Sutton v BearingPoint INC

[2017] FCCA 477

FEDERAL CIRCUIT COURT OF AUSTRALIA

SUTTON v BEARINGPOINT INC [2017] FCCA 477

Catchwords:
BANKRUPTCY – Application to set aside bankruptcy notice – whether issuing of the bankruptcy notice was abuse of process – consideration of factors – application dismissed.

Cases cited:

Maxwell-Smith v S & E Hall Pty Limited, in the matter of Maxwell-Smith [2006] FCA 825

Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616
Brunninghausen v Glavanics [1998] FCA 230
Killoran v Duncan [1999] FCA 1574
Slack v Bottoms English Solicitors [2002] FCA 1445
Re Excel Finance Corporation Limited (Receiver and Manager Appointed); Worthley v England and Australian Securities Commission [1993] FCA 108; (1993) 41 FCR 346
Davidova v Murphy [2009] FCA 601
Watts v Adelaide Bank Limited [2009] FCA 420
Sutton v BE Australia WD Pty Ltd [2010] NSW 772
BE Australia WD Pty Ltd v Sutton [2011] NSWCA 414
Sutton v BE Australia WD Pty Ltd (Subject to a Deed of Company Arrangement) [2012] HCAtrans 167
BE Australia WD Pty Ltd (subject to a deed of company arrangement) v Sutton [2016] NSWSC 485
Hellier Capital Pty Limited v Richard Albarran [2009] NSWSC 403
Chint Australia Pty Ltd v Cosmoluce Pty Limited [2008] NSWSC 1054
Leondaris v KGB Design & Construction Pty Ltd [1998] FCA 1354
Australian Securities and Investment Commission v Forge [2003] FCAFC 274; (2003) 133 FCR 487
Petratos v Provident Capital Limited [2009] FMCA 1168
Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509

Applicant: MARY SUTTON

Respondent: BEARINGPOINT INC

File Number: SYG 2851 of 2015

Judgment of: Judge Nicholls

Hearing date: 6 December 2016

Date of Last Submission: 6 December 2016

Delivered at: Sydney

Delivered on: 16 March 2017

REPRESENTATION

Counsel for the Applicant: Mr M J Lewis

Solicitors for the Applicant: Gilbert + Tobin Lawyers

Counsel for the Respondent: Mr A Shearer

Solicitors for the Respondent: Ashurst Australia

ORDERS

(1)The application made on 19 October 2015 and further amended on 20 November 2015 is dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2851 of 2015

MARY SUTTON

Applicant

And

BEARINGPOINT INC

Respondent

REASONS FOR JUDGMENT

1.Before the Court is an application made on 19 October 2015, and further amended on 20 November 2015, by Ms Mary Sutton for an order that bankruptcy notice BN 184561 issued on 14 September 2015, and said to have been served on her on 29 September 2015, be set aside. The sole remaining ground for the application is that the issuing of the bankruptcy notice is, in the circumstances of this case, an abuse of process.

2.The central proposition put by Ms Sutton in support of the ground of the further amended application, is that the bankruptcy notice was not issued with a view to properly invoking this Court’s bankruptcy jurisdiction, but rather to “pressure” Ms Sutton to pay an amount emanating from a cost judgment made against her by the New South Wales Court of Appeal.

3.The respondent in these proceedings, BearingPoint Inc. (“BPI”) opposes the making of the order.

Evidence Before the Court

4.Ms Sutton filed, and sought leave to read the following affidavits:

a)The affidavit of Mr Andrew Attilio Floro, solicitor, made on 16 October 2015.

b)The affidavit of Ms Mary Sutton, taxation specialist, made on 26 July 2016.

c)The affidavit of Mr Andrew Attilio Floro, solicitor, made on 26 July 2016.

5.BPI filed and sought leave to read the following affidavits:

a)The affidavit of Ms Caroline Jane Rasaiah, solicitor, made on 12 November 2015.

b)The affidavit of Ms Caroline Jane Rasaiah, solicitor, made on 2 December 2015.

c)The affidavit of Ms Caroline Jane Rasaiah, solicitor, made on 12 July 2016

d)BPI also sought to rely on earlier affidavits that had been read or relied upon in what she described as “earlier proceedings”. These documents appeared at Tabs 1 through 7 of the Supplementary Court Book (“SCB”).

6.The relevant objections to the affidavit evidence, and the disposition of those objections, are as set out at Schedule 1 to this judgment.

7.BPI also tendered the documents that appeared in the SCB at Tabs 8 through 13 with no objection from Ms Sutton (“RE1”).

8.BPI also sought to tender a lease document. No objection was made by Ms Sutton’s solicitor as they were unable to obtain instructions in this regard, but the document was admitted subject to relevance (“RE2”).

Relevant Law

9.

There did not appear to be a dispute of substance between the parties as to the relevant law. It is of assistance to note what was stated by Justice Jacobson in Maxwell-Smith v S & E Hall Pty Limited, in the matter of Maxwell-Smith [2006] FCA 825 (“Maxwell-Smith”) at

[41] – [44]:

“[41] The Court’s power to set aside a bankruptcy notice arises from s 30 of the Act. But the Act confers no general discretion to set aside a bankruptcy notice that is valid in form and not an abuse of process; Re Briggs; Ex Parte Briggs v Deputy Commissioner of Taxation (1986) 12 FCR 310 at 311 – 312; Re Athans; Ex Parte Athans (1991) 29 FCR 302 at 310; Australian Securities and Investments Commission v Forge [2003] FCAFC 274; (2004) 48 ACSR 474 at [27].

[42] It follows from this that the Court does have power to set aside a bankruptcy notice which can be characterised as an abuse of process; Amos v Brisbane TV Limited [2000] FCA 825; (2000) 100 FCR 82 at [21].

[43] If it is apparent to the Court that the purpose of a bankruptcy notice is to put pressure on a debtor to pay a debt, rather than to invoke the Court’s insolvency jurisdiction, the issuing of the bankruptcy notice will be an abuse of process; Brunninghausen v Glavanics [1998] FCA 230; see also

Re Sarina; Ex parte Wollondilly Shire Council [1980] FCA 66; (1980) 43 FLR 163 at 166.

[44] However, it is not an abuse of process if a creditor genuinely intends to pursue the matter if there is default in complying with the notice and there is no evidence of collateral purpose or undue pressure; Slack v Bottoms English Solicitors [2002] FCA 1445 at [15] – [21].”

10.Ms Sutton specifically relied on Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616 (“Yarranova”) per Justice Gordon (before Her Honour’s elevation to the High Court of Australia) at [91]:

“It is an abuse of process for a judgment creditor to pursue bankruptcy proceedings ‘for the purpose of stifling litigation’: Bayne v Baillieu; Bayne v Riggall [1908] HCA 39; (1908) 6 CLR 382 at 396. So, for example, if the purpose of the bankruptcy notice is to put pressure on a debtor to pay a debt rather than to invoke the Court’s jurisdiction in relation to insolvency, then the filing of a bankruptcy notice is an abuse of process: cf

Maxwell-Smith v S & E Hall Pty Limited, in the matter of Maxwell-Smith [2006] FCA 825; (2006) 233 ALR 81.”

11.Ms Sutton drew specific attention to what was said to be relevant to the current case, that is, that it would be an abuse of process for a judgment creditor to pursue bankruptcy proceedings for the purpose of stifling litigation. The specific example was that of a bankruptcy notice filed to put pressure on a debtor to pay a debt rather than to invoke the Court’s bankruptcy jurisdiction (see also Brunninghausen v Glavanics [1998] FCA 230 at [15] and Maxwell-Smith at [20] – [23], [43], and [47] – [49]).

12.BPI agreed with Ms Sutton, that while the Court had no general discretion to set aside a bankruptcy notice, it could do so if it finds an abuse of process where the purpose of the bankruptcy notice is to put pressure on a debtor to pay a debt rather than invoke the Court’s insolvency jurisdiction (see also Killoran v Duncan [1999] FCA 1574 (“Killoran”) at [12] – [14] and Slack v Bottoms English Solicitors [2002] FCA 1445).

13.It was also not in dispute between the parties, although this was particularly emphasised in BPI’s submissions, that the onus which can be described as “heavy”, rests with Ms Sutton as the party alleging that the issuing of the bankruptcy notice by BPI was an abuse of process (see Yarranova at [90] citing Re Excel Finance Corporation Limited (Receiver and Manager Appointed); Worthley v England and Australian Securities Commission [1993] FCA 108; (1993) 41 FCR 346).

14.As BPI submits, to establish an abuse of process, more than mere assertion is required (Davidova v Murphy [2009] FCA 601 at [91], Watts v Adelaide Bank Limited [2009] FCA 420 at [18] and Yarranova at [90]).

Background

15.Both parties, in both written and oral submissions, set out and referred to what was described as the “factual matrix”, or background, giving rise to the issuing of the bankruptcy notice. For current purposes the following is relevant in that context:

a)On 1 November 2005, Ms Sutton commenced proceedings in the Industrial Court against BearingPoint Australia Pty Ltd (“BPA”). The dispute arose from a “contract” by which Ms Sutton performed certain work for “BPA” (BPA is now BE Australia WD Pty Ltd (“BEAWD”) a subsidiary of BPI).

b)Before that matter could be determined, BPA successfully sought voluntary administration.

c)Ms Sutton lodged a proof of debt in relation to her claim which was rejected by the relevant administrators (“the Administrators”).

d)Ms Sutton was successful at first instance in her action seeking relief justifying the Administrators in admitting her proof of debt, or reversing the decision to reject the proof of debt (Sutton v BE Australia WD Pty Ltd [2010] NSWSC 772).

e)Ms Sutton lost an appeal (BE Australia WD Pty Ltd v Sutton [2011] NSWCA 414), and costs orders were made against her in relation to the initial proceedings, and on that subsequent appeal. She was then refused leave to appeal to the High Court (Sutton v BE Australia WD Pty Ltd (Subject to a Deed of Company Arrangement) [2012] HCAtrans 167).

f)A number of costs assessments were made which resulted in the issue of Certificates of Determination of costs and amended Certificates of Determination of costs in the total amount payable by Ms Sutton to BEAWD and the Administrators, assessed as being $165,033.52 in total (“the Judgment Debt”).

g)On 30 May 2014, judgment was entered in the amount of $165,033.52. BEAWD and the Administrators were named as plaintiffs. Ms Sutton was the defendant.

h)On 24 June 2014, a deed of assignment was executed between BEAWD and the Administrators who assigned the debt to BPI.

i)A Notice of Assignment of Debt was executed on 18 July 2014, and posted to Ms Sutton on 7 August 2015 (see also the further steps taken to effect service of the Notice of Assignment of Debt as set out in BPI’s written submissions filed on 24 November 2016 at [17], although see also Ms Sutton’s written submissions filed on 17 November 2016 at [2.9]).

j)On 17 July 2015, BPI sought leave by way of Notice of Motion (“the Execution Motion”), to issue a writ of execution of the Judgment Debt. This was served on Ms Sutton on 23 July 2015. She opposed BPI’s writ of execution.

k)The Execution Motion was listed for directions on 31 July 2015. On that day, Ms Sutton, through her counsel, raised in Court the issue of a Notice of Motion seeking to pay the Judgment Debt by instalments (“the Instalment Motion”) (see further at [54] below).

l)Both parties filed written submissions at the relevant times in relation to these matters (see further below).

m)On 18 August 2015, Registrar Kenna of the Supreme Court of New South Wales (“the Registrar”) heard oral argument. The Instalment Motion was withdrawn, and Ms Sutton consented to costs being awarded against her in relation to that motion.

n)On 8 September 2015, the Registrar delivered judgment in favour of BPI.

o)The bankruptcy notice, which is the subject of the current proceedings, was issued by BPI on 14 September 2015, and served on Ms Sutton on 29 September 2015.

p)Ms Sutton filed a Notice of Motion on 2 October 2015 seeking a review of the Registrar’s decision, and in the alternative, a prohibition on the enforcement of the Judgment Debt (BEAWD was obviously the respondent).

q)On 22 April 2016, judgment was delivered in BE Australia WD Pty Ltd (subject to a deed of company arrangement) v Sutton [2016] NSWSC 485 (“BE Australia WD Pty Ltd”). The application was dismissed with costs.

16.Two matters require mention. First, there was a dispute between the parties arising from Ms Sutton’s submission that the parties had been engaged in “hard fought litigation in the Industrial Court (IC) and the NSW Supreme Court for over a decade” (see the applicant’s written submissions at [2.1] and also see [2.2] – [2.4] of those submissions).

17.BPI points to the evidence before the Court that there have been different parties to the different proceedings initiated by Ms Sutton over this period (see [7] – [9] of the respondent’s written submissions of 24 November 2016).

18.I note that in the Supreme Court judgment in BE Australia WD Pty Ltd at [5], the Supreme Court stated that “[t]his litigation between the party spans over 10 years and has been hard fought in various Courts.”

19.Given what is set out above, I respectfully understood that to be a general reference to various proceedings including Ms Sutton, emanating from the workplace dispute in 2005.

20.I note for the sake of clarity the relationship between BPI and BEAWD. BPI is a company incorporated in the USA. It is subject to a “Chapter 11 bankruptcy” process in the United States of America. BEAWD is a subsidiary of the respondent BPI.

Consideration

21.As set out above, in the current case, the onus rests on Ms Sutton to show that the issuing of the bankruptcy notice, at the relevant time, by BPI was an abuse of process (Killoran at [13]). Ms Sutton raises five “reasons” from which she says the “inference” may be drawn that the purpose of BPI was to put undue pressure on her to pay what she describes as a “relatively small debt”, rather than to genuinely invoke the Court’s bankruptcy jurisdiction.

22.For the reasons that follow, none of Ms Sutton’s arguments or “reasons”, taken either individually or cumulatively, discharge the onus to show that the issuing of the bankruptcy notice was an abuse of process.

23.First, Ms Sutton asserts that at the time of the issuing of the bankruptcy notice, BPI “knew” that Ms Sutton was “in all probability”, solvent. She relies on BPI’s written submissions filed on 11 August 2015 in relation to the proceedings before the Registrar involving BPI’s seeking of leave to issue a writ of execution, and the subsequent motion by Ms Sutton to pay the debt by instalments (see the affidavit of Mr Floro of 16 October 2015 at [11] and exhibit “AAF – 3” at pages 50 to 55 (“the Written Submissions”)).

24.Ms Sutton drew attention to [30] of the Written Submissions:

“The Applicant opposes the Instalment Motion and submits that the proposed repayment schedule is untenable for the following reasons:

(a) The defendant has not indicated why she is unable to pay the full judgment immediately and why she has not already paid it. The defendant’s financial statement annexed to her affidavit of 30 July 2015 in support of the Instalment Motion states that the value of her (jointly held):

(i) assets total $5,366,500.00; and

(ii) liabilities total $1,602,289.00.

This demonstrates that the defendant is more than capable of repaying the full judgment immediately.”

[Emphasis added.]

25.As set out above, the bankruptcy notice was issued on 14 September 2015. What was stated in the Written Submissions, predated that date, given they were signed and filed on 11 August 2015.

26.Ms Sutton argues that in that light, at the relevant time, and having regard to what is specifically stated in the Written Submissions, at least one month earlier, BPI “knew” that Ms Sutton had assets in total, greatly exceeding the Judgment Debt.

27.Further, that Ms Sutton had made an offer to satisfy the Judgment Debt (the Instalment Motion), but BPI took the position that the offer was “untenable” because Ms Sutton could “immediately” pay the debt from her liquid assets.

28.The following matters answer Ms Sutton’s argument. One, while Ms Sutton relies on the statement in the Written Submissions made by BPI (see [24] above), she does not point to any material, nor otherwise assert, in the context of the current proceedings, and with reference to the relevant time, that she was actually solvent at the relevant time, being the date of the issuing of the bankruptcy notice.

29.Two, the context of BPI’s statement is important in understanding its meaning. It is to be remembered that the specific issue to which the Written Submissions were directed was Ms Sutton’s proposal to pay the debt by instalments (see the heading “Defendant’s proposed repayment schedule” under which the impugned statement appears, and the following headings: “Defendants motion to pay by instalments” and “Instalment applications” in the affidavit of Mr Floro of 16 October 2015 and exhibit “AFF-3” at pages 52 - 53).

30.Amongst the Written Submissions at [27], in my view relevantly, BPI relied on Hellier Capital Pty Limited v Richard Albarran [2009] NSWSC 403 (the reference in the submissions is to “Hellier Australasia”, but in the circumstances that appears to be a typographical error) at [8], citing Chint Australasia Pty Ltd v Cosmoluce Pty Limited [2008] NSWSC 1054 and Leondaris v KGB Design & Construction Pty Ltd [1998] FCA 1354 for the proposition that “an instalment order ought not be made if the judgment debtor’s means are sufficient to enable him or her to pay the judgment debt immediately and in full”.

31.In that context, and amongst other things, BPI pointed to the inconsistency between Ms Sutton’s motion to pay by instalment and the evidence she herself had submitted (that is, her financial statement attached to her affidavit). That is, at the same time as she indicated by her financial statement that she had sufficient funds to pay the debt, she nonetheless sought to pay by instalments. This was in circumstances where no satisfactory explanation for this inconsistency had been proffered up to that date.

32.I agree on balance, and when the impugned statement in the Written Submissions is read fairly in context with BPI’s submissions now (being the written submissions filed in this Court on 24 November 2016), that the statement in the Written Submissions was made in response to the clear implication in Ms Sutton’s evidence, that she herself was asserting that she had funds to pay the Judgment Debt in full. Further, on a fair reading, I also accept that this did not constitute an acceptance that she had those funds. It is clear from the Written Submissions, that the words “this demonstrates” as they appear in the sentence under [30](a)(ii) (see above at [24]), is a reference to Ms Sutton’s own evidence.

33.Nor, on what has been put before this Court now, does there appear to have been evidence available to BPI at the time of the drafting of those Written Submissions, that what was in the financial statement represented a realistic evaluation of the relevant properties, or that there had been any process of objective, or independent, assessment of those valuations, and the efficacy as to the assertions relating to the liquid assets referred to in the statement.

34.Before the Court now, Ms Sutton argues that BPI’s Written Submissions brought the circumstances of this case to a situation where the reasoning of the Court in Maxwell-Smith should be applied.

35.The difficulty for Ms Sutton however, is that the circumstances which gave rise to the findings of the Court in Maxwell-Smith (at [45] – [51]) that led to the conclusion that the issuing of the bankruptcy notice was an abuse of process, do not exist in the current case.

36.For example, there is no evident comparable delay in the current case (with reference to Maxwell-Smith at [46]). Nor is there the evidentiary basis before this Court now, to reasonably allow the finding as to solvency made at [47] – [48] in the circumstances of Maxwell-Smith. Nor, importantly, that BPI had any basis on the material before it from which to draw a probative, reasonable inference as to Ms Sutton’s solvency.

37.In this light also, BPI’s reference to Australian Securities and Investments Commission v Forge [2003] FCAFC 274; (2003) 133 FCR 487 at [15] is instructive for current purposes ([55] of BPI’s written submissions filed on 24 November 2016):

“…All persons are under an obligation to comply with final judgments or final orders. Failure to do so, especially after having been placed on notice that compliance is required by the party in whose favour the final judgment or final order was made, may be assumed to indicate an inability to do so; that is, to indicate insolvency.”

38.It is, in my view, important to note the distinction between the fact of a failure by a debtor to pay a debt, and what is known by a creditor as to the capacity of the debtor to pay that debt. In any event, again there is an inconsistency in Ms Sutton’s conduct in not paying the debt on or before the relevant time, and her conduct in seeking to pay by instalments. It was, in my view, reasonable of BPI to draw the inference that her motion to pay by instalments was, in all the circumstances, reflective of an inability to pay the debt.

39.There is great strength in BPI’s submission that Ms Sutton made the offer to pay by instalments rather than the debt in full, with the benefit of legal representation. BPI’s argument is that it was reasonable to infer that she was not able to pay the debt in the absence of any clear explanation from Ms Sutton as to the reasons for her offer to pay by instalments. There was at that time, no question that she owed the debt, and knew that BPI required compliance with the relevant Court order.

40.In all, I do not accept Ms Sutton’s first argument supporting the proposition that the issuing of the bankruptcy notice was an abuse of process.

41.Second, Ms Sutton argues that BPI took no steps in the period between the formal filing of her motion to pay by instalments (3 August 2015) and the issuing of the bankruptcy notice (14 September 2015) to inquire, as to the state of her finances, given the financial statement attached to the affidavit filed in the matter of the Instalment Motion.

42.This argument again depends on the proposition that BPI “knew”, as at the time of making its Written Submissions that Ms Sutton was capable of paying the debt. That is, the argument relies on the statement in the Written Submissions, as relied upon in the first argument. Given that, the second argument does not assist in revealing an abuse of process for the reasons already set out above.

43.Third, Ms Sutton complains that BPI found her “reasonable offer” to pay by instalments to be “untenable”. The argument is that had BPI accepted that offer by the time of the written submissions made by the applicant in the current proceedings (17 November 2016), she would have paid $100,000 of a debt of $165,000.

44.Two propositions are said to flow from this. One, BPI should have considered the offer in the circumstances as being reasonable. Two, the situation was such that BPI should have made further enquiries before issuing the bankruptcy notice. The failure to make further enquiries was said to “bespeak” of a “collateral purpose” ([4.4] of Ms Sutton’s written submissions filed on 17 November 2016).

45.It is important to note the actual circumstances in which, what Ms Sutton characterises as an “offer”, was made. This “offer” was not made in some exchange of correspondence between the parties, as is often seen in matters involving the payment of debt.

46.Rather, the parties were already engaged in litigation in relation to the Execution Motion before the Supreme Court of New South Wales. Ms Sutton’s “offer” to pay by instalment was made by way of Notice of Motion filed, without notice, at the directions hearing in relation to the Execution Motion brought by BPI. To the extent that Ms Sutton now relies on what she says was a lack of relevant action by BPI, some account must reasonably be taken of the need for some reasonable time for BPI to consider what was put by Ms Sutton without prior notice.

47.Further, Ms Sutton, at best, relies now on what she says was the consequential outcome of this failure of BPI to “accept” the Instalment Motion. However, no satisfactory attempt has been made now to engage with BPI’s explanation given in its Written Submissions. The difficulty for Ms Sutton now, is that no satisfactory attempt has been made to explain why BPI’s reasons for not accepting the offer to pay by instalments, set out in its Written Submissions, were unreasonable.

48.It is also important to note in this context, that Ms Sutton withdrew the Instalment Motion, that is, the “offer” to pay by instalment on 18 August 2015. The period within which BPI was said to have not made the necessary enquiries was between 31 July 2015 and 18 August 2015.

49.Ms Sutton now seeks to argue that BPI acted unreasonably in not making enquiries as to her financial situation during this period. She has not however, provided any satisfactory, or reasonable, explanation as to why she waited until the day of the directions hearing to make the “offer” by way of Notice of Motion, and its subsequent withdrawal.

50.

Ms Sutton submits that BPI’s failure “bespeaks” of a “collateral purpose” and seeks to draw on what was said in Maxwell-Smith at paragraphs [45] - [50]. What was not satisfactorily explained, given the circumstances of this case (as opposed to what was found in

Maxwell-Smith

), was how the failure to make enquiries in this period and in the circumstances, provided a basis to indicate that BPI did not intend to invoke the Court’s bankruptcy jurisdiction, if there was default on the bankruptcy notice. The Written Submissions , written in part, in answer to Ms Sutton’s Instalment Motion, make clear BPI’s intention to pursue the issuing of a bankruptcy notice in relation to Ms Sutton, the basis for that intended action, and the reason (which was not in dispute), as to why a writ of execution was necessary. The third argument also does not assist Ms Sutton.

51.Fourth, Ms Sutton argues that an inference that the bankruptcy notice was issued for a collateral purpose also arises from the conduct of BPI, in particular, in not accepting a “second instalment offer” from her to pay by instalments.

52.Ms Sutton relies on the affidavit of Mr Floro of 26 July 2016 at [6] (and exhibit “AFF – 10” at page 1) to submit that Mr Floro, acting for Ms Sutton, sent a “letter” to BPI’s solicitors. The key elements of the letter were said to be the statements that Ms Sutton’s financial circumstances had not significantly altered since the formal filing of the (first) instalment motion on 3 August 2015, and that the relevant US court had, two months prior to the issuing of the bankruptcy notice, extended the time by which BPI’s bankruptcy trust (in the USA) had to be concluded and terminated.

53.The letter made an “offer” to pay the debt by instalments on the same terms as the first “offer” and to complete payment by the bankruptcy trust expiration date.

54.Ms Sutton now argues that she received no response from BPI. In circumstances where there was no obvious prejudice to BPI, she now asserts that this is compelling in revealing the intention of BPI was to place “undue pressure” on her, before the conclusion of what she says, was related litigation in the Industrial Court of New South Wales.

55.In her submissions, Ms Sutton otherwise recognised that the relevant time, for current purposes, is the date of the issuing of the bankruptcy notice (see Killoran and Ms Sutton’s written submissions filed on 17 November 2016 at [3.6]). In that light, it is important to note that the date of Mr Floro’s “letter” was over 10 months after the issuing of the bankruptcy notice.

56.It must be said that Ms Sutton’s submission that subsequent events have only “slight relevance” is inconsistent with the submission that BPI’s “conduct”, after receiving Mr Floro’s letter, was “compelling evidence” of BPI’s intention in issuing the bankruptcy notice.

57.Given the circumstances of this case, Ms Sutton’s argument is further diminished by her submission that the relevance of subsequent events is limited to their throwing light on the circumstances which might have been appreciated, and foreseen, at the time of the issue of the bankruptcy notice (with reference to Killoran at [13]).

58.However, apart from mere assertion that BPI’s “conduct” provides compelling evidence, no satisfactory explanation was given by Ms Sutton to the Court now, as to how BPI’s claimed conduct in July 2016 throws light upon its relevant intention in September 2015. This argument also does not assist Ms Sutton.

59.BPI made a number of submissions in answer to Ms Sutton’s argument that, in my view, provide further strong arguments that reveal the paucity of her argument.

60.One, the second “offer” was made some nine months after the current proceedings commenced. It was linked to these proceedings by Ms Sutton in that the offer was exhibited Mr Floro’s affidavit filed in these proceedings by her on 26 July 2016, and sworn on the same day. I agree with BPI that an inference may be drawn that the purpose of Mr Floro’s letter may have been other than the making of a “genuine” offer.

61.Two, although on the basis of “one” above, it is, in my view, not open to use such a colourful description as “concocted” as used by BPI in its written submissions now. The impulse to use this description however is further explained by the fact that the “offer” was only open for three days after the date of its making. This also was not satisfactorily explained by Ms Sutton to the Court.

62.Three, the second “offer” was said to have been made on the same terms as the first “offer”. This meant that given interest on the debt, the repayment “schedule” would have put the repayment of the debt beyond the extended deadline given by the US Bankruptcy Court. I agree with BPI that in the circumstances, it was not unreasonable of BPI not to accept the second “offer”.

63.It is to be remembered that BPI was, and is, under the control of a trustee in bankruptcy. Further, it is not a party to the Industrial Court proceedings on which Ms Sutton’s submissions rely. Ms Sutton has not satisfactorily explained the consequences of these matters in her submissions.

64.The fifth argument raised by Ms Sutton is that BPI delayed in taking steps to enforce the Judgment Debt for about a year, and in circumstances where the Judgment Debt was for a relatively small amount of money. The assignment of the Judgment Debt to BPI occurred on 24 June 2014. However, the writ of execution was not filed until 17 July 2015. The argument is that BPI has offered no adequate explanation for this delay.

65.What must be taken into account is that BPI was not relevantly idle in this period. On the evidence, a number of attempts were made to effect service on Ms Sutton of the notice of assignment. The period up to 9 September 2014 is therefore adequately explained by this ([17] of the respondent’s written submissions of 24 November 2016).

66.It is the case that the Execution Motion was not filed until some 10 months later. However, I accept BPI’s submission that BPI is in the hands of a liquidating trustee whose proper focus, which was addressed by the trustee in this period, was the liquidation and distribution of the assets of BPI. In my view, this provides an adequate explanation for that period.

67.Since that time, the process of execution has been diverted and delayed by the efforts of Ms Sutton herself in the various attempts made to prevent the execution.

68.In all, Ms Sutton’s arguments individually, in aggregate or cumulatively, do not support, let alone make out, given the onus on her, the proposition that the issuing of the bankruptcy notice by BPI was an abuse of process. This is sufficient to dispose of the application to the Court.

69.However, for the sake of completeness, I also note a further argument put by BPI in responding to Ms Sutton’s case. That is, that there is no evidence to suggest, to the high standard necessary, that BPI had no intention to pursue bankruptcy proceedings through the jurisdiction of this Court if the debt was not paid. That is, that BPI had no legitimate or proper motive for issuing the bankruptcy notice.

70.It must be said that putting the argument of the claimed state of knowledge of solvency by BPI to one side (it has been dealt with above), the remainder of Ms Sutton’s submissions, with respect to her counsel who made valiant attempts on her behalf, was simply that the bankruptcy notice was issued to pressure her into paying the debt.

71.At the hearing of this case, references were made to Petratos v Provident Capital Limited [2009] FMCA 1168, a judgment of this Court, which addressed the question, in part, of the “hope” of a creditor, that on issue of the bankruptcy notice, that the debt would be paid in circumstances where if not paid, the threat of an act of bankruptcy may ensue.

72.It is not necessary to go into great detail on this. I agree with BPI that the judges of this Court have consistently applied the principles set out in Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, which in effect described an abuse of process relevantly as occurring when the purpose for issuing the bankruptcy notice is not to prosecute it to a conclusion, but to use it to obtain some advantage for which the bankruptcy notice proceedings were not envisaged, or for some collateral purpose. Ms Sutton, on the evidence, has not established that this was the case.

Conclusion

73.For the reasons set out above, Ms Sutton has not discharged the onus of proving, nor provided evidence for proving, that the issuing of the bankruptcy notice by BPI was other than to invoke the Court’s bankruptcy jurisdiction. The application should be dismissed. I will make the appropriate order.

I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for judgment of Judge Nicholls

Date: 16 March 2017

Schedule 1

Affidavit	Part	Objection	Disposition
Andrew Attilio Floro, of Gilbert + Tobin Lawyers, affirmed 16 October 2015	[6] - [7] (and associated exhibited documents)	Relevance	Admitted subject to relevance
	[20] - [21] (and associated exhibited documents)	Relevance	Admitted subject to relevance
	AAF - 3 (affidavit of Ms Sutton at pages 47 – 48)	Section 136 limitation - not to be admitted as to truth of its contents given that applicant does not rely on any contention as to solvency Otherwise: Relevance – applicant does not rely on any contention as to solvency Opinion/conclusion – inadmissible opinions/conclusions as to estimated values	Admitted subject to Evidence Act 1995 (Cth) s.136 limitation
	AAF - 3 (affidavit of Mr A A Floro at page 56, insofar as it concerns the IC proceedings)	Relevance	Admitted subject to relevance

Mary Sutton, taxation specialist, affirmed 26 July 2016	[7] – [8] (and associated exhibited documents)	Relevance – applicant does not rely on any contention as to solvency Opinion/conclusion – inadmissible opinions/conclusions as to estimated values	Admitted subject to Evidence Act 1995 (Cth) s.136 limitation
Andrew Attilio Floro, of Gilbert + Tobin Lawyers, affirmed 26 July 2016	Entire affidavit	Relevance	Admitted subject to relevance
Kris Sabatino, Process Server, sworn 19 August 2014	Entire affidavit	Relevance	Admitted subject to relevance
Anthony Romeo, Licensed Private Enquiry and Commercial Agent, sworn 18 September 2014	Entire affidavit	Relevance	Admitted subject to relevance
Caroline Jane Rasaiah, Solicitor, sworn 17 July 2015	Entire affidavit	Relevance	Admitted subject to relevance
Mabel Man Bo Koo, Solicitor, sworn 24 July 2015	Entire affidavit	Relevance	Admitted subject to relevance
Caroline Jane Rasaiah, Solicitor, sworn 14 August 2015	Entire affidavit	Relevance	Admitted subject to relevance
Mabel Man Bo Koo, Solicitor, sworn 14 August 2015	Entire affidavit	Relevance	Admitted subject to relevance
Caroline Jane Rasaiah, Solicitor, sworn 4 December 2015	Entire affidavit	Relevance	Admitted subject to relevance