Red Energy Pty Limited v Saxton
[2019] FCCA 86
•29 January 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RED ENERGY PTY LIMITED v SAXTON | [2019] FCCA 86 |
| Catchwords: BANKRUPTCY – Review of a registrar’s sequestration order – bankrupt failed to take steps to set aside judgment debt – bankrupt conceded liability for part of the debt – consideration of s 118 of the Australian Constitution – consideration of s 78B of the Judiciary Act – bankrupt putting in issue whether Corporations Act was validly enacted – whether petitioning creditor a corporation with standing to commence proceeding – review of the history of aspects of bankruptcy law – application for review dismissed. |
| Legislation: Bankruptcy Act 1883 (UK) (46 & 47 Vict., C.52) Bankruptcy Act 1966 (Cth), s.52 Commonwealth of Australia Constitution Act 1900 (UK) (63 & 64 Vict., Ch. 12), s.118 Federal Circuit Court Rules 2001, rr.13.03C(1)(c), 16.05(2)(a) |
| Cases cited: Breavington v Godleman (1988) 169 CLR 41 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 Ramsay Healthcare Australia Pty Ltd v Compton (2017) 261 CLR 132 |
| Other materials: Baldwin, Edward, The Law of Bankruptcy and Bills of Sale (Stevens & Haynes, 1895) |
| Applicant: | RED ENERGY PTY LIMITED (ACN 107 479 372) |
| Respondent: | IVAN SAXTON |
| File Number: | MLG 1320 of 2018 |
| Judgment of: | His Honour Judge Wilson |
| Hearing date: | 22 November 2018 |
| Date of Last Submission: | 22 November 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 29 January 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms S Cipriano |
| Solicitors for the Applicant: | CLI Lawyers Pty Ltd |
| Respondent: | In person |
| Solicitors for the Respondent: | None |
ORDERS
The application for review of a registrar’s decision filed 30 August 2018 is dismissed.
The respondent pay the applicant’s costs of the proceeding, to be taxed in default of agreement.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1320 of 2018
| RED ENERGY PTY LIMITED (ACN 107 479 372) |
Applicant
And
| IVAN SAXTON |
Respondent
REASONS FOR JUDGMENT
Introduction
The amount involved in this case is very small, $13 728.05 with interest of $1 065.08, yet Mr Saxton’s financial reputation hangs on his succeeding in his application to set aside the sequestration order made by a registrar of this court on 12 July 2018.
Synopsis
For the reasons that follow, I dismiss this application.
Short factual narration
To better understand Mr Saxton’s application it is necessary to briefly narrate the relevant facts of this case.
On 12 July 2017 Red Energy Pty Ltd entered default judgment in the Magistrates’ Court of Victoria against Ivan Saxton for $10 281.70, together with interest of $411.27 and costs of $1 970. Mr Saxton has not applied to set aside that default judgment at any stage nor has he paid the default judgment whether in whole or in part. As it was entitled to do, on 5 January 2018 the applicant served on Mr Saxton a bankruptcy notice issued on 19 September 2017. Mr Saxton did not pay the amount stipulated in the bankruptcy notice nor did he compound with his creditor in respect of that sum. By that stage the debt had escalated to $13 728.05. That sum together with interest of $1 065 was the sum stipulated in the creditor’s petition on which the sequestration order was later made. Mr Saxton was duly served with a creditor’s petition and an affidavit verifying the relevant provisions of the creditor’s petition. He was served in the manner authorised by a registrar of this court by order made on 12 July 2018. Mr Saxton failed to comply with the creditor’s petition. The relevant date of the act of bankruptcy on which the applicant relied was altered to 29 January 2018 by order made on 9 August 2018 by Registrar Ryan of this court who also, by the same orders, made an order for the sequestration of the estate of Mr Saxton.
On 30 August 2018 Mr Saxton applied to review the orders made by the registrar on 9 August 2018. He personally prepared the application. That application was listed before me on 4 October 2018. Mr Saxton failed to appear that day with the consequence that I dismissed his application pursuant to r 13.03C(1)(c) of the Federal Circuit Court Rules. Upon Mr Saxton applying to reverse the order dismissing his application to review the sequestration order, by consent on 23 October 2018 I set aside my orders made on 4 October 2018, and required Mr Saxton to file further affidavit material. I otherwise adjourned the hearing of this application to 22 November 2018.
Mr Saxton duly filed an array of further affidavit material, the more salient details of which are set out below.
According to the applicant’s evidence, the applicant entered into an agreement with the respondent for the provision of electricity to the applicant’s premises at 321 Stuhrs Road, Darnum, in the State of Victoria. A deponent by the name of Nane Johnson of Red Energy Pty Ltd affirmed the existence of Mr Saxton’s indebtedness to Red Energy Pty Ltd as at 14 May 2018 when Nane Johnson affirmed that paragraphs one, two and three of the creditor’s petition were truthful. On 8 August 2018, Nane Johnson affirmed that Mr Saxton’s indebtedness to Red Energy Pty Ltd was due and unpaid, then in the sum of $13 728.05.
In debate before me on 22 November 2018 Mr Saxton told me that he did not dispute that Red Energy Pty Ltd had supplied electricity to his premises and that he had resided during the relevant period at 321 Stuhrs Road, Darnum. He recognised that by the provision of electricity to his premises he had benefitted from his premises having power supplied by Red Energy Pty Ltd.
Mr Saxton affirmed several affidavits. He requested me to carefully read them, which I did. His affidavits were made on 30 August 2018, 4 October 2018, two affidavits made on 5 November 2018 and one made on 21 November 2018. The more important matters raised in those affidavits may be summarised as follows –
a)he received “no notice of any action against [him]” (his words) and the “first paperwork [he] received of the ex parte action against [him] was the decision and insolvency notice” (his words);
b)he was being “called into court” (his words) to defend himself over an alleged debt in the absence of evidence of an itemised account as required, so he said, by the Australian Consumer Law and the Competition and Consumer Act;
c)the applicant had not complied with the Code of Conduct for Marketing Retail Energy in Victoria in that the applicant had not provided Mr Saxton with a “blue ink signature” (his words) version of his “legally binding contract” (again, his words);
d)the Corporations Act had not been validly enacted with the consequence that the legal existence of Red Energy Pty Ltd was in dispute and the bankruptcy notice on which the creditor’s petition was based underpinning the sequestration order was invalid, so Mr Saxton said;
e)this court lacked jurisdiction under the Australian Consumer Law;
f)the applicable industry code was given effect pursuant to the Essential Services Commission Act (Vic) and Mr Saxton sought “exemption” (again, his word) from the application of s 118 of the Commonwealth Constitution;
g)he sought an indefinite stay of this proceeding so that he could serve notices under s 78B of the Judiciary Act upon all interested Attorneys-General within the Commonwealth;
h)Red Energy Pty Ltd lacked standing to bring or maintain this bankruptcy motion against Mr Saxton because the Corporations Act had not been validly enacted; and, spectacularly
i)“the alleged corporation has no standing to start any legal action in the Federal Court for a proposed bankruptcy, which cannot be lawful, and cannot be actioned by any court, since the criminal and unlawful removal of her Majesty Queen Elizabeth II, by an illegitimate State Attorney-General, James McGinty, whose name does not appear on the Supreme Court Roll, who, together with the WA Governor, John Sanderson, removed, by deleting Her Majesty, Queen Elizabeth II from various overt Acts and the Supreme Court Act, 1935 (WA), which automatically challenges and changes the Commonwealth Constitution Act, across Australia [and] this Commonwealth Constitution matter has never been resolved” (his words).
Certain factual and less legally abstruse matters were recorded by Mr Saxton in a second affidavit affirmed by him on 5 November 2018. Among them were the following –
a)Mr Saxton constructed a dwelling at 321 Stuhrs Road, Darnum, in 1976 and commissioned State Electricity Commission of Victoria to bring a supply of electricity to his property in that year or thereabouts;
b)in 2012, after his property had been unlawfully entered by intruders, he changed locks and security on his property and he no longer gave access to persons to read electricity metres;
c)thereafter, Red Energy Pty Ltd sent Mr Saxton accounts for electricity that was supplied to him;
d)those accounts from Red Energy Pty Ltd were based on estimated electricity usage rather than on actual metre readings;
e)Mr Saxton at no stage agreed to pay for electricity supplied by Red Energy Pty Ltd on an estimated usage basis;
f)Mr Saxton has not been supplied with a valid, properly itemised account for his electricity use; and
g)accounts rendered to Mr Saxton by Red Energy Pty Ltd have included a component called “service to property” that fails to recognise how Mr Saxton in 1982 or thereabouts paid for a new high voltage supply facility to his dwelling with infrastructure including a transformer on a concrete floor in his house yard.
In his affidavit made 21 November 2018 Mr Saxton advanced certain factual matters. He made a large number of “submissions” about his perceptions of the legal issues in this case. He contended that Red Energy Pty Ltd had not filed a counterclaim. To that it must be said that Red Energy Pty Ltd did not assert a counterclaim. That company was and remains a judgment creditor. The legal propositions he agitated were as follows, transcribed verbatim (with errors in the original) –
a)“the Australian Electoral Commission, held a National Referendum, on the 6th of November, 1999 on the question of changing to a Republic or, retention of the Constitutional Monarchy [and] the majority of Australian Electors in each State and Territory voted for the retention of the Constitutional Monarchy, and that was the last National Referendum dealing with the subject”;
b)“the preeminent question cannot be answered by the Federal Court of Australia that it may not interfere with the laws of a State, as, at present, the Industry Code of Conduct is a piece of legislation that originated from the Victorian Parliament”;
c)“Direction and guidance or any alternative response cannot be provided by the State Government of Victoria, as there is currently, at this time, no Attorney General as the Parliament has been ‘prorogued’ until the State Election is completed, starting on the 24th November, 2018, and the Election Writ has been returned from Warwick Gately, the Victorian Electoral Commissioner back to the State Governor – Linda Dessau, and the Parliament of Victoria [and that] this has not yet been successfully completed”;
d)“I seek leave from this Federal Court, and upon my request, should this be given by the court, to transfer this matter into a State Court, where the Industry Code of Conduct can be heard, by a member of the Judiciary of the State Government of Victoria, with local jurisdiction, which can hear this matter; until then, all aspects of this matter must cease”; and
e)“The question of any purported debt simply cannot be heard, until the matters contained in our Australian Consumer Law – the Competition and Consumer Act, are fully heard and argued, under the Code of Conduct, section 3.5, dealing with Contracts, for trade and Commerce to occur, which will assist both parties to arrive at the most suitable conclusion [and] this must be discussed first, before any other matters can be heard in open court”.
At the outset let me state that I shall do no such thing as transfer this proceeding to a state court. Red Energy Pty Ltd holds a valid, enforceable judgment debt. Unless I set aside the registrar’s sequestration order, the judgment debt is immediately enforceable. The question for me in this case was whether the sequestration order should be set aside by reason of one or more of the propositions put forward by Mr Saxton.
Against that regrettably long narration of events, it became necessary to analyse Mr Saxton’s many contentions in this case.
Overview
For the reasons that follow, in my view none of the challenges urged by Mr Saxton had merit. As mentioned above, I dismiss his application to set aside the registrar’s sequestration order.
Some preliminary issues
Mr Saxton advanced a large number of propositions to support his contentions that the judgment debt entered by Red Energy Pty Ltd was invalid and that the sequestration order should not have been made. In debate with Mr Saxton on 22 November 2018 he told me he had not received any process prior to receiving a version of Registrar Ryan’s order for the sequestration of his estate. I pressed Mr Saxton on that statement. Mr Saxton was firm in his denial that he had not been previously served with any court documents in the proceeding in the Magistrates’ Court, including the default judgment and nothing in the bankruptcy notice issued out of this court until he received Registrar Ryan’s order for the sequestration of Mr Saxton’s estate.
Mr Saxton’s statement stood at odds with information about service from Ken Neale Fraser, a process server who deposed to serving Mr Saxton with various documents on 22 July 2018. Retracing the relevant chronology, on 12 July 2018 Registrar Morgan of this court made orders dispensing with the need for personal service. Registrar Morgan authorised substituted service of a sealed copy of that order, together with a copy of each affidavit verifying the creditor’s petition, of a copy of any affidavit of service of the bankruptcy notice and the trustee’s consent to act. The authorised alternative methods of service were –
a)personally handing those documents to any person apparently over the age of 16 or, if that was not possible, by leaving the documents in the letterbox or affixing them to the front gate in an envelope addressed to Mr Saxton at 321 Stuhrs Road, Darnum; and
b)by sending those documents by prepaid ordinary post addressed to Mr Saxton at Post Office Box 14, Darnum; and
c)by scanning those documents and sending them by email to Mr Saxton’s given email address.
Registrar Morgan also ordered Red Energy Pty Ltd to send a text message to Mr Saxton using Mr Saxton’s mobile telephone number stating that Red Energy Pty Ltd had filed a creditor’s petition with this court, that the documents had been sent to or left at 321 Stuhrs Road, Darnum, as well as emailed to Mr Saxton’s email address and that the petition would be heard on 9 August 2018. Once service had been effected in the detailed manner specified in the registrar’s order, then pursuant to paragraph 7 of those orders the creditor’s petition was deemed duly served.
Proof was duly adduced about service being effected in the manner stipulated by the registrar. Mr Saxton did not contend otherwise. I do not therefore accept that Mr Saxton did not receive notice of the court documentation in this court. So far as the court documentation in the Magistrates’ Court was concerned, a copy of the default judgment was among the material verifying paragraphs one, two and three of the creditor’s petition.
As has already been mentioned, Mr Saxton took no step to set aside the default judgment. Prior to the hearing on 22 November 2018 there was no evidence that he approached anyone to raise the points he sought to put in issue in this litigation. Aside from the so-called legal issues Mr Saxton wanted to agitate, at a factual level one of the more important matters he raised was his contention that at no stage did he agree to the assessment of his electricity liability on an estimated basis. Another was his contention that he had not been provided with one or more itemised accounts for his electricity usage. So far as his contention that he did not agree to an invoice based on estimated usage, it must not be forgotten that Mr Saxton changed the locks of his premises and denied access thereafter to anyone who might have read the electricity metre. He said he asked the electricity supplier to contact him and give him advance notice of any planned metre reading, which request he refused. Thereafter, estimates were provided. Mr Saxton said in one of his affidavits affirmed 5 November 2018 that he “has no intention of avoiding payment for the reasonable costs of power [he] may have used” and Red Energy Pty Ltd has not provided him with a properly itemised bill.
Mr Saxton advanced seemingly contradictory and inconsistent propositions in certain respects. On the one hand he argued that for a variety of reasons ranging from constitutional matters to problems associated with the enactment of the Corporations Act he was not liable for the debt in this case. Yet he concurrently contended that he was willing to pay for the costs of power he may have used so long as the cost of that power was reasonable. No suggestion was raised by Red Energy Pty Ltd that Mr Saxton’s liability for payment of electricity he used was delineated by reasonableness of the charge. This case was not cast as a quantum meruit claim where issues of reasonable remuneration might have arisen as occurred in Pavey & Matthews Pty Ltd v Paul.[1]
[1] (1987) 162 CLR 221
Nor was there evidence that Mr Saxton actually requested an itemised account, assuming he may have been entitled to receive one.
Then there was Mr Saxton’s failure to apply to set aside the default judgment. No explanation was given for that. Instead, his application to this court was premised on the validity of his contentions that the judgment debt was wrongful.
I do not accept his contentions in that regard.
Before developing the application of the High Court’s learning in Ramsay Healthcare Australia Pty Ltd v Compton,[2] let me record my observations in Commonwealth Bank of Australia Limited v Jordanou,[3] judgment in which was delivered as recently as 24 October 2018. In court during the hearing of this application on 22 November 2018, I handed to Mr Saxton and to Ms Cipriano a copy of my reasons in that case, inviting any submissions on the issue. Neither Mr Saxton nor Ms Cipriano took up that invitation. In that case, I said the following –
[2] (2017) 261 CLR 132
[3] [2018] FCCA 2972
30.In this litigation Ms Jordanou wanted me to go behind the judgment of Kennedy J. For that matter, she had to do so. Otherwise, her Honour’s judgment stood and so did the regularity of the sequestration order. In order for Ms Jordanou to go behind the judgment she needed to successfully invoke the principles relating to going behind a judgment as most recently propounded by the High Court of Australia in Ramsay Health Care Australia Pty Ltd v Compton.[[4]] There, the High Court reviewed the leading learning on point from such cases as Wren v Mahony,[[5]] Corney v Brien[[6]] and In re Fraser; Ex parte Central Bank of London.[[7]] It is necessary to descend to the detail of Ramsay in order to better understand its utility for present purposes.
[4] (2017) 261 CLR 132
[5] (1972) 126 CLR 212
[6] (1951) 84 CLR 343
[7] [1892] 2 QB 633
31.In that case, Compton gave a personal guarantee of a company’s obligations to pay Ramsay Health Care. The company was later placed in liquidation. As the company had gone into liquidation, Ramsay Health Care sued Compton under the guarantee in the Supreme Court of New South Wales. At the trial, both parties were represented by counsel. Compton relied on a defence that had failed and the trial judge awarded judgment in favour of Ramsay Health Care. Compton did not appeal nor did Compton comply with a bankruptcy notice nor with a creditor’s petition. Instead, Compton contested the creditor’s petition before the Federal Court. The judge did not investigate whether the debt was in fact owed, deciding instead not to go behind the judgment. The Full Court (Siopis, Katzmann and Moshinsky JJ)[[8]] concluded that substantial reasons had been shown for going behind the judgment and that the primary judge should have investigated whether the debt was truly owing. Ramsay Health Care appealed to the High Court of Australia. The majority of the High Court (Kiefel CJ, Keane and Nettle JJ, Edelman J agreeing)[[9]] dismissed the appeal from the Full Court of the Federal Court. The following propositions of law emerged from the reasons of the majority of the High Court –
[8] Compton v Ramsay Health Care Australia Pty Ltd (2016) 246 FCR 508
[9] (2017) 261 CLR 132 [97]
a)applying the reasoning from Wren v Mahoney, the overarching obligation imposed by s 52 of the Bankruptcy Act is for a bankruptcy court (me, in this case) to be satisfied that there is in truth and reality a debt;
b)the power to go behind a common law judgment obtained after a contested trial exists beyond the categories of fraud, collusion or miscarriage of justice and despite the caution usually exercised by courts when exercising that power the power nevertheless exists;
c)in further application of Wren v Mahoney, when a bankruptcy court scrutinises the debt propounded by the judgment creditor it does not do so in some way impeaching the judgment but rather it does so while investigating whether some miscarriage of justice has occurred;
d)applying In re Fraser; Ex parte Central Bank of London, when a bankruptcy court is undertaking the scrutiny required by s 52 of the Bankruptcy Act into whether there is in truth and reality a debt owing to the petitioning creditor, it does so to protect the interests of third parties, particularly in respect of other creditors of the debtor; and
e)applying Ex parte Lennox; In re Lennox,[[10]] In re Flatau; Ex parte Scotch Whisky Distillers Ltd[[11]] and Corney v Brien,[[12]] a judgment debt may usually be taken to be sufficient evidence of a debt for the purposes of s 52 of the Bankruptcy Act, yet where the merits of the claim and counterclaim have not been tested in adversarial litigation the judgment debt may not be a reliable indication of the real debt.
32.Several issues emerged in this case from those observations of the majority.
33.The first related to the real and true basis on which the sequestration order was made in this case. The question became whether the debt was owed in fact and in law, truly and in reality, tested in adversarial litigation. The Honourable Justice Kennedy concluded that the debt was proved. This was not a case of a default judgment. Her Honour required counsel for the bank to make good the bank’s proofs. Those proofs were mostly documentary as to both liability and quantum. The bank’s counsel took her Honour through the bank’s evidence. That evidence included the guarantee given by Ms Jordanou, notices of demand, a certificate of indebtedness and non-payment. Counsel for the bank explained the commercial setting of the borrowings and the purpose of the loan. It seemed to me that her Honour had proof of the fact and reality of the debt that Ms Jordanou guaranteed. The debt was very considerable. It was not paid. The bank was entitled to look to Ms Jordanou pursuant to the guarantee for payment of the amount owed. Ms Jordanou failed to pay that amount as guaranteed. The bank moved for judgment. It proved its entitlement. The judgment was unimpeachable.
34.In Ramsay, the majority pointed out that a creditor should not be able to make a person bankrupt on a debt that is not provable. The debt on which the bank obtained judgment in this case was far from not provable. The majority also pointed out that the notion that a party is bound by the conduct of his or her case has never been a sufficient reason not to look behind a consent judgment or a default judgment. This observation addressed the suggestion that Mr Bradley conducted Ms Jordanou’s case by failing to lead evidence of her counterclaim in such a way that led to the entry of judgment against Ms Jordanou for a very considerable sum. I do not agree. On the evidence of Mr Bradley outlined above Ms Jordanou specifically instructed Mr Bradley that she did not wish to enter the witness box (erroneously described as “the stand”) to give evidence on the basis of the risk of her incriminating herself. It was readily apparent that Kennedy J did not wish to force Mr Bradley to take a step in the proceeding he had not considered or in respect of which he was not instructed to take or make. Ms Jordanou had sat in court listening to his submissions without protest.
35.I do not accept that Ms Jordanou’s unfamiliarity with the legal process provided an explanation for her silence while Mr Bradley informed her Honour that no evidence would be led on the counterclaim. In my view, Ms Jordanou’s decision not to lead evidence on the counterclaim was deliberate and it was made on the advice of Mr Bradley. In those circumstances I do not say in this case, as the primary judge said in Ramsay Health Care Australia Pty Ltd v Compton,[[13]] that Ms Jordanou is bound by the way her defence was conducted. That is to invert the relevant enquiry. In my view, according to s 52 of the Bankruptcy Act I needed to be satisfied that there was in truth and reality a debt on which the sequestration order was based. I am so satisfied in this case. In reviewing the material that was before Kennedy J for satisfaction of the debt owed by Ms Jordanou, I am in no way seeking to impeach her Honour’s judgment. I was concerned in this case whether the debt on which the judgment was based was truly a basis for making the sequestration order. That is how the High Court in Ramsay analysed matter, following In re Fraser; Ex parte Central Bank of London. Having read the transcript of the proceeding before Kennedy J several times as well as the court book in this case that incorporated the transactional documentation, as well as having heard viva voce from Ms Jordanou and Mr Bradley, I am persuaded that the debt was genuine and that the judgment debt on which a sequestration order was based was in truth and reality a valid judgment debt.
36.It next became necessary to address Ms Jordanou’s assertion that she wished to set aside the judgment debt with a view to seeking leave to appeal out of time against the judgment and orders of Kennedy J. Naturally, it was a matter for the Court of Appeal of the Supreme Court of Victoria if I were to conclude that the judgment of Kennedy J should be impeached. It was not possible for me to gainsay what the Court of Appeal might have done on the hearing of any such application. But undoubtedly the Court of Appeal would examine the utility of making the order sought, especially having regard to the fact that Ms Jordanou chose not to advance the very counterclaim on which her contentions against the bank were premised. At one point, Ms Jordanou was advancing an argument about unconscionability in the form best understood against the High Court’s decision in Amadio. She was also advancing at one point an argument based on Garcia. She chose not to adduce evidence of those grounds, apparently fearing the risk of self-incrimination if she gave evidence. Of course, it is not up to me to presuppose how the Court of Appeal may deal with Ms Jordanou’s application. But undoubtedly, a relevant and possibly determinative factor relevant to the exercise of the Court of Appeal’s discretion to grant Ms Jordanou leave to appeal out of time would be her legal representative’s submissions before Kennedy J that Ms Jordanou’s counterclaim was not being advanced. The issue occupied quite a deal of time before me.
37.In the end, I was not persuaded that the judgment debt ordered by Kennedy J was anything but valid and regular.
[10] (1885) 16 QBD 315
[11] (1888) 22 QBD 83
[12] (1951) 84 CLR 343
[13] [2015] FCA 1207
This case had certain similarities to the case of Jordanou. Each involved a bankrupt who had not taken steps to set aside the relevant judgment. In each the bankrupt wanted to ventilate a collection of alleged defences to the claims on which the judgment debt was grounded. In each the bankrupt disputed that there was in truth and in reality a debt. In this case specifically Mr Saxton seemed to concede his liability for some amount. He argued that he was liable for the reasonable costs of the power he used, not the estimated power cost as claimed by Red Energy Pty Ltd.
I reject Mr Saxton’s contentions in that regard.
Mr Saxton told me that he did not apply to set aside the default judgment even though he knew about it at many stages leading to the making of the sequestration order against his estate. He said he did not go to the Magistrates’ Court in relation to the judgment debt. The following exchange was relevant –
HIS HONOUR: And most people would want there to be rock-hard evidence before such an order is made. But, equally, in order to reverse an order that has been made for a person’s bankruptcy, the person needs to demonstrate that there’s some purpose in doing it, because the law doesn’t allow insolvent people to run around. So do you have evidence that you can put before me – maybe not today, but at some stage – that demonstrates that you are solvent – you can pay your bills as and when they fall due, you are balance-sheet solvent and that you are cashflow solvent and suchlike? Because Ms Cipriano points out that that’s critical you haven’t done it, and she’s right. There’s another argument here, though, and that is this case has been before me many times. There’s a degree of proportionality involved in coming back and forth. We’re arguing over $13,000. So why haven’t you done that yet?
MR SAXTON: Well, this is new territory for – very new territory for me. I mean, I used to be fairly well off, having been since diminished financially by certain people – and by certain corporations.
HIS HONOUR: Yes.
MR SAXTON: Some of which involve fraud. But, I mean – okay, not ‑ ‑ ‑
HIS HONOUR: Are you solvent?
MR SAXTON: Well, I would say I’m – I’ve never had any problems with solvency, other than this applied to me now.
HIS HONOUR: Well, what’s your proposal to pay off this debt? Or do you dispute that it’s owing at all?
MR SAXTON: Well, I would question it.
HIS HONOUR: Well, just a second.
MR SAXTON: Yes.
HIS HONOUR: You see, you can’t have it both ways. If this – you might not agree as to the precise quantum of the debt, but ‑ ‑ ‑
MR SAXTON: Yes.
HIS HONOUR: But some of it’s owing. Fair comment?
MR SAXTON: Yes.
Mr Saxton repeated that he needed to see an itemised account before he would acknowledge his indebtedness to Red Energy Pty Ltd. That enlivened the following exchange –
HIS HONOUR: Just one second. What is it that you need to see to be satisfied that you owe something? If the lights are on in your house, it follows that you’ve been given electricity, for which you have to pay. So let’s not be too difficult about this for its own sake. If you’re getting power to your property, you must know that you have to pay for some of it. You may not agree on the whole amount, but ‑ ‑ ‑
MR SAXTON: Yes.
HIS HONOUR: ‑ ‑ ‑ some of it’s owing.
MR SAXTON: Yes.
HIS HONOUR: And you will need to – if this case is to go further, you will need to address that point. And I’m not going to make an order setting aside the bankruptcy unless you do that, because you either have to demonstrate to me that you’re solvent, which you haven’t done – and, at the moment, it sounds like Ms Cipriano’s client is correct in bringing the bankruptcy proceeding and getting the order that she did. Or if you say you are solvent and can demonstrate it, it must follow that your solvency enables you to pay at least some of the debt upon which this motion is based.
MR SAXTON: I have never disputed and I have always said I want to pay for the power that I use.
Mr Saxton’s concession that he wanted to pay for the electricity he used together with his concession that power was supplied to his premises negated his dispute with the truth and reality of his indebtedness, it seemed to me.
At one level, that may have disposed of his arguments in this case. Yet Mr Saxton, who was not legally trained, advanced a collection of propositions about the legal standing and enforceability of the debt held by Red Energy Pty Ltd. Mr Saxton opened the debate in the following terms –
MR SAXTON: Sir, I – your Honour, I would be astonished if Sir Owen Dixon would countenance an order being made by a single person against somebody else.
Section 118 of the Constitution
As best I could follow the point, Mr Saxton advanced an argument that the applicable industry code that related to the supply of electricity emanated from the Competition and Consumer Act. He said the industry code was “taken from the Essential Services Commission Act” (his words), legislation of the Parliament of the State of Victoria. Mr Saxton said it was somehow incompetent for me as a member of a federal court to adjudicate on a matter arising out of legislation from a state. He called in aid s 118 of the Constitution of the Commonwealth of Australia.
Mr Saxton submitted that only a member of the judiciary of the State of Victoria could hear and determine this matter. He said a federal court could not “interfere with the laws of a state” (his words) as the industry code of practice was “a piece of legislation that originated from the Victorian Parliament” (his words).
Three responses arise to those contentions. They are developed below but in summary –
a)those contentions involve a misunderstanding of s 118 of the Constitution;
b)this case does not involve any consideration of the validity of an industry code, the Competition and Consumer Act or a point of constitutional law; and
c)a judgment debt on which the sequestration order was based was regular.
Section 118 of the Constitution is in the following terms –
Full faith and credit shall be given, throughout the Commonwealth to the laws, the public Acts and records, and the judicial proceedings of every State.
Most commentators on federal constitution law recognise that s 118 has an important evidentiary effect. As the learned authors of the ninth edition of Lumb, Moens & Trone, The Constitution of the Commonwealth of Australia Annotated record that the section means that a court is entitled to take judicial notice of certain properly authenticated public documents. Those public documents are described in s 118 itself to mean “the laws”, “the public acts and records” and “the judicial proceedings of every state”. The High Court has held that a single common law of Australia operates in Lange v Australian Broadcasting Corporation,[14] Lipohar v R,[15] John Pfeiffer Pty Ltd v Rogerson[16] and Kirk v Australian Industrial Relations Commission.[17] Accordingly, the unity of the common law throughout Australia means that there is not a separate common law for each state to which full faith and credit could be given. In Breavington v Godleman,[18] various observations were made about the evidentiary effect of s 118, especially in the judgment of Dawson J. Deane J held that s 118 served to confirm the national character of the Australian legal system.
[14] (1997) 189 CLR 520
[15] (1999) 200 CLR 485
[16] (2000) 203 CLR 503
[17] (2010) 239 CLR 531
[18] (1988) 169 CLR 41
In the 2015 revised edition of Quick & Garran’s Annotated Constitution of the Australian Commonwealth commentary about s 118 is set out. It is in the following terms –
Section 118 contains a constitutional declaration in favour of inter‑state official and judicial reciprocity, which the Federal Parliament and the States may assist to effectuate, but which they cannot prejudice or render nugatory; the Federal Parliament being enabled to carry it into execution by sec. 51—xxiv. and xxv., and the States in the exercise of their reserved powers.
In the arena of federal courts in Australia, the learned authors of the ninth edition (2014) of Nigh’s Conflict of Laws in Australia record the position of federal courts giving full faith and credit to decisions of other federal courts as being grounded in policy rather than in constitutional law. The policy is said to lie in the desirability of avoiding conflicting orders. Thus, in Re Baxter; ex parte Official Receiver v Baxter,[19] as well as in Official Trustee in Bankruptcy v Turner,[20] the Federal Court of Australia gave full faith and credit to orders of the Family Court of Australia. A similar view was adopted in Official Trustee in Bankruptcy v Mateo.[21]
[19] (1988) 10 FCR 398
[20] (1994) 94 FCR 512
[21] (2003) 94 CLR 512
It will be immediately apparent that Mr Saxton’s complaint was not properly grounded in s 118 of the Constitution.
Is the applicant a corporation?
Next, Mr Saxton asserted that Red Energy Pty Ltd was not a “legal corporation under federal laws”.
I disagree.
It was incorporated under the Corporations Act. It has an Australian Company Number.[22] It has a registered office.[23] Pursuant to the Corporations Act it has perpetual succession. It also has power to sue in a court of competent jurisdiction including the Magistrates’ Court where it obtained the judgment debt and in this court where it pursued Mr Saxton’s bankruptcy. In my view it had standing to commence this proceeding.
Is the Corporations Act invalid?
[22] ACN 107 479 372
[23] Sydney NSW 2000
Next, Mr Saxton argued that the Corporations Act “had not been passed into valid law”.
Questions about the constitutional validity of the Corporations Law were addressed by the High Court in Re Wakim; ex parte McNally.[24] But the assertion Mr Saxton addressed related to whether the Corporations Act 2001 was validly passed by parliament. He adduced no evidence to show that it was not validly enacted. I reject his assertions.
Section 78B of the Judiciary Act
[24] (1999) 198 CLR 51
Mr Saxton relied on s 78B of the Judiciary Act to contend that I must, in the discharge of the duty there stated, not proceed with this case until relevant notices to Attorneys-General had been given.
I decline to do as he seeks.
No constitutional issue is raised in this case. This case is one involving a person’s indebtedness to an energy supplier and his refusal to meet payment for the electricity so supplied.
Mr Saxton failed to persuade me that he was entitled to an order discharging the sequestration order.
The consequences of his bankruptcy
In debate with Mr Saxton I raised with him the seriousness of his bankruptcy. I offered him the chance to compromise his debt with the petitioning creditor. He said he wanted to run this case instead, even though the amount involved was relatively small. Collier J spoke of a sequestration order resulting in bankruptcy as being a very serious matter in Mulhern v Pearce (No.2).[25] That was an understatement. Sir William Holdsworth KC’s A History of English Law (1925) referred to the practice in the reign of Henry VIII of shutting up an honest but unfortunate debtor in prison to live in charity or at his own expense or death by starvation. The Bankruptcy Act of 1883 (46 & 47 Vict., C. 52) operated in conjunction with the Debtors Act, the latter legislation permitting the imprisonment of the bankrupt with or without hard labour. In Baldwin, The Law of Bankruptcy and Bills of Sale (1895) the learned author pointed out how the making of a bankruptcy order in relation to the master terminated any relationship of apprenticeship between the apprentice and the master. Potter, Adams and Dickson pointed out in The Elementary Principles of the Law of Bankruptcy and Deeds of Arrangement (1932) that in its early emanation, bankruptcy law was penal in nature. It regarded the insolvent man as a wrongdoer. The insolvent person adjudged bankrupt forfeited his rights to control the use of his property and it was taken from him and placed in the hands of a person responsible for its administration. Cases involving fraudulent debtors were dealt with in the Star Chamber such as Twyne’s Case.[26]
[25] [2014] FCA 805
[26] Mich. 44 Eliz (3 Coke Report 81)
The history surrounding the origin of bankruptcy law in 1543 to 1962 was traced in the very useful Report of the Committee Appointed by the Attorney-General of the Commonwealth to review the bankruptcy law of the Commonwealth.[27]
[27] Commonwealth, Report of the Committee Appointed by the Attorney-General of the Commonwealth to Review the Bankruptcy Law of the Commonwealth, Parl Paper No 1964/65 (1965)
Suffice to say that very serious intrusions into a person’s personal affairs are made by a sequestration order. Chief among them are the loss of a person’s unfettered entitlement to own property and to carry on his or her financial matters unsupervised. Bankruptcy ordinarily affects a person’s reputation. I respectfully support the characterisation given by Collier J of a person’s bankruptcy being a serious matter.
But in this case Mr Saxton has chosen to adopt what can only be described as an obdurate approach to Red Energy Pty Ltd’s claim. Rather than attempting to negotiate to settle the claim, Mr Saxton has chosen to advance an array of dubious or ill-directed legal arguments, causing costs to increase. He failed to advance any point of substance especially as he conceded that he was obliged to pay some amount for the electricity he used. This was all the more peculiar having regard to the serious consequences of his remaining a bankrupt.
For those reasons I dismiss the application for review filed 30 August 2018.
I order Mr Saxton to pay the costs of Red Energy Pty Ltd.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson
Associate:
Date: 29 January 2019
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