R.E.B.A. v Low (No.2)
[2009] FMCA 142
•27 February 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| R.E.B.A. v LOW (No.2) | [2009] FMCA 142 |
| BANKRUPTCY – Sequestration order – fine and costs imposed in disciplinary proceedings – whether for offence against a law. BANKRUPTCY – No statement concerning debt agreement – whether formal defect or irregularity. |
| Bankruptcy Act 1966 (Cth), ss.52(5), 82(3), 306(1) Federal Court Rules, O.62 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.4.06(3)(b)(ii) Real Estate and Business Agents Act 1978 (WA), ss.4, 68(4) and (6)(a), 102(1)(a), 103(1)(b) |
| Albarran v Companies Auditors and Liquidators Disciplinary Board (2006) 151 FCR 466; [2006] FCAFC 69 Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board & Anor (2007) 231 CLR 350; [2007] HCA 23 Law Society of Tasmania v Turner (2001) 11 Tas R 1; [2001] TASSC 129 Moore-McQuillan v Scott (2006) 149 FCR 486; [2006] FCA 63 Real Estate & Business Agents Supervisory Board v Low [2008] FMCA 1030 Re Phillips (1963) 81 WN (NSW) 179 |
| Applicant: | REAL ESTATE & BUSINESS AGENTS SUPERVISORY BOARD |
| Respondent: | GLENN WILLIAM LOW |
| File Number: | PEG 30 of 2008 |
| Judgment of: | Lucev FM |
| Hearing date: | 19 August 2008 |
| Date of Last Submission: | 19 August 2008 |
| Delivered at: | Perth |
| Delivered on: | 27 February 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Bevilacqua |
| Solicitor for the Applicant: | Ms J King |
| Respondent: | No appearance |
ORDERS
A sequestration order be made against the estate of Glenn William Low.
Applicant’s costs, including reserved costs, if not agreed, be taxed by a Registrar of this Court in accordance with Order 62 of the Federal Court Rules, and paid from the estate of Glenn William Low in accordance with the Bankruptcy Act1966 (Cth).
AND the Court notes that the date of the act of bankruptcy is 4 February 2008.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 30 of 2008
| REAL ESTATE & BUSINESS AGENTS SUPERVISORY BOARD |
Applicant
And
| GLENN WILLIAM LOW |
Respondent
REASONS FOR JUDGMENT
Introduction
In reasons for judgment delivered on 1 August 2008[1] this Court found that the Respondent Debtor’s liability to the Applicant Creditor under SAT Orders[2] did not arise from an obligation incurred before the Respondent Debtor’s bankruptcy, the date of which was 24 November 2004 and which expired by the effluxion of time on 19 April 2008, and that the liability arising from the SAT Orders was therefore not a provable debt in the Respondent Debtor’s bankruptcy. Therefore, issues concerning the competency of the Applicant Creditor to enforce any remedy, or the requirement to obtain leave of the Federal Court or this Court to commence proceedings did not arise.[3] A question arose as to whether the penalty (costs) and fine imposed under the SAT Orders were in relation to an offence against a law for the purposes of s.82(3) of the Bankruptcy Act1966 (Cth),[4] and therefore not provable in bankruptcy. The proceedings were adjourned to allow the parties to make further submissions in relation to that issue. That issue is dealt with further below.
[1] Real Estate &Business Agents Supervisory Board v Low [2008] FMCA 1030 (“REBA (No.1)”).
[2] On 12 April 2006 the Western Australian State Administrative Tribunal (“SAT”) made orders arising from disciplinary proceedings against the Respondent Debtor under the Real Estate and Business Agents Act1978 (WA) (“REBA Act”). Those orders were that the Respondent Debtor:
[3] REBA (No.1) at paras.1 and 22 per Lucev FM.
[4] “Bankruptcy Act”.
It should be noted that:
The proceedings in SAT were disciplinary proceedings in the nature of an inquiry into conduct, in which if SAT was satisfied (as it was) that proper cause existed for disciplinary action, allowed SAT to impose a fine not exceeding $10,000 on the Respondent Debtor.[5]
[5] REBA (No.1) at para.24 per Lucev FM (footnotes omitted).
In REBA (No.1) the Court also found that all of the formal requirements for the making of a sequestration order had been met save for there being no statement on affidavit that there are no details of a debt agreement, about a debt agreement on which the Applicant Creditor relied, in the National Personal Solvency Index on the day when the search was made. As to the consequence of that compliance failure, and in particular whether there was any issue arising under s.306(1) of the Bankruptcy Act, the Court again adjourned the proceedings to allow the parties the opportunity to deal with that issue. Again, that issue is dealt with further below.
In respect to the two issues described above, the proceedings were adjourned to 19 August 2008.
The Applicant Creditor filed an outline of submissions on the day of the adjourned hearing, and appeared by counsel. The Respondent Debtor did not appear at the adjourned hearing.
On 6 February 2009 the Court ordered that the time at which the creditors petition lapses be extended until midday on 27 February, or until further order of the Court, whichever is the sooner.[6]
[6] Bankruptcy Act, s.52(5).
Penalty issue
The nature of disciplinary proceedings conducted under s.103 of the REBA Act has been described by the Supreme Court of Western Australia, Court of Appeal as follows:
The character and purpose of disciplinary proceedings against a member of a profession have been examined on numerous occasions. The object of those proceedings is the protection of the public and the maintenance of proper professional standards. The maintenance of proper professional standards is conducive to the protection of the public. Disciplinary proceedings are not designed to punish the person who is disciplined.[7]
[7] Paradis v Settlement Agents Supervisory Board (2007) 33 WAR 361 at 375 per Buss JA (Wheeler and Pullin JJA agreeing: WAR at 364); [2007] WASCA 97 at para.25 per Buss JA (Wheeler and Pullin JJA agreeing: WASCA at paras.1 and 2 respectively).
The Tasmanian Supreme Court, in the context of disciplinary proceedings against a legal practitioner and that Court’s powers for that purpose, has observed:
The Court’s task is to uphold the dignity and standards of the profession and to enable it to do so, it has many powers, including the power to impose a fine … to order payment of costs, to suspend and to strike off. Such orders are, of course, of a punitive nature but their imposition should not be regarded as sentences as for crimes and offences.[8]
[8] Law Society of Tasmania v Turner (2001) 11 Tas R 1 at 24 per Crawford J; [2001] TASSC 129 at para.61 per Crawford J.
Although to some extent focused upon the question of the exercise of the judicial power of the Commonwealth, similar views were expressed by the High Court in Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board & Anor,[9] as follows:
There has been no determination by the Board of whether Mr Gould or Mr Albarran has committed any offence whether under the Corporations Act or otherwise. Consideration of R v White; Ex parte Byrnes assists an understanding as to why that is the case. In White, this Court dealt with the disciplinary structure created by the Public Service Act 1922 Cth and emphasised the distinction between disciplinary proceedings and criminal proceedings; in the former category no offence was specified and no declaration of guilt made. Subsequently, when delivering the advice of the Judicial Committee in Kariapper v Wijesinha, Sir Douglas Menzies remarked:
Speaking generally, however, their Lordships would observe that it is not readily to be assumed that disciplinary action, however much it may hurt the individual concerned, is personal and retributive rather than corporate and self-respecting.[10]
[9] (2007) 231 CLR 350; [2007] HCA 23 (“Albarran”).
[10] Albarran CLR at 358-359 per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ; HCA at para.17 per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ (footnotes omitted).
Further, in Albarran it was also said that the function performed by the relevant board in that case “was not the ascertainment or enforcement of any existing right or liability in respect of an offence and the punishment for an offence.”[11] The conclusion expressed by the Full Court of the Federal Court in the judgment under appeal was said to be one that should be accepted.[12] That conclusion was as follows:
The function of the Board is not, as was submitted, to find (as an exercise of deciding present rights and obligations in the above sense) whether an offence has been committed and, if so, to inflict a punishment therefor. It is, as we have said, to assess whether someone should continue to occupy a statutory position involving skill and probity, in circumstances where (not merely because) the Board is satisfied that the person has failed in the performance of his or her professional duties in the past. Messrs Gould and Albarran say that punishment or a penal or harmful consequence is finally inflicted on the person consequent upon the finding of the committal of an offence prescribed by law. That is not what s 1292(2) says the function of the Board is. It is not, in substance, what the Board does.[13]
[11] Albarran CLR at 359 per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ; HCA at para.21 per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ.
[12] Albarran CLR at 359 per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ; HCA at para.21 per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ.
[13] Albarran v Companies Auditors and Liquidators Disciplinary Board (2006) 151 FCR 466 at 478 per Emmett, Allsop and Graham JJ, [2006] FCAFC 69 at para.50 per Emmett, Allsop and Graham JJ, cited in Albarran CLR at 359-360 per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ; HCA at para.21 per per Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ.
An examination of the above cases indicates that a penalty (including costs) or fine imposed in respect of disciplinary proceedings is not a penalty or fine imposed by a court in respect of an offence against a law for the purposes of s.82(3) of the Bankruptcy Act. The REBA Act distinguishes between “offence” and “disciplinary action”, and deals separately with a range of specified offences.[14] The fact that it does so is a clear indication of an intent on the part of the State Parliament that penalties and fines imposed as disciplinary action do not constitute an offence. There would be nothing to preclude criminal proceedings in respect of the same conduct as had given rise to disciplinary action.[15] The Court therefore concludes penalties and fines imposed in disciplinary proceedings do not fall within the ordinary meaning of the word “offence”, and their exclusion from the application of s.82(3) of the Bankruptcy Act is consistent with the policy of the Bankruptcy Act. The Court accepts that the costs component of the SAT Orders is compensatory in nature, rather than in the form of a penalty.[16]
[14] See the examples in REBA (No.1) at fnn 26-27 per Lucev FM.
[15] Re Phillips (1963) 81 WN (NSW) 179 at 182 per Monahan DCJ.
[16] Moore-McQuillan v Scott (2006) 149 FCR 486 at 492 per Mansfield J; [2006] FCA 63 at para.22 per Mansfield J.
Formal compliance requirements
Section 306(1) of the Bankruptcy Act provides that a formal defect or irregularity will not invalidate proceedings under the Act unless substantial injustice has been caused which cannot be remedied.
The Court accepts the submission of the Applicant Creditor that the absence in these proceedings of a “statement that there are no details of a debt agreement, about the debt agreement on which the applicant relies, in the Index on the day when the search was made”,[17] although a requirement under r.4.06(3)(b)(ii) of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), is a formal defect in the proceedings, and that as a consequence the proceedings are not invalidated. No substantial injustice arises as a consequence of the absence of the statement as:
i)there is no other indication that there is any debt agreement to disclose; and
ii)the Applicant Creditor, having had the opportunity to do so, has not presented any evidence of any debt agreement.
[17] See REBA (No.1) at para.41 (l)(iii) per Lucev FM.
In those circumstances, the Court is prepared to infer the non-existence of any debt agreement at the time the search was conducted, and in that circumstance, taken together with the matters referred to above, no injustice, let alone substantial injustice, arises.
Conclusion
All of the necessary requirements for the issuance of a sequestration order have been met in these proceeding. Therefore, a sequestration order will issue. Costs, including reserved costs, if not agreed, are to be taxed by a Registrar of this Court under O.62 of the Federal Court Rules and paid from the bankrupt’s estate in accordance with the Bankruptcy Act.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: Sandra Gough
Date: 27 February 2009
(a) be fined $10,000 payable to the Applicant Creditor within 28 days; and
(b) pay the Applicant Creditor’s costs fixed at $65,000 within 28 days (“SAT Orders”).
See Affidavit of Rebekah Ruth Dornan, sworn 18 March 2008, para.11-14 and Annexures D and E. See also REBA (No.1) at para.6 per Lucev FM.
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