Rana v Chief of Army
[2008] FMCA 518
•22 April 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RANA v CHIEF OF ARMY | [2008] FMCA 518 |
| BANKRUPTCY – Review of Registrar’s decision – application to set aside bankruptcy notice – abuse of process – going behind judgment – counterclaim – set-off or cross-demand – application to set aside judgment. |
| Administrative Decisions (Judicial Review) Act 1977 (Cth) Bankruptcy Act 1966 (Cth) ss.40(1)(g), 41(6A), 41(7) Defence Act 1903 (Cth) s.9 Defence Force Retirement and Death Benefit Act 1973(Cth) s.37 Disability Discrimination Act 1992 (Cth) Federal Court Rules Federal Magistrates Act 1999 (Cth) Military Rehabilitation and Compensation Act 2004 (Cth) Racial Discrimination Action 1975 (Cth) Veterans’ Entitlement Act 1986 (Cth) s.179 |
| Corney v Brien (1951) 84 CLR 343 Ebert v The Union Trustee Company of Australia Limited (1960) 104 CLR 346 James v Abrahams (1981) 51 FLR 16 Rana v Chief of the Army [2005] FCA 1283 Rana v Chief of the Army [2006] FCAFC 63 Rana v Kiefel and Others [2008] HCASL 56 A33/2007 Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1988) 30 ALR 433 Re Glen; Glen v Harrowall of Hunt & Hunt Lawyers (2003) 198 ALR 331 Re Lentini; Ex parte Lentini v CSR Ltd (1991) 29 FCR 363 Re Stirling; Ex parte Esanda Pty Ltd (1980) 30 ALR 77 Re Anderson; Ex parte Alexander (1927) 27 SR (NSW) 296 STEC v Orfanos [1999] FCA 457 Udovenko v Mitchell (1997) 79 FCR 418 Wren v Mahoney (1972) 126 CLR 212 |
| Applicant: | RANJIT SHAMSHER JUNG BAHADUR RANA |
| Respondent: | CHIEF OF ARMY |
| File Number: | ADG 123 of 2007 |
| Judgment of: | Simpson FM |
| Hearing date: | 10 September 2007 |
| Date of Last Submission: | 10 September 2007 |
| Delivered at: | Adelaide |
| Delivered on: | 22 April 2008 |
REPRESENTATION
| Applicant: | In person |
| Counsel for the Respondent: | Mr Doyle with Ms R Sidey |
| Solicitors for the Respondent: | Australian Government Solicitor |
ORDERS
The application is dismissed.
The applicant pay the respondent’s costs and disbursements pursuant to the Federal Court Scale to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 123 of 2007
| RANJIT SHAMSHER JUNG BAHADUR RANA |
Applicant
And
| CHIEF OF ARMY |
Respondent
REASONS FOR JUDGMENT
The proceedings
This is an application pursuant to s.104(2) of the Federal Magistrates Act 1999 (Cth) for review of a decision of a Registrar of the Court dismissing an application seeking the setting aside of bankruptcy notice No 198 of 2007 and an extension of time to comply with the notice.
The application seeks the following final orders[1]:-
(a)The applicant be set aside on the grounds of wanton of prosecution.
(b)The applicant is seeking compensation from the Military Rehabilitation and Compensation Commission for racial harassment and physical and other traumatic abuses linked psychiatric and diabetic illnesses significantly contributed by Australian Army dating back to August 1981.
(c)The claim is significantly more than the disputed amount allegedly owed by the applicant to the respondent.
(d)The current claim by the respondent is premature as the applicant has not finished seeking appeal against the decision of Crennan J and that the applicant also has not finished seeking special appeal to the High Court.
[1] The exact text of the orders sought has been included without any indication of apparent errors.
The following interim orders were sought:-
(a)The respondent is restrained in bringing bankruptcy application against the applicant until the Administrative Appeals Tribunal has determined the applicant’s compensation.
(b)The applicant seeks extension of time to comply with this Bankruptcy Notice until the AAT finalises the applicant’s compensation claim.
Background
The bankruptcy notice was issued on 10 May 2007 claiming an amount of $7,582.86. The notice was founded on an order for costs against the applicant in Action SAD 74 of 2005 in the Federal Court of Australia.
The dispute between the parties giving rise to the costs order originated from an unsuccessfully attempt by the applicant to have the respondent inform the Defence Force Retirement and Death Benefits Authority (“DFRDBA”) pursuant to s.37 of the Defence Force Retirement and Death Benefits Act 1973 (Cth) (“DFRDB Act”) that at the time he was discharged from the Australian Army (in 1982) grounds existed upon which he could have been retired on the ground of physical or mental capacity to perform his duties. The DFRDBA declined to do so. The applicant sought a review of this decision in the Federal Court under the Administrative Decisions (Judicial Review) Act 1977. Following a full hearing of the matter, his application was dismissed by a single judge of the Court and the costs order made[2].
[2] Rana v Chief of the Army [2005] FCA 1283.
The decision of the single judge was appealed unsuccessfully to the Full Court of the Federal Court[3].
[3] Rana v Chief of the Army [2006] FCAFC 63.
The applicant then sought to have the matter dealt with by the High Court, applying for an order nisi seeking certiorari and mandamus against the Federal Court Judges who had dealt with the matter and to have the matter remitted to the respondent for redetermination. On 4 May 2007 Crennan J refused his application.
On 4 June 2007 the applicant sought leave to appeal from the decision of Crennan J. As the application was out of time the High Court Registry returned the application to the applicant. Subsequently, on 28 June 2007 an application for leave to appeal also seeking an extension of time was accepted for filing. On 27 March 2008 Justices Kirby and Heydon refused the application for leave to appeal. They did so on the basis of the substantive merits of the application rather than whether an extension of time should be granted. They decided that no reasonably arguable ground for relief was shown and that an appeal would therefore be futile[4].
[4] Rana v Kiefel and Others [2008] HCASL 56 A33/2007.
Material relied upon
The applicant relies upon the following documents:
a)Application to set aside bankruptcy notice;
b)Affidavit of applicant filed 21 May 2007;
c)Outline of submissions filed 4 June 2007;
d)Affidavit of applicant filed 4 June 2007;
e)Outline of submissions filed 5 June 2007;
f)Affidavit of applicant filed 5 June 2007;
g)Applicant’s outline of submissions filed 6 June 2007;
h)Affidavit of applicant filed 20 June 2007;
i)Affidavit of applicant filed 21 June 2007;
j)Applicant’s outline of submissions filed 21 June 2007;
k)Applicant’s outline of submissions filed 25 June 2007;
l)Affidavit of applicant filed 28 June 2007;
m)Application for review filed 11 July 2007;
n)Applicant’s outline of submissions filed 16 July 2007;
o)Affidavit of applicant filed 30 July 2007;
p)Affidavit of applicant filed 30 July 2007;
q)Applicant’s outline of submissions filed 3 August 2007;
r)Affidavit of applicant filed 28 august 2007;
s)Applicant’s review outline of submissions filed 30 August 2007; and
t)A letter from the Australian Government Solicitor to the Deputy Registrar of the Administrative Appeals Tribunal in Adelaide dated 15 August 2007 tendered by consent during the hearing.
The respondent relies upon the following documents:
a)Respondent’s submissions filed 1 June 2007;
b)Respondent’s submissions filed 19 June 2007;
c)Respondent’s List of Authorities;
d)Affidavit of Rosemary Helen Sidey filed 19 June 2007;
e)Affidavit of Rosemary Helen Sidey filed 26 June 2007; and
f)Respondent’s book of documents titled “Index of documents” filed 10 September 2007.
Issues to be decided
I will consider whether or not the relief that the applicant seeks should be granted for any of the following reasons:
a)That the issuing of the bankruptcy notice was an abuse of process;
b)That this Court can go behind the judgment relied upon for the bankruptcy notice and should find in this case that there is no proper debt;
c)That the applicant has a counter-claim, set-off or cross-demand against the respondent in an amount that equals or exceeds the amount claimed in the bankruptcy notice and therefore satisfies the provisions of s.40(1)(g) of the Bankruptcy Act 1966 (“the Act”); and
d)That the applicant satisfies the provisions of s.41(6A) of the Act in that he has commenced proceedings to set aside the judgment relied upon for the bankruptcy notice.
Abuse of Process
Although on this review the applicant failed to put a submission that the bankruptcy notice should be set aside as an abuse of process I notice that in the learned Registrar’s Reasons for Decision she says:-
The applicant has suggested that the issuing of the Bankruptcy Notice by the respondent in this case is harassment, futile as he has no assets, and an attempt to thwart his application for compensation against the Military Rehabilitation and Compensation Commission (“MRCC”) (and possibly also the Repatriation Commission) in the AAT. He argues therefore that the issue of the notice is an abuse of process.
As the applicant is unrepresented and is not legally trained I will not consider the submission abandoned on this review.
The applicant has the onus of establishing that the creditor’s real purpose in issuing the bankruptcy notice was other than the purpose for which the process was designed. It would, for example, be improper to issue a bankruptcy notice merely to put pressure on the applicant to pay the debt rather than to invoke the Court’s bankruptcy jurisdiction. If abuse of process can be established the Court can then invoke its inherent jurisdiction to set aside the bankruptcy notice[5].
[5]Re Stirling; Ex parte Esanda Pty Ltd (1980) 30 ALR 77; Re Lentini; Ex parte Lentini v CSR Ltd (1991) 29 FCR 363.
I can find no evidence in the numerous affidavits filed by the applicant that could lead to the inference that the bankruptcy notice was issued for an in improper purpose. I see no evidence from which I can infer harassment of the applicant. Even if the applicant were to prove that he has no assets this does not lead inevitably to the conclusion that the issuing of the bankruptcy notice was an abuse of process. There is certainly no evidence that the issuing of the bankruptcy notice was merely an attempt by the respondent to thwart the applicant’s proceedings for compensation. In my view the bankruptcy notice was clearly issued for the purpose of invoking the Court’s bankruptcy jurisdiction and not for any other improper purpose.
Going behind the Judgment
The applicant failed to put any submission to me that I should go behind the judgment relied upon for the bankruptcy notice to determine whether or not there was a proper debt. For the reasons stated earlier, I will again not consider the submission abandoned. I therefore again rely on the submissions put to the learned Registrar. In her Reasons for Decision she said:
“… the applicant has also suggested that the Court should go behind the judgment relied upon, to determine whether there is a proper debt … the applicant has raised issued regarding the merits of the decision which gave rise to the costs orders founding the Bankruptcy Notice …”
This court may always look behind the judgment relied upon and ask whether in truth there is a debt. The judgment is never conclusive in bankruptcy.[6] It will usually only do so when there is shown to be a prime facie case of fraud, collusion or miscarriage of justice.[7]
[6] Wren v Mahoney (1972) 126 CLR 212 at 224-225.
[7] Corney v Brien (1951) 84 CLR 343 at 357-357; Udovenko v Mitchell (1997) 79 FCR 418-419.
I have examined the affidavit material to see if there is any basis upon which it would proper for me to go behind the judgment. The judgment is a costs order made against the applicant after an unsuccessful legal proceeding in the Federal Court. There is no evidence before me suggesting fraud, collusion or a miscarriage of justice in obtaining the judgment as would be required for a bankruptcy notice to be set aside on this basis. There is no merit in this aspect of the applicant’s case.
Counterclaim, Set-Off or Cross-Demand
This is perhaps the principal basis upon which the applicant says that he is entitled to have the bankruptcy notice set aside. It certainly is the main focus of the applicant’s submissions [8] and the affidavit material[9]. The applicant refers in particular to three potential set-off actions:
a)Firstly, the applicant’s proceedings against the Military Rehabilitation and Compensation Commission (“MRCC”) being Actions Numbered S2006/223 and S2007/1885 in the Administrative Appeals Tribunal (“AAT”) (“the First Set-off Action”). These applications seek review of two decisions of Delegates of the MRCC which resulted in the applicant being denied compensation. The applicant’s compensation claims arise from his conditions of paranoid schizophrenia and diabetes said by him to have been materially contributed to by his army service;
b)Secondly, the applicant’s proceedings against the Repatriation Commission in the AAT being Action Number S2005/33 (“the Second Set-off Action”). The applicant’s application to the AAT here challenges certain decisions of the Repatriation Commission in relation to the benefits sought by the applicant under the Defence Force Retirement and Death Benefit Act 1973(Cth) (“DFRDB Act”) and the Veterans’ Entitlement Act (“VE Act”). They relate to the applicant’s suggestion that his condition of paranoid schizophrenia was materially contributed by the applicant’s one year and nine months period of service with the Australian Army which commenced on 14 October 1980. The Repatriation Commission decided on 15 September 2003 that the applicant was not entitled to claim a pension because he was not a “member of the Forces” as defined in the DFRDB Act. On 16 December 2004 the Veteran’s Review Board decided to affirm the decision under review.
c)Finally, the applicant’s proceedings against the Commonwealth of Australia – Australian Defence Force (First Respondent) and Brigadier Craig Orme as delegate of Chief of the Army (Second Respondent) in the Federal Court of Australia being Action Number SAD 111 of 2007 (“the Third Set-off Action”). This application alleges unlawful discrimination contrary to the Disability Discrimination Act 1992 (Cth) and Racial Discrimination Action 1975 (Cth) as well as the tort of negligence. The applicant’s claim alleges that the unlawful discrimination occurred in about September 2003 when the applicant sought from the first respondent a change to his army record of his discharge which stated that “retention of this soldier (is) not in the interest of Australia or the Army.” The applicant sought that this be changed to say that he had been discharged for “medical or psychiatric incapacity” which would have had the effect of strengthening his position for compensation or a pension. It is further alleged by the applicant that the second respondent discriminated against the applicant on 5 April 2005 as the second respondent denied the applicant the benefits that he sought. The tortious action against the first and second respondents alleges that, in breach of a duty of care owed, the first respondent vicariously and the second respondent as principal, breached their duty by failing to change army records relating to the applicant with the result that he did not gain the benefit of the DFRDB Act.
[8] The documents referred to in paras.9(g), (j) and (n) of these reasons.
[9] The documents referred to in paras.9(b), (d), (o) and (p) of these reasons.
Section 41(7) of the Act provides as follows:
Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counterclaim, a set-off or cross-demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counterclaim, set-off or cross-demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.
Section 40(1)(g) relevantly provides that:
A debtor commits an act of bankruptcy …
…
(g)if a creditor who has obtained against the debtor a final judgment or final order, … has served on the debtor … a bankruptcy notice under this Act and the debtor does not:
(i) …within the time specified in the notice; …
…
…
Satisfy the Court that he or she has a counterclaim, set-off or cross-demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counterclaim, set-off or cross-demand that he or she could not have set up on the action or proceeding in which the judgment or order was obtained;”
To succeed under this heading the applicant must not only establish that there exists a counterclaim, set-off or cross-demand equal to or exceeding the judgment sum but also that it is a set-off that could not have been set up in the proceedings founding the bankruptcy notice, that the set-off and the judgment debt are mutual and due in the same right and that there is “sufficient substance” in the debtor’s claim[10] sometimes referred to as “a prime facie case”[11] or one with “a fair chance of success”[12]. The requirement that the two claims be “in the same right” is directed to the capacities in which the claimants claim[13].
[10]Re Glen; Glen v Harrowall of Hunt & Hunt Lawyers (2003) 198 ALR 331.
[11] Ebert v The Union Trustee Company of Australia Limited (1960) 104 CLR 346.
[12] Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1988) 30 ALR 433.
[13] STEC v Orfanos [1999] FCA 457 at [24]; (Re Anderson; Ex parte Alexander (1927) 27 SR (NSW) 296; James v Abrahams (1981) 51 FLR 16 at 27.
Is the First Set-off Action sufficient?
In relation to the First Set-off Action the applicant fails to satisfy s.41(7) of the Act as the respondent to the action is not the Chief of the Army. The MRCC and the Chief of the Army are different legal entities. The MRCC is established by s.363 of the Military Rehabilitation and Compensation Act 2004. The Chief of the Army is appointed pursuant to s.9 of the Defence Act 1903. There is therefore no mutuality between the two claims.
A further reason why the applicant cannot succeed in having the bankruptcy notice set aside or the time for compliance extended on the basis of the First Set-off Action is that there is no satisfactory evidence before the Court that establishes that the application in the AAT has a reasonable chance of success. In fact, on the material before me it is clear that the First Set-off Action is essentially the same as that previously considered by the Tribunal in two previous actions brought by the applicant (Actions Numbered S1986/207 and S2001/378) in which the applicant was unsuccessful. The first of these actions concerned an allegation by the applicant that he developed paranoid schizophrenia which had been materially contributed to by his army service as a result of physical attacks, racial and sexual harassment and name calling. The second of the actions concerned an allegation by the applicant that he suffered from stress induced diabetes which developed as a result of his paranoid schizophrenia. The MRCC rejected the applicant’s claim in relation to the paranoid schizophrenia on the basis that it was essentially the same as that previously considered. In relation to the allegation of stress induced diabetes the MRCC made a decision on 9 May 2007 affirming a determination of 22 July 2006 denying liabilities for the diabetes. It can be said therefore that the two actions that the applicant relies upon here are the views or challenges to decisions that have already been made. The applicant has been unsuccessful in both actions. The paranoid schizophrenia application of the applicant referred to was also the subject of an appeal heard by Justice Mansfield[14] in which his Honour decided that the principal decision that the applicant complained of was not the result of any reviewable error on behalf of the delegate and that the appeal should be dismissed. It seems to be common ground that the claim in relation to stress induced diabetes is dependent largely on the outcome of the applicant’s claim for his condition of paranoid schizophrenia. This being the case, I conclude that the applicant’s case in relation to the First Set-off Action is extremely weak and therefore does not entitle the applicant to an order that the bankruptcy notice be set aside.
[14] Rana v Chief of Army [2005] FCA 1283.
Additional reasons why the applicant can not rely on the First Set-off Action to have the bankruptcy notice set aside is that there is no explanation from the applicant as to why the First Set-off Action could not have been brought as part of the proceedings before Mansfield J. In addition, there is no evidence before me that the amount of the claim in the First Set-off Action is equal to or exceeding the amount of the judgment debt upon which the bankruptcy notice is based.
For all of these reasons the applicant has failed to satisfy me that he has a counterclaim, set-off or cross-demand of the kind referred to in s.40(1)(g) of the Bankruptcy Act based on the First Set-off Action..
Second Set-off Action
The applicant is unable to rely on the Second Set-off Action for reasons similar to those identified in relation to the First Set-off Action. The party to the proceedings in the Second Set-off Action are the applicant and the Repatriation Commission. The Second Set-off Action raises issues that are effectively the same as those which are at the heart of the proceedings referred to in the First Set-off Action. The Repatriation Commission is a separate legal entity from the Chief of the Army[15].
[15] s.179 of the Veterans Entitlements Act which establishes the Repatriation Commission.
Again, the applicant has failed to establish that in the Second Set-off Action has a reasonable prospect of success. In my opinion the applicant is unlikely to be able to convince the AAT that the Repatriation Commission’s decision was flawed. Again, the applicant has failed to put any evidence before me to explain why it was not possible to have this issue raised before Mansfield J and, in addition, there is no proper evidence put before me to establish that the amount of the claim in the Second Set-off Action is equal to or in excess of the judgment debt upon which the bankruptcy notice is based.
Third Set-off Action
In relation to the Third Set-off Action, I have been provided with a copy of the Application and the Form 167 filed in the Federal Court on 11 July 2007 which attaches the applicant’s Statement of Claim and the Notice of Termination of the Human Rights and Equal Opportunities Commission (“the Commission”) dated 5 July 2007. I note that the delegate of the President of the Commission reached the conclusion that the claim should be terminated as lacking in substance.
I note also that the applicant’s claim involves the same factual issues which have underpinned the First and Second Set-off Claims earlier referred to, albeit that the applicant now alleges that his paranoid schizophrenia is as a result of discrimination whilst in the service of the Australian Army. Paragraphs 17 and following of the applicant’s Statement of Claim deal with the negligence claim saying that not only was the decision not to carry out the alteration to the applicant’s Army record wrong and discriminatory but that it was also done negligently. Such a claim is unlikely to succeed. The applicant has failed to convince me that his claim pursuant to the Third Set-off Action has merit.
Proceedings to set aside the Judgment
The applicant alleges that the High Court proceedings that he has instituted in May 2006 constitute proceedings to set aside the judgment upon which the bankruptcy notice is based and that this justifies the setting aside of the bankruptcy notice. The applicant misconceived the nature of his application to the High Court. It was not an application for special leave to appeal but rather an application seeking certiorari and mandamus based on an appeal being dismissed by a Full Federal Court comprising Keifel, Kenny and Graham JJ, that Full Court having heard an appeal from the decision of Mansfield J. After hearing the argument her Honour Justice Crennan decided[16] that the application should be dismissed with costs. As has been dealt with earlier in these reasons[17] the applicant’s application for leave to appeal has now been dismissed. The High Court proceedings can therefore provide no basis for the setting aside of the bankruptcy notice.
[16] [2007] HCA Trans 190 (4 May 2007).
[17] paras. 6 – 8.
Conclusion
For these reasons the applicant’s application should be dismissed with costs.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Simpson FM
Associate: Julie Davey
Date: 22 April 2008
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