Renshaw v Queensland Mining Corporation Ltd
[2015] FCCA 1555
•4 June 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RENSHAW v QUEENSLAND MINING CORPORATION LTD | [2015] FCCA 1555 |
| Catchwords: BANKRUPTCY – Application to set aside the bankruptcy notice – whether the applicant has a counterclaim, set-off or cross-demand equal to or exceeding the judgment debt the subject of the bankruptcy notice – issue estoppel – Anshun estoppel – application dismissed. |
| Legislation: Bankruptcy Act 1966 ss.27, 30, 40, 41 |
| Queensland Mining Corporation v Renshaw [2014] FCA 365 Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 44 FLR 135 Renshaw v Queensland Mining Corporation [2014] FCAFC 172 Truthful Endeavour Pty Ltd v Condon (Trustee), in the matter of Rayhill (Bankrupt) [2015] FCAFC 70 |
| Applicant: | HOWARD RENSHAW |
| Respondent: | QUEENSLAND MINING CORPORATION LTD (ACN 109 962 469) |
| File Number: | SYG 211 of 2015 |
| Judgment of: | Judge Street |
| Hearing date: | 4 June 2015 |
| Date of Last Submission: | 4 June 2015 |
| Delivered at: | Sydney |
| Delivered on: | 4 June 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr J.T. Johnson |
| Solicitors for the Applicant: | Beazley Singleton Lawyers |
| Counsel for the Respondent: | Mr N. Furlan |
| Solicitors for the Respondent: | Kemp Strang |
ORDERS
The application be dismissed.
The applicant pay the respondent’s costs in the application.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 211 of 2015
| HOWARD RENSHAW |
Applicant
And
| QUEENSLAND MINING CORPORATION LTD (ACN 109 962 469) |
Respondent
REASONS FOR JUDGMENT
This is an application in the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 in respect of an application under s.41(7) to set aside a bankruptcy notice served on the applicant. The amount being sought by the bankruptcy notice is the sum of $382,273.81. Section 41(7) of the Bankruptcy Act provides as follows:
Section 47 - Bankruptcy notices
…
(7) 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 counter-claim, 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 counter-claim, 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) provides:
Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia--within the time specified in the notice; or
(ii) where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, 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 counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
In determining whether or not the Court is satisfied that the applicant has a counterclaim, set-off or cross-demand equal to or exceeding the amount identified in the bankruptcy notice, I take into account the principles identified by Lockhart J in Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 44 FLR 135 at [140]. The Federal Circuit Court (Bankruptcy) Rules2006 r.3.02 provide as follows:
(1) An application to set aside a bankruptcy notice must be accompanied by:
(a) a copy of the bankruptcy notice; and
(b) an affidavit stating:
(i) the grounds in support of the application; and
(ii) the date when the bankruptcy notice was served on the applicant; and
(c) a copy of any application to set aside the judgment or order in relation to which the bankruptcy notice was issued and any material in support of that application.
(2) If the application is based on the ground that the debtor has a counter-claim, set-off or cross demand mentioned in paragraph 40(1)(g) of the Bankruptcy Act, the affidavit must also state:
(a) the full details of the counter-claim, set-off or cross demand; and
(b) the amount of the counter-claim, set-off or cross demand and the amount by which it exceeds the amount claimed in the bankruptcy notice; and
(c) why the counter-claim, set-off or cross demand was not raised in the proceeding that resulted in the judgment or order in relation to which the bankruptcy notice was issued.
The affidavit of Mr Renshaw was purported to quantify the amount of the counterclaim, set-off or cross-demand, but did not set out full details of the counterclaim, set-off or cross-demand, nor did it set out why the counterclaim, set-off or cross-demand was not raised in the proceedings that resulted in the judgment or order beyond a bald contention that was admitted into evidence only on the basis that it was a submission.
The Federal Circuit Court Bankruptcy Rules requirement under r.3.02 is not one satisfied simply by annexing documents that purport to identify a contractual arrangement and a deed of settlement. The affidavit did not comply with the requirements of r.3.02. Mr Johnson sought a dispensation of the requirements of r.3.02 and maintained that insofar as the power could not be found through r.1.03, that the dispensation power found in the general rules of the Federal Circuit Court of Australia was something that was not inconsistent with these rules and further maintained there was power under s.30 of the Act.
I accept that there is power under s.30 of the Act to dispense with the requirements of r.3.02. The principles in relation to which any dispensation should be exercised must take into account the object of the provision, which was clearly to require on a timely basis, a swift determination of whether there was a real cross-claim, counterclaim or set-off and the expeditious procedure required is not of itself, a ground for non-compliance. An expeditious procedure is not of itself, a ground that justifies exemption from the requirement to comply with the rule.
Clearly, the Court will be influenced by the interests of the justice and whether there is, in fact, identified, a real counterclaim, set-off or cross-demand. In this case, Mr Renshaw alleged first, a real claim relating to alleged damages for breach of contract, which is was alleged was terminated by the respondent on 23 October 2012. That damages claim is said to amount to $537,500. That claim is one in respect of which the respondent said there was a clear issue estoppel, as well as an Anshun estoppel, as a result of litigation between the applicant and the respondent that was determined by the Federal Court of Australia in Queensland Mining Corporation v Renshaw [2014] FCA 365 and in respect of which, the Full Court delivered a decision dismissing the appeal and cross-appeal, being Renshaw v Queensland Mining Corporation [2014] FCAFC 172.
In the former case, the issue of whether or not the service agreement annexed to Mr Renshaw’s affidavit had been terminated was the subject of findings by Perry J, relevantly at [112]-[115]:
112. The evidence as to what occurred at the meeting on 16 October 2011 when Mr Renshaw was requested to resign was not in issue: see [40]-[48] above. There was no evidence, for example, that Mr Renshaw was confronted with a threat of dismissal if he did not accept the request to resign, evidence of which may well have established a renunciation of the contract by QMCL. To the contrary, the meeting accepted Mr Renshaw’s position that he would not resign unless and until he was happy with the terms and conditions of the termination of his employment as Managing Director. As such, in my view, the conduct of QMCL at that meeting was such as would convey to a reasonable person in Mr Renshaw’s position that QMCL would continue to abide by the terms and conditions of the agreement unless and until agreement was reached as to the terms and conditions on which Mr Renshaw might resign.
113. Nor in my view does the evidence suggest at that stage that there was any intention by QMCL to terminate the November 2011 Services Agreement insofar as it related to the provision of services by Butmall, separate from those provided by Mr Renshaw as managing director. There was no evidence of that topic being specifically raised at the meeting.
114. Equally in my view, the subsequent conduct of QMCL would not convey to a reasonable person in Mr Renshaw’s position any clear intention to repudiate or disavow the November 2011 Services Agreement. Rather, the conduct of both QMCL and Mr Renshaw is consistent with them being mutually desirous of reaching agreement for Mr Renshaw to resign as managing director on terms and conditions which would see his entitlements under the Services Agreement fully paid out and with which Mr Renshaw was happy. In this regard, Mr Renshaw had the benefit of legal advice from a solicitor engaged by him; it was Mr Renshaw’s legal representative who prepared the draft agreement; and Mr Renshaw’s legal representative was present throughout the negotiations with Mr Renshaw and QMCL on 23 October 2011 at which the Settlement Deed was concluded. Furthermore, Mr Renshaw read the Settlement Deed very carefully before he signed it and would not have signed it unless the moneys were to be paid on the same day, as in fact occurred.
115. It follows that I do not consider that there was a breach of the November 2011 Services Agreement. As a result, I do not consider that the Renshaw defendants can rely upon the exemption from s 200B of the Act contained in s 200F(2).
I accept the respondent’s submission that Mr Renshaw is the subject of an issue estoppel in relation to the allegation of termination of the agreement. For that reason alone, there is no substance and no real claim in respect of the service agreement. I also accept the respondent’s submission that it is clear that the service agreement was a matter, the subject of the proceedings, in respect of which there was a cross-claim brought by Mr Renshaw which was unsuccessful and I accept the respondent’s submission that to the extent that the termination of the agreement was not the subject of any issue estoppel, it is clearly the case that the claim for damages are the subject of an Anshun estoppel.
This is not a case of the same kind identified in Truthful Endeavour Pty Ltd v Condon (Trustee), in the matter of Rayhill (Bankrupt) [2015] FCAFC 70, where there was any relevant reservation that might give rise to the absence of application of an Anshun estoppel. For those reasons, I am not satisfied that there is a counterclaim, set-off or cross-demand of the kind alleged in paragraph 2(a) relating to the service agreement, and on this basis alone, the amount advanced by Mr Renshaw would not be sufficient to equal or exceed the amount, the subject of the bankruptcy notice.
Mr Johnson endeavoured to advance an argument that his client was the subject of an obligation not to approbate or reprobate, by reason of which he was not able to raise the issue sought to be raised in respect of the termination of the agreement and the damages claim advanced in paragraph 2(a). I do not accept that there is any such doctrine that prevented the applicant from advancing or pursuing the alleged claim for termination of the service agreement, indeed it is clear the claims relating to that service agreement were pursued by the applicant. Accordingly, this is a case where it is clear that there is no real counter-claim, set-off or cross-demand relating to the alleged damages for breach of contract and alleged termination as advanced by the applicant.
To the extent that there are items identified in paragraphs (b) and (c) of paragraph 2 to the applicant’s affidavit, I accept the respondent’s submission that each of those are matters that fall within the scope of a deed of settlement entered into between the parties and fall within cl.4.1 which is as follows:
4. 1 Subject to the fulfilment by QMC of its obligations pursuant to this Deed and subject to clause 4.3, the Renshaw parties release and forever- discharge each of QMC (and its directors, officers., employees, consul1anf:s, legal counsel, agents and administrators) and the QMC Parties (and their directors, officers, employees, consultants, legal counsel, agents and administrators) from all actions, causes of action, claims and demands which the Renshaw Parties had, now have or can, shall or may have arising out of or relating to in any way whatsoever any matter, cause or thing including, but not limited to:
a. the Renshaw Agreement and provision of services pursuant to that agreement; and/or,
b. any act or omission by QMC and/or the QMC Parties in connection with Renshaw's position as Managing Director of QMC and/or as a Director and/or Officer of any of the QMC Parties.
director and/or officer of any other of the OMC Parties in addition to QMC.
I take into account in that regard the application of cl.10, which is as follows:
10. Severance
Any provision of this Deed that is- invalid or unenforceable will be read down if possible so as to be valid or enforceable or otherwise severed to the extent of the invalidity or unenforceability, without affecting the validity or enforceability of the remaining provisions of this Deed.
Mr Johnson properly drew the court’s attention to cl.10 but endeavoured to pray in aid the approbation and reprobation argument which, for the reasons I have given, I reject. It is clear that the applicant has no real counter-claim, set-off or cross-demand in relation to the matters identified in paras.2(b) and (c) of the applicant’s affidavit.
In relation to para.2(d) the respondent pointed out that the amended cross-claim filed in the proceedings that were heard in the Federal Court of Australia identified the retraction of a claim which is in substance identical to that advanced by para.2(d) of the applicant’s affidavit. That claim was the subject of an amendment withdrawing the same by way of letter dated 16 December 2013 and there was no reservation of any kind that would give rise to that claim not also being the subject of a clear Anshun estoppel arising out of the final determination of the proceedings between the parties in the Federal Court of Australia.
Accordingly, there is no real claim within para.2(d) of the applicant’s affidavit. Further, I am not satisfied that there is any adequate explanation as to why the counter-claim, set-off or cross-demand was not raised in the proceedings so far as it concerns the requirements of r.3.02(2). The underlying counter-claim, set-off and cross-demand lack any substance and the court is not satisfied that they are real counter-claims, set-offs or cross-demands.
This is not an appropriate case to dispense with the requirements of r.3.02. Accordingly, the affidavit did not comply with the requirements of r.3.02, which is a mandatory requirement unless dispensed with and on that ground the court refuses to set aside the bankruptcy notice. Further, for the reasons I have given above, the court is not satisfied that the applicant has a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt the subject of the bankruptcy notice. The application is dismissed.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 10 June 2015
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