Samootin v Wagner & Anor - [2005] FMCA 1512

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SAMOOTIN v WAGNER & ANOR

[2005] FMCA 1512

BANKRUPTCY – Application to set aside bankruptcy notice and/or extend time for compliance – pending appeal hopeless or without merit.

Bankruptcy Act 1966, ss.30, 41(6A), 41(6C)

Samootin v Shea & Ors (No.2) [2003] NSWSC 695
Goldberg v Morrow [2005] FCA 103
Re: Riggs Ex parte Riggs v Deputy Commissioner of Taxation WA (1986)
12 FCR 310
Jenkins v National Australia Bank Ltd [1999] FCA 1758

Applicant:

ALEXANDRA SAMOOTIN

Respondents:

GISELLE M WAGNER & ADRIAN HOLMES

File Number:

SYG 2039 of 2005

Judgment of:

McInnis FM

Hearing date:

30 September 2005

Delivered at:

Sydney

Delivered on:

30 September 2005

REPRESENTATION

Applicant:

In person

Counsel for the Respondents:

Mr J Stoljar

Solicitors for the Respondents:

Mallesons

ORDERS

The application filed 2 August 2005 be dismissed.
The applicant shall pay the respondents’ costs of and incidental to the application including reserved costs, if any, upon an indemnity basis with costs to be taxed in default of agreement pursuant to order 62 of the Federal Court Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2039 of 2005

ALEXANDRA SAMOOTIN

Applicant

And

GISELLE M WAGNER & ADRIAN HOLMES

Respondents

REASONS FOR JUDGMENT

(Revised from transcript)

This is an application by Alexandra Samootin, the applicant, seeking to set aside a bankruptcy notice. The application, filed on 2 August 2005, seeks to set aside a bankruptcy notice. The grounds relied upon, though not clearly specified in the application itself, appear to relate primarily to the applicant's desire to either delay or set aside the bankruptcy notice, that is to either delay the effect of the bankruptcy notice or set it aside. Delay, for these purposes, includes extending the time for compliance with the bankruptcy notice under s.41(6A) of the Bankruptcy Act 1966 (the Act).
Further, it should be noted that the applicant, who is unrepresented, had otherwise sought in the alternative to adjourn this application. Both the adjournment of the application and the application to set aside and/or extend the time for compliance with the bankruptcy notice, relates specifically to pending proceedings which have been filed by the applicant in the Court of Appeal in the Supreme Court of New South Wales.
Those pending proceedings are in an application number 40603 of 2004 filed on 14 September 2005 which I understand has its first hearing date scheduled for 10 October 2005 at 9.45 am. That application in the Court of Appeal of the Supreme Court of New South Wales seeks to re-open a case and set aside a judgment of Palmer J dated 1 August 2003 in Samootin v Shea & Ors No.2 [2003] NSWSC 695 (the Palmer decision). The application to reopen that case relies upon a claim of fraud and/or what is claimed to be the discovery of fresh evidence. The bankruptcy notice, which is the subject of this application, was issued on 17 June 2005. It claims that the applicant debtor owes Ms Giselle Wagner and Mr Adrian Holmes, the creditors, a debt of $164,529.13.
Annexed to the bankruptcy notice is a schedule and the schedule includes orders made in the Supreme Court of New South Wales on

13 May 2005. Those orders include orders whereby the applicant, in these proceedings, was required to pay the respondents the sums of $155,522.69 and $9,006.44 respectively. There is no issue raised in this case in relation to the form of the bankruptcy notice. There is no issue raised as a result of there being two orders included in the bankruptcy notice.
As I indicated earlier, the application before this court was filed on

2 August 2005. Orders were made in this court by a Registrar on

2 August 2005 and on that occasion the Registrar extended the time for compliance by the applicant with the requirements of the bankruptcy notice up to and including 9 August 2005. Liberty to apply was granted to the parties.
Further orders were made by the court on 9 August 2005 when the matter came before a Federal Magistrate. On that occasion, his Honour ordered that the applicant was to file and serve on or before 23 August 2005, any further evidence in support of either the principal application or any related application and, indeed, any further related application. The respondents were ordered to file and serve any evidence in opposition to the applications on or before 30 August 2005 and the matter was then specially fixed for hearing before this court on

29 September 2005 at 2:15 pm. Time for compliance with the bankruptcy notice was extended up to an including 29 September 2005.
In considering the law in relation to an application of this kind, it is noted that in the matter before this court that the applicant effectively would need to rely upon the court's powers pursuant to s.30 and/or s.41(6)A of the Act. For the present purposes, it is sufficient to indicate that the relevant law in relation to matters of this kind, that is the discretion to be exercised pursuant to s.30 of the Act, does not include what might be described as a general discretionary jurisdiction. Instead I adopt and apply the reasoning of Crennan J of the Federal Court of Australia, as she then was, in the matter of Goldberg v Morrow [2005] FCA 103 at paragraph 18 where her Honour states, in part, the following:
“It is well established that the grounds upon which a bankruptcy notice may be set aside must relate to the form and content of the notice itself, service of the notice, the existence of the debt upon which the judgment and, in turn, the notice is based and any cross demand which the debtor may have against the creditor for a comparable amount.”
Her Honour includes reference to Re: Riggs Ex parte Riggs v Deputy Commissioner of Taxation WA (1986) 12 FCR 310 at 311, 312. In relation to the relevant law concerning the exercise of the court's powers pursuant to s.41(6A) of the Act, I have been referred to and apply the decision of Ryan J in the matter of Jenkins v National Australia Bank Ltd [1999] FCA 1758 as follows:-
“3 I accept, for the purposes of the argument, that the applications for special leave can be treated as proceedings of the kind contemplated by s41(6A) to set aside the judgment on which the present bankruptcy notices have been issued. However, the Court retains a wide discretion whether or not to set aside a bankruptcy notice, even if it is not satisfied as to the matters identified in s41(6C). As Kiefel J said in Re Baker, para 4:
‘Clearly the discretion under the sub-section is at large: see Re Taylor ex parte Deputy Commissioner (1983) 74 FLR 377, 379. But that is to say that account may be taken of whatever factors appear relevant in the particular case. It does not say much of the position where, as here, there is only one factor to consider, namely the existence of a bona fide and arguable appeal which has been instituted and prosecuted with diligence. In such a case I can see no warrant for inquiring into the relevant merits of the grounds of the appeal and forming a view as to its outcome. I can think of sound practical considerations why that course should not be pursued, not the least of which is that what is presented to this Court under the guise of this "factor" going to discretion is not even a fully argued case. If the grounds of appeal were hopeless and completely without merit then a finding could fairly readily be made that it is not an arguable appeal and indeed the view may be taken that it was not instituted bona fide but for the purposes, for instance, of delay. But that is not the case here, and it is noteworthy that the argument about its prospects ranged over some hours.’”
It is sufficient for the present purposes to note in that paragraph that his Honour then accepted that an application for special leave can be treated as proceedings of a kind contemplated by s.41(6A) to set aside the judgment on which the bankruptcy notices were issued.
His Honour further notes that the court retains a wide discretion whether or not to set aside a bankruptcy notice, even if it is not satisfied as to the amounts identified in s.41(6C) of the Bankruptcy Act. It is clear that his Honour refers to and applies the decision of Kiefel J in the matter of Re Baker ex parte Baker and Staples, matters number QN613 (1995) unreported 4 September 1995.
Although Her Honour in that case found the appeal was not instituted for delay purposes and could not be regarded as lacking bone fides the reference nevertheless becomes apposite in the present case.
The applicant before this court is, as I have indicated, unrepresented.

It is clear that she has not had the benefit of legal advice in the preparation of the documentary material relied upon in support of this application. So much is evident from the fact that although voluminous, a great deal of the information is either irrelevant and/or repetitive. Nevertheless, it is to be noted that the applicant relies upon affidavits sworn by her on 1 August 2005, 4 August 2005, 23 August 2005, 6 September 2005, and 27 September 2005. She has otherwise relied upon detailed submissions dated 28 September 2005.
The respondent has relied upon an affidavit of Judy Anne Reid sworn 29 September 2005, and otherwise relies upon written submissions dated 28 September 2005. Neither party has objected to the late filing of the material.
Apart from referring to the claimed pending proceedings in the New South Wales Court of Appeal to which reference has been made earlier in this judgment, the applicant through her affidavit evidence has otherwise raised issues concerning service, a belief that the issuing of the bankruptcy notice was premature and should be set aside and has sought to raise issues of solvency.
It is to be noted that in her affidavit of 23 August 2005 the applicant simply asserts that she is not insolvent. It is perhaps also noteworthy that in the same affidavit the applicant refers to having seven leave to appeal applications in the High Court of Australia. She otherwise deposes in that affidavit and other affidavits as to the further proceedings that she has embarked upon, and revisits in some considerable detail facts sought to be relied upon which clearly demonstrate that this applicant has what can only be described as a genuine belief of an injustice arising out of the Palmer decision and other matters to which brief reference will be made presently.
It is clear in that affidavit of 23 August 2005 in paragraph 25(h) that the applicant was seeking at that point to consider pursuing other course of action. She states the following:
At the moment I am negotiating with the Court of Appeal, Supreme Court, to see which avenue that I can take with the further fresh evidence that has just been discovered. I shall keep the court informed of the situation by way of a further affidavit.
I have deliberately referred to that paragraph as it provides an example of the thought processes which seem evident throughout the material filed and served by the applicant. Indeed, reference has been made to what is described sometimes as ‘advice’ from Registrars. It is clear to me that there is no advice given, rather reference made properly to appropriate rules and courses of action which may or may not be available. The mere fact that officers of a court direct an unrepresented litigant to relevant rules does not mean that they are engaging in negotiations with a party, nor indeed that they are embarking upon a process of providing advice.
The background to this application is indeed a background which follows aptly a description given by the applicant herself as being what can only be described as a ‘nightmare’. To put it another way, this is clearly a litigation saga and I accept in the circumstances that the applicant genuinely wishes that she had not become involved in this litigation saga or, as she describes it, this litigation ‘nightmare’.
Without necessarily adopting them all as final facts, the factual background provided in the outline of submissions by the respondent does at least provide a sufficient overview of the chronology of events. I note further that in the affidavit sworn by Judy Anne Reed there is a very detailed chronology of proceedings which otherwise sets out what can only be described as indeed a nightmare of litigation. It is not necessary for me to refer in detail to those proceedings.
However, I note that in the judgment of Palmer J delivered on 1 August 2003 detailed findings of fact were made by his Honour. It is instructive to refer to certain extracts from his Honour's judgment. In particular, I note the following.
“1 This is a tragic case for all who have been involved in it. The Plaintiff, Ms Samootin, has developed a fixation that she has been a victim of a fraudulent conspiracy between her ex-husband, the First Defendant (“Mr Shea”), and the Second Defendant (“Mr Deans”) whereby she has been cheated out of her home. She has commenced proceedings in the Family Court, in this Court and in the Federal Court, all of which she has conducted herself without legal assistance.
2The reality is that, while Ms Samootin’s share of the net proceeds of sale of her jointly owned former matrimonial property was invested in the properties the subject of these proceedings and her name did not appear on the title to those properties, Mr Shea and Mr Deans have never denied that Ms Samootin had a beneficial interest in the properties commensurate with the proportion of her contribution to the parties’ equity in the properties. Indeed, at Ms Samootin’s request Mr Shea and Mr Deans signed an acknowledgement to that effect in July 1998, well before Ms Samootin commenced these proceedings.
3As far as I am able to determine, these proceedings and the proceedings in the Family Court were never necessary in order to establish Ms Samootin’s interest in the properties because that interest was not in contest.”
Indeed, at Ms Samootin's request, Mr Shea and Mr Deans signed an acknowledgment to that effect in July 1988, well before Ms Samootin commenced these proceedings.
It is noted that further in his Honour's judgment he held as follows:
“17.… there should be findings of the court on the factual issues which would bind the parties by issue estoppels or estoppels by judgment so as to put an end, so far as is possible, to all further controversy between the parties.”
The chronology of events, which I shall recite in brief form, clearly reveals that was a forlorn hope. In the Palmer decision the following details may be extracted as follows which sets out further background to this litigation:
·
In 1988 the applicant became registered proprietor as joint tenant with her then husband, Mr Shea, of a property at

82 Waterview Street, Mona Vale (the Mona Vale property).
·On 27 July 1997 the applicant and Mr Shea entered into a contract for the sale of the Mona Vale property for $401,500.
·
On 18 October 1997 the applicant and Mr Shea located another house at 26 Oxford Falls Road, Beacon Hill

(26 Oxford Falls Road) and made an offer of $365,000 for the purchase of that property, which offer was accepted.
·
On 24 October 1997 the sum of $36,500, being part of the deposit paid by the purchaser of the Mona Vale property, was released to the applicant and her former husband, and a contract was entered into for the purchase of 26 Oxford Falls Road. The contract was in the sole name of

Mr Shea.
·On 25 October 1997 the applicant and her family moved in to 26 Oxford Falls Road. On or shortly after 25 October 1997 Mr Shea and a friend of his, Mr Deans, became aware that the neighbouring property, 24 Oxford Falls Road, Beacon Hill (24 Oxford Falls Road) was also for sale.
·
Mr Shea and Mr Deans acquired a company then known as Shea Dealite Proprietary Limited which they intended to use as the vehicle to develop the two properties at

24 and 26 Oxford Falls Road.
·On 27 October 1997 settlement of the sale of the Mona Vale property took place. The net proceeds of the sale received by the applicant and her former husband were $226,809.79.
·On 7 November 1997 the contract, dated 24 October 1997, for the purchase in the name of Mr Shea of 26 Oxford Falls Road was rescinded, with the consent of the vendor, and in its place a new contract for the sale of 26 Oxford Falls Road was entered into, this time with Shea Dealite Limited as the purchaser.
·On 14 November 1997 Shea Dealite Proprietary Limited entered into a contract for the purchase of 24 Oxford Falls Road for $370,000.
In the Palmer decision His Honour otherwise referred to the events that then followed in these terms:
“29.Settlement of the purchase of the properties was effected on 5 December 1997. Precise details of the source and application of funds for the settlement have not been ascertainable at this stage and will have to be determined in an accounting, but the following appears from the available documentation: the total purchase price in respect of both properties was $735,000; the source of the deposits of $37,000 and $36,500 in respect of the purchases of numbers 24 and 26 respectively was the proceeds of the sale of the Mona Vale property. The moneys paid on settlement of the purchases total $666,351.79. Of that amount, $550,849 was provided by the St George Bank pursuant to a mortgage over numbers 24 and 26 and a mortgage over Mr Deans' property at 33A Oxford Falls Road, Beacon Hill. The balance came from two bank cheques, the exact source of which is presently unknown but probably was the proceeds of sale of the Mona Vale property. Stamp duty on both contracts and other incidental costs and disbursements of the purchases were also paid out of the proceeds of the sale of the Mona Vale property.”
I note that the first respondent was the solicitor on the sale of that Mona Vale property and the purchase of 24 and 26 Oxford Falls Road.
It is noted the applicant commenced proceedings against Mr Shea, Mr Deans, Shea Dealite Pty Ltd and others including the respondents in the Supreme Court of New South Wales. However, as indicated in the extract to which I referred earlier from the Palmer decision, it was made clear in that judgment that Mr Shea and Mr Deans never denied that the applicant had an equitable interest in 24 and 26 Oxford Falls Road commensurate with her contribution to the parties' equity on the properties.
As indicated in the extract from his Honour's judgment earlier, his Honour stated that as far as he was able to determine, these proceedings and the proceedings in the Family Court were never necessary in order to establish Ms Samootin's interest in the properties because that interest was not in contest.
It is not necessary for the court to provide a detailed analysis of the chronology of events which I have referred to earlier which appear to have been set out adequately in the affidavit of Ms Reid. Nevertheless it is noted that on 4 July 2003, the Court of Appeal in proceedings 41053 of 2002 dismissed an application for leave to appeal from various interlocutory orders made by Palmer J with costs.
On 1 August 2003, as indicated earlier, Palmer J delivered his judgment. The effect of that judgment was to dismiss the applicant's claim against the respondents with costs. The claims against other defendants, including Mr Shea and Mr Deans, were referred to for the taking of accounts, which I understand and it is common ground is incomplete.
On 3 June 2004, the Court of Appeal dismissed an appeal from the judgment of Palmer J. The applicant had commenced an application for special leave to appeal to the High Court from, amongst other things, the judgments of the Court of Appeal on 3 June 2004 dismissing the appeal from the judgment of Palmer J.

In a stay application heard in the High Court of Australia on 29 March 2005, it is noted that McHugh J of that court stated that the applicant's application for special leave “did not have any prospects of success”.
On 13 May 2005, following an assessment of costs, the Supreme Court gave judgments in relation to the costs in which the applicant was ordered to pay the respondents in the proceedings. Those judgments are the judgments annexed to the bankruptcy notice referred to earlier in this decision. In summary, they provide as follows: that in application 1973/2001, being the proceedings before Palmer J which gave rise to the 2003 judgment, including the application to the Court of Appeal on 10 July 2003, judgment in the amount of $155,522.69 was awarded and in application 41053/2002, being the proceedings for leave to appeal from earlier orders made by Palmer J which were dismissed with costs by the Court of Appeal on 4 July 2003, an amount that the judgment allowed was $9006.40. It is not disputed that the applicant failed to pay the amounts claimed to be owing on those judgments.
In the material relied upon by the applicant it is clear in my view that the application currently pending in the Court of Appeal of the Supreme Court of New South Wales seeking to re-open the case relies, as indicated earlier, upon claims of fraud and/or discovery of fresh evidence. In the material relied upon by the applicant in that application before the Court of Appeal she has sought to assert that there is indeed fresh evidence and has otherwise sought to further assert, or one might indicate continue to assert, that the judgment should be set aside for fraud.
It is noted that in her material before this court, exhibit AS1 to the affidavit sworn by the applicant on 27 September 2005, that the applicant refers to paragraph 26 of a judgment of their Honours Bryson and Gyles JJ delivered on 16 May 2005. That judgment contains the following in paragraph 26:
“However, it is not proper to re-open consideration of what in substance was considered on the earlier appeal an application for leave to appeal. With such applications as with other interlocutory applications there ought to be some substantial new ground or circumstance warranting reconsideration before the power to give renewed interlocutory consideration is exercised.”
It is clear to me on a proper reading of the voluminous material that the applicant has in fact sought to rely upon that passage as providing, in a sense, some form of encouragement to pursue the present pending application before the Court of Appeal of the Supreme Court of New South Wales, and although the applicant has otherwise sought to rely upon the relevant rules in the Supreme Court of New South Wales, it is clear to me that what has occurred and I find as a matter of fact is that the applicant is now seeking to re-agitate matters which could and should have been raised on an earlier occasion and has done so having regard to the chronology of events to which I referred to earlier after her application to set aside the bankruptcy notice was filed in this court and well after the bankruptcy notice was served upon her.
The pending proceedings in the Court of Appeal on the face of it, I find, appear to be without merit and do not, in my view, appear to raise what could properly be regarded as an arguable case, given that both issues concerning whether there is fresh evidence and whether it could properly be argued that there is now evidence of fraud could not be sustained in circumstances where considerable time has passed. In any event, during the course of his judgment, Palmer J accurately and succinctly identified the grievance then felt by the applicant before his Honour and properly characterised that grievance as being one where the applicant felt she had been deprived of her home by the fraudulent conduct of others.
As to any suggestion of fresh evidence, whilst the applicant from the bar table sought to argue that the obtaining of the fresh evidence had been delayed due to ill health, the fact of the matter is that the chronology of events, which I have only described briefly, indicates the applicant's clear capacity to pursue in some detail proceedings both in this court and elsewhere. Indeed, her capacity to provide and produce what can only be described as voluminous material itself demonstrates a capacity, if indeed there be other fresh evidence, to obtain that evidence earlier.
In any event, on my reading of the proposed fresh evidence, it seems to me that a proper characterisation of that evidence is that it appears to be vague and unhelpful, hence I conclude in the present case that I am not satisfied, on the material before me, that the pending action in the Court of Appeal of the Supreme Court of New South Wales is arguable and I further find in fact on my assessment of the material it would appear on the face of it to be what the authorities would describe otherwise as a hopeless case.
Other issues that were raised in this matter include issues of solvency and service of the bankruptcy notice.
The issue of solvency in my view is not a matter which is relevant to take into account on an application to set aside a bankruptcy notice.
The issue of service, however, in my view, is not a real issue in this matter, having regard to the applicant's own affidavit evidence sworn

1 August 2005 where in paragraph 2 she deposes:
“On 14 July 2005 when I came home I found a plain brown envelope that had been placed on my garage doorstep with my name and address that had been handwritten on the front of it. Enclosed in the envelope was the bankruptcy notice.”
In this matter it is my concluded view that there is no reasonable or arguable case currently pending in the Court of Appeal of the Supreme Court of New South Wales. I further accept, however, that even if there was some merit in those proceedings, then that of itself does not necessarily provide a proper basis upon which the bankruptcy notice should be set aside. Those matters may be raised upon proper evidence and considered on merit if and when a creditor’s petition is filed arising out of the act of bankruptcy based, as it inevitably will be based, upon the bankruptcy notice.
It is my concluded view that this application is an application without merit. For the reasons given, it follows therefore that the application should be dismissed.
In dismissing the application before this court it should also be noted that during the course of the submissions, what I take to be effectively an application to simply adjourn this application to set aside the bankruptcy notice was made. That application, in my view, is inextricably connected with the proposal that there should be some further delay, having regard to the pending appeal in the Court of Appeal of the Supreme Court of New South Wales.
For the reasons given, it is not appropriate, in my view, to allow the application to set aside the bankruptcy notice based on the pending appeal and likewise in my view nor could it form any proper basis upon which any adjournment should be granted in relation to this application. Accordingly it follows the application should be dismissed with costs.

Costs

On delivering the reasons for judgment I indicated that the application filed 2 August 2005 should be dismissed with costs.
Counsel for the respondents has submitted that the appropriate order for costs is the applicant should pay the respondents costs upon an indemnity basis. In support of that application counsel has submitted that the application now dismissed was without merit and further sought to rely upon correspondence dated 5 August 2005 from the respondents solicitors addressed to the applicant. That correspondence responds to other correspondence by the applicant addressed to the respondents’ solicitors dated 4 August 2005.
It is not necessary to refer in detail to the correspondence from the applicant save to note that it is that correspondence which is the subject of a reply from the solicitors for the respondents dated 5 August 2005 which in part states under the heading ‘Withdrawal of Application to Set Aside Bankruptcy Notice’ the following:
“5.1We believe that there is no proper basis to set aside the Bankruptcy Notice.
5.2We request that you withdraw the Application to set aside the Bankruptcy Notice immediately.
5.3 If you do not withdraw the application we reserve the right to submit this letter in support of an application for indemnity costs order against you.”
That letter, as I have indicated is dated 5 August 2005. A great deal of affidavit material has been filed and served since that date but having regard to my ex tempore judgment delivered this day it is clear to me that the further material did not in any substantive way add to the merit of this application which in my view is indeed an application without merit. That factor, combined with the content of the letter dated

5 August 2005 in the exercise of the court's discretion in relation to the award of costs on an indemnity basis persuades me that this is indeed an appropriate case in which to exercise a discretion in the manner submitted is appropriate by counsel for the respondents.
In my view, the application to set aside the bankruptcy notice is without merit and the letter dated 5 August 2005 clearly at an early date prior to a previous hearing date in this matter, had put the applicant on notice in relation to the lack of merit of the application and that the respondents had reserved the right to seek indemnity costs against the applicant. For those reasons it is my view that the appropriate orders of the court are:
The application filed 2 August 2005 be dismissed.
The applicant shall pay the respondents’ costs of and incidental to the application including reserved costs, if any, upon an indemnity basis with costs to be taxed in default of agreement pursuant to order 62 of the Federal Court Rules.
They are the orders of the court. I direct that the reasons for judgment I have just given be transcribed and upon review shall constitute my reasons for judgment both in relation to the substantive matter and my decision in relation to costs.

I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 30 September 2005