Smith v Abbott, Stillman & Wilson

Case [2007] FCA 1256

FEDERAL COURT OF AUSTRALIA

Smith v Abbott Stillman & Wilson [2007] FCA 1256

TREVOR SMITH v ABBOTT STILLMAN & WILSON
VID 1125 OF 2006

RYAN J
17 AUGUST 2007
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1125 OF 2006
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

TREVOR SMITH
Appellant

AND:

ABBOTT STILLMAN & WILSON
Respondent

JUDGE:

RYAN J

DATE OF ORDER:

17 AUGUST 2007

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The respondent’s costs of the appeal form part of the petitioning creditor’s costs in the bankruptcy.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1125 OF 2006
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

TREVOR SMITH
Appellant

AND:

ABBOTT STILLMAN & WILSON
Respondent

JUDGE:

RYAN J

DATE:

17 AUGUST 2007

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

  1. By notice of appeal filed in this Court on 13 October 2006, the appellant has appealed from orders made by Burchardt FM on 25 September 2006, which included a sequestration order against the estate of the appellant;  see Abbott Stillman & Wilson v Smith [2006] FMCA 1519.

    Background to the appeal

  2. On 15 July 2004 the respondent firm filed a complaint against the appellant in the Magistrates Court of Victoria at Melbourne, claiming an amount of $36,763.40.  On 7 February 2005 an amended complaint was filed, claiming a reduced amount of $21,687.35.  The respondent alleged that the amounts owed by the appellant were evidenced by tax invoices rendered by the respondent for legal services provided to the appellant pursuant to an agreement dated 20 November 2003.

  3. On 5 August 2005 terms of settlement were executed between the appellant and respondent in the Magistrates Court proceeding.  Those terms provided that the respondent would accept, in full and final settlement of its claim, payments to be made in accordance with a schedule incorporated in the terms.  Initially, the appellant made payments as required by the schedule, but, on 10 February 2006, he failed to make a stipulated payment.  The terms of settlement provided that, in the event of a default by the appellant in payment of any instalment, the complaint should be reinstated, and the respondent be entitled to enter judgment by consent for the full amount claimed less any part payments made by the appellant.

  4. On 28 February 2006, Smith FM ordered that the complaint be reinstated, that the respondent file and serve an application for judgment within 7 days, and that the appellant file and serve any application in response within 7 days of service of the application.  In accordance with the terms of settlement, the respondent wrote to the appellant on 28 February 2006 noting that the appellant had defaulted in complying with the schedule of payments, and advising that, if payment were not received by 6 March 2006, an application for judgment would be made to the Magistrates…

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Details
AGLC
Smith v Abbott, Stillman & Wilson [2007] FCA 1256
Case
[2007] FCA 1256
Decision Date

CaseChat Overview and Summary

Smith has appealed against a sequestration order made against him by Burchardt FM on 25 September 2006. The appeal was brought against the orders of the Federal Magistrates Court, and follows a judgment entered against Smith in the Magistrates Court of Victoria at Melbourne, for an amount of $20,157.74. The appeal challenges the validity of the Magistrates Court judgment, and argues that the judgment is not a binding debt owed by Smith to the respondent, Abbott Stillman & Wilson. Smith argues that the costs agreement between himself and the respondent was made by a company of which he was a director, and was not binding on him personally. Smith also argues that the relevant documents tending to support that contention had not been discovered by the respondent during the proceeding.

The Court considered whether there were substantial reasons to warrant the exercise of the discretion to go behind the judgment of the Magistrates Court. The Court found that Smith had entered voluntarily into the terms of settlement, and that the judgment had been entered by consent pursuant to the terms of settlement after a default in making a payment required by the terms. The Court held that, even if the appellant had succeeded in showing that the judgment itself had been irregularly entered, the terms of settlement present an insuperable obstacle to his successfully maintaining that a substantial debt was not in truth and reality due from him to the respondent.

The appeal was dismissed with costs. The respondent’s costs of the appeal were ordered to form part of the petitioning creditor’s costs in the bankruptcy.

ORDERS:
1. The appeal be dismissed.
2. The respondent’s costs of the appeal form part of the petitioning creditor’s costs in the bankruptcy.

Orders

Orders of the court

1. The appeal be dismissed.

2. The respondent’s costs of the appeal form part of the petitioning creditor’s costs in the bankruptcy.

Background

Background to the litigation

By notice of appeal filed in this Court on 13 October 2006, the appellant has appealed from orders made by Burchardt FM on 25 September 2006, which included a sequestration order against the estate of the appellant; see Abbott Stillman & Wilson v Smith [2006] FMCA 1519. Background to the appeal On 15 July 2004 the respondent firm filed a complaint against the appellant in the Magistrates Court of Victoria at Melbourne, claiming an amount of $36,763.40. On 7 February 2005 an amended complaint was filed, claiming a reduced amount of $21,687.35. The respondent alleged that the amounts owed by the appellant were evidenced by tax invoices rendered by the respondent for legal services provided to the appellant pursuant to an agreement dated 20 November 2003. On 5 August 2005 terms of settlement were executed between the appellant and respondent in the Magistrates Court proceeding. Those terms provided that the respondent would accept, in full and final settlement of its claim, payments to be made in accordance with a schedule incorporated in the terms. Initially, the appellant made payments as required by the schedule, but, on 10 February 2006, he failed to make a stipulated payment. The terms of settlement provided that, in the event of a default by the appellant in payment of any instalment, the complaint should be reinstated, and the respondent be entitled to enter judgment by consent for the full amount claimed less any part payments made by the appellant. On 28 February 2006, Smith FM ordered that the complaint be reinstated, that the respondent file and serve an application for judgment within 7 days, and that the appellant file and serve any application in response within 7 days of service of the application. In accordance with the terms of settlement, the respondent wrote to the appellant on 28 February 2006 noting that the appellant had defaulted in complying with the schedule of payments, and advising that, if payment were not received by 6 March 2006, an application for judgment would be made to the Magistrates Court. The appellant did not respond to that notification, and, on 6 March 2006, the respondent filed and served an application for judgment in default in accordance with the terms of settlement. On 13 April 2006 Smith FM ordered that the appellant pay to the respondent the sum of $20,157.74. There was no appearance by the appellant before the Magistrates Court on 13 April 2006. On 24 April 2006 the appellant applied to the Magistrates Court to set aside the orders which had been made on 13 April 2006, claiming that he had not been notified of the hearing of the application for judgment, despite having provided his new address to the Court on at least two previous occasions. The appellant’s application was heard on 12 May 2006 by Smith FM, when the appellant alleged that the costs agreement with the respondent had been made by a company that of which he was a director and was not binding on him personally. He also alleged that the relevant documents tending to support that contention had not been discovered by the respondent during the proceeding. However, his Honour refused the application holding that the appellant had not demonstrated a valid basis for setting aside the judgment as he had entered voluntarily into the terms of settlement and the judgment had been entered by consent pursuant to the terms of settlement after a default in making a payment required by the terms.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

RYAN J
I am therefore not persuaded that substantial reasons have been established in this Court to warrant the exercise of the undoubted discretion to go behind the judgment of the Victorian Magistrates Court. Even if the appellant had succeeded in showing that the judgment itself had been irregularly entered by, for example, demonstrating that he had been denied procedural fairness at the time when the default judgment was entered, the terms of settlement present an insuperable obstacle to his successfully maintaining that a substantial debt was not in truth and reality due from him to the respondent.Conclusion For the reasons which I have endeavoured to explain, the appeal must be dismissed with costs. I shall order that the respondent’s costs of the appeal form part of the petitioning creditor’s costs in the bankruptcy.

Ratio Decidendi

Legal Principle Established

Established by: RYAN J

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