Rizzuti, E. v Colin Daley Quinn & Co & Peter J. Dwyer

[1990] FCA 715

Re: ERNESTO RIZZUTI
Ex Parte: COLIN DALEY QUINN and CO. and PETER J. DWYER
No. B815 of 1990
FED No. 715
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
GENERAL DIVISION
Gummow J.(1)

CATCHWORDS

Bankruptcy - application to set aside bankruptcy notice - whether Court should "go behind" judgment on which bankruptcy notice based - bankruptcy notice brought in business name of creditors, a firm of solicitors - members of firm not identified - Bankruptcy Act 1966, s. 307.

Bankruptcy Act 1924, s. 33

Bankruptcy Act 1966, s. 307

Bankruptcy Act 1914 (U.K.), s. 119

Wren v Mahony (1972) 126 CLR 212

Olivieri v Stafford (1989) 91 ALR 91

Bell v Peter Browne and Co. (a firm) (1990) 3 All ER 124

Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86

Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534

Re Wheeler and Reynolds (A Firm); Ex parte Kerr (1988) 20 FCR 185

Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372

Trojan v Corporation of Hindmarsh (1987) 16 FCR 37

Re Stirling; Ex parte Webb Ross and Co. (1990) 1 NZLR 569

HEARING

SYDNEY

#DATE 17:12:1990

The debtor/applicant appeared in person.

Counsel and solicitors for Mr P. Brereton instructed
the creditors/respondents: by Messrs Minter Ellison.

ORDER

1. That the time for compliance with bankruptcy notice No. B815 of 1990 dated 28 May 1990 be extended until 4 p.m. on 8 January 1991.

2. That the applicant pay the costs of the respondents of the application filed 18 June 1990, but only as part of their costs on any petition based upon non-compliance by the applicant with bankruptcy notice No. B815 of 1990. Otherwise, no order as to the costs of the application.

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

Introduction

This is an application filed by the debtor 18 June 1990. In his application, Mr Rizzuti seeks the setting aside of a bankruptcy notice dated 28 May 1990 or an extension of time for compliance with this notice. A Registrar of this Court on 14 August 1990 extended until further order the time for compliance with the notice and gave leave to the parties to approach the District Registry for a date for a "special fixture". The hearing commenced before me on 23 October 1990 and was adjourned to 27 November 1990.

1. In the bankruptcy notice, the judgment creditors, identified as "Colin Daley Quinn and Co. and Peter J. Dwyer", and described as "the judgment creditor" (sic), seek payment of a sum of $5,554.63 pursuant to a judgment awarded to them for costs on a party/party basis in matter No. 10620 of 1988 in the Common Law Division of the Supreme Court of New South Wales at Sydney. This sum is based on a Certificate of Taxation issued 6 July 1989 for $4,846.05, with the balance being interest from that date until 26 March 1990, the date upon which the creditors made application for issue of the bankruptcy notice.

2. This matter has a long and complicated, if not labyrinthine, history involving apart from this Court several proceedings in the Local Court of New South Wales, the District Court of New South Wales, the Supreme Court of New South Wales and the Court of Appeal of the Supreme Court of New South Wales. In order to appreciate the background to this application, it will be necessary to go into the history of proceedings between the parties in some detail. But I bear in mind, from the outset, the principles controlling the extent to which in a proceeding of this kind this Court may "go behind" the judgment on which the bankruptcy notice is based: Wren v Mahony (1972) 126 CLR 212; Olivieri v Stafford (1989) 91 ALR 91.
   History

3. The genesis of these proceedings was an action commenced by the debtor as plaintiff in proceedings No. 11011 of 1985 in the District Court of New South Wales in May 1985 against "Colin Daley Quinn and Co.". In these proceedings ("the 1985 District Court matter"), Mr Rizzuti alleged professional negligence against Colin Daley Quinn and Co. ("the firm"), which had acted as his solicitors in a number of Local and District Court matters in 1979.

4. It was alleged by Mr Rizzuti that the firm was liable for "damages and professional negligence" in its handling and conduct of the following matters. First, it had acted for Mr Rizzuti as complainant in proceedings in 1979 before the Court of Petty Sessions (as the Local Court was then called) at Kogarah in Sydney brought under s. 52 of the Noise Control Act 1975 (N.S.W.) ("the Noise Control Act"). These proceedings were initiated by Mr Rizzuti against a neighbour, Mr Talarico, for the issue of a noise abatement order. Secondly, interwoven with these proceedings were criminal proceedings against Mr Rizzuti in 1979 in the same Local Court, relating to the use of unseemly words in contravention of the Summary Offences Act 1970 (N.S.W.), s. 9. Mr Rizzuti had also instructed the firm to act on his behalf in the criminal matter and, after his conviction for this offence in the Local Court, on his appeal to the District Court late in 1979. Hicks D.C.J. dismissed the appeal, finding the offence proved but ordering, pursuant to s. 556A of the Crimes Act 1900 (N.S.W.), that the conviction not be recorded. Mr Rizzuti alleged that the firm was liable for professional negligence in these criminal proceedings as well, in that they failed to call six available witnesses to corroborate his testimony.

5. Mr Rizzuti had also made numerous complaints and representations concerning both the civil and criminal matters to various authorities including the State Pollution Control Commission, officers of Rockdale Municipal Council, the Ombudsman of New South Wales and the Law Society of New South Wales. It was from these matters and contemporaneous complaints and representations to various bodies that there emerged the basis for the 1985 District Court matter against the firm for professional negligence. And the root cause lay in what can be fairly described as a feud between neighbours, who were also relatives, Mrs Rizzuti being a cousin of Mr Talarico. It focussed largely on Mr Rizzuti's complaints about Mr Talarico's activity on the neighbouring premises with a refrigerated truck used by Mr Talarico to preserve smallgoods which were carried by him in his trade. Mr Rizzuti alleged this constituted a nuisance in terms of the Noise Control Act.

6. It should be borne in mind that Mr Rizzuti appears to have conducted his own legal affairs, including appearances in Court, and filing and serving of various documents, for most of the proceedings since 1979 (one clear exception to which I will return later being 1981 proceedings in the Local Court which themselves gave rise to another District Court action for professional negligence against another firm of solicitors in matter No. 11013 of 1985). He has also acted through a Court Interpreter on several of his appearances before various courts, including this Court. Mr Rizzuti has a limited facility in speaking English. He grew up in Italy, and Italian remains his first language. A large number of affidavits and other documents have been filed in the various proceedings, but much of this material appears to be irrelevant or to have been duplicated.

7. This brings me back to the 1985 District Court matter, in which Mr Rizzuti brought an action against the firm "for damages and professional negligence". On 25 October 1985, Nash D.C.J. struck out the plaintiff's statement of claim upon a motion filed by the defendants. It had been contended by the solicitors for the defendants that the statement of claim (apparently drawn by Mr Rizzuti) had not disclosed any reasonable cause of action and that there had been a failure to supply the particulars required by Part 9 Rule 19 of the District Court Rules. On 3 December 1985, Nash D.C.J. ordered Mr Rizzuti to pay the costs of the defendants of the motion and proceedings generally. These costs were taxed and allowed at the sum of $1,077.47 pursuant to a Certificate of Taxation of an Assistant Registrar of the District Court dated 15 November 1989. The judgment creditors sought the issue of a Writ of Execution to enforce the judgment for these costs on 20 December 1989 and the writ was issued that day; pursuant to this writ, a Sheriff of the District Court seized various property of the judgment debtor on 8 February 1990. However, further execution of this writ was stayed on 21 February 1990, following Mr Rizzuti's application to the District Court to pay the judgment debt by instalments, in the sum of $400 per month. On 25 July 1990, the return of this writ expired. There is no evidence as to what if anything has happened since this date regarding these costs; presumably they have been paid.

8. After the striking out of the 1985 District Court matter, Mr Rizzuti commenced another set of proceedings in the District Court against the firm in 1986 (No. 22114 of 1986). It was in these proceedings that "Peter J. Dwyer" first made an appearance as a named party, added as apparently the second defendant. The allegations in these proceedings ("the 1986 District Court matter") were in substance the same as in the 1985 District Court matter. As Studdert J. observed in the Common Law Division of the Supreme Court of New South Wales in his judgment of an appeal from Master Monaghan to which I will shortly come,
   

"It seems to me to be clear that (Mr Rizzuti)

in the proceedings he began in 1986 is complaining about precisely the same matter and is seeking the same relief on the same basis as that in the

proceedings begun (in 1985)".

1. The defendants applied to the Common Law Division of the Supreme Court of New South Wales by summons filed 11 February 1988 to transfer to the Supreme Court the 1986 District Court matter pursuant to s. 145 of the District Court Act 1973 (N.S.W.). The ground for this application was embarrassment: a probable witness in the 1986 District Court matter being Mr Rizzuti's former barrister in his criminal appeal, who had since been appointed as a Judge of the District Court. This application was matter No. 10620 of 1988 ("the 1988 Supreme Court matter"). It was from this matter that there arose the judgment debt which founds the present bankruptcy notice. On 26 February 1988, Master Monaghan in the Common Law Division of the Supreme Court made an order for transfer to the Supreme Court of the 1986 District Court matter in accordance with the summons. The defendants also sought in their summons of 11 February 1988 an order for summary judgment pursuant to Part 13 Rule 5 of the Supreme Court Rules; Master Monaghan made this order on 20 July 1988. This Supreme Court Rule provides for the staying or dismissal of any claim for relief in the Supreme Court where it appears that (a) no reasonable cause of action is disclosed; (b) the proceedings are frivolous or vexatious; or (c) the proceedings are an abuse of the process of the Court.

2. The order made by the Master for summary judgment in favour of the firm was the subject of an appeal, as indicated earlier, to a judge of the Common Law Division of the Supreme Court of New South Wales. Studdert J., on 30 September 1988, affirmed the Master's order. The firm successfully contended before the Master and Studdert J. that Mr Rizzuti's claim was statute barred by s. 14 of the Limitation Act 1969 (N.S.W.). As will be recalled, the events of which Mr Rizzuti complained, that is to say the alleged negligence of the firm, had occurred in 1979, so it appeared that the 1986 District Court matter which had been transferred had been commenced outside the six year period prescribed by the Limitation Act; see, generally, Bell v Peter Browne and Co. (a firm) (1990) 3 All ER 124. The 1985 District Court matter (which had been brought within time) had been struck out. Studdert J. also ordered Mr Rizzuti to pay the costs of the firm of the appeal. The costs of the proceedings before the Master had also been ordered against Mr Rizzuti.

3. A Certificate of Taxation certified on 6 July 1989 allowed costs on a party/party basis of the proceedings before the Master in the sum of $4,846.05. A later Certificate of Taxation certified on 17 July 1989 allowed costs on the same basis of the appeal to Studdert J. in the sum of $1,687.81. It should be noted at this point that the earlier of these certificates, for the sum of $4,846.05, is the basis of the judgment debt which founds the bankruptcy notice in these proceedings. Execution of the judgment in the later certificate was sought against Mr Rizzuti in September 1990 by a Writ for Levy of Property (Exhibit A in the present application). However, the story does not end with these proceedings in the Common Law Division of the Supreme Court of New South Wales.

4. The dispute then moved to the Court of Appeal of the Supreme Court of New South Wales. Mr Rizzuti by notice of appeal filed 26 October 1988 appealed against the decision of Studdert J. in the 1988 Supreme Court matter. The respondents in that appeal, the present judgment creditors, filed a motion on 11 November 1988 seeking, inter alia, dismissal of the appeal pursuant to Part 13 Rule 5 of the Supreme Court Rules. On 17 February 1989, Clarke J.A. of the Court of Appeal delivered judgment on this motion in matter No. CA603 of 1988. In his reasons, his Honour dealt with what he described as the "unhappy history" of Mr Rizzuti's litigation, and described as "somewhat draconian" the order of Nash D.C.J. on 25 October 1985. But his Honour ordered that the appeal be dismissed in accordance with the motion of the respondents and, although expressing sympathy for the position in which Mr Rizzuti found himself, ordered that he pay the respondents' costs of the appeal and of the motion.

5. On 2 May 1990, Mr Rizzuti filed a further summons in the Court of Appeal, numbered as CA40253 of 1990. In this summons, Mr Rizzuti sought leave to appeal from the decision of Nash D.C.J. in the 1985 District Court matter. On 4 June 1990, Handley J.A. held that the proposed appeal was incompetent in accordance with the principles expounded by the majority of the Court of Appeal in Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86, on the basis that it was outside the rights of appeal conferred by s. 128 of the District Court Act 1973 (N.S.W.). The High Court refused an application for special leave to appeal in the Clutha Developments Case in April 1990. His Honour therefore refused leave to appeal, dismissing the summons, and ordered Mr Rizzuti to pay the costs of the respondents.

6. Recently further proceedings have been commenced by Mr Rizzuti in the Common Law Division of the Supreme Court of New South Wales by statement of claim filed 18 October 1990 (Exhibit B in the present application). They are numbered 15972 of 1990. Again, in substance, these proceedings relate to the alleged professional negligence of the firm in 1979. A motion was also filed by Mr Rizzuti on 22 October 1990 in which he sought expedition of the proceedings in the Common Law Division, and the provision of various transcripts and judgments from the earlier proceedings already described. The return date for this motion was 12 November 1990.

7. From the material before me, the history traced above would appear to be an accurate summary of the proceedings between these parties which are in any way relevant to the present proceedings. However, for the sake of completeness, I shall briefly outline other proceedings involving Mr Rizzuti to the extent of which they are in evidence before me.

8. As mentioned earlier in these reasons, there are other proceedings involving Mr Rizzuti and a different firm of solicitors. These proceedings have also given rise to the issue of a bankruptcy notice against Mr Rizzuti. The background is as follows. Mr Rizzuti retained a firm of solicitors, Hancock Alldis and Co. in Local Court proceedings in 1981 for assault. In 1985, he instituted proceedings against this firm in the District Court "for damages and professional negligence" on the basis of the conduct of the 1981 Local Court proceedings (District Court matter 11013 of 1985).

9. The course of the proceedings involving Hancock Alldis and Co. appears to have been similar to those involving the present creditors. On 25 October 1985, Nash D.C.J. ordered the striking out of the District Court proceedings. On 3 December 1985, it was further ordered by Nash D.C.J. that Mr Rizzuti pay the defendant's costs of the proceedings. Mr Rizzuti then initiated further District Court proceedings on 16 May 1986 against Hancock Alldis and Co. (matter 18307 of 1986). These proceedings were heard on 8, 9 and 11 February 1988 before Shadbolt D.C.J. On 12 February 1988, judgment with costs was given for the defendants. Mr Rizzuti filed a Notice of Appeal against this judgment with the Registry of the Court of Appeal of the Supreme Court of New South Wales on 4 March 1988 (No. CA 93 of 1988). Orders were made that the appeal be stayed until Mr Rizzuti lodged the sum of $4,000 as security for costs of the appeal. In November 1988, McHugh J.A. and in July 1989, Clarke J.A. extended the time for supplying this security. On 9 October 1989, Mahoney J.A. made a self-executing order that unless the security was lodged on or before 11 December 1989, the appeal would be dismissed with costs. Mr Rizzuti complied with this order on 7 December 1989.

10. However, also in late 1989 Hancock Alldis and Co. had issued a bankruptcy notice against Mr Rizzuti for the costs awarded to them by Shadbolt D.C.J. in the District Court, in the sum of $8,031.88 (including interest). The bankruptcy notice was issued on 31 August 1989 in this Court, in matter B3489 of 1989. The notice was issued in the name of the following "judgment creditor" (sic): "KENNETH BRUCE HANCOCK, BRUCE HONEYMAN, MICHAEL JOHN STILES, and EDWARD ALBERT HANCOCK t/as HANCOCK ALLDIS and CO."

11. After the time for compliance with the notice had been extended on several occasions, the matter came before Burchett J. on 20 March 1990 for hearing of Mr Rizzuti's application of 28 September 1989 that the notice be set aside. His Honour gave ex tempore reasons for judgment and ordered that (i) the time for compliance with the notice be extended until further order; (ii) in case the appeal in the Court of Appeal was not prosecuted by Mr Rizzuti with due diligence, the creditors be granted liberty to apply on 21 days' notice to the Court to have the extension cut short; and (iii) the costs of that day be reserved. Nothing further appears to have occurred in this matter since his Honour's orders. Moreover, there is no evidence as to the progress of the appeal in the Court of Appeal after 20 March 1990 - at that date, the appeal index was not settled.
    "Going Behind" the Bankruptcy Notice

12. I shall now return to the present application by Mr Rizzuti.

13. Mr Rizzuti makes allegations against the firm and against various judicial officers who have played a role in the history of the litigation. In particular, he asserts, in effect, that the bankruptcy notice is based upon a judgment for costs awarded against him in proceedings tainted by collusion and fraud. No proceedings have been instituted in the Supreme Court to set aside the judgment for fraud, in accordance with the principles explained most recently in Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534. Rather, the applicant seeks to have this Court enter upon and determine that issue. Notwithstanding bulky documentation proffered by Mr Rizzuti, from which I have sought to distil the account of his litigation given earlier in these reasons, there is no basis upon which I could find any reasonable chance that he would succeed if this Court were to "go behind" the judgment upon which the bankruptcy notice is based.

14. Mr Rizzuti has appeared for himself, in this and in other Courts, and is embittered by what he sees as the refusal by various firms of solicitors to act against another firm. He also is embittered by his belief that he was dealt with brusquely at several stages in the State courts, particularly when no reasons, or no considered reasons, for judgment were given to explain decisions made against him. His jaundiced view of the legal process stems also from the circumstance that it was his former lawyers who successfully pleaded against him the statute of limitations to a complaint by him as to their professional competence. From these and other elements, it appears that Mr Rizzuti has nourished his belief that he is the victim of a judgment fraudulently obtained. But in truth that last step is a serious non sequitur. There are no circumstances tending to show fraud or collusion; cf Wren v Mahony (1972) 126 CLR 212 at 223.
    The Form of the Bankruptcy Notice

1. In the proceedings which were commenced in the District Court and transferred into the Supreme Court (being the proceedings giving rise to the judgment debt founding the present bankruptcy notice) Mr Rizzuti sued "Colin Daley Quinn and Co. and Peter J. Dwyer". The members of the firm were not identified, and were sued in their business name within the meaning of Part 46 Rule 1 of the District Court Rules, and Part 64 Rule 1 of the Supreme Court Rules. Amendments had not been made by Mr Rizzuti to ensure that the proceedings were continued by him against the members of the firm in their individual names (as stipulated by Part 46 Rule 4 of the District Court Rules, and Part 64 Rule 5 of the Supreme Court Rules) before the defendants successfully applied for removal into the Supreme Court and for summary judgment. The form of the judgment for costs which the defendants obtained has been followed in the bankruptcy notice.

2. Section 307 of the Bankruptcy Act 1966 has its antecedents in s. 33 of the Bankruptcy Act 1924, and in s. 119 of the Bankruptcy Act 1914 (U.K.). It provides:
   

"Any person or persons carrying on business

under a firm name may take proceedings or be

proceeded against under this Act in the firm name, but in that case the Court may, on the application of an interested person, order the name of the

person or the names of the persons so carrying on business to be disclosed and verified in such

manner as the Court directs."

(Counsel for the judgment creditors referred to s. 119 of the British Act, but not to the Australian provisions.) No difficulties of the kind dealt with in Re Wheeler and Reynolds (A Firm); Ex parte Kerr (1988) 20 FCR 185 at 189-190 arise in this case. Mr Rizzuti initiated the proceedings from which the judgment debt against him arose, and made no application to this Court for disclosure of the names of the members of the firm.

Conclusion

1. I should allow Mr Rizzuti a short period in which to comply with the bankruptcy notice; if he does so, he will avoid the commission of an act of bankruptcy which would found a bankruptcy petition against him. But the application to set aside the bankruptcy notice otherwise fails and should be dismissed.

2. I appreciate that Mr Rizzuti quite vigorously asserted that in truth he has quite substantial assets, that he is able to meet his debts as they fall due, and that he is able but unwilling to pay his former debtors, given his view of the history of the dispute with them; cf Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372; Trojan v Corporation of Hindmarsh (1987) 16 FCR 37; Re Stirling; Ex parte Webb Ross and Co. (1990) 1 NZLR 569. These are issues for determination on the hearing of a petition based upon failure to comply with the bankruptcy notice. Nevertheless, Mr Rizzuti may still decide to start to close this chapter in his life by satisfying the judgment debt which founds the bankruptcy notice, in accordance with the terms of the notice. I will extend the time for compliance to 8 January 1991 at 4 p.m.

3. In all the circumstances of this case, the respondents to the application will have their costs, but only as part of their costs on any petition based upon non-compliance by Mr Rizzuti with the bankruptcy notice. Otherwise there will be no order as to costs of the application.