Shephard v Blueberry Farms of Australia (Corindi) Ltd
[2001] FMCA 2
•1 February 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
Derek George Shephard v Blueberry Farms of Australia (Corindi) Limited [2001] FMCA 2
BANKRUPTCY – bankruptcy notice – error in certificate of judgment annexed to the notice – use of former name of creditor – failure to include telephone number of court registry – whether correct statutory provision under which interest was claimed was referred to – whether errors or omissions invalidated the bankruptcy notice – claim by debtor of counterclaims, set-offs or cross demands of equal or greater value than judgment debt – costs in favour of self represented litigant
Bankruptcy Act 1966 (Cth), ss 30, 40(1)(g), 41(2), 41(6A), 41(7), 306 – Federal Court of Australia Act 1976, s.32AB – Fair Trading Act 1987 (NSW) – Trade Practices Act 1974 (Cth) – Acts Interpretation Act 1901, s.25C – Supreme Court Act 1970 (NSW), s.95 – Local Courts (Civil Claims) Act (1970) (NSW), s.39 – Local Courts (Civil Claims) Rules 1988 (NSW), part 13 – Magistrates Court Act (1989) (Vic) – Supreme Court Act 1986 (Vic) – Penalty Interest Rates Act 1983 (Vic), s.2 - Corporations Law, s.161 - Federal Court Rules, Order 77 rule 13(2) – Bankruptcy Regulations, reg 4.02
CASES CONSIDERED
Australian Steel Company (Operations) Pty Limited v Lewis; Royal and Sun Alliance Workers’ Compensation Limited v Oakes; Metropolitan Fire and Emergency Services Board v Zemlic [2000] FCA 1915; Thompson v Metham [1999] FCA 935
CASES APPLIED
Australian Steel Company (Operations) Pty Limited v Lewis; Royal and Sun Alliance Workers’ Compensation Limited v Oakes; Metropolitan Fire and Emergency Services Board v Zemlic [2000] FCA 1915
CASES FOLLOWED
Kleinwort Benson Australia v Crowl (1988) 165 CLR 71;
Re Crisafulli; ex parte National Commercial Banking Corporation of Australia Limited (1985) 11 FCR 272;
Bonds Industries Limited v Sing [1999] FCA 1055
CASES NOT FOLLOWED
Bendigo Bank Limited v Williams (2000) 173 ALR 175; Kirk v Ashdown [1999] FCA 1664
CASES DISTINGUISHED
Re Celestine; ex parte Monte Paschi Australia Limited (1997) 71 FCR 399
CASES REFERRED TO
Trustees of the Franciscan Missionaries of Mary v Weir [2000] FCA 574;
St George Bank Limited v Klintworth (1998) 157 ALR 286;
CASES CITED
Ebert v Union Trustee Co (Aust) Limited (1960) 104 CLR 346;
Re A Debtor; ex parte Bolam (1909) 9 SR (NSW) 580;
Re Ling; ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129;
Nath v Clipway Pty Limited (unreported, FCA, Drummond J, 18.05.99), [1999] FCA 625;
Re Franks; ex parte GIO Holdings Limited (1990) 24 FCR 398;
Re Brink; ex parte Commercial Banking Co of Sydney Limited (1980) 44 FLR 135 at 138;
Paul Dainty Corporation Pty Limited v National Tennis Centre Trust (1990) 22 FCR 495;
Kelly v CAL Bell Commodities Corporation Pty Limited (1989) 18 NSWLR 248;
Workman v Cowper [1961] 2 QB 143; Cachia v Hanes (1994) 179 CLR 403
ApplicantDerek George Shephard
Respondent: Blueberry Farms of Australia (Corindi) Limited
File No:SZ85 of 2000
Delivered on: 1 February 2001
Delivered at: Sydney
Hearing Date: 28 November 2000
Judgment of: Driver FM
REPRESENTATION:
Counsel for the Applicant: Applicant in person
Counsel for the Respondent: Mr R Newlinds
Mr H Stowe
Solicitors for the Respondent: Fishburn Watson O’Brien
ORDERS:
Bankruptcy Notice number NW663 of 2000 is set aside.
Within two days of entry, the petitioning creditor is to provide a copy of this order to the Official Receiver in Sydney.
The respondent is to pay the applicant’s costs of the application, which are fixed at $500.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
SYDNEY REGISTRY
No SZ85 of 2000
DEREK GEORGE SHEPHARD
Applicant
And
BLUEBERRY FARMS OF AUSTRALIA (CORINDI) LIMITED
Respondent
REASONS FOR DECISION
This is an application by Derek George Shephard to set aside a bankruptcy notice under sections 30, 41(6A) and 41(7) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”). The respondent opposes the application. Both the applicant and the respondent also seek costs. The proceedings were instituted in the Federal Court on 17 May 2000. On 18 May 2000 Deputy District Registrar Kavallaris ordered that the time for compliance with the requirements of the bankruptcy notice be extended up to and including 6 June 2000. On 19 June 2000 the applicant filed points of claim in compliance with further orders made on 6 June 2000, supporting an alleged counterclaim, set off or cross demand of equal or greater value than the judgment debt the subject of the bankruptcy notice. It is not disputed that in the circumstances of this case s.41(7) of the Bankruptcy Act applies to further extend the time for compliance with the bankruptcy notice until and including the day on which the Court determines whether it is satisfied that the applicant has a counterclaim, set off or cross demand. On 19 October 2000 Sackville J made certain further interlocutory orders and transferred the proceedings to this Court pursuant to s.32AB of the Federal Court of Australia Act 1976.
The applicant relies upon affidavits sworn or affirmed by him on 12 May 2000, 19 June 2000, 1 November 2000, 8 November 2000 and 17 November 2000. The respondent relies upon affidavits sworn or affirmed by Scott Roland Wolgamot on 16 October 2000 and 24 November 2000, Gary William Wright on 24 November 2000 and David Anthony Bardon on 24 November 2000. Both the applicant and Mr Wolgamot were cross-examined and re‑examined on their affidavits. By agreement, neither Mr Wright nor Mr Bardon were cross‑examined. Both the applicant and the respondent have filed written submissions in support of their case and also presented oral submissions at hearing on 28 November 2000.
Following the decision of the Full Federal Court in Australian Steel Company (Operations) Pty Limited v Lewis [2000] FCA 1915 and two other cases heard at the same time, further written submissions were invited from the parties. Both parties filed further written submissions. The Court sought clarification of the applicant’s submissions, which brought to light that a page had been omitted from the copy of the bankruptcy notice filed with the application. The omitted page proved to have a vital bearing on the case. The omission was accidental, but underscores the importance of parties ensuring that, in proceedings over a bankruptcy notice, the complete bankruptcy notice is provided to the Court.
The applicant challenges the bankruptcy notice on two bases. First, the applicant says that the bankruptcy notice is invalid because it contains a number of errors and that the certificate of judgment attached to it also contains errors. Secondly, the applicant says that he has a series of counterclaims, set offs or cross demands of equal or greater value than the judgment debt.
Background
The factual background to this matter is quite detailed and there are contested facts. The dispute between the parties leading to the judgment debt has a long history. It is common ground that, on or about 29 June 1984, the applicant and his wife entered into a series of agreements, by which they acquired certain land and rights which were part of a proposed cooperative scheme for the planting, maintenance and harvesting of blueberry plants in a proposed sub division in the Coffs Harbour area. The applicant has deposed that he entered into three contracts:
(a) a contract for the purchase of land at Corindi from Vosington Pty Limited (“Vosington”);
(b) a contract with Johnson Farm Management Pty Limited (“Johnson Farm Management”) for the purchase and supply of irrigation equipment, the planting of blueberries, the construction of a dam and provision by Johnson Farm Management of maintenance and supervision of a blueberry plantation on the property; and
(c) a contract with Vosington for the management of the irrigation system to the boundary of the applicant’s property and the supply of water to the boundary of the property.
The applicant says that he and his wife paid $70,800 in consequence of entering into these contracts.
The parties are in dispute as to whether and, if so, to what extent, property passed from Johnson Farm Management to the applicant and his wife in all or any of the components of the irrigation system which was to be supplied. The parties are also in dispute as to what, if any, rights to the supply of water the applicant obtained from Vosington.
Mr Scott Wolgamot for the respondent has deposed that, in addition to the contracts referred to, the applicant and his wife were also a party to a “section 88B instrument” by which numerous easements were created over the lot acquired by the applicant and his wife. Mr Wolgamot has deposed that the easements were created to facilitate the implementation of the cooperative farming scheme.
It is common ground that the blueberry farm venture was promoted as a cooperative venture to facilitate the pooling and sharing of resources, and to minimise the unit cost of planting, maintenance, harvesting and marketing of blueberries. It appears that many of the investors in the scheme intended to obtain taxation advantages.
10. The respondent is a company through which the blueberry farm cooperative has operated, virtually since its inception. It appears that the promoter of the venture and the lot owners originally contemplated that shares in Vosington would be issued to each lot owner and that Vosington would become the corporate entity through which the cooperative scheme would be conducted. However, the original lot owners elected to use the respondent as the corporate vehicle for the conduct of the cooperative, because Vosington had mortgaged its assets prior to shares being issued in that company to the lot owners. Initially, the respondent engaged Johnson Farm Management to provide management and maintenance support and consultancy, in relation to the business of the cooperative. At the same time, Johnson Farm Management was contractually bound to the applicant and his wife to provide farm maintenance services. During 1985 Johnson Farm Management undertook the installation of the required irrigation system and provided farm maintenance services to the applicant. However, it appears that from July 1985 Johnson Farm Management undertook the provision of farm management services pursuant to an agreement with the respondent rather than pursuant to its contract with the applicant. It is clear that by 1 July 1986 the blueberry farm venture was operating as a cooperative venture and that farm services were being arranged by the respondent through Johnson Farm Management. It seems that Johnson Farm Management was experiencing financial difficulties and that the respondent progressively assumed control of the farm management and irrigation supply operations.
11. The terms upon which farm services were to be provided to the applicant were changed by the respondent in 1987. Also, the applicant was offered and purported to take up shares in the respondent. The applicant was dissatisfied with the terms upon which farm services were to be provided and the standard of services. A number of issues also appear to have arisen concerning the management of the respondent. The applicant was also dissatisfied with arrangements for the supply of water, no doubt having regard to the agreement that the applicant had entered into with Vosington.
12. On 13 October 1995, the respondent entered into an agreement with the receiver of Vosington, by which it acquired certain assets from Vosington, including assets which related to the conduct of the blueberry farm cooperative. In 1998, the respondent merged with Chiquita Brands South Pacific Limited, a company with extensive interests in fruit growing and marketing. The merger was effected by the acquisition by Blueberry Farms of Australia (Corindi) Limited (“Blueberry Farms”) of shares in Chiquita Brands, and the issue of shares in Blueberry Farms to the former shareholders of Chiquita Brands. Following the merger, Blueberry Farms acquired in excess of 40 of the farms originally in the blueberry farms cooperative. The respondent now owns most of the farms in the development. It has on several occasions offered to buy the applicant’s farm but the parties have not reached any agreement on a sale. It appears that the most recent offer by the respondent was to purchase the applicant’s property for $20,000.
13. In approximately July 1991 the applicant commenced proceedings against the respondent claiming a refund of money that had been paid for farm management services and a refund for money paid for shares in the respondent. The respondent cross-claimed against the applicant for money alleged to be owing to it. The matter was referred to arbitration and the arbitrator delivered an award on 21 June 1994. The matter was subsequently reheard in the Local Court of New South Wales at Coffs Harbour which, on 20 November 1995, made consent orders confirming the arbitrator’s award. The Local Court ordered the applicant to pay to the respondent the sum of $8,574 and also allowed interest on the judgment. It is this judgment which establishes the judgment debt. The certificate of the judgment annexed to the bankruptcy notice establishes that the respondent also incurred costs of attempting to enforce the judgment, recoverable against the judgment debtor in the amount of $809. $1,607.40 has been recovered from the applicant in part satisfaction of the judgment debt.
14. The ownership of the irrigation system is central to the dispute between the parties. However, that question of ownership was not put in issue in the Local Court proceedings. The applicant says that he owns the irrigation system, or at least that part of it which he has access to on his land or, alternatively, that he has a legal interest in the whole of the system. He also says that he is entitled to draw water from a holding dam through the system. The respondent denies that the applicant owns any part of the system (but the respondent concedes that the applicant formerly owned reticulation lines placed on the land and attached to the common irrigation network). The respondent denies that the applicant is entitled to draw water through the common system. In view of the dispute between the parties concerning the provision of farm management services the applicant ceased using the services offered by the respondent. In January 1994 the respondent switched off the water supply to the applicant’s farm and ceased to provide any farm maintenance. It appears that, acting on his belief that he owned the irrigation system under and on his land and that he was entitled to draw water through it, the applicant took matters into his own hands after the water supply was disconnected. There were a number of incidents up until October 1995 affecting the irrigation system on the applicant’s land. The respondent says that the applicant tampered with the irrigation system and that this tampering substantially interfered with the operation of the overall irrigation system. In or about October 1995 the respondent commenced proceedings in the District Court of New South Wales, seeking an injunction against the applicant, restraining him from altering, interfering with, removing or damaging the irrigation system. On 20 October 1995 the injunction was granted by consent. The injunction was incorporated into the final consent orders dated 20 November 1995 in the Local Court proceedings.
15. It is common ground that, notwithstanding the issuing of the injunction, the applicant continued to interfere with the irrigation system by removing or altering the operation of components on the system. It is also common ground that the applicant dug a series of holes on his property over one of the main irrigation lines which punctured the line, although there is a dispute as to whether the applicant was on all occasions seeking to puncture the line or whether he was merely seeking to dig post holes for a fence.
16. Rather than take further legal proceedings against the applicant, servants or agents of the respondent entered the applicant’s land on several occasions in purported reliance upon the easements granted over the land in order to repair and protect the irrigation system. Some components were removed by the respondent from the land and placed upon a neighbouring property. The applicant subsequently entered that neighbouring property and continued his efforts to either secure a supply of water or retrieve parts of the irrigation system which he regarded as his property. The respondent arranged for the owner of a nearby lot (referred to as “PG” in the affidavit material) to keep watch upon the applicant and to alert the respondent to the applicant’s activities. There followed several incidents during which servants or agents of the respondent intercepted the applicant, either on his own land or on the neighbouring property where irrigation components had been relocated, at which times there were physical confrontations between the applicant and the respondent’s servants or agents. The applicant also complains of a number of incidents involving PG who had agreed to keep watch.
17. On 8 April 1998 the applicant commenced proceedings against the respondent and others in the Local Court at Coffs Harbour claiming damages for detention of irrigation equipment claimed by him, and damages for loss of use of the equipment. In about December 1999 the applicant commenced proceedings against the respondent in the District Court of New South Wales at Coffs Harbour claiming a settlement of accounts relating to the farm management services and also compensation for the alleged unauthorised use of the irrigation system by the respondent, and alleged trespass to the applicant’s property. On 21 January 2000 the applicant commenced proceedings against the respondent and others in the Supreme Court of New South Wales claiming a breach of fiduciary duties and equitable compensation. This claim also alleges a trespass to the applicant’s land. The applicant also alleges breaches of the Fair Trading Act 1987 (NSW) (“the Fair Trading Act”) and the Trade Practices Act 1974 (Cth) (“the Trade Practices Act”).
The Legislation
18. This application is brought under s.30 of the Bankruptcy Act. That section provides that:
“(1) The Court:
(a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and
(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.”
19. It is well accepted that this section empowers the Court to set aside a bankruptcy notice. Section 30(1) is not a provision limiting the Court’s jurisdiction. It is facultative giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act.
20. Section 41 of the Bankruptcy Act deals specifically with bankruptcy notices. The section relevantly provides that:
“(1)An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment or final order that:
(a)is described in paragraph 40(1)(g); and
(b)is for an amount of at least $2000.
(2)The notice must be in accordance with the form prescribed by the Regulations…
(6A) Where, before the expiration of the time fixed for compliance with the requirement of a bankruptcy notice:
(a)proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued had been instituted by the debtor; or
(b)an application has been made to the Court to set aside the bankruptcy notice; the Court may, subject to subsection (6C) [which is not currently relevant]; extend the time for compliance with the bankruptcy notice.”
(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 counterclaim, set off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counterclaim, set off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.
21. As noted earlier, the provisions of s.41(6A) and s.41(7) have previously been enlivened to extend the time fixed for compliance with the requirements of the bankruptcy notice.
The Application
22. The applicant seeks orders as follows:
(a) an order that bankruptcy notice number NW663/2000 which was served on the applicant on 27 April 2000 be set aside. A copy of the bankruptcy notice (albeit incomplete) was annexed to the application in purported compliance with Order 77 Rule 13(2) of the Federal Court Rules.
(b) costs.
23. In his affidavit dated 12 May 2000 the applicant advanced the following circumstances justifying the application to set aside the bankruptcy notice. First, the applicant says that the bankruptcy notice is defective for the following reasons:
(a) the certificate of judgment issued by the Local Court at Coffs Harbour on 11 April 2000 attached to the bankruptcy notice names the applicant as the judgment creditor and names “Bluberry [sic] Farms of Australia (Corindi) Ltd formerly known as Twigger Pty Ltd” as judgment debtor. The applicant says that, in the terms of the certificate of judgment, he is entitled to demand payment from the respondent and the respondent has no entitlement to demand payment from him;
(b) the respondent is not correctly named in the bankruptcy notice. Blueberry Farms of Australia (Corindi) Limited is a former name of the company bearing ACN 002 687 961. That company has changed its name to “Chiquita Brands South Pacific Limited”.
24. In addition, in his first written submissions the applicant advances the following further reasons why the bankruptcy notice is defective:
(a) the applicant says that the bankruptcy notice fails to state the provision under which interest is claimed and the applicant relies upon the decision of the Full Federal Court in Bendigo Bank Ltd v Williams (2000) 173 ALR 175;
(b) the bankruptcy notice does not contain the telephone number of the relevant Federal Court Registry.
25. Furthermore, the applicant submits that he has a counterclaim, set off or cross demand of equal or greater value to the judgment debt supporting the bankruptcy notice. The applicant has provided extensive particulars of his points of claim in accordance with a direction from a Registrar and he relies upon the matters set out in his affidavits of 12 May 2000 and 19 June 2000. In addition, the applicant relies upon his affidavits made on 1, 8, and 17 November 2000. These detail claims relating to trespass and assault, breach of contract, estoppel, detinue and conversion, breach of trust or fiduciary duty, breaches of the Trade Practices Act and the Fair Trading Act, restitution and other claims which lack particularity.
The Bankruptcy Notice
26. As noted above, the applicant raises four matters which he says invalidate the bankruptcy notice. These are:
(a)the inconsistency between the name of the creditor on the bankruptcy notice and the attached certificate of judgment;
(b) the creditor’s name change;
(c)the failure to include the Federal Court Registry’s phone number; and
(d)the failure to identify the correct statutory provision under which interest was claimed.
27. It is accepted that s.41(2) of the Bankruptcy Act provides that a bankruptcy notice must be in accordance with the form prescribed by the Regulations. The relevant Regulation is Regulation 4.02. The relevant form is incorporated by Regulation 4.02 as Form 1. The requirements of a bankruptcy notice are subject to the provisions of s.25C of the Acts Interpretation Act 1901 and s.306 of the Bankruptcy Act. Section 25C of the Acts Interpretation Act applies to the format of the bankruptcy notice: Bankruptcy Regulations 4.02(2) and (3). If that section has any application to the content of a notice, it seems that application is quite limited: Australian Steel Company v Lewis (op cit) at paragraph 43. Section 306 relevantly provides that proceedings under the Bankruptcy Act are not invalidated by “a formal defect or irregularity unless the Court… is of the opinion that substantial injustice has been caused by the defect…” It has long been held that s.306 is applicable to bankruptcy notices: Kleinwort Benson Australia v Crowl (1988) 165 CLR 71 at 77. Accordingly, the respondent has correctly submitted that a bankruptcy notice will not be invalidated by a defect or irregularity if that defect or irregularity is “formal” and it does not cause substantial and irremedial injustice. A defect or irregularity will be characterised as “substantive” rather than formal if it fails to meet a requirement made “essential” by the Act or it is one which “could reasonably mislead a debtor as to what is necessary to comply with the notice”: Kleinwort Benson, op cit at 79.
28. Unfortunately, there has been some confusion recently as to what is made “essential” by the Act. This is because there have been conflicting decisions of the Full Federal Court on the point: see Kirk v Ashdown [1999] FCA 1664; Bendigo Bank Ltd v Williams (2000) 173 ALR 175; Trustees of the Franciscan Missionaries of Mary v Weir [2000] FCA 574. The approach taken in those cases varies between a strict approach in Bendigo Bank and a more liberal approach in Kirk. The approach taken in Weir tends more to the position in Kirk than that in Bendigo Bank, although the latter case was distinguished on the facts. In an attempt to resolve these differences a Full Bench of five in the Federal Court has heard three matters and gave judgment upon them on 22 December 2000: Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915; Royal and Sun Alliance Workers’ Compensation Ltd v Oakes; and Metropolitan Fire and Emergency Services Board v Zemlic. The latter two cases were heard and determined at the same time as Australian Steel Company v Lewis and bear the same citation. Bendigo Bank was a case in which there was a complete failure to include in a bankruptcy notice the provision under which interest was claimed. Kirk v Ashdown was a similar case. In Bendigo Bank the omission was held to be a breach of an essential requirement. In Kirk v Ashdown it was not. Australian Steel Company v Lewis was a case of an error in the inclusion of the statutory provision under which interest was claimed. The present case is not (with one exception) one of omissions of material from the bankruptcy notice. It is a case of errors in material that was included in the notice. It is therefore necessary to pay careful attention to the Full Federal Court decision in Australian Steel Company v Lewis (op cit).
29. Even if the identified defects in the bankruptcy notice are not matters made “essential” by the Act, they would still invalidate the bankruptcy notice if they are matters which “could reasonably mislead a debtor”. In that regard, it is irrelevant whether the debtor is in fact misled. The Court must apply an objective test but the Court is entitled to take into account the surrounding circumstances and should consider the position of the actual debtor: Re Crisafulli; ex parte National Commercial Banking Corporation of Australia Ltd (1985) 11 FCR 272. The essential point is that a debtor needs to understand by reading the bankruptcy notice what he or she must do to comply with its requirements and thus avoid the consequences of an act of bankruptcy.
30. In the present case the certificate of judgment annexed to the bankruptcy notice contains an error in that the names of the judgment creditor and judgment debtor were transposed. However, the certificate correctly sets out the terms of the Court’s judgment. In Thompson v Metham [1999] FCA 935 the Federal Court set aside a bankruptcy notice which had attached to it a document which was neither a copy of the judgment relied upon by the creditor nor a certificate of that judgment, and which contained a number of serious errors relating to the terms of the judgment. In that case Katz J held that if a document other than a copy of the relevant judgment itself is relied upon, the particulars of the judgment which that document contains must at least be substantially accurate, something which was manifestly not so in that case. It was, however, conceded that a creditor is entitled to attach to a bankruptcy notice an official certificate of the judgment relied upon: St George Bank Limited v Klintworth (1998) 157 ALR 286.
31. In Australian Steel Company v Lewis at paragraphs 39-41 the Full Federal Court, by a majority of 3 to 2, held that a court, when considering whether an error in a bankruptcy notice constitutes a breach of a requirement made essential by the Bankruptcy Act, must take a purposive approach. In practice, this requires consideration of each part of the prescribed form in order to determine whether a departure from the prescribed form, either by omission or error in included material, goes to an item in the form which was intended to be essential. The majority envisaged that some parts of the prescribed form would, on that analysis, be found not to be essential, while other parts (and arguably most parts) would be found to be essential. The Court confirmed, at paragraph 42, that the requirement that a copy of the judgment relied upon be attached to the bankruptcy notice is a requirement made essential by the Act.
32. In the present case I find that the document attached to the bankruptcy notice was a certificate in the usual form. Apart from the typographical error in the spelling of Blueberry Farms in the certificate, the only error was the transposition of the names of the judgment creditor and judgment debtor. It is an essential requirement of the Bankruptcy Act that a copy of the judgment relied upon or the certificate of judgment be annexed to the bankruptcy notice and that was done. It is not an essential requirement of the Bankruptcy Act that the annexed judgment or certificate be free from errors. The question then is whether the mistake in the certificate is one which could reasonably mislead a debtor in the position of the applicant. The applicant concedes that he was not misled but the question is whether a person in his position could have been. There has been a history of legal dispute between the parties and several legal proceedings have been instituted. Had there been a multiplicity of legal proceedings in the Local Court a debtor in the position of the applicant may well have been confused. But there was not a multiplicity of proceedings in that court. The debtor need only look on the certificate at the court giving judgment, the date of the judgment and the amount of the judgment debt to be clear as to what judgment was in issue. I conclude that the respondent was entitled to rely upon the certificate of judgment issued by the Local Court and that the certificate would not have reasonably misled a debtor in the position of the applicant, having regard to the surrounding circumstances in this case. Accordingly, I find that the error in the certificate of judgment does not invalidate the bankruptcy notice.
33. The second issue is the alleged error in the name of the creditor. The respondent concedes that the name of the creditor on the bankruptcy notice was not the name of the creditor at the time the notice was served. On the notice the creditor is described as “Blueberry Farms of Australia (Corindi) Limited formerly known as Twigger Pty Limited”, whereas by 19 April 2000 the creditor’s name was “Chiquita Brands South Pacific Limited”. Form 1 stipulates that the name of the creditor must be included in the bankruptcy notice. The respondent concedes that the correct way to describe a judgment creditor which has changed its name between the date of the judgment and the date of the bankruptcy notice is “[present name] (formerly known as) [former name]”: see Re Crisafulli op cit. However, the respondent relies upon the judgment in Re Crisafulli and s.161 of the Corporations Law to say that this error does not invalidate the notice because it is not an essential requirement, nor has it the capacity to mislead the debtor. I do not think that s.161 of the Corporations Law displaces the requirements of the Bankruptcy Act. But the decision in Crisafulli does support the respondent’s position.
34. In Crisafulli the Federal Court held that where, between the date of judgment and the issue of a bankruptcy notice, there had been a change of the corporate name of the judgment creditor, the bankruptcy notice issued in the former corporate name was not invalid. The Court had regard to the facts that the judgment creditor had continued to occupy the same address and, had the debtor sought to make contact, there was no reason to think that the use of the company’s former name would have presented an obstacle or led to any confusion on his part; for that reason, and in the light of the similarity of name before and after the change, and the publicity surrounding the change, the bankruptcy notice was not capable of misleading the debtor.
35. Crisafulli was a case decided before the 1996 amendments to the Bankruptcy Act and the issue requires consideration in the light of the decision of the Full Federal Court in Australian Steel Company v Lewis (op cit). While the Court in that case did not rule on the point, following the purposive approach established by the majority judgment, it can be safely assumed that the inclusion of the name of the creditor in the bankruptcy notice is a requirement made essential by the Bankruptcy Act. It does not follow, however, that where the creditor is known by more than one name (such as where there has been a recent change of name and both names are still in use), the Bankruptcy Act requires that a bankruptcy notice must include all names by which the creditor is known. The obvious purpose of the requirement that the creditor’s name be included is to ensure that the debtor knows who he or she is indebted to. If the creditor was at all relevant times known by its former name the inclusion of that name in the bankruptcy notice should be sufficient. It may only confuse a debtor to include a multiplicity of names by which the creditor is known. In the circumstances, the decision in Crisafulli should be regarded as still good law.
36. In the present case I am satisfied that the essential requirement of the Act has been met in that the creditor’s name has been included in the bankruptcy notice. The question is whether the inclusion of the former name without the inclusion of the present name of the creditor invalidates the bankruptcy notice by reason that it has the capacity to mislead the debtor. I do not think that it did. Although the new name is not similar to the old name the address of the company and the operations of the company remain unchanged. Having regard to the matters set out the affidavit of Scott Wolgamot sworn on 16 October 2000, especially at paragraph 10, it is apparent to me that persons dealing with the respondent (including the applicant) were well aware that Chiquita Brands and Blueberry Farms were one and the same company.
37. The question of the omission of the Federal Court Registry telephone number can be dealt with shortly. Form 1 requires that the telephone number of the Federal Court be incorporated in the notice. The requirement is to provide the address and telephone number of the relevant Registry. The address was included, the telephone number was not. The failure to provide a telephone number is clearly not a failure to comply with an essential requirement of the Act: Bonds Industries Ltd v Sing [1999] FCA 1055. Neither does the omission of the telephone number have the capacity to mislead a debtor. The telephone number of the Court is a matter of public record.
38. This conclusion is unaffected by the decision in Australian Steel Company v Lewis. The majority in that case stated, at paragraph 47, that the application of the purposive approach they favour would result in the same outcome in nearly all of the post 1996 decisions on the validity of bankruptcy notices. The Court only identified two decisions where the result would have been different. The decision in Bonds Industries Ltd v Sing is well known and recent and if the Court had wanted to disturb the reasoning in that case it could be expected to identify Bonds Industries as a case where the result would have been different by application of the purposive approach. The fact that the Court did not do so supports my own view that the application of the purposive approach leads to a conclusion that the inclusion of the address and telephone number of the relevant court registry is not a matter made essential by the Act. The Court in Australian Steel Company v Lewis did refer to the decision in Re Celestine; ex parte Monte Paschi Australia Ltd (1997) 71 FCR 399. That was a case in which the wrong address of the Court was included in the notice. That case was distinguished in Bonds Industries v Sing on the basis that in Celestine the debt was required to be paid at the court registry. The inclusion of the address at which the debt is to be paid is a requirement made essential by the Bankruptcy Act. The inclusion of the address and phone number of the relevant court registry where it is not an address for payment of the debt is not an essential requirement. The distinction can be taken to be left undisturbed by the majority decision in Australian Steel Company v Lewis.
39. The question of the provision supporting the claim of interest is more complex. The first complaint of the applicant is that the interest is said to be claimed under the Supreme Court Act 1970 (NSW) (“the Supreme Court Act”) when in fact the bankruptcy notice should have referred to the Local Courts (Civil Claims) Act 1970 (NSW) (“the Local Courts (Civil Claims) Act”). The second submission made by the applicant is that, even if the Supreme Court Act was correctly referred to, the wrong section of that Act was identified in the bankruptcy notice as the provision under which interest was claimed. In Kirk v Ashdown the Full Federal Court held that a complete failure to refer to the statutory provision under which interest is claimed was not a breach of an essential requirement and the notice in that case was held to be valid. On the other hand, in Bendigo Bank a notice which omitted any reference to the provision under which interest was claimed was held to be in breach of an essential requirement and therefore invalid. However, the Court in that case drew an important distinction between a complete failure to include a matter prescribed in Form 1 and the “inaccurate or incomplete” provision of information. Although obiter, the Court indicated that such an error was not a breach of an essential requirement and was properly classified as a “formal” defect: Bendigo Bank, op cit, at 192, paragraph 36.
40. The decision in Kirk v Ashdown has been disapproved by the majority decision in Australian Steel Company v Lewis. In his further written submissions Mr Newlinds has pressed this Court to nevertheless follow Kirk v Ashdown, on the basis that that decision is consistent with the decision of the High Court in Kleinwort Benson, while the decision of the majority in Australian Steel Company v Lewis is inconsistent with the High Court decision. Mr Newlinds has invited this Court to prefer the minority decisions in Australian Steel Company v Lewis. Interesting though that invitation is, I am not prepared to accept it. I accept that this Court is bound to follow the precedent established by the High Court in Kleinwort Benson. But it is clear from the majority decision in Australian Steel Company v Lewis that their Honours regarded their own decision as consistent with the decision of the High Court. Indeed, they applied it. The fact that the minority in Australian Steel Company v Lewis took a different view, in common with the Full Court in Kirk v Ashdown and Kiefel J in Bendigo Bank indicates that the attempted resolution of the issue by the Federal Court may now need to become a resolution of the issue by the High Court. Until such time as that occurs, however, this Court should follow the most recent pronouncement on the issue by the Full Federal Court.
41. Following the disapproval of Kirk v Ashdown by the majority in Australian Steel Company v Lewis, the former decision can no longer be relied upon. However, the reasoning in the latter case is also inconsistent with the reasoning in Bendigo Bank: Australian Steel Company v Lewis, op cit at paragraphs 45-47 and 119. It follows that no further reliance can be placed on the reasoning in Bendigo Bank either. I am bound to follow the reasoning of the majority in Australian Steel Company v Lewis. It is clear from that decision that the misdescription, as well as the omission, of the statutory provision under which interest is claimed is a breach of a requirement made essential by the Bankruptcy Act which will invalidate a bankruptcy notice. In that case the wrong statutory provision was included in the notice, although the rate of interest prescribed under both Acts was the same. The notice should have referred to the Magistrates Court Act 1989 (Vic). Instead, the notice referred to the Supreme Court Act 1986 (Vic). Both Acts provide that interest accrues on judgment debts at the rate fixed under s.2 of the Penalty Interest Rates Act 1983 (Vic). The Court described the fact that the same rate was applicable under both Acts as “adventitious”, meaning accidental.
42. In the present case, however, the position is quite different. The Supreme Court Act and the Local Courts (Civil Claims) Act both prescribe the same rate of interest but that is not adventitious. Section 39 of the Local Courts (Civil Claims) Act relevantly provides that interest payable in respect of a judgment debt shall “be calculated at such rate as may be prescribed by the rules”. Part 13 of the Local Courts (Civil Claims) Rules 1988 (NSW) (“the Local Courts (Civil Claims) Rules”) relevantly provides that, in respect of interest accruing after 27 May 1993, the prescribed rate is “the rate prescribed for the purposes of section 95(1) of the Supreme Court Act 1970”. It will be immediately seen that in the Local Court jurisdiction in New South Wales, in contrast to the Magistrates Court jurisdiction in Victoria, the applicable statutory provision supporting a claim of interest on a judgment is s.95 of the Supreme Court Act. That is not to say that the inclusion of a reference to the Local Courts (Civil Claims) Act or the Local Courts (Civil Claims) Rules would be an error. It simply means that the inclusion of a reference to s.95 of the Supreme Court Act is correct.
43. The certificate of judgment attached to the bankruptcy notice identified s.95(1) of the Supreme Court Act as the provision under which the applicable rate of interest was prescribed. The certificate correctly identified the provision under which interest was claimed for the purposes of the bankruptcy notice. However, the page of the bankruptcy notice which was initially omitted by the applicant from the copy of the bankruptcy notice filed with his application contained an error. As well as setting out the calculation of interest claimed over certain time periods, this page contained the statement that, “Interest is claimed pursuant to s.94 of the Supreme Court Act 1970”. Section 94 is a provision dealing with pre judgment interest in Supreme Court proceedings. It is not the provision under which the rate of interest is prescribed for the purposes of proceedings in the Local Court. In his further written submissions Mr Newlinds submits that it is sufficient if the debtor is referred to the correct Act. But the sin here is not one of omission, of identifying the Act without referring to any section of the Act. The sin here is a sin of commission. The wrong section was identified. Whatever might have been the result if no section had been referred to, the result in my view is clear where, as here, the wrong section was referred to. The bankruptcy notice stated incorrectly the provision under which interest was claimed. In the light of the majority decision of the Full Federal Court in Australian Steel Company v Lewis I am bound to find that, because of this error, the bankruptcy notice is invalid.
44. Even if the Court could be satisfied that the requirement made essential by the Act had been met, or that it was not an essential requirement, the question would remain whether the inclusion of two different provisions of the Supreme Court Act could reasonably have misled a debtor. I think that the correct answer to that question is yes. The debtor was confronted with conflicting statements about the provision under which interest was claimed: one in the notice itself and one in the certificate of judgment attached to it. If the debtor were to check the two provisions of the Supreme Court Act, he would be left wondering whether the claim was for pre judgment or post judgment interest. Any debtor would be left perplexed and confused.
45. I conclude that the bankruptcy notice contained an error which breached a requirement made essential by the Act and which had the capacity to mislead a debtor in the position of the applicant. I conclude, therefore, that the bankruptcy notice is invalid by reason of irregularity.
Counterclaim, Set Off or Cross Demand
46. As I have found the bankruptcy notice to be invalid, it is not strictly necessary for the Court to deal with the balance of the applicant’s case, concerning his alleged counter claims, set offs or cross demands. I have elected to deal with those arguments, however, for three reasons. First, because if a fresh bankruptcy notice is served by the respondent on the applicant, the parties will be assisted by the Court’s findings on these issues. Secondly, judgment in this matter has been reserved for several months, which was longer than I anticipated at trial. In the circumstances, the parties are entitled to a considered and comprehensive judgment on their submissions. Finally, and perhaps most importantly, this case could be the subject of an appeal. It is desirable to avoid the necessity for retrial should the respondent succeed on appeal.
47. As I have already noted the applicant claims that he has a counterclaim, set off or cross demand within the terms of s.40(1)(g) of the Bankruptcy Act. The relevant legal principles are usefully set out in the 5th Edition of McDonald, Henry & Meek; Australian Bankruptcy Law and Practice, Law Book Co, at [40.1.340-350]. For convenience, I incorporate extracts from that text below at paragraphs 47-50. A debtor upon whom a bankruptcy notice has been served must offer evidence that he or she has such a counterclaim, set off or cross demand. The mere production of a statement of claim in an action for which he or she alleges facts, which, if true, might give rise to such a claim, is not evidence and is insufficient unless supported by prima facie evidence of their truth. The applicant must first establish the existence of a counterclaim, set off or cross demand. Secondly he must establish that the counterclaim “could not have been set up in the actual proceedings in which the judgment or order was obtained” and, thirdly, he must establish that the counterclaim is equal to or exceeds the amount of the judgment debt.
48. As to the first issue, it has been held by the High Court that the degree to which the bankruptcy court should be satisfied that a debtor has a counterclaim, set off or cross demand of the required amount “may be expressed by saying that the debtor must show that he or she has a prima facie case, even if then and there he or she does not adduce the admissible evidence which would make out a prima facie case before a court trying the issues that are involved in his or her counterclaim, set off or cross demand”: Ebert v Union Trustee Co (Aust) Ltd (1960) 104 CLR 346 at 350. However, the demand must be more than bona fide. The Court must be satisfied that it has a reasonable probability of success. This Court is not called upon to determine the validity of the counterclaim, set off or cross demand but it must be satisfied that the claim is a substantial and bona fide claim which the debtor should fairly be permitted to litigate before the bankruptcy proceedings are allowed to continue: Re A Debtor; ex parte Bolam (1909) 9 SR (NSW) 580. The state of satisfaction required involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim.
49. Secondly, the debtor must establish that the counterclaim could not have been set up in the actual proceedings in which the judgment or order supporting the bankruptcy notice was obtained. The Court is entitled to have regard to the nature of the action, the relative timing of the claim and the action, the absence of empowering provisions or some positive inhibition to do so. However, the question whether the cross demand could not have been set up in the proceedings in which the judgment was obtained is a question to be answered by reference to legal considerations: Re Ling; ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129. Whether or not a cross claim could be set up does not depend upon whether it could have been successfully but whether it could have been set up as a matter of law. Importantly, considerations personal to the debtor which may have prevented him from pursuing a cross claim in the proceedings where the judgment was entered are not relevant: Nath v Clipway Pty Ltd (unreported, Federal Court of Australia, Drummond J, 8 February 1999). (Affirmed on appeal by the Full Federal Court on 18 May 1999) [1999] FCA 625. The Court will decline to set aside a bankruptcy notice on this ground, where the debtor has only been denied the opportunity of contesting the creditor’s claim, and making a claim or set off against the creditor in the relevant proceeding due to the debtor’s own failure to take steps to avail himself of the opportunity; for example, where the debtor has failed to meet pre conditions for setting aside a default judgment or where the debtor was simply unaware of alternative actions that were available to him. A debtor cannot be said to have been unable to set up a counterclaim in the initial proceeding because, under the relevant court rules, he needed leave of the court, or an exercise of discretion by the court to do so, especially where the debtor had not even applied for it. This principle extends to transferring proceedings to a higher court because of jurisdictional limits upon the court dealing with the original proceedings: Re Franks; ex parte GIO Holdings Ltd (1990) 24 FCR 398. The fact that the debtor would face procedural difficulties in having his claim consolidated with the claim against him, does not mean that he cannot bring it in the same proceeding.
50. Finally, the debtor must establish that the counterclaim is equal to or exceeds the amount of the judgment debt. In this regard, the counterclaim must be measurable in an amount of money: Re Brink; ex parte Commercial Banking Co of Sydney Ltd (1980) 44 FLR 135 at 138. It is not necessary that the counterclaim be for a liquidated sum, or even for a sum of money at all, but it must be capable of being quantified in terms of money and the affidavit filed by the debtor should quantify it.
51. The applicant has asserted a significant number of counterclaims, set offs or cross demands that are available to him. The material filed by the applicant in supporting his assertions is voluminous and the analysis of the claims has occupied considerable time. The allegations made by the applicant are so wide ranging that they verge upon him loading up a legal blunderbuss with shot and firing it off in the general direction of the respondent in the hope that some of the shot will find its mark. The approach taken by the applicant can be in large part explained by the long history of dispute between the parties and the applicant’s strong personal involvement in that dispute. However, the history of the matter indicates that the applicant has, over time, expanded his range of claims against the respondent as new ideas come to him in the thrust and parry of his day to day dealings with the respondent. As will appear, this presents problems for the applicant in satisfying this Court that he could not have set up the claims which he currently makes in the original proceedings giving rise to the judgment debt.
52. In his affidavit made on 19 June 2000 the applicant sets out his points of claim in compliance with directions of the Registrar made when the matter was before the Federal Court on 6 June 2000. At paragraphs 1 to 32 of that document the applicant details matters which he says go to a claim against the respondent based upon an alleged contract or contracts between the parties. The substance of the claim is that the applicant alleges that the respondent has become bound to perform the contractual obligations of Johnson Farm Management and Vosington concerning the provision of farm services and the supply of water. I have been unable to determine clearly the merit of these claims. The facts are largely contested. I am not able to say that the claims are wholly without merit but it does appear to me that the applicant would have difficulty satisfying a court that he was entitled to receive farm services and water from the respondent without paying anything for them in addition to the payments made by the applicant when he entered into his contracts with Johnson Farm Management and Vosington. Be that as it may, it seems to me that the contract claims could have been brought in the proceedings in the Local Court giving rise to the judgment debt. The relevant facts were all in place prior to the decision of the Local Court. The applicant chose to prosecute the proceedings in the Local Court on a limited basis but it was clearly open to him at the time to introduce his contractual claims. He chose not to do so at that time and he cannot now say that he was unable to do so.
53. Secondly, the applicant makes claims based on estoppel as an alternative to the contract claims. The estoppel claims are based upon the same facts as the contract claims and, for the same reasons, I am not satisfied that the applicant could not have set up the estoppel claims in the proceedings in the Local Court.
54. Thirdly, the applicant makes claims of detinue and conversion relating to the irrigation equipment which the applicant asserts is his property and which has been dealt with by the respondent. These matters are detailed in paragraphs 65 to 68 of the points of claim. Clearly, these claims could have been set up in the proceedings before the Local Court. The issue of the irrigation equipment was in fact dealt with by the Local Court when the injunction was issued against the applicant, although the competing claims of ownership do not appear to have been argued. The applicant has sought to avoid this conclusion by saying that it was not until the end of those proceedings that he became aware who was holding the irrigation equipment. I do not think that that is any answer. The applicant must have known at the time that he asserted ownership to the equipment. He knew that the police had taken custody of some parts of it. He knew or should have known that the only other person claiming the equipment was the respondent. The cause of action, if he had one, was complete prior to the judgment in the Local Court proceedings. The applicant fails in his contention that he could not have set up the detinue and conversion claims in the Local Court proceedings.
55. Next, the applicant makes claims of breach of trust and/or breach of fiduciary duty against the respondent. These are detailed at paragraphs 42 to 49 of the points of claim and are described by the applicant in his written submissions as significant claims. I find that these claims are no answer to the bankruptcy notice for two reasons. First, they depend essentially on the same facts as the contractual and estoppel claims and could have been set up in the proceedings before the Local Court. Secondly, the applicant has failed to establish a prima facie case for these claims. I do not think that the applicant could satisfy a court that the respondent owed a fiduciary duty to the applicant. It is true that the respondent operates a cooperative farming scheme but there is nothing to suggest that the respondent is anything other than a commercial enterprise dealing with blueberry farmers who are themselves operating commercial enterprises. The relationship between the parties is essentially a commercial one, not a fiduciary one. Courts of equity in Australia have been averse to finding a fiduciary relationship between the parties to an arms length commercial transaction: Paul Dainty Corporation Pty Limited v National Tennis Centre Trust (1990) 22 FCR 495; Kelly v CA&L Bell Commodities Corporation Pty Limited (1989) 18 NSWLR 248. The existence of a fiduciary relationship depends upon a person undertaking to act in the interests of another and not in his or her own interests. I do not think that a court could be satisfied by the applicant that the respondent was under some duty to act in Mr Shephard’s interests and against its own interests to the extent that the interests conflicted. Furthermore, if the respondent has any duties to the blueberry farmers as part of the cooperative nature of the venture then it owes those duties severally and collectively. However, the respondent could not owe a duty to any single lot holder which required the respondent to act against the interests of the other lot holders. In order to succeed in this claim the applicant would have to satisfy a court that the respondent was obliged to act in his interests to the exclusion of all others. I am satisfied that he could not succeed in such a claim.
56. The applicant also makes claims of trespass and assault. These claims require more careful consideration. These matters are detailed in the points of claim document at paragraphs 58 to 62. It is common ground that there have been a series of incidents between the applicant and servants or agents of the respondents which have involved physical conflict. The respondent concedes that its servants or agents have from time to time entered the property of the respondent and that they have restrained him physically from interfering with the irrigation system. The respondent also concedes that, from time to time, its servants or agents have taken temporary possession of chattels belonging to the applicant in order to prevent the applicant from using them to interfere with the irrigation system. It is also conceded that on one occasion a servant of the respondent without authority sought to provide a physical barrier to the applicant gaining access to his shed on his property. The respondent concedes that one of its employees, without authority, but in the apparent belief that he was acting in his employer’s interest, sealed the lock on the door to the shed. The respondent says that it has a right to enter the applicant’s property by virtue of the easements granted over that property in order to protect and repair the irrigation system. The applicant says that the servants or agents of the respondents were trespassing.
57. It is apparent from the evidence that there have also been incidents on the neighbouring property when the applicant entered that property in order to deal with the irrigation system. It appears from the evidence that there have also been incidents involving “PG”, who is not a servant or agent of the respondent. The respondent is not responsible for the conduct of PG, notwithstanding that there is apparently an understanding between the respondent and PG that he would keep watch on the applicant’s activities and report them to the respondent. I am satisfied that a court would not hold the respondent liable for the conduct of PG referred to in the evidence. However, a court would hold the respondent liable for the conduct of its servants or agents, at least to the extent that the servants or agents were acting in the course of their employment or agency. This would extend to the activities of servants or agents which those servants or agents sincerely believed was in the course of their employment or agency or was intended to carry out their duties, even if by unauthorised means.
58. The issue of substance is whether Mr Shepherd has a prima facie case in trespass or assault against the respondent and, if so, what the likely value of that claim is. There is a contest of evidence as to how much force was used by the servants or agents of the respondent and whether the applicant incurred any injury. There is no medical evidence of any injury being suffered by the applicant.
59. It was open to the respondent to take further legal proceedings against the applicant in order to stop him interfering with the irrigation system. However, as a practical matter, such legal action would have taken some time and would probably not have been as effective as direct physical action in order to prevent damage to the irrigation system which might have had an adverse impact upon other farmers and which could have been expensive and time consuming to repair. I think it likely that a court would conclude that, pursuant to the easements over the applicant’s land, the respondent, through its servants or agents, was entitled to enter that land and to take reasonable measures to protect and repair the irrigation system on or under that land. The question for a court hearing this claim would be whether the measures taken were reasonable. The applicant would have this Court believe that the measures taken were not reasonable and that the force used was excessive. The respondent contests this. I think that the applicant has a prima facie case of trespass to his shed on his property and to some of his chattels but the value of that claim would be very small and certainly far less than the judgment debt. If the applicant could succeed in an action for assault upon his person he would stand more chance of recovering significant damages. On the evidence before this Court I am unable to conclude that the applicant is likely to succeed on such a claim or even that he has a prima facie case. I think that a court would have due regard to the fact that the applicant was acting in apparent defiance of an injunction granted by the Local Court, albeit that there is a legal issue as to the enforceability of that injunction.
60. A court would also take cognizance of the possibility (which some mention was made of at trial in this matter) that the applicant was seeking to deliberately set up a situation of physical confrontation which would suit his purposes. The applicant conceded under cross-examination that he chose to dig over the irrigation pipe under his land at times when he knew that he was likely to be observed. The applicant also conceded that, based upon his experience, he expected that some effort would be made by the respondent to intervene. On one occasion the applicant took the precaution of having a relative on hand with a camera to record what transpired. There was in my view a degree of provocation in the applicant’s actions, which appears to have increased over time, and which a court hearing a civil claim for damages would take into account.
61. The respondent referred to the decision of the English High Court in Workman v Cowper [1961] 2 QB 143 as authority for the proposition that a person is entitled to use reasonable force against another to deal with a real and imminent threat to the property of third persons. There may be a better case, although none were cited in argument. It is well recognised that self defence is a defence to an action for trespass (whether to the person or to goods). The defence extends to the defence of one’s property. It is but a small step to say that the defence extends to an employee acting to protect the property of his or her employer, or property that the employee knows that the employer is itself bound to protect.
62. The applicant has made a number of other claims which are only mentioned briefly in his written submissions but which are to some extend particularised in his points of claim document annexed to his affidavit of 19 June 2000. These claims are:
(a) for restitution – paragraphs 33 to 40 of the points of claim document;
(b) breach of constructive trust – paragraphs 53 to 56 of the points of claim document;
(c) alleged breaches of the Trade Practices Act and/or the Fair Trading Act – paragraphs 71, 72, 82 and 83 of the points of claim document;
(d) conspiracy – paragraph 73 of the points of claim document;
(e) inducing breach of contract – paragraphs 74 and 75 of the points of claim document;
(f) unconscionability in equity – paragraph 80 of the points of claim document;
(g) enforcement of writ of execution – paragraph 69 of the points of claim document;
(h) issue of bankruptcy notice – paragraph 70 of the points of claim document; and
(i) offer of settlement – paragraphs 76 to 79 of the points of claim document.
63. The applicant’s claims relating to the enforcement of the writ of execution, the issue of the bankruptcy notice and the offer of settlement were not seriously pressed. That is understandable as there is nothing to support them. The claim of breach of constructive trust is put up as an alternative to the claim of breach of fiduciary duty and it depends upon the same facts. It would fail for similar reasons. The claims could also generally have been raised in the proceedings before the Local Court.
64. The claims relating to alleged breaches of the Trade Practices Act and/or the Fair Trading Act depend substantially upon the same facts supporting the contract and estoppel claims and could have been raised in the proceedings before the Local Court. Some of the claims would also be statute barred under the Trade Practices Act. The claims of conspiracy, inducing a breach of contract and unconscionability in equity are put up as alternative claims and, once again, depend essentially upon the same facts. As a general proposition these claims could also have been raised in the proceedings in the Local Court. In addition, virtually nothing was said in argument in relation to these claims and there is virtually nothing in evidence to support them. I cannot be satisfied that the applicant has established a prima facie case in relation to these claims.
65. I conclude that the applicant has failed to establish that he has a counterclaim, set off or cross demand of equal or greater value than the amount claimed in the bankruptcy notice.
Conclusion and Orders
66. The outcome of these proceedings is that the applicant has established that there is an irremedial defect in bankruptcy notice number NW663/2000 but he has failed to establish that he has a counterclaim, set off or cross demand of equal or greater value than the amount claimed in the bankruptcy notice. The applicant has, overall, been successful in these proceedings and he has done nothing to disentitle himself to an award of costs in his favour. I do not think that it matters whether he has succeeded because of a legal development subsequent to trial. He is, however, a self represented litigant in person. The basic principle on which costs are ordinarily awarded is as an indemnity for legal costs and expenses actually incurred: Cachia v Hanes (1994) 179 CLR 403. The applicant has not incurred any legal costs. He has been exempted from payment of court fees in these proceedings. He has doubtless incurred some incidental expenses in relation to photocopying, postage and telephone and fax transmissions. He would have incurred expenses in attending court in Sydney as a witness on 28 November 2000. This calls for an award of costs in a modest amount. I have decided to fix an amount so as to avoid the creation of yet another area of dispute between the parties. Accordingly, I make the following orders:
1. Bankruptcy Notice number NW663 of 2000 is set aside.
2. Within two days of entry, the petitioning creditor is to provide a copy of this order to the Official Receiver in Sydney.
3. The respondent is to pay the applicant’s costs of the application, which are fixed at $500.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
I certify that the preceding sixty six (66) paragraphs are a true copy of the Reasons for Judgment of Driver FM.
Associate:
Dated 1 February 2001
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