The orders sought by Jones in the Review Application are:
1. Order for extension of time for APPLICATION FOR REVIEW.
2. That the order for sequestration be annulled.
3. Such other orders as the court considers just.
This was subsequently withdrawn by orders of Registrar Segal (see [10] below).
Jones has since filed a further Application for Review on 18 June 2013 (the “Second Review Application”) which sought the following orders:
1. Order for extension of time for application for review.
2. Order for stay of sequestration pending review.
3. That the order for sequestration be annulled.
4. Such other orders as the Court considers just.
On 4 July 2013 Jones filed an application in a case (the “Interlocutory Application”) seeking the following orders:
1. Order to Stay the Order for Sequestration
2. Order to transfer the matter
a. to Armidale, or in the alternative
b. to Coffs Harbour, or in the alternative
c. to Grafton, or in the alternative
d. to Tamworth at the convenience of the Court
3. Orders to produce documents, In the case of each application for extension for freeze orders the following documents for each of the hearings on or about 20th July 2011, 15th December 2011, 17th January , 2012, 7th June 2012, 10th December 2012, 7th June 2013: and any other dates on which applications were heard specifically but not limited to:
a) The order(s)
b) The notice of motion to be relied on at the Hearing on the return date
c) The following material in so far as it was relied on by the Plaintiff at the hearing when the order was made:
i. The affidavits (or draft affidavits):
ii. Exhibits capable of being copied
iii. Any written submissions:
iv. Any other document that was provided to the Court: and
a) A transcript or, if none is available, a note, of any exclusive oral obligation of fact that was made and of any exclusively oral submission that was put to the Court.
and serve on the applicant as the Court directs.
4. Order for compensation and damages
On 9 May 2012 the applicant creditor, Purnell Motors Pty Ltd (“Purnell”) filed a creditor’s petition in this Court (the “Petition”). On 24 August 2012 Purnell filed an interim application (the “Substituted Service Application”) in the proceedings seeking the following orders:
1. That personal service of the Creditor’s Petition be dispensed with.
2. That service of the Creditor’s Petition, a copy of the affidavit of Rodney Dale verifying the petition and consent of Jason Lloyd Porter and Paul Gerard Weston being the registered trustee (Documents) be effected by service of the Documents, and a sealed copy of these orders (Orders), on that Person specified or referred to in Part A of the Schedule.
3. That service of the Documents on Richard Jones be effected in the manner set out in Part B of the Schedule.
4. That service of the Creditor’s Petition on Richard Jones be deemed effected after compliance with the last method of service set out in Part B of the Schedule.
Schedule
Part A Persons to be served
Richard Jones
Part B Substituted Service Method
(a) By serving a copy of the Documents and Orders on David Sigler, solicitor at Curlington Legal & Consulting Pty Ltd at [George Street, Sydney NSW 2000];
(b) By sending a copy of the Documents and Orders by email to [address1]@gmail.com;
(c) By sending a copy of the Documents and Orders by email to [address2]@hotmail.com;
(d) By posting a copy of the Documents and Orders by ordinary mail addressed to the debtor at [PO Box] at the University of New England at Armidale NSW
(e) By posting a copy of the Documents and Orders by ordinary mail addressed to the debtor at [PO Box] Ulmarra NSW 2462; and
5. The hearing of the petition be adjourned to …
6. Such further or other orders as the Court thinks fit.
7. Applicant’s costs of this application reserved.
Purnell, in support of its Substituted Service Application, filed three affidavits, being:
a)The Affidavit of Mark Ruthven sworn [24 August] 2012;
b)The Affidavit of Christopher Garry Bryett sworn 23 August 2012; and
c)The Affidavit of Christopher Garry Bryett sworn 4 September 2012.
On 4 September 2012 Registrar Morgan made the following orders:
1. Personal service of the Creditor’s Petition be dispensed with.
2. A signed and sealed copy of the Creditor’s Petition, a copy of the affidavit of Rodney Dale verifying the petition, consent of Jason Lloyd Porter and Paul Gerard Weston being registered trustees and affidavit of service of the Bankruptcy Notice by Mark Ruthven and a sealed copy of this order be served on the Respondent:
(a) By sending them by prepaid post addressed to the Respondent at [PO Box] at the University of New England, NSW 2351;
And also:
(b) By scanning them and sending by email to: [address2]@hotmail.com
3. The Creditor’s Petition shall be deemed served on the Respondent 5 days after compliance with Orders 2(a) and (b), whichever is the later.
4. The hearing date of the Creditor’s Petition be amended to 2:00pm on 25 September 2012 at the Law Courts Building, Queens Square, Sydney.
5. Costs be reserved.
On 25 September 2012 the Petition was returnable for hearing before District Registrar Wall, who made the following orders:
1. The Creditor’s Petition be adjourned to 2pm on 05 October 2012.
2. By 4:30pm on 26 September 2012 the Petitioning Creditor
a) to send written notification to the Respondent (or their solicitor on the record) of the details of the time, date and place of the adjourned hearing and the details of any other orders made today and if seeking to proceed to provide an affidavit proving this notification on the adjourned date.
b) Serve its rule 4.04(1)(a) affidavit,
by:
i) Prepaid post addressed to the Respondent at PO Box U58 at the University of New England NSW 2351;
ii) Email to [email protected]
3. Service in the manner specified in Order 2 shall constitute due service for the purpose of rule 4.05.
4. Costs be reserved.
On 5 October 2012, the Petition came before Registrar Tesoriero and a sequestration order was made against Jones in the following terms:
1. A Sequestration Order be made against the estate of RICHARD JONES.
2. The Applicant Creditor’s costs be fixed in the sum of $10,498.00 and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.
The Court notes that the date of the act of bankruptcy is 7 May 2012.
It should be noted that up to and including the date of the making of the sequestration order against Jones, no appearance was made by Jones or any authorised to represent Jones in respect of the Petition.
After Jones filed the First Review Application on 26 April 2013 (see [1] above), the proceedings came before Registrar Segal on 13 May 2013 and the following orders were made:
1. Grant Leave to Richard Jones to withdraw the Application for Review filed on 26 April 2013.
2. Costs reserved to any further application filed by Richard Jones in relation to review of annulment of the sequestration order made on 5 October 2012.
3. Note the Application is now withdrawn.
Accordingly, the Court need not have regard to the First Review Application.
Jones subsequently filed the Second Review Application on 18 June 2013 (see [2] above). The Second Review Application came before Registrar Ng and was referred to this Court for directions, where the following orders were made:
1. The proceedings be adjourned for directions at 9.30am on 29 July 2013 in Court 6C, John Maddison Tower. The Court notes that the applicant has leave to appear by telephone on that date.
2. The interlocutory hearing listed before the Registrar on 29 July 2013 be vacated.
3. The applicant have leave to file and issue any subpoena by 3 July 2013.
It should be noted that no subpoenas were issued by Jones (the applicant in respect of the Second Review Application) on or before 3 July 2013.
The proceedings next came before the Court on 29 July 2013 for directions. On that date the following orders were made:
1. By 19 August 2013 Mr Jones is to advise the solicitors for the petitioning creditor and the Trustees, in writing, the specific source of power (in the case of a section of an act or regulation, by identifying, as appropriate, the specific Act and its section(s), and/or regulation and the regulation(s)), and the specific grounds, on which he relies in seeking each prayer for relief in the Application for Review filed 18 June 2013 and Application in a Case filed 4 July 2013.
2. Purnell Motors Pty Ltd serve all affidavit evidence it intends to rely on by 16 September 2013.
3. The Application be listed for hearing on 30 October 2013 at 10.15am in Court 6D, John Maddison Tower, 88 Goulburn St, Sydney.
4. There be liberty to restore the proceedings on 3 days’ notice.
On 15 October 2013, Jones filed by post five subpoenas with the Court. These subpoenas were addressed to:
a)John Gerard Bamford to attend court to give evidence and to attend court to give evidence and produce documents;
b)Simon Gregory to attend court to give evidence and to attend court to give evidence and produce documents;
c)Christopher Garry Bryett to attend court to give evidence;
d)Rodney Dale to attend court to give evidence; and
e)Mark Ruthven (Process Server) to produce documents and to attend Court to give evidence.
On 23 October 2013 Purnell filed an application in a case (the “Reg. 15A.09 Application”) seeking the following orders:
1. The subpoena issued by the Applicant to SIMON GREGORY dated 15.10.13 be set aside pursuant to Regulation 15A.09 of the Federal Circuit Rules 2001 on the grounds that it is too broad, fishing, oppressive and an abuse of process.
2. The subpoena issued by the Applicant to JOHN GERARD BAMFORD dated 15.10.13 be set aside pursuant to Regulation 15A.09 of the Federal Circuit Court Rules 2001 as to
a) Paragraph 2 of the Schedule to the subpoena on the grounds that it is an abuse of process as it seeks to effect the outcome sought in paragraph 3 of the document titled “Attachment – Orders sought:’ attached to the Application dated 04.07.13 and filed by the Applicant in the proceedings and is therefore premature; and
b) Paragraph 3 of the Schedule to the subpoena on the grounds that it is too broad and an abuse of process.
3. The subpoena issued by the Applicant to MARK RUTHVEN dated 15.10.13, as to the words “a;; records of Travel & accommodation & diaries for the period 1st March 2012 to 1st October 2012’, be set aside pursuant to Regulation 15A.09 of the Federal Circuit Court Rules 2001 on the grounds that it is oppressive, not relevant to the issues in dispute in the proceedings, too broad and an abuse of process.
On 24 October 2013 Purnell filed a Notice Stating Grounds of Opposition to the Second Review Application and Interlocutory Application (the “Notice of Opposition”). The Notice of Opposition pleads the following grounds:
1. It is not proper to extend time for review of the Registrar’s decision on 05.10.12 to order the sequestration of the applicant’s estate.
2. It would not serve the public policy consideration underlying the Bankruptcy Act to set aside the sequestration order.
3. Were the Court to set aside the sequestration order, the delay in applying for review would have occasioned significant prejudice to the creditors and the Trustees.
4. The applicant has not advanced any arguable basis on which the Court ought be satisfied that the sequestration order not be made. Alternatively, the bases are so weak as not to outweigh the matters otherwise weighing against the grant of an extension.
5. The applicant has not satisfactorily explained his delay in applying to review the sequestration order.
6. We understand that the Applicant seeks a stay of the sequestration order pending determination of his application for Review. The Court does not have power to grant a stay.
7. In any event, it would be an inappropriate exercise of power to stay the sequestration order either on an interim basis or permanently.
8. The court ought not (exercising such power as it has to do so) to order production of documents regarding the application s for freezing orders in the District Court.
On 28 October 2013 Purnell filed two notices of opposition to the subpoenas issued to Simon Gregory and John Gerard Bamford.
a)The objections was raised by Simon Gregory were :
The subpoena issued by the applicant to SIMON GREGORY dated 15/10/13 be set aside pursuant to regulation 15A.09 of the Federal Circuit Court Rules 2001, on the grounds that it is to broad, fishing, oppressive, not relative to any grounds in dispute adequately particularised by the applicant and an abuse of process.
b)John Gerard Bamford objects to the subpoena:
The subpoena issued by the Applicant to JOHN GEREARD BAMFORD dated 15.10.13 be set aside pursuant to Regulation 15A.09 of the Federal Circuit Court Rules 2001 as to
(a) Paragraph 2 of the Schedule to the subpoena on the grounds that it is an abuse of process as it seeks to effect the outcome sought in paragraph 3 of the document titled ‘Attachment –Orders sought:’ attached to the Application dated 04.07.13 and filed by the Applicant in the proceedings and is therefore premature; and
(b) Paragraph 3 of the Schedule to the subpoena on the grounds that it is too broad, fishing and an abuse of process.
The recipient of the subpoena states:
(a) The terms of Paragraph 2 of the Schedule are the same as in paragraph 3 of the document titled ‘Attachment- Orders sought:’ attached to the Application dated 04.07.13 and filed by the Applicant in the proceedings;
(b) The documentation sought is located on the Court file in the proceedings in the District Court in which the issuing party id the Plaintiff.
(c) The proceedings were last before the District Court on 15.07.13 for the extension of the asset freezing orders.
(d) The issuing party as the Plaintiff in those proceedings was in attendance at the District Court on that day.
(e) The issuing party as the Plaintiff in those District Court proceedings had had access to the Court file.
(f) The issuing party agitated the issue of access to the documentation sought under the orders and subpoena issued to the recipient of the subpoena in these proceedings on 15.07.13 before Justice Gibson as appears from Exhibits JGB-01-045 to JGB-01-077 to the affidavit of John Gerard Bamford sworn 18/09/2013 and filed in these proceedings and served on the Applicant in these proceedings in relation to the Applications before the Court for hearing on 30.10.13.
Hearing 30 October 2013
Background to the Amended Application in a Case
Mr Gregory, Counsel for Purnell, sought leave in Court to file an Amended Application in a Case and the affidavit of John Gerard Bamford, (the “Second Bamford Affidavit”) sworn 29 October 2013 which annexures “A” to “F” inclusive.
Mr Gregory informed the Court that on 15 October 2013, subpoenas were issued at the request of Jones to Mr Gregory to produce documents and to attend at the hearing to give evidence. The solicitor on the record for Purnell is Mr John Gerard Bamford who also received a subpoena to produce documents and to attend at the hearing to give evidence. The solicitor who had carriage of the matter for Purnell until the sequestration orders were made, Mr Christopher Gary Bryett received a subpoena to produce documents and to attend the hearing to give evidence. The principle of Purnell, Rodney Dale, was subpoenaed to attend at the hearing to give evidence and the process server Mr Mark Ruthven was subpoenaed to produce documents and to attend at the hearing to give evidence. All of the subpoenas were subsequently served on 21 October 2013. Mr Bamford, having learned of the subpoenas served on him and Mr Bryett, solicitor for Purnell, sought to have the matter relisted prior to the scheduled hearing on 30 October 2013, for mention but there was no availability of Court time prior to this hearing. Purnell filed an Application in a Case on 23 October 2013, while Mr Bamford and Mr Gregory filed Notices of Objection on 25 October 2013 and those documents were served on Jones.
Mr Gregory moved on the Amended Application in a Case, filed in Court on 30 October 2013, in the following form:
1. The Applicant seeks leave to file this Amended Application in a Case.
2. That this Amended Application in a Case be returnable instanter.
3. The Applicant inform the Court:
(a) whether he proposes to call the Respondent’s Counsel, Mr Gregory, to give evidence on his application;
(b) if so, the specific source of power and the specific grounds, to which he says the evidence of Mr Gregory is relevant;
(c) what is the substance of the evidence that he expects to elicit from Mr Gregory;
(d) the basis for his belief that Mr Gregory will give that evidence;
(e) why, not having sought, or served, an affidavit sworn by Mr Gregory, not having given notice to the Respondent of his intent to call Mr Gregory and only giving notice to Mr Gregory by serving the subpoena filed 15 October 2013, the Court ought permit him to call Mr Gregory to give evidence.
4. The Applicant not be permitted to call Mr Gregory to give evidence on is applications, in his case.
5. The subpoena issued by the Applicant to SIMON GREGORY dated 15.10.13 be set aside pursuant to Regulation 15A.09 of the Federal Circuit Court Rules 2001 on the grounds that it is too broad, fishing, oppressive and an abuse of process.
6. The subpoena issued by the Applicant to JOHN GERARD BAMFORD dated 15.10.13 be set aside pursuant to Regulation 15A.09 if the Federal Circuit Court Rules 2001 as to
(a) Paragraph 2 of the Schedule to the subpoena on the grounds that it is an abuse of process as it seeks to effect the outcome sought in paragraph 3 of the document titles ‘Attachments –Orders sought:’ attached to the Application dated 04.07.13 and filed by the Applicant in the proceedings and is therefore premature; and
(b) Paragraph 3 of the Schedule to the subpoena on the grounds that it is too broad and an abuse of process.
7. The subpoena issued by the Applicant to MARK RUTHVEN dated 15.10.13, as to words “all records of Travel & accommodation & diaries for the period 1st March 2012 to 1st October 2012’, be set aside pursuant to Regulation 15A.09 of the Federal Circuit Court Rules 2001 on the grounds that it is oppressive, not relevant to the issues in dispute in the proceedings, too broad and an abuse of process.
The relief sought in the Amended Application in a Case which is in addition to the Reg.15A.09 Application, filed on 23 October 2013, specifically concerns the subpoena served on Mr Gregory to give evidence and the consequence that flowed in respect of the right of Mr Gregory to appear in these proceedings.
Mr Gregory indicated that he sought a direction, in addition to the relief sought in the Amended Application in a Case, as to whether Jones proposes to call Mr Gregory as a witness in the proceedings, the substance of the evidence that he expects to illicit, the basis of his expectations that he will be able to illicit that evidence, the specific source of power and the specific grounds to which he says Mr Gregory’s evidence is relevant and why the Court ought not to permit Jones from calling Mr Gregory to give evidence in these proceedings. Prayer 4 is for directions that the Court not permit Jones to call Mr Gregory as a witness in these proceedings.
I asked the parties whether the issue of the subpoena goes to Jones’ challenging the decision of the District Court and reviewing all the evidence before the District Court, because that matter has not been before this Court, sitting in its bankruptcy jurisdiction, and relies upon the decision of the District Court which is the basis of the Petition. Mr Gregory confirmed that the principal debt, in this matter, arises out of an order for costs which was assessed and judgment entered on that assessment. There has been no application to review the assessment and there has been no application to set aside the judgment.
There was an asset freezing order made against Jones in relation to his disposal of two properties for no money and he has not applied to set aside or vary those orders. There were asset freezing orders made against a third party to whom Mr Jones transferred properties and he informed the District Court that he has no interest in those properties. He has made no application to set aside or vary those orders. The Official Receiver has served a s.139ZQ Notice on each of those transferees on the basis that the transfers are void as against the Trustee. One of those transferees has transferred the property back to the Trustee.
Mr Gregory indicated to the Court that it is now over 12 months since the sequestration order was made and at least a couple of years since the original judgment was entered on the Costs Assessments. I note, that when the matter was before me on 29 July 2013, Jones informed the Court that he would supply some details as to the Court’s power to go behind the decision. Mr Gregory indicated that Jones had served Purnell with the letter of 18 August 2013 and that letter is annexed to the Second Bamford Affidavit at annexure “E” which he intends to read because, clearly, the material to what evidence is relevant to the grounds that Jones has notified Purnell as forming a basis to the specific sources of power in the Prayers for relief.
Mr Gregory submitted that Jones’ subpoena to call Mr Gregory as a witness would cause irreparable damage to his client because of the need to brief new counsel on what is a large and complicated matter. The circumstances are more irreparable because of the prospects of not recovering costs, even if they were ordered in the favour of Purnell.
Mr Gregory referred the Court to contained in the Second Bamford Affidavit, which addressed the issue of Purnell’s legal representation, in the following paragraphs:
Purnell legal representation
35. As I have noted, on 01.07.13 the Applicant told the Court that he was ready to proceed and at the directions hearing on 29.07.13 the Applicant did not intimate that the Applicant proposed to rely on evidence additional to the affidavits which the Applicant had filed and served. Mr Gregory appeared for Purnell Motors on 29.07.13 and the Applicant was also present at Court on 29.07.13.
36. Mr Gregory was briefed on, and prepared for, the hearing of these Applications well before the Gregory Subpoena was issued or served for the purposes, and as a consequence, of the event of 29.07.13 and the subsequent receipt of Annexure E and the need to meet order 2 made in these proceedings on 29.07.13. Mr Gregory was involved in settling the evidence which Purnell Motors served by letter dated 18.09.13.
37. The facts associated with the matters in dispute in the District Court Proceedings are extensive.
38. The facts associated with the matters dispute in the Bankruptcy Proceedings are extensive.
39. The cost of Mr Gregory familiarising himself with the Applicants for hearing on 30.10.13 and the affidavits of the Applicant in support and in advising in relation to the evidence of Purnell Motors has been substantial.
40. Mr Gregory has not sworn an affidavit which is filed in the proceedings. If he were to be called to give evidence in the proceedings he would be giving evidence in the Applicant’s case.
41. I am informed by Mr Gregory, and believe that the Applicant has not:
(a) notified Mr Gregory of the specific evidence the Applicant would seek to elicit from Mr Gregory;
(b) asked Mr Gregory what evidence Mr Gregory could or would give;
(c) asked Mr Gregory to swear an affidavit in the proceedings
42. I am informed by Mr Dale, and believe that the Applicant:
(a) did not notify Purnell Motors that is has served a subpoena to give evidence on Mr Gregory;
(b) has not notified Purnell Motors of the specific evidence the Applicant would seek to elicit from Mr Gregory;
(c) has not asked Purnell Motors what evidence Mr Gregory could or would give;
(d) has not asked Purnell Motors to have Mr Gregory swear an affidavit in the proceedings.
43. The Applicant:
(a) did not notify Bamford Lawyers that it has served a subpoena to give evidence on Mr Gregory;
(b) has not notified Bamford Lawyers of the specific evidence the Applicant would seek to elicit from Mr Gregory;
(c) has not asked Bamford Lawyers what evidence Mr Gregory could or would give;
(d) has not asked Bamford Lawyers to have Mr Gregory swear an affidavit in the proceedings.
44. If Mr Gregory is unable to continue to appear in these proceedings it will be necessary for Bamford Lawyers to instruct new counsel to appear in the applications of the Applicant in these proceedings. The detail of the facts to be conveyed to new counsel except at considerable cost and expense to Purnell Motors for the fees of the new counsel and those of Bamford Lawyers in instructing new counsel. The time that would be required to prepare the brief and provide instructions would be considerable.
45. Were the Applicant ordered to pay that additional cost in recovery (certainly without reducing the dividend which otherwise would be paid to the Respondent from the Applicant’s bankrupt estate) is entirely problematic. The Applicant is bankrupt and has acknowledged to this Court that he has no assets. I refer to Exhibit JGB-01-030 (line 10) to My 18.09.13 Affidavit.
I indicated to the parties that, before a detailed consideration as to the admissibility of the subpoenas, I required some indication whether the overall purpose in issuing the subpoenas was to obtain material in order to go behind the original decision in this matter. I indicated that I believed that a preliminary ruling as the evidence relating to the earlier decisions, in this matter were quite substantial and long ranging. I indicated to the parties that I knew some of the background from reading the material in the Court file, but the contents indicated that the history of this matter is much broader than what has been filed in the affidavit material currently before the Court. It relates to the purchase of a number of vehicles as early as 2000 and subsequent damage to those vehicles. The concern is that a period of 12 months has passed since the making of the sequestration order and that the Second Review Application before this Court, in broad terms, relates to issues that should have been addressed and resolved before the District Court.
Jones informed the Court that he had no intention of going back beyond 2009 and 2010 and essentially the issue that he was pursuing was a matter of the Costs Assessment, rather than the original decision on which that order is based. Jones acknowledged that the District Court decision should have been appealed at the relevant time, but that he had failed to take that step and that he was not appealing any aspects of the District Court decision, rather, he was focused on the Costs Assessment and the processes that had occurred since the issue of that Costs Assessment. Jones submitted that he was prevented from appealing the Costs Assessment because he was not aware that it had been completed, and that is one of the main issues which he brings to this Court. He claims that he would have appealed the Costs Assessment if he had been aware of its existence. Jones claims that he did apply to the Supreme Court for a review, but, by the time that he had received a response he was overseas and the sequestration order had been made. As a consequence of the sequestration order he was prevented from making any appeal on any of those matters.
Mr Gregory submitted that there is no evidence provided by Jones that he has made any such application. However, what is before the Court is that Jones was served with the Bankruptcy Notice on 16 April 2012 and that is not an issue. The judgment, on which Purnell relies, was attached to that Bankruptcy Notice. The service of the Notice is now 18 months ago and Jones was aware of the existence of that Bankruptcy Notice at that time.
I indicated to the parties that I had a substantial amount of material before me, which I had read and that parts of the file related back to events that had occurred in 2000. It does not specifically mention allegations about the issues to be challenged in respect to the making of the Costs Assessment. I acknowledge that in broad terms there was probably some challenge to the Costs Assessment because that is the only basis of the judgment on which the Bankruptcy Notice is based. However, no specific challenge has been articulated in that respect. I indicated to the parties that I would briefly adjourn to provide Jones with the opportunity to consider the documents that had been filed during the hearing and give him an opportunity to prepare his response to the Amended Application in a Case.
Prayer 1 & Prayer 2 of the Amended Application in a Case
Prayer 1 and Prayer 2 of the Amended Application in a Case were granted at the hearing before the Court on 31 October 2013.
Consent to Prayer 3 of the Amended Application in a Case
After an adjournment of 15 minutes, Mr Gregory informed the Court that he would invite Jones to consent to the orders in the terms of Prayer 3 in the Amended Application in a Case. Jones indicated that he could respond, except, insofar as Prayer 3(b) because he did not have the resources or the time to identify sources of that power. It was agreed, except for Prayer 3(b), that Jones be provided the opportunity to prepare a written response to the issues raised in Prayer 3 and a further adjournment was granted to enable Mr Jones to undertake that task to formally respond to the Court.
After the second adjournment, Jones speaking from notes, a copy of which was given to Purnell and the Court and was marked Exhibit “A1” indicated that he proposed to call Mr Gregory on the basis that in the event that the Court resolved to look behind the judgment, some part of that would involve examination of the costs, as invoiced by Mr Gregory, and the freezing orders. The Costs Assessor in his reasons referred to the time taken by Counsel for the preparation is not made out. Since receiving the Costs Assessment in April 2012, Jones wrote to the Legal Services Commission and the manager of costs assessments complaining about not having been provided with a copy of the Costs Assessment. Jones further stated that he wrote to the Chief Justice of the Supreme Court to seek a review outside the time limit for appeal and an explanation as to why he, or his solicitor, did not receive a copy of the Costs Assessment. The Supreme Court response arrived while Jones was overseas and already bankrupt so he submits that he was deprived of an opportunity to apply for any review. Jones stated that when he received the Costs Assessment he compared the invoices listed by Mr Gregory with the Court transcript and the judge’s directions. He claims that he found large discrepancies which he proposed to appeal if Purnell did not accept settlement in April 2012, hence, his letters to the Costs Assessor after that time. The subpoena for documents from Mr Gregory does not refer specifically to these anomalies.
Jones claimed that submissions made in respect to the freezing orders by Mr Gregory to the District Court in June 2011 were in conflict with the sworn evidence of Mr Bryett in his affidavit for the same application. Jones challenges the representations made by Mr Gregory in his submissions for the freezing orders. Jones contends that the late issue of the subpoenas was partly due to a Registry error in respect to which he has lodged a complaint. He stated that he was not aware of a requirement to seek an affidavit from Mr Gregory. If Jones intended to call Mr Gregory it would be as his witness and evidence relied upon was required to filed in affidavit form.
Mr Gregory acknowledges that Jones had consented to the direction regarding Prayer 3 in the terms sought, acknowledging this, Mr Gregory then sought an order in respect of Prayer 4 as he stated he needed a decision on this issue in order to be able to continue to appear in the matter in light of Jones’ indication that he is proposing to call Mr Gregory as a witness. Mr Gregory also indicated that he proposed to read the affidavit of Mr John Gerard Bamford, sworn 18 September 2013 (the “Bamford Affidavit”) and tender the exhibit on the application, which has the full judgment in the District Court of NSW: Jones v Purnell Motors Pty Ltd & Anor [2010] NSWDC 82 (24 February 2010) being the judgment of his Honour Hungerford ADCJ.
Prayer 4 & 5 of the Amended Application in a Case
Mr Gregory submits that the Court ought not permit Jones to call and lead evidence orally from the Counsel for Purnell, namely Mr Gregory himself. This application is made in circumstances where Jones served a subpoena to give evidence on Mr Gregory less than a fortnight prior to the hearing which was fixed on 29 July 2013, being approximately three months earlier. Mr Gregory drew the Court’s attention to the Bamford Affidavit, annexure “JGB-01” being the District Court Judgment of his Honour Hungerford ADCJ in Jones v Purnell Motors Pty Ltd & Anor (supra) at [86] where his Honour was critical of Mr Jones prosecution of the District Court proceedings:
86 Overall view of claimed losses: On any view of the items claimed, which amounted to a total of $150,351.03, the success to the extent of $100 for fuel costs is clearly de minimus. Otherwise, in my view, the claims as being losses with respect to the incorrect wiring of the four roof rack driving lights were simply misconceived and not supported by any credible evidence or logic. Indeed, the single highest claim of $93,150 for the alleged decrease in value of the Range Rover had no reasoned support. And neither did the claim for loss of income of $17,900. I have to say that in setting out the detailed claims in his affidavit the plaintiff seems to have embarked upon a course to unreasonably recover significantly more than the original cost of the vehicle of $118,150 and where the fault occasioned by the incorrect wiring of the four roof rack driving lights was rectified. However, he seemed determined to pursue his dissatisfaction with the vehicle, not only with the defendants but with other relevant bodies such as the Roads and Traffic Authority, DOTARS, the Ombudsman, motoring journals, the national press, the CEO of Ford, and so on. Regrettably, it seems to me, that determination has resulted in a case against the first defendant, of a not insignificant nature occupying eight hearing days plus extensive written submissions, of claims wholly disproportionate to the issues and of the real measure of any economic loss he may have thought he sustained.
Mr Gregory referred the Court to the Bamford Affidavit which indicates that Jones, after receiving Purnell’s draft Bill of Costs, which he had been ordered to pay, transferred two of his three properties for no payment. In the affidavit of Mr Porter, sworn 18 September 2013 at annexure “JLP01-011” is Jones’ Statement of Affairs, and at Item 33 it states that the transfer of the property at Armidale and the property at Dorrigo was for nil payment. His third property was mortgaged and subsequently repossessed and sold by the mortgagee with no surplus. During the process of the transfer of those properties, Jones made an undertaking to alleviate the need for Purnell to apply for assets freezing orders. Jones, represented by his solicitor at that time, stated to Purnell that he had no intention of selling the properties.
Mr Gregory informed the Court that he had not sworn an affidavit in these proceedings and therefore, if called, he would be giving evidence in Jones’ case. Jones would be doing so without leading questions and would not be able to cross-examine. Jones has not notified Mr Gregory or Purnell of the specific evidence he would seek to elicit until he informed the Court at the hearing of 30 October 2013 as to the nature of the evidence he was seeking. Nor has he asked Mr Gregory what evidence he could or would give and has not asked Mr Gregory to swear an affidavit. Jones indicated to the Court that he was not aware that he was required to request Mr Gregory to file an affidavit.
Mr Gregory submits that Jones seeks to prove his Second Review Application with three affidavits of himself filed on 15 April, 12 June and 3 July 2013. Mr Gregory indicated that Mr Bamford, appearing for Purnell at a directions hearing on 1 July 2013, and Jones advised the Court that they were ready to proceed. The matter was stood over for further directions on 29 July 2013, when Mr Gregory appeared for Purnell as he had on many occasions previously. On that occasion Mr Gregory sought and obtained directions for Jones to identity, file and serve an affidavit which detailed the specific grounds on which Jones relied on seeking each Prayer for relief in his Second Review Application, filed 18 June 2013. There was a direction that Purnell serve all affidavit evidence relied upon, for the Second Review Application, by 16 December 2013. Jones, during those directions on 1 July 2013, suggested that he may wish to lead some additional evidence in his case. As it is not highlighted in the reply to the evidence of Purnell, Jones should have notified Purnell before 29 July 2013, given the direction for Purnell to serve the evidence on which it purposed to rely in the Second Review Application by that date.
Mr Gregory contends that the order regarding notification of grounds reflects the very serious allegations which are made in Jones’ affidavit. At the directions hearing on 29 July 2013 Jones did not intimate that he proposed to rely on evidence, additional to the affidavits which he had filed and served and, in particular, he did not intimate that he proposed to call Mr Gregory in his case.
In the Second Bamford Affidavit at [35]-[45] (reproduced at [26] above) disposes to settle evidence and prepare for the hearing of the Second Review Application before the subpoena, addressed to Mr Gregory, was served. Mr Bamford also deposes to the costs being substantial due to the extent of the evidence. Mr Gregory informed the Court that the subpoena was served on him less than two weeks before the hearing and it is likely that for him not to appear for Purnell it would either necessitate an adjournment or deny Purnell of representation. It would certainly deny Purnell the benefit of Mr Gregory’s extensive preparation and would result in all likelihood of irrecoverable costs.
Mr Gregory then addressed the two subject matters that Jones indicted that Mr Gregory could give evidence. These grounds are contained in the handwritten submissions prepared by Jones, during the adjournment which is referred to at [33] above. In that document Mr Jones states:
3. When I received the costs assessment and reasons I compared the invoices listed by Mr Gregory with the Court transcript and the judges directions and found large discrepancies which I proposed to appeal if Purnell’s did not accept settlement in April 2012.
Mr Gregory submits that Jones seeks to somehow elicit evidence from him regarding discrepancies he says he found between Mr Gregory’s invoices and records of the Court, namely, transcript and the judges’ directions. Jones has not exposed how any evidence Mr Gregory would give would assist him in that process.
The second subject matter identified by Jones:
5. Submissions made with respect to the freezing orders by Mr Gregory are in conflict with the sworn evidence of Mr Bryett of June 2011.
6. Mr Gregory made misrepresentations in his submissions for the freezing orders which I would challenge.
Mr Gregory indicated that he understood this is a reference to written submissions that were handed to the Court on the ex parte application in June 2011. Jones confirmed that he was referring to those written submissions.
Mr Gregory submits that there is no issue about what was submitted to the Court and if related to a ground in dispute, Jones could simply tender the written submissions without the need to call Mr Gregory, however, in any event, neither subject matter has been identified as a ground by Jones in either his letter of August 2013 or indeed in any adequate manner in his affidavit of 15 April 2013 to which his letter of August 2013 refers. Mr Gregory contends that Jones is now seeking to expand his case after he told the Court that he was ready to proceed, after this Court made specific directions about him notifying his grounds. As a consequence, Purnell has incurred what is likely to be irrecoverable costs meeting the case as previously brought. The action of subpoenaing Purnell’s Counsel immediately before a scheduled hearing appears to be for the purpose of giving evidence on matters which have not been previously foreshadowed in the pleaded grounds.
Mr Gregory contends that the nearest that Jones’ affidavit of 15 April 2013 comes to this issue is at [46], where Jones deposes:
On or about August 2011, I lodged further complaint with the Legal Services Commissioner against Benefit Lawyers, with particular reference to their freezing orders and subpoenas and the misrepresentations by their counsel, any submissions that support application to the court.
(emphasis added)
Mr Gregory submits that the above extracted passage from the affidavit of Jones of 15 April 2013 is the sum total of the evidence that Jones proposes to rely on and it is also the sum total of the notification to Purnell of what Jones now says is a ground that he proposes to propound regarding Counsel for Purnell misleading the District Court on the application for freezing orders. These misrepresentations are not otherwise disclosed or identified in the evidence of Jones; rather, it is a historical recitation of the facts that he lodged a complaint with the Legal Services Commission. These discrepancies are to be seen in light of the fact that Jones had a costs consultant view the Bill of Costs submitted by Purnell and in circumstances in which Jones has not advanced, in any proper manner, a ground of challenge to the Costs Assessment. It is argued that Jones’ current disclosure does not suggest that he has discovered information that was not available prior to the Costs Assessment, nor does he suggest that it was not properly taken into account by the Costs Assessor. Jones’ claim is that from the material that pre-existed the Costs Assessment he found differences between the invoices listed, the Court transcript and the judge’s directions. The reasons of the Costs Assessor are not in evidence and there is absolutely nothing to suggest that what Jones now says is either new or in any way impeaches the Costs Assessment.
By way of clarification, Mr Gregory informed the Court that he apprehends that Jones says that particulars of work, given within the invoices, is inconsistent with, for example, a hearing date or a direction that was made in some way which is not exposed. In other words, exactly the type of work that an Costs Assessor would be involved in determining whether the fees charged are fair and reasonable.
Mr Gregory indicated that there is a bare assertion in Jones’ affidavit of 15 April 2013 at [25], where it states:
…I discovered evidence of fraudulent claims within the Bill of Costs which had not been taken into account. I have drawn these matters to the attention of the legal services commissioner who refused to investigate. My letters to the manager of cost assessments were unanswered.
As indicated earlier, Jones then wrote to the Supreme Court on 22 August 2012 and received a response on 30 August 2012 advising the course of action for a review of the Costs Assessment. The more important aspect is that Jones makes a bare assertion that he discovered evidence of fraudulent claims within the Bill of Costs. He does not attribute the amount to anyone in particular but, it is clear that he was asserting that they were fraudulent.
Mr Gregory submits that the allegations of fraud is the only tangential reference to anything of the nature of evidence that Jones has foreshadowed that he would seek to elicit from Mr Gregory if called to give evidence. In respect of fraud, it is necessary for allegations to be made with specificity and with particularity: Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 per Handley J at 700B. The bare assertion in Jones’ affidavit of 15 April 2013 at [25] is that the claims within the Bills of Costs are fraudulent. Mr Gregory submits that Jones has not done any of those things in either his letter dated August 2013 pursuant to the directions on 29 July 2013 or otherwise. Mr Gregory submits that in [25] of the Jones affidavit, it is entirely unclear whether Jones is asserting that the fraudulent claims within the Bill of Costs where disallowed or allowed. If they were disallowed, they could not be advanced in his case, and, if they were allowed he has not established that the sequestration order ought not be made: Bourke v Beneficial Finance Corporation (1993) 47 FCR 264 per Shepard, Einfield and Beasley JJ at 272g. Jones has not identified any facts which, if proved, to the requisite standard would establish that the assessment for the judgment entered thereon ought to be set aside: McDonald v McDonald (1965) 113 CLR 529 per Barwick CJ at 53-3.
Mr Gregory informed the Court that the Statement of Affairs lodged by Jones with his Trustee in which he acknowledge the debt to Purnell Motors of $300,000 which is grounded in the assessment and the judgment entered on the Costs Assessment. Mr Gregory claims that Jones now comes to the Court suggesting that there were fraudulent claims in the Bill of Costs. He does not suggest that information was not available to him in advance of the Costs Assessment, had a cost consultant reviewed the Costs Assessment it does not in any way show whether or not the fraudulent claims were taken into account and affected the amount in the assessment. Despite this claim of fraudulent aspects of the Bill of Costs Jones has not done anything in respect to initiate steps seeking rectification and he also acknowledges the debt in his Statement of Affairs.
When Jones was invited to make submissions in respect to Prayer 4 of the Amended Application in a Case he informed the Court that he had no desire to increase anybody’s costs or waste anybody’s time and the purpose for calling Mr Gregory was to establish certain facts. In respect to the resolution of Jones’ Second Review Application the matter of costs would be a consideration. Jones acknowledges the submissions made by Mr Gregory that when the issue of costs and freezing orders come into question, Jones is seeking that evidence from Mr Gregory. Jones indicated that the invitation to accede to Prayer 4 because the material that he believed that Mr Gregory would supply would not be able to be discussed or considered. Initially, Jones indicated that he would consent to the subpoena for attendance being set aside, but not the subpoena for production of documents. However, Jones sought an adjournment during the lunch time recess to allow him to obtain advice on his response to the compliance with Prayer 4.
On resumption after the lunch time adjournment Jones informed the Court that he had sought advice which he indicated that if he wished to pursue all the matters, that he had identified, then he should not accede to the request in Prayer 4.
Consideration of Prayer 4 & Prayer 5
I am acutely aware that Jones is a self-represented litigant who has been pursuing this litigation for a considerable period of time. At times he has either been represented or assisted by a legal practitioner, however, the substantial part of various proceedings up until this hearing, Jones has represented himself. The problem started in early 2004 when he purchased a Series 3 Range Rover because Jones believed its diesel engine gave better fuel economy and extended engine life which suited his work commitments in rural areas. The purchase was from Purnell Motors Pty Ltd showrooms at Arncliffe. Approximately six months after the purchase Jones arranged with Purnell to fit four additional driving lights and a rear facing work light mounted on the roof rack of the vehicle. Jones was dissatisfied with a number of the aspects of the vehicle, culminating in a failure in the vehicle’s electrical system causing the engine to stop and all external lights to extinguish requiring the vehicle to be returned to Purnell for repair. From that period onwards, Jones was dissatisfied with both the vehicle’s safety and performance.
Ultimately, this dissatisfaction led to Jones, at that stage represented, to begin proceedings in the NSW District Court against Purnell with a judgment delivered by his Honour Hungerford ADCJ on 24 February 2010, with verdict and judgment for Purnell against Jones. Jones was ordered to pay Purnell’s costs as to 80% of those costs assessed on the ordinary basis. A certificate of Determination of Costs was issued on 8 September 2011 for the amount $277,582.02 together with a certificate of Determination of Costs of the Costs Assessment of the same date for the amount of $5,004.91. A judgment of costs was made on 10 September 2012 and entered 20 September 2012 for the amount of $282,686.93. This was the basis of the Bankruptcy Notice BN 1900 issued 30 March 2012 and served on Jones on 16 April 2012. A Creditor’s Petition was issued on 9 May 2012 on the basis that Jones failed to comply on or before 7 May 2012 with the requirements of the Bankruptcy Notice served on him on 16 April 2012, or to satisfy the Court that he had a counter claim, set-off or cross demand equal to or more than the sum claimed in the Bankruptcy Notice.
On 24 August 2012, the solicitors acting for Purnell filed an Interim Application before this Court seeking substituted service as Jones could not be located at his Dorrigo property by a process server. On 4 September 2012, Registrar Morgan of this Court made substituted service orders which included the scheduled hearing of the Petition on 25 September 2012, see [6] above.
From the bar table Jones indicated that he did not appeal the Costs Assessment because he was not aware that it had been completed and that is a major issue in his Second Review Application. He indicated that he did apply to the Supreme Court for a review, by the time that he received the response he was overseas and the sequestration order had been made. The consequence of that order was that he was prevented from making any appeal on any of those matters by his Trustee. I have included this brief summary to assist and to place into context what Mr Jones is seeking in his Second Review Application.
In the subpoena issued to Mr Gregory, it requires him to:
a)Attend Court to give evidence;
b)Attend Court to give evidence and produced documents.
In the attached schedule, setting out the materials that Mr Gregory was required to produce under his possession, custody and control were as follows:
All documents relating to record keeping and accounting for the period 1st October 2009 to 30th March 2010, including but not limited to diaries, timekeeping records, invoices and accounts.
NOTE it is acceptable to obscure client names except any references to Purnell Motors, Bamford Lawyers or Purnell Motors.
On 28 October 2012, Mr Gregory filed, electronically, a “Notice of Objection – Subpoena” on the basis that the subpoena issued by the Jones to Gregory dated 15 October 2013 be set aside pursuant to Reg.15A.09 of the Federal Circuit Court Rules2001 on the grounds that it is too broad, fishing, oppressive, not relevant to any grounds in dispute adequately particularised by the applicant and an abuse of process.
At the commencement of the hearing I indicated to the parties my concern as to the intended course of the hearing as to the Second Review Application for Review, filed by Jones on 26 April 2013 which sought:
1. Order for extension of time for application for review;
2. Order for a stay of sequestration, pending review
3. That the order for sequestration be annulled;
4. Such other orders as the Court considers just.
Whereas the recently issued subpoenas sought accounting information for the period 1 October 2009 to 30 March 2010 which is a similar timeframe as the District Court proceedings which commenced its hearing on 27 October 2009 and finished on 4 December 2009 with the judgment being delivered on 24 February 2010.
My other concern was the orders were made, on 29 July 2013 in the following form:
1. By 19 August 2013 Mr Jones is to advise the solicitors for the Petitioning Creditor and the Trustees, in writing, the specific source of power(in the case of a section of an act or regulation, by identifying, as appropriate, the specific act and its section(s), and /or regulation and the regulation(s), and the specific grounds, on which he relies in seeking each prayer for relief in the application for review filed 18 June 2013 and application in a case filed 4 July 2013.
2. Purnell Motors Pty Ltd serve all affidavit evidence it intends to rely on by 16 September 2013.
3. The application be listed for hearing on 30 October 2013 at 10.15am in court 6D, John Maddison Tower, 88 Goulburn Street, Sydney.
4. There be liberty to restore the proceedings on 3 days notice.
In either of the documents, mentioned at [59]-[60] above, there is no reference of documents sought in the subpoena to Mr Gregory for the time period specified, nor is there any indication that Jones would be seeking to call Mr Gregory to give evidence. At this point, I will put to one side the issue of the status of Mr Gregory being called by Jones where Mr Gregory holds the brief for Purnell. I indicated to the parties that there was a preliminary issue as to whether this Court, sitting its bankruptcy jurisdiction, should in fact be going behind a decision of the District Court which has not been appealed and is the basis of a number of procedural steps leading to the issue of the Bankruptcy Notice and Creditor’s Petition also without challenge, resulting in a sequestration order being made in September 2012, six months prior when the First Review Application and over 12-months prior to being ready for hearing in these proceedings.
Having expressed these concerns, I ask the parties to indicate their approach to these issues. Jones, from the bar table, stated that he had no intention and he hoped that no one else had any intention of going back beyond 2009/2010 and essentially it is a matter of Costs Assessment rather than the decision of the District Court. Jones acknowledged that the decision of the District Court should have been appealed at the time if there was an avenue for appeal, but that was not pursued, he confirmed to the Court that he was not appealing the District Court decision at all, but merely the Costs Assessment and the processes since then. Mr Gregory indicated that a judgment had been handed down on the Costs Assessment and Jones has not sought to have that decision set aside or reviewed. I put to Jones that presumably the intention is that we go back to the mechanism of coming to the cost order total which is, in effect, going back to the Costs Assessment. Jones confirmed that is was his intention to pursue that course because he was prevented from appealing the Costs Assessment because he was not even aware it had been completed, and that is the major issue in bringing these proceedings. It is noted above, the limited steps that were pursued by Jones by making an application to the Supreme Court for review.
I accept that a bankruptcy court has the power to “go behind” a judgment relied upon by a Petitioning Creditor and to assess the merits of the suggested other claims against the Creditor. However, the authorities have indicated that the Court is reluctant to go behind a judgment, and exercise the discretion to embark a fresh trial of underlying issues, in the absences of good reason for questioning the judgment debt which has been relied upon in the Petition.
It must be shown that there are substantial reasons for questioning whether behind the Costs Assessment there was in truth and reality a debt due to the Petitioning Creditor in the sense considered by his Honour Barwick CJ (with whom Wineyer and Owen JJ agreed) in Wren v Mahony [1972] HCA 5 such as to warrant going behind that assessment. His Honour Barwick CJ stated:
…the emphasis is upon the paramount need to have satisfactory proof of the petitioning creditor's debt. The Court's discretion in my opinion is a discretion to accept the judgment as satisfactory proof of that debt. That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner.
However, the Court will go behind a judgment in order to determine whether the Petitioning Creditor’s debt should be struck out altogether, not merely to determine whether a judgment debt should be reduced, but rather, to ascertain whether the creditor has a debt upon which the bankruptcy proceedings can be founded: Olivieri v Stafford & Ors (1989) 24 FCR 413; Re Longo; Ex parte Longo (1995) 57 FCR 523. There is no evidence before the Court to show a prima facie case of fraud, collusion or miscarriage of justice: Corney v Brien (1951) 84 CLR 343. Of particular relevance in these circumstances is that the Court will not reconsider or go behind a judgment in order to ascertain whether the Petitioning Creditor’s debt on which the proceedings are founded should be struck out altogether: Olivieri v Stafford & Ors (supra).
The Court does not reconsider a judgment merely with the view to seeing whether the judgment debt should be reduced, at least in circumstances where there is nothing in the evidence before the Court. If Jones’ contentions, to the precise extent of his indebtedness, were to be accepted the Creditor does have a debt which exceeded the minimum upon which a Creditor’s Petition could be founded in accordance with s.44 of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”). A Court of bankruptcy will generally accept the judgment on which the bankruptcy notice is based as conclusive as to the existence of a debt, unless consideration on which it is founded is questioned: Re Beauchamp; Ex parte Beauchamp [1904] 1KB 572; Re Bedford; Ex parte HC Sleigh (Qld) Pty Ltd (1967) 9 FLR 497.
As indicated above, Jones had prepared some hand written notes, during a brief adjournment, granted for that purpose, to assist him in addressing the Court. Jones indicated that he wanted the Court to examine the costs invoiced by Mr Gregory as invoiced for the District Court proceedings (Jones v Purnell Motors Pty Ltd & Anor [2010] NSWDC 82) and in respect to the freezing orders in separate District Court proceedings on 25 June 2011 by his Honour Judge Colefax. He stated that the Costs Assessor, in his reasons, referred to the time taken by Counsel for preparation and that is not made out. Jones stated that he compared the invoices listed by Mr Gregory, with the Court transcript and the judge’s directions and found large discrepancies which he proposed to appeal if Purnell did not accept settlement in April 2012. Jones stated that the subpoena for documents from Mr Gregory refer specifically to those anomalies in his request for documents surrounding that issue.
Prior to this matter being listed for final hearing there was a number of directions hearings where attempts were made to encourage Jones to amend his pleadings to articulate more clearly the basis of his claims. Despite these efforts, it was not until the final hearing commenced and the argument concerning whether the subpoenas issued by Jones at a very late stage in the proceedings should be set aside, pursuant to Reg.15A.09 of the Federal Circuit Court Rules 2001, that Jones raised the issue of the alleged errors in the Costs Assessment that this issue was the central point his Second Review Application. There is no formal evidence before the Court in respect to this issue and the claim is limited to Jones’ oral submissions from the bar table. The claim appears to be that certain bills rendered by Mr Gregory, to the Cost Assessor, could not be identified by Jones in his review of the Court transcript or judges’ directions.
The general principle is that particulars of fraud should be precisely alleged in the pleadings: Banque Commerciale SA (in liq.) v Akhil Holdings Limited (1990) 169 CLR 279. I have formed the view that a claim of fraud, putting to one side its absence in the pleadings, in the absence of any evidence in support is extremely unlikely to be established in this matter. I take comfort that the function of a Costs Assessor, in preparing a Costs Assessment is primarily focused on the verification and assessment of all times and bills presented. I also believe that if an error has been made, it would not be the result of the presentation of multiple bills for work that has not been performed. In these circumstances I am not satisfied that the Court can find that the validity of the Costs Assessment was vitiated by fraud.
Jones then referred to submissions made in respect to the freezing orders by Mr Gregory to the District Court in June 2011 which, he argues, are in conflict with the sworn evidence of Mr Bryett in affidavits for the same application. Mr Gregory made representations in his submissions for the freezing orders which Jones indicated that he will challenge.
I acknowledge that Jones may be aggrieved by what he perceives to be errors that occurred in evidence in the freezing order proceedings before the District Court. However, the freezing orders do not form part of the proceedings brought before this Court as they are not the basis of the bankruptcy proceedings which is limited to the Costs Assessment made up of the certificate of Determination Costs for $277,580.20 issued on 8 September 2011 and the certificate of Determination of Costs of Costs Assessment in the amount of $5,104.91 issued on 8 September 2011 and entered the judgment in the sum of $282,686.93 which was entered on 10 October 2011 made on 20 September 2011. As matters relating to the freezing orders are not the basis of the Bankruptcy Notice, this information is ignored in the current consideration.
I now turn to the subpoena issued to Mr Gregory. The subpoena carries the Court date stamp of 15 October 2013 and the notation that the last day for service of the subpoena is 21 October 2013. The subpoena requires attendance at Court to give evidence and produce documents. Part B of the subpoena requires attendance on 30 October 2013 at 10.15am. The issue of the subpoena satisfies the time limits set out in the Federal Circuit Court Rules 2001 in Rule 15A.04 which states:
Time limits
(1) A subpoena requiring production only may be made returnable at a time fixed by the Court.
(2) A subpoena requiring attendance of a person must be made returnable on a day when the proceeding is listed for a hearing.
(3) Unless the Court directs otherwise:
(a) a subpoena requiring attendance must be served at least 7 days before attendance under the subpoena is required; and
(b) a subpoena requiring production must be served at least 10 days before production under the subpoena is required.
Note: A subpoena must be served within 3 months of issue: see rule 6.18.
Mr Gregory filed a “Notice of Objection – Subpoena” and this document carries the Court date stamp of 8 October 2013. The objection was raised on 5 separate grounds:
a)It is too broad;
b)Fishing;
c)Oppressive;
d)Not relevant to any ground in dispute adequately particularised;
e)An abuse of process.
In McIlwainv Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785 per Greenwood J at [35] where his Honour is addressing the general principles as follows:
35. In relation to the principles governing when leave ought to be granted to issue subpoenas, these principles emerge:
(a) A writ of subpoena duces tecum is competent against both a party and a stranger to the proceeding: The Adelaide Steamship Company v Spalvins (unreported, O’Loughlin J, 1 August 1997).
(b) A request for a subpoena cannot be used to disguise an application for discovery of documents, or as an alternative to an application for further and better discovery. It is not permissible to use to a writ of subpoena duces tecum as a substitute for discovery of documents against a party to the proceeding. The subpoena process should not have the effect of discovery against a person who, as a stranger to the proceeding, is not liable to make discovery: The Adelaide Steamship Company v Spalvins;The Commission for Railways v Small (1938) SR (NSW) 564; Diddams v Commonwealth Bank of Australia [1998] FCA 497. The subpoena process cannot be used to initiate an inquiry as to relevance outside of the time and place identified by the rules for discovery.
(c) Reference has already been made to the principles identified by Branson J in Diddams & Ors v. Commonwealth Bank of Australia.
(d) The documents for production must be identified with reasonable particularity. (The Commissioner for Railways v Small(1938) SR (NSW) 564, 574-575 per Jordan CJ). The category of documents must not be so wide as to be oppressive.
(e) The documents must be relevant to an issue raised on the pleadings and be used to elicit documents to support the applicant’s existing case. It cannot be used for purposes of ‘fishing’ or for the purpose of determining a preliminary question as to whether the party has a supportable case (Hennessy v Wright (1888) 21 QBD 509), or to investigate the character of the opposing party’s evidence (Griebart v Morris [1920] 1 KB 659, 666).
(f) The test for relevance does not require that a party demonstrate direct relevance to the contest between the parties. Rather, the documents must have some potential relevance to the pleadings as they stand. In Australian Gas Light Company v Australian Competition & Consumer Commission [2003] FCA 1101, French J summarised the matters which are relevant to the grant of leave:
"It is not appropriate to be overly prescriptive in setting out criteria for the grant of leave to issue a subpoena. Plainly, the documents sought must have at least some apparent potential relevance to the matters in issue in the litigation. The assistance that the requesting party may derive from the production of such documents must be taken into account. Case management considerations are also relevant. A wide-ranging subpoena, seeking documents of doubtful relevance at great inconvenience to, or that risk compromising the commercial privacy of, a third party, may not readily attract the grant of leave. Where the issue of such a subpoena is likely to delay progress to trial because of the legitimate interests of a party in resiting its issue, that may also be a practical factor to be weighed."
(g) The same notion was expressed in Small (575) and Dorajay Pty Limited v Aristocratic Leisure Limited [2005] FCA 588, [34] in requiring the existence of a legitimate forensic purpose for the production of documents.
(h) In Trade Practices Commission v Arnotts Limited (No. 2) [1989] FCA 248; (1989) 21 FCR 306, Beaumont J said that the question of whether a subpoena should go can conveniently be addressed by reference to two questions. First, does the material sought by the subpoena have an apparent relevance in a descriptive or adjectival sense rather than a substantive sense? Does the subpoena have a legitimate forensic purpose to this extent from the perspective of the party issuing the subpoena? Secondly, does the subpoena cast a serious and unfair burden or prejudice upon the respondent to the subpoena?
(i) Spender J in Cosco Holdings Pty Ltd v Commissioner for Taxation [1997] FCA 1504 suggested that adjectival relevance looks toward the possibility whether the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings.
(j) When a party contends material that either is or may be or may have been in the possession, custody or power of a respondent relates to any question or issue raised on the pleadings, they will be taken to mean that the material is relevant in the sense contemplated by section 55 of the Evidence Act 1995 (Cth) namely, evidence that if accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceedings. This is the substantive relevance of the material. The test for the issue of the subpoena is whether the material appears to have relevance in the sense of throwing light on at least some of the issues in the principal proceeding.
(k) The relevance of the documents must not be disproportional to any benefit that their production might have for the respondent: Dorajay [34].
(l) A subpoena ought not issue in circumstances where it would unduly disrupt the conduct of the trial by requiring the Court to read documents which could have been obtained at an earlier stage in the proceedings: Diddams v Commonwealth Bank of Australia[1998] FCA 497.
(m) The issue of the subpoena must not, in all the circumstances be oppressive in terms of its impact on the recipient. That is, the issue of the subpoena must not be ‘seriously unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’. (Hamilton v. Oades [1989] HCA 21; (1989) 166 CLR 486, 502, Oceanic SunLine Special Shipping Co. Inc. v. Fay [1988] HCA 32; (1988) 165 CLR 197, Seven Network Limited v News Limited (No 5)[2005] FCA 510; [2005] 216 ALR 147, [12].
(n) The issue of a subpoena against a stranger to the proceeding is more likely to succeed later in the proceeding. Though there is no formal barrier to a subpoena to produce being returnable prior to the hearing, the document may well be premature where no trial date has been fixed. Where the proceeding is of considerable evidentiary complexity there is stronger force to serving the subpoena at an earlier stage: Hughes v Western Australian Cricket Association (1986) 66 ALR 541.
(o) In Dorajay Pty Limited v. Aristocrat Leisure Limited [2005] FCA 588 at paragraph [17], Stone J noted the observations of Waddell J in Spencer Motors Pty Ltd v. LNC Industries Ltd [1982] 2 NSWLR 921 at 927, summarising the views of Moffitt P in National Employers’ Mutual General Association Ltd v. Waind & Hill [1978] 1 NSWLR 372 to the effect that whether subpoenas are oppressive or an abusive process depends on whether "it is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case". Her Honour said at paragraph [18]:
“These authorities show that the criteria by which one determines whether a subpoena should be set aside, in whole or in part, may be expressed in different ways but ultimately, they all come down to whether such action is required to prevent an abuse of the processes of the court to prevent injustice. As Deane and Gaudron JJ recognised [Hamilton v Oades [1989] HCA 21; (1989) 85 ALR 1 at p.11] in the comments quoted by Beaumont J [in Trade Practices Commission v. Arnotts Limited], various terms may be used in focusing these concerns on the circumstances of a particular case. In this case, whether the documents are relevant (in the sense used by Beaumont J) will determine the issue provided that the requirements of the subpoena are not otherwise oppressive."
Taking into account these general guidelines in respect to subpoenas, the Court is required to make a judgment on whether there is any real possibility the documents required for production can be relevant to the pleaded issue. If the Court is of the opinion that they are not relevant to the pleaded case the subpoena should be set aside. However, if the Court is of the opinion they are or it is reasonably likely they are relevant, the Court must then consider whether the effort and burden of obtaining or retrieving the documents is, or would, be oppressive to the party required to produce them. This argument focuses on the very broad, almost unlimited categories of documents sort by Jones as a whole, particularly those sought in the schedule to the subpoena, namely:
All documents relating to record keeping and accounting for the period 1st October 2009 to 30th March 2010, including but not limited to diaries, timekeeping records, invoices and accounts.
NOTE it is acceptable to obscure client names except any references to Purnell Motors, Bamford Lawyers or Purnell Motors.
Although not clearly stated, it would appear that Jones seeks to somehow elicit from Mr Gregory in respect of some discrepancies that he has identified between Mr Gregory’s invoices and records of the Court, namely transcripts and directions of his Honour Hungerford ADCJ. Most importantly Jones has not exposed to this Court, any evidence Mr Gregory would file in response to that subpoena would assist Jones in identifying these individual discrepancies and their quantum.
Another basis of objection to the subpoena is that given the broad range of documents it calls for, it bears the classic hallmarks of discovery. The documents are not specifically described; rather, they are very broadly described and are of the nature that would be expected to be seen in a discovery application. In this jurisdiction discovery is not automatically granted and there is a general presumption against it, which had been well established: Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 per Lander J at [53] where his Honour states:
53. The purpose of discovery is to assist in resolving disputes as to fact. Discovery can be a lengthy and expensive process. Because of the high cost to the parties of the discovery process, both in giving discovery and taking inspection, the modern trend is to contain the obligation to give discovery by giving the Court control over the process; by limiting the circumstances in which discovery is to be given; and, if discovery is to be given, by limiting the extent of the discovery given. The cost of discovery can far outweigh the benefits.
If Jones wished to make a discovery application he should have done so through the proper mechanism by making a formal application to the Court. The Court would then have regard to s.45 of the Federal Circuit Court Act 1999 (Cth) whether it was in the interest of justice or otherwise to overcome the presumption against discovery. If the subpoena was allowed to stand it is effectively discovery by stealth and should not be allowed to overcome the clear legislative requirements that a formal application for discovery be made.
In preparing these reasons, I wish to make it abundantly clear to Jones that the Court appreciates the difficulties that he faces in the preparation and presentation of his case as a self-represented litigant. In this respect, I note the observations of his Honour Lucev FM (as he was then) in Reynolds v Minister for Health & Anor (2010) 247 FLR 425 at [60]:
The role of a federal court in relation to self-represented litigants has been broadly described by the Federal Court as a requirement to be fair.[39] That does not entail being unfair to the other party. Such guidance as is provided by a federal court to a self-represented litigant is not for the purpose of advantaging the self-represented litigant in the litigation, or disadvantaging the other party or parties, but rather to ensure that the case proceeds, so far as is possible, in a manner consistent with the interests of justice.[40]
[39] Dowling v Fairfax Media Publications Pty Ltd (No 2) [2010] FCAFC 28 at para.24 per Graham J, citing Malouf v Malouf [2006] NSWCA 83; (2006) 65 NSWLR 449 at 452 per Bryson JA.
[40] Brehoi at paras.6-7 per Beaumont J.I now turn to whether there is a legitimate forensic purpose in Mr Jones seeking production of the documents described in the schedule to the subpoena. In Cole v Quest Software Pty Ltd [2013] FCCA 1160, it states:
48. In Trade Practices Commission v Arnotts Ltd & Ors [1989] FCA 248; (1989) 88 ALR 90 his Honour Beaumont J stated at 102:
The general test for present purposes is well settled. The issue of a subpoena will be an abuse of process if it is not used for a legitimate forensic purpose: see Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100-1. But, as Deane and Gaudron JJ observed in Hamilton v Oades [1989] HCA 21; (1989) 85 ALR 1 at 11, the court's general powers in this area have a dual aspect: “The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice ... [This] power ... is not restricted to defined and closed categories ... In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power. The terms ‘oppressive’ and ‘vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously and unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’”: Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 62 ALJR 389 at 411 ; [1988] HCA 32; 79 ALR 9 at 45 per Deane J.
49. His Honour at 103 then addressed the application before him by reference to two tests, namely:
a. Does the material sought have an apparent relevance to the issues in the principal proceedings, i.e., is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? This involves a consideration of the matter from the standpoint of the [party that issued the subpoena]; and
b. Is the subpoena seriously and unfairly burdensome or prejudicial? This is to look at the matter from the point of view of [the subpoenaed party].
Jones has not made any specific submissions as to how he intends to reconcile the various documents requested to be supplied by Mr Gregory to that of the Costs Assessor in their report. The task of a Costs Assessor is a specialty practice in the application of a wide range of court rules and procedures. During this process, individual items contained in bills may be fully or partially denied in order to comply with a particular rule. This would not be immediately apparent to a person that is not legally trained and undertaken the additional academic preparation to be a Costs Assessor. Jones has not indicated to the Court how long he expects to review each cost item and to verify its validity in a costing. For a lay person, this would be a daunting task that would require a considerable amount of time in preparation to identify any discrepancies and then prepare the evidence in the form of an affidavit, served on the other side and the Court. Nor has there been any suggestion that Jones would call the Costs Assessor to assist in this analysis.
I note Jones’ submissions, from the bar table, that it was not his intention to incur further costs for the parties in these proceedings. However, to pursue this proposed analysis and verification of the Costs Assessment certificate as the basis of the debt claimed in the Bankruptcy Notice could only lead to the requirement for further adjournments for the documents to be examined and preparation for trial to be prepared. This would automatically result in the escalation of costs to the parties.
I note the submissions made by Mr Gregory that if Jones elected to pursue this course, Mr Gregory would become Jones’ witness and therefore would not be available for cross-examination by Mr Jones. Both parties clearly acknowledge that no discussions have occurred between the parties to resolve this problem and to determine what evidence Mr Gregory was likely to or willing to give in chief. While I acknowledge that an experienced Counsel may have avenues open to them to address some of the problems that would arise in a similar situation, I am not confident that Jones, as a self-represented litigant and lay advocate would be aware of these avenues and how to pursue them.
Without pursuing a more detailed analysis to identify every possible defect in respect to the serving of the subpoena by Jones on Mr Gregory, I am satisfied that the subpoena should be set aside.
Prayer 6 & Prayer 7
Prayer 6 and Prayer 7 were not considered at the hearing before the Court on 30 October 2013.
Application for Stay of Sequestration Order pending Review
In an attempt to clarify the issues before the Court in respect to the First and Second Review Application and the Interlocutory Application, all of which seek a stay of the sequestration order each of which is expressed in slightly different terms can be resolved without written or oral submissions or further Court time.
Section 52(3) of the Bankruptcy Act states:
(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.
As indicated in the Introduction at [8] above, a sequestration order was made against the estate of Jones on 5 October 2012. No application for a stay of those orders were made at that time and the provisions available under s.52(3) of the Bankruptcy Act expired on 29 October 2012. Mr Jones filed the First Review Application on 26 April 2013 which was subsequently withdrawn and the Second Review Application was filed on 18 June 2013 (see [2] above) which is approximately 7 and a half months out of time. However, pursuant to the Federal Court of Australia Act1976 (Cth), s.29 and the Federal Court Rules, r.36.08 where there is an appeal to the Federal Court against a sequestration order made under s.52 of the Bankruptcy Act the Court has a discretionary power to grant a stay on the operation of a sequestration order which operates beyond the 21 day period mentioned in s.52(3) one a Notice of Appeal has been filed, notwithstanding s.37(2)(a): Evans v Heather Thiedeke Group Pty Ltd (1990) 95 ALR 424 per Pincus J; Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297 per Carr J; De Robillard v Carver (2007) 159 FCR 38; [2007] FCAFC 73 at 125.
In Ekes v QBE Insurance (Australia) Ltd [2011] FCA 230 his Honour Cowdroy J made the following observation where the circumstances justified a stay in proceedings:
16. In Evans v Heather Thiedeke Group Pty Ltd (1990) 95 ALR 424 the Court held that the power to grant a stay pursuant to s 52(3) of the Act does not nullify the Court’s jurisdiction to order a stay under O 52 r 17 of the Rules. Further, since the application for a stay against the operation of the sequestration order was made under s 24 of the Court Act and not under any provision of the Bankruptcy Act, the time limit of 21 days prescribed by s 52(3) of the Bankruptcy Act did not apply. Instead, O 52 r 17 empowers the Court to grant a stay of proceedings unlimited as to time.
17. Subsequent decisions of this Court have referred to and impliedly agreed with the decision in Evans: see Kellow v Dudzinski [2003] FCA 238 per Cooper J; Coleman v Lazy Days Investment Pty Ltd (1994) 55 FCR 297; Freeman v National Australia Bank Ltd [2002] FCA 427 per Spender J.
18. In Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 Burchett J, delivering the judgment of the Court at 66, referred to the matters necessary to warrant a stay of proceedings. In doing so his Honour referred to two authorities, namely Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 694 and Re Middle Harbour Investments Ltd (In liq) (unreported), Court of Appeal NSW, 15 December 1976. Such authorities refer to the necessity for an applicant for a stay to demonstrate a reason or an appropriate case to warrant the exercise of the Court’s discretion in his favour.
19. In Cambridge Credit Corporation, the New South Wales Court of Appeal at 694 quoted an extract from the decision of Mahoney JA in Middle Harbour Investments Ltd as follows:
Where an application is made for a stay of proceedings, it is necessary that the applicant demonstrate an appropriate case. Prima facie, a successful party is entitled to the benefit of the judgment obtained by him and is entitled to commence with the presumption that the judgment is correct. These are not matters of rigid principle and a court asked to grant a stay will consider each case upon its merits, but where an applicant for a stay has not demonstrated an appropriate case but has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party.
20. In Henderson and Ors v Amadio Pty Ltd and Ors (No 3) (1996) 65 FCR 66, Heerey J adopted such test in respect of an application made under O 52 r 17(1) of the Rules, and said at 69: ‘I do not think however the circumstances need to be “special” or “exceptional” in the sense of being unusual or rare’.
In Singh v Owner Strata Plan No. 11723 [2012] FCA 538 per Griffiths J at [28]-[29], his Honour stated:
28. Rule 36.08 is in substantially similar terms to order 52, rule 17 of the previous Rules. There are numerous decisions of the Court to the effect that it has a power under that rule in an appropriate case to stay the execution of a sequestration order pending the determination of an appeal in this Court (see, for example, Coleman v Lazy Days Investments Pty Ltd (1995) 55 FCR 297 at 301-302 per Carr J; Freeman v National Australia Bank Limited [2002] FCA 427 per Spender J; Menzies v Paccar Financial Pty Limited (ACN 005 592 049) [2002] FCA 692 per Ryan J; Ogle v Tendiris Pty Limited[2007] FCA 1638 per Logan J).
29. It is equally well established that, in determining whether or not to grant a stay of proceedings, it is necessary to consider whether there is an arguable point raised by the proposed appeal and whether the balance of convenience favours the granting of a stay. The weighing of the balance of convenience may require consideration to be given to any claims supported by admissible evidence concerning prejudice on the part of both the applicant and the respondent.
It has been held that the Federal Circuit Court has a similar jurisdiction, however, the learned authors of Australian Bankruptcy Law and Practice, McQuade & Gummow, 6th ed at [52.3.10] suggest that this is not entirely clear and referred to the decisions in Millar v Loyal (No. 46 (2001) 187 ALR 766 per Beaumont FM at 6; Otvosi v Ferella [2005] FMCA 1631 and Otvosi v Ferella (2005) 225 ALR 292 per her Honour Barnes FM (as she was then). At [6]-[8] it states:
6. An initial issue arose as to the extent of the power of the Court to grant a stay pending determination of a review of a decision of the Registrar. Mr White, for the debtors, did not dispute that, as contended by Mr Johnson for the creditors, the Court was limited to granting a stay of only 21 days pursuant to s.52(3) of the Act, although he submitted that such period was to be calculated, not from the date of the sequestration order, but rather from the date the stay was granted. This admission was made despite the fact that I had raised in the course of the hearing the question of whether this Court had power to grant a stay pending the completion of its review and not limited to a period of 21 days, pursuant to s.104(3) of the Federal Magistrates Court Act 2001 (and also see s.15 of the Act) consistent with what the Full Court of the Federal Court had held in Trustees of the Franciscan Missionaries of Mary v Weir [2000] FCAFC 574 in relation to the comparably worded provisions of the Federal Court of Australia Act 1976 (see ss.35A(6) and 23 and also see Australian Guarantee Corporation Limited v Collard [1997] FCA 1094). As I have decided, for the reasons set out below, not to order a stay of proceedings under either of the sequestration orders it is not necessary for me to determine whether this Court does have power to stay proceedings under a sequestration order made by a Registrar for an indefinite period pending its review by the Court or whether, if it is limited to granting a stay of 21 days, the date from which such a stay would be calculated. It may be that those matters which persuaded the Full Court of the Federal Court as to the existence of power under the Federal Court of Australia Act 1976 to stay such proceedings for an indefinite period pending review by that Court are equally applicable to the powers of this Court under the Federal Magistrates Court Act 2001 (see in particular Weir's case at [19] to [23]). That remains to be determined in some other proceedings.
7. This is not a case in which a stay is sought pending an appeal. Hence consideration of whether there is an arguable point on the proposed appeal can have no direct relevance (see Freeman v National Australia Bank [2002] FCA 427 at [4] and Beames v Rigby [2002] FCA 808 and Rigg v Commonwealth Bank of Australia [2001] FCA 1340 at [25]).
A review of a Registrar's decision under s.104(3) of the Federal Magistrates Court Act 2001 is a hearing de novo so that the petitioning creditor must re-prove to the satisfaction of the Court the matters required under s.52(1) (see Adelaide Bank Limited v Badcock [2002] FMCA 10 and Martin v Commonwealth Bank of Australia [2001] FCA 87 and also see Cottrell v Wilcox [2001] FCA 866 in relation to the comparable position in the Federal Court in relation to a review under s.35A(6) of the Federal Court of Australia Act1976). No issue was raised at this stage of the proceedings as to whether there was an act of bankruptcy (see Collard) or a defect in the bankruptcy notice (see Weir). No question was raised as to the construction of the law. As indicated, the debtors sought a stay on the basis that they were, or shortly would be, able to pay their debts and so the Court would dismiss the creditors’ petitions (or set aside the decision of the Registrar) and also for the purpose of refinancing to make available an amount to pay out debts.8. In HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638 French J applied the principles in Weir's case to the grant of a stay of winding up proceedings under s.35A(6) or section 23 of the Federal Court Act 1976 pending a review by the Federal Court of a winding up order made by a Registrar. Relevantly his Honour stated at [48]:
"The grant of a stay under s.35A(6) or s.23 is a matter for the discretion of the Court in the light of all the circumstances of the case. There is no rule confining the exercise of that discretion which requires special reasons to be shown for its exercise. In the statutory context of Part 5 of the Corporations Act 2001 however, the power is to be exercised with caution so as not to unduly delay the liquidator or hinder his or her capacity to carry out the duties imposed by the statute. There is therefore a clear onus on the applicant [for a stay] to make out a positive case."
The learned authors of Australian Bankruptcy Law and Practice indicate that in deciding whether to exercise the discretion the Court should have regard to whether there is an arguable point arising from the proposed grounds of appeal, seeing the evidence before the Court when the sequestration order was made and determining whether the matters put forward by the applicant for the stay “raise any doubt as to the correctness of the judgment” in making the sequestration order.
The problems faced by Jones in this Second Review Application are substantial. In the Second Review Application, Ground 3 seeks the sequestration order to be annulled, however the ground is not particularised. Nor is there evidence formally before the Court in the form of an affidavit. It has only become apparent during the hearing on 30 October 2013 which was scheduled as the final hearing date did Jones indicate from the bar table the basis of his action was to challenge the Costs Assessment which is the basis of the Bankruptcy Notice. Jones indicated that he is of the belief that the Costs Assessment was invalid based on an analysis he performed comparing the Costs Assessor’s report with the transcript and directions of his Honour Hungerford ADCJ during the proceedings in the District Court in 2010. As discussed earlier in this decision, Jones appears to be trying to rely upon material that is to be subpoenaed from Counsel, representing Purnell; however, this will not be forth coming as that subpoena has been set aside. Nor is there any appeal lodged in the District Court or Supreme Court in respect of issues relating to the sequestration order. The Second Review Application makes no direct reference to the orders of Registrar Tesoriero made on 5 October 2012 regarding the sequestration of Jones’ estate. The only challenge to the sequestration order concerns a request to go behind the District Court costs orders but this has not been pleaded and there is no clear indication of any evidence or anticipated approach of how the Costs Assessment is to be formally challenged. As indicated elsewhere in this decision, Jones is a self-represented litigant, however, these proceedings cannot be allowed to drift and accumulate costs when the applicant pursues numerous avenues in an attempt to reconsider and review a range of issues concerning his dispute with Purnell, its management, its legal representation and other external organisations that have become involved since the problems experienced with various vehicles sourced from Purnell. In the circumstances I am not satisfied that an order staying the sequestration order should be made.
Extension of Time for the Second Review Application
Section 104(2) of the Federal Circuit Court Act 1999 gives a right to seek review of a sequestration order made by a Registrar, whether or not the debtor attended Court and opposed the petition. That right is conditional upon the application being made “within 21 days after the day on which the power was exercised”, but subject to a power to shorten or lengthen that period (see s.104(2) and Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) r.2.03(1). In the present case, Jones needs an extension of time of about 7 months, before the Court would acquire power under s.104(2) to terminate his bankruptcy. On such an application brought within the time prescribed or extended, the Court has the power to “make any order or orders it thinks fit in relation to the matter in respect to which the power was exercised”: s.104(3). The Court then conducts a de novo hearing of the Creditor’s Petition: Totev v Sfar (2008) 247 ALR 180. If the Court sets aside the sequestration order and dismisses the petition, then this “returns the relevant circumstances of the debtor to the conditions on which they were before the making of a sequestration order”, and has the effect that “no valid sequestration order was ever made”:Pattison v Hadjimouratis (2006) 155 FCR 226 at [14] and [182]. Accordingly, if such an order is made, there is no statutory regime protecting the actions and expenses of a trustee appointed pursuant to the sequestration order and preserving the position of third parties. In particular, a trustee loses his right to charge an indemnification from the debtor’s property provided by s.154 of the Bankruptcy Act. In Pattison v Hadjimouratis (supra) in every application under s.104(2) the court also requires the power to consider its alternative power to annul the bankruptcy under s.153B of the Bankruptcy Act.
Although the Court has power in which to grant an extension of time in which to lodge an appeal, such an application ought properly be made within the time required for lodging that application. No formal explanation for not lodging an appeal has been given, however Jones has made a number of submissions from the bar table explaining the circumstances of his absence from Australia at the time of the sequestration order being made. Subsequent to the order, Jones was further delayed overseas and initially due to a period of convalesces to recover from a heart condition then being denied access to his pension entitlements by a claimed action of the trustee, appointed to administer his estate. Jones has not filed any evidence in these proceedings specifically addressing an application for an extension of time.
In circumstances where limitation periods for appeals are legislated by parliament, the Court will not readily extend time except for proper reason. Although no formal order has been made granting Jones an extension of time, he has, in effect, achieved that extension by the Court endeavouring to provide the parties with sufficient time for the filing of evidence and submissions in preparation for a formal hearing on the issues raised in the application for a review. In the circumstances I do not believe it is necessary to make a formal order granting an extension of time to consider the Second Review Application.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Associate:
Date: 1 April 2014
4
51
6