The Owner Strata Plan SP22143 v Renet
[2022] FedCFamC2G 953
Federal Circuit and Family Court of Australia
(DIVISION 2)
The Owner - Strata Plan SP22143 v Renet [2022] FedCFamC2G 953
File number(s): CAG 2 of 2022 Judgment of: JUDGE W J NEVILLE Date of judgment: 15 November 2022 Catchwords: BANKRUPTCY – Application for review of sequestration order made by Registrar on the basis of the debtor not having complied with the requirements of a bankruptcy notice – sequestration order sought/made on the basis of unsatisfied judgment debt – whether creditor has established preconditions to the making of a sequestration order – non-compliance with earlier orders of the Court – hearing de novo – application for review dismissed with costs. Legislation: Bankruptcy Act 1966 (Cth) s. 37, 52(1) - (3)
Federal Circuit and Family Court of Australia Act 2021 (Cth) s.256(1) and (2)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) Division 13.2; Division 21.2 “Review of Registrars’ powers”
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) Division 7.2 “Review of sequestration order”
Cases cited: Bechara v Bates (2021) 286 FCR 166
Clapham v Commonwealth Bank of Australia [2013] FCAFC 84
Hutchings v Australian Securities and Investments Commission [2017] FCA 858
Kimber v Owners of Strata Plan No.48216 (2017) 258 FCR 575
Ling v Enrobook Pty Ltd (1997) 74 FCR 19; (1997) 143 ALR 396
Martin v Commonwealth Bank of Australia (2001) 217 ALR 634
Richmond v BMW Australia Finance Ltd (No.1) [2009] FCAFC 24
Robson v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 286 FCR 494
Schepis v Osborne [2015] FCA 192
Totev v Sfar (2008) 167 FCR 193
Zdrilic v Hickie (2016) 246 FCR 532
Division: Division 2 General Federal Law Number of paragraphs: 51 Date of last submission/s: 16 September 2022 Date of hearing: 19 August 2022 Place: Canberra Solicitor for the Applicant in the Application for Review Self-represented Solicitor for the Respondent in the Application for Review Baker Deane & Nutt ORDERS
CAG 2 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: THE OWNER - STRATA PLAN SP22143
Applicant
AND: MARK RENET
Respondent
order made by:
JUDGE W J NEVILLE
DATE OF ORDER:
16 November 2022
ON A FINAL BASIS, THE COURT ORDERS THAT:
1.The Application for Review of the Orders made by a Registrar of this Court on 27 May 2022 that:
(a)a sequestration Order be made against the estate of the Respondent Debtor; and
(b)The Applicant’s costs fixed in the sum of $8,172.47 be paid from the bankrupt estate of the Respondent in accordance with the Bankruptcy Act 1966 (Cth),
is dismissed.
2.The sequestration Order made by a Registrar of this Court on 27 May 2022 is affirmed.
3.The Applicant’s costs of the review fixed in the sum of $5,000.00 be paid from the bankrupt estate of the Respondent in accordance with the Bankruptcy Act 1966 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE W J NEVILLE
Introduction
A creditor’s petition was filed in this matter by the Applicant (“Strata Plan”) on 2nd February 2022, seeking a sequestration Order against the estate of the Respondent, Mr Mark Renet (“Mr Renet”). This was in circumstances where the Applicant alleged it was/is owed the amount of $12,365.19 by the Respondent for outstanding strata levies, pursuant to a Judgment of the Queanbeyan Local Court dated 8th June 2021 (“the judgment debt”).
A bankruptcy notice was served on the Respondent on 6th August 2021. The Respondent failed to comply with the requirements of that notice by the specified date, being 27th August 2021.
The matter first came before a Registrar of the Court on 25th March 2022. There was no appearance by or on behalf of the Respondent. In these circumstances, the matter was adjourned to 27th May 2022, with procedural Orders (a) directing the Applicant to notify the Respondent of the adjournment, (b) that any further adjournment was to be supported by an affidavit, and (c) in the event this was not complied with, or there was no appearance by or on behalf of the Respondent at the Hearing, the Applicant may proceed on the petition for a sequestration Order and the Court would determine the Application on the evidence available.
At the Hearing on 27th May 2022, noting that there was again no appearance by or on behalf of the Respondent, the Registrar made Orders for a sequestration Order against the estate of the Respondent, Mark Renet, and for the Applicant’s costs in the fixed sum of $8,172.47 to be paid from the bankrupt’s estate. It is these Orders of 27th May 2022 that the Respondent seeks to review pursuant to an Application for Review filed 31st May 2022.
Cautionary principle
Before proceeding, it is important that I record, and recall for significant reflection, some recent and salutary remarks of Allsop CJ in Hutchings v Australian Securities and Investments Commission.[1] At [4] – [6], the Chief Justice said:
[4] As an introduction to these reasons, two things should be emphasised which are central to every application in the bankruptcy jurisdiction almost without exception. First, the jurisdiction is not about debt collection; it is about the change of status of insolvent persons. The question of solvency or insolvency is at the root of the jurisdiction. That said, however, insolvency can arise from a whole raft of reasons, and those reasons have a connection with the second matter which attends every single application, and that is not just the economic, but the human consequences that attend the change of status and the change of lives of people who are made bankrupt.
[5] The importance of this is best understood by reminding oneself of what one of the masters of bankruptcy in this country, Deane J, said in a dissenting judgment in Kleinwort Benson Australia Ltd v Crowl [1988] HCA 43; 165 CLR 71. Though the circumstances to which his Honour was referring do not describe accurately or completely the circumstances of Mr Hutchings, some of the matters to which Deane J referred should be understood in the background of this application. He said the following at 82:
It is true that the strictness of the above rules leaves open the possibility of abuse by unscrupulous debtors. That is, however, an unavoidable concomitant of the protection of ordinary people faced with the threat of being made bankrupt. Many, and possibly most, of the petitions in the bankruptcy lists of this country seek the bankruptcy of honest, albeit unbusinesslike or naive, people whose indebtedness springs from causes which evoke sympathy rather than indignation. For such people, bankruptcy does not represent a game to be played to the frustration of their creditors. It represents a pronouncement of failure and humiliation attended by the fear of unknown consequences and the susceptibility to criminal punishment for what would otherwise be innocent conduct.
(citations omitted)[6] … The importance of the passage is to remind myself of the centrally human relationship between the notion of insolvency and its consequences.
[1] Hutchings v Australian Securities and Investments Commission [2017] FCA 858. Similar comments were made by Allsop CJ in Robson v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 286 FCR 494 at [7].
Mr Renet’s Orders sought – Applicant in the Review Application
Mr Renet filed an Application for Review on 31st May 2022, in relation to the Orders made by the Registrar on 27th May 2022. The Respondent’s Orders sought were as follows:
Details of orders sought to be reviewed
1.A sequestration Order against Mark Renet.
2.Applicant creditor’s costs fixed sum $8,172.47 of respondent debtor.
Orders sought
1.Cancel judgment to hear matter of defendant
By way of apparent relief and in response to that part of the Application entitled “terms of the Order(s), Mr Renet stated: “Re list hearing” and “To re list hearing to address matter with all parties.”
On the face of the Orders sought, it is clear enough that, strictly speaking, the reference to “judgment” is incorrect or at least ambiguous. It is, for example, somewhat unclear, whether he is seeking to have the original debt obtained in the Local Court at Queanbeyan set aside, a matter to which he referred on numerous occasions in his oral submissions, and which is also referenced in his somewhat shambolic written submissions. Alternatively, he may only be referring to the Registrar’s decision under review. It is not completely clear. He may, of course, be intending to refer to both.
The Applicant’s Orders sought – Respondent in the Review Application
Strata Plan filed a Notice Stating Grounds of Opposition to Application, interim application or petition on 21st June 2022. Strata Plan’s Grounds of Opposition and Orders sought were as follows (emphasis in original):
Grounds of opposition
The Applicant, who is the Respondent to the Application for Review and the creditor (the Applicant/Review Respondent/Creditor), intends to oppose the Application for Review filed by the Respondent (the Respondent/Review Applicant/Debtor) on the following grounds:
1. Order 1 dated 25 March 2022 stated that the hearing was adjourned to 11 am on 27 May 2022, to be conducted via MS Teams.
2. Order 4 dated 25 March 2022 required the Applicant/Review Respondent/Creditor to notify the Respondent/Review Applicant/Debtor of the adjournment and the Orders dated 25 March 2022.
3. The Applicant/Review Respondent/Creditor complied with Order 4 dated 25 March 2022 by providing a copy of the Orders dated 25 March 2022 to the Respondent/Review Applicant/Debtor by email and by express post.
4. No requests for any adjournment were made by the Respondent/Review Applicant/Debtor pursuant to Order 2 dated 25 March 2022.
5. The Respondent/Review Applicant/Debtor did not appear at the hearing on 27 May 2022.
6. The Applicant/Review Respondent/Creditor was entitled to rely on Order 3 dated 25 March 2022 and proceed on the petition for a sequestration order.
7. Even if the Respondent/Review Applicant/Debtor's attempts to appear on 27 May 2022 had been successful, Order 3 dated 25 March 2022 prevails and the Court would have determined the Applicant/Review Respondent/Creditor's petition for a sequestration on the evidence available, those being the Respondent/Review Applicant/Debtor has committed an act of bankruptcy, which was the basis for the petition; the petition was served on the Respondent/Review Applicant/Debtor; and that the debt relied on by the Applicant/Review Respondent/Creditor is still owing.
Mr Renet’s written submissions
Orders of 31st May 2022 directed the parties to file and serve written submissions for the Hearing. Notwithstanding these Orders, no submissions were filed by or on behalf of the Respondent debtor.
Strata Plan’s written submissions
The Strata Plan’s written submissions, filed 19th July 2022, were as follows (emphasis in original):
A. BACKGROUND
1.On 31 August 2020, the Applicant/Respondent for the Review (Applicant/Review Respondent) filed a statement of claim in the Queanbeyan Local Court against the Respondent/Applicant for the Review (Respondent/Review Applicant) for outstanding body corporate levies outstanding to be paid by the Respondent/Review Applicant in respect of the property known as 7 /3 Charles Street, Queanbeyan NSW 2620.
2.On 8 June 2021, Orders were made in the Queanbeyan Local Court ordering that the Respondent/Review Applicant pay to the Applicant/Review Respondent the sum of $12,365.19 inclusive of GST.
3.On 6 August 2021, bankruptcy notice was personally served on the Respondent/Review Applicant.
4.On 2 February 2022, the Applicant/Review Respondent filed the creditor's petition application in the Federal Circuit and Family Court of Australia (FCFCOA).
5.On 24 February 2022, the Creditor's Petition documentation were personally served on the Respondent/Review Applicant.
6.On the morning of 25 March 2022, the date of the hearing, the Respondent/Review Applicant emailed the FCFCOA seeking an adjournment on the basis of his ongoing illness and alleging that the outstanding debt had been settled.
7.Orders were made on 25 March 2022, adjourning the hearing to 27 May 2022. The purpose of the adjournment was to provide the Respondent/Review Applicant with an opportunity to pay the outstanding debt, and for him to seek legal advice.
8.The Orders also made clear that unless by consent, any further adjournment was to be supported by an affidavit to be filed and served by 20 May 2022.
9.The Applicant/Review Respondent emailed and express posted a letter to the Respondent/Review Applicant enclosing a copy of the Orders made on 27 May 2022, complying with Order 4, and explaining the basis for the adjournment being granted.
10.The Respondent/Review Applicant did not seek any further adjournments nor pay any of the outstanding debt.
11.On 27 May 2022, the hearing proceeded in the Respondent/Review Applicant's absence as he did not make an appearance.
12. Sequestration Order was made against the Respondent/Review Applicant.
B. RESPONDENT/REVIEW APPLICANT'S APPLICATION
1.The Respondent/Review Applicant's review application and its supporting affidavit attached screenshots of the Respondent/Review Applicant's phone trying to dial into the virtual courtroom.
2.The Respondent/Review Applicant's affidavit stated that he dialled the meeting number #923255303 for the hearing.
3.The correct dial in number for the hearing on 27 May 2022 should have been #957584035, as informed by the FCFCOA on 26 May 2022 to both parties by way of email in anticipation of the hearing on 27 May 2022. The dial in number #923255303 was for the hearing on 25 March 2022.
4.The Applicant/Review Respondent respectfully submits that even if the Respondent/Review Applicant had attended the hearing on 27 May 2022, the outcome of the hearing would have been no different to the Orders made on 27 May 2022, in that the Registrar would have made the Sequestration Order against the Respondent/Review Applicant, for the following reasons:
(a)The Respondent/Review Applicant ignored the FCFCOA's advice that the Respondent/Review Applicant seek legal advice and pay the outstanding debt.
(b)The Respondent/Review Applicant has not provided any evidence that the outstanding debt have been settled, as claimed by the Respondent/Review Applicant in his email to the FCFCOA on 25 March 2022. The Applicant/Review Respondent submits that the Respondent/Review Applicant has mislead [sic] the FCFCOA as the debt is still due and outstanding as evidenced by Affidavit of Debt of Micaela Battiste affirmed 26 May 2022.
(c)The Applicant/Review Respondent has complied with the Orders made on 25 March 2022 and has satisfied the FCFCOA that the requirements of s 52 of the Bankruptcy Act 1966 (Cth) (the Act) have been met for the Sequestration Order to be made.
(d)The Applicant/Review Respondent has complied with all Orders, the Act and the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth).
5.The Applicant/Review Respondent respectfully submits that the evidence before the FCFCOA shows that the Respondent/Review Applicant has committed an act of bankruptcy and has taken no active steps to remedy the outstanding debt and that the Sequestration Order made on 27 May 2022 was made pursuant to Order 3 made 25 March 2022.
6.The Respondent/Review Applicant has abused the court process throughout the Queanbeyan Local Court matter by seeking multiple adjournments and the Applicant/Review Respondent respectfully submits that the Respondent/Review Applicant's application to review the Registrar's decision is abuse of the court process and at the Court's and the Applicant/Review Respondent's expenses.
7.As such, the Applicant/Review Respondent submits the review application should be dismissed and seeks costs against the Respondent/Review Applicant.
Mr Renet’s further submissions
Pursuant to Orders dated 19th August 2022, the parties were directed to file further written submissions in relation to the 2021 proceedings in the Queanbeyan Local Court and the material produced by the Applicant (Strata Plan) from those proceedings. Mr Renet’s very brief closing (or supplementary) written submissions were emailed to Chambers on 16th September 2022. They were as follows:
Further written submissions:
•Lawyer John O’Keefe withdrew after not concluding on settlement
•Magistrate - Identified that while there is money owing the value was unsubstantiated.
•Record goes back to 2014. Breaching settlement.
•An itemized account has been produced to conclude settlement Respondent Affidavit (22/7/2022) see item 8 page 2. An additional instalment for 1/9/2022 - 31/11/2022 Levies 4th Quarter $626.10 being indemnified of all other charges to pay no more than settlement on April 2017 in addition to charging my legal fees of $9000, less $13,774.20. Leaves a balance of $447.10 to be paid up to 31/11/2022
In addition to the applicant having to spend 30 years in prison. Subject to fraud. Under the crimes act of 1990. Section 192E. 1 count - maximum jail sentence of 10 years in prison. Beach of settlement – See Item 1 Respondent Affidavit (Filed 22/7/2022 4:20pm) Committing fraud of opening balance – See Item 5 Respondent Affidavit (22/7/2022) show that account goes back to 2014 in previous submissions by Applicant. 3. Violating section 85(5) of strata scheme management act of 2015 - See Item 8 page 3 Respondent Affidavit (22/7/2022)
Strat Plan’s closing written submissions
The Applicant’s closing written submissions were emailed to the Court on 15th September 2022.[2] They were as follows:
[2] The submissions were formally filed at the request of the Court on 12th October 2022.
Queanbeyan Local Court (the Court) Matter 2020/00252979
1.Statement of Claim was filed on 31 August 2020 as a result of the Defendant's (Respondent/Review Applicant) non-payment of body corporate levies. Since this date, the Plaintiff (Applicant/Review Respondent) at all times has complied with the directions and Orders of the Court.
2.On the other hand, the Respondent/Review Applicant, on multiple occasions even with the benefit of the Court's leniency on the basis of the Respondent/Review Applicant being a self-represented litigant, has not complied with the directions or Orders of the Court.
3.The Respondent/Review Applicant was legally represented since January 2021 until his lawyer withdrew from the matter on 25 March 2021.
4.Following the Respondent/Review Applicant's lawyer's withdrawal from the proceedings, the hearing was adjourned with sufficient time for the Respondent/Review Applicant to seek legal representation.
5.The Respondent/Review Applicant chose not to be legally represented and as a result, the hearing proceeded with the Respondent/Review Applicant representing himself on 8 June 2021.
6.Due to the Respondent/Review Applicant's aggressive behaviour in Court and against the Applicant/Review Respondent's solicitor during the hearing, the Respondent/Review Applicant was asked to leave the cmntroom. The remainder of the hearing, which was delivery of judgment by His Honour, proceeded ex pa1te.
7.It is clear from the evidence filed in Comt that the Respondent/Review Applicant did not dispute the fact that he owed levies to the Applicant/Review Respondent. The issue has been how much he ought to pay to the Applicant/Review Respondent.
8.An Amended Plaintiffs Schedule was filed by the Applicant/Review Respondent pursuant to the Orders made on 16 March 2021, to correct the error in the sum of levies outstanding and the amount therefore claimed by the Applicant/Review Respondent.
9.The Respondent/Review Applicant did not file any fmther materials to suggest why he should not be paying the outstanding levies to the Applicant/Review Respondent nor suggested a different amount to be paid to the Applicant/Review Respondent.
10.As a result, an Order was made requiring the Respondent/Review Applicant to pay to the Applicant/Review Respondent the sum of $12,365.19.
11.The Respondent/Review Applicant did not pay any outstanding body corporate levies throughout the Queanbeyan Local Court proceedings. The Respondent/Review Applicant still has not paid any outstanding levies until now, a year after the Queanbeyan Local Comt proceedings has finalised. The amount of levies outstanding to be paid to the Applicant/Review Respondent continues to increase.
12.Further to this, the Applicant/Review continues to incur fmiher costs associated with the Review Application, and we respectfully submit that the Applicant/Review Respondent has not complied with any Orders made by the Federal Circuit and Family Court of Australia (the FCFCOA) in respect of the application that the Respondent/Review Applicant has commenced.
13.The Applicant/Review Respondent tried to obtain transcripts of the hearing and other Comi appearances to assist the FCFCOA, but was unable to do so as each transcript was going to take approximately 6 to 8 weeks for production by the Comi Registry.
14.We respectfully submit that the Respondent/Review Applicant was provided with ample opp01iunities by way of multiple adjournments and other assistance provided by the Court to seek legal representation and to assist the Respondent/Review Applicant.
15.On the basis of the documents provided to the FCFCOA, the submissions made at the hearing on 19 August 2022 and this fmiher written submissions, the Applicant/Review Respondent requests that the review application be dismissed with costs.
Outline of principle
Before coming to the review Application proper, primarily (but not only) for the benefit of Mr Renet, and without being exhaustive in any respect, I set out a few decisions, which refer to, or outline, basic principles regarding the application of relevant sections of the Bankruptcy Act 1966 (Cth) (“the Act”) (which are also set out) exercised by a Court in bankruptcy proceedings in the course of ultimately coming to a decision to make, to challenge or to vary, a sequestration Order.
Section 37 of the Bankruptcy Act 1966 provides:[3]
(1) Subject to subsection (2), the Court may rescind, vary or discharge an order made by it under this Act or may suspend the operation of such an order.
(2) The Court does not have power to rescind or discharge, or to suspend the operation of:
(a) a sequestration order; or
(b) an order for the administration of the estate of a deceased person under Part XI.
[3] For a general discussion regarding the operation of s.37, see the Full Court decision in Richmond v BMW Australia Finance Ltd (No.1) [2009] FCAFC 24. More recently and in particular detail regarding the operation of both s.37 and s.52 of the Act, see the Full Court’s decision in Robson v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 286 FCR 494 (“Robson”).
Sections 52(1) and (2) of the Bankruptcy Act 1966 are in the following terms:
(1) At the hearing of a creditor’s petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
…
(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
According to longstanding authority, it is clear that the onus rests with the debtor to establish that there are sufficient reasons that would prevent the Court making the sequestration order as sought by the creditor. Put another way, the Full Court (Davies, Wilcox and Branson JJ) in Ling v Enrobook Pty Ltd said that, as a general proposition, there is no apparent reason why a petitioning creditor should not be entitled to have a sequestration order made if the requirements of s.52 are otherwise satisfied.[4]
[4] Ling v Enrobook Pty Ltd (1997) 143 ALR 396.
The following summary of principle by the Full Court in Clapham v Commonwealth Bank of Australia should also be noted.[5] At [54] in that case, the Full Court (North, Barker and Nicholas JJ) said (emphasis added):
[54] The discretion conferred by s.52(2)(b) is wide. For the purposes of this case, where the claims relied upon by Mr and Mrs Clapham are claims against the petitioning creditor, the relevant principles governing the exercise of the discretion may be briefly summarised as follows:
A petitioning creditor who has satisfied the requirement of s.52(1) of the Act is prima facie entitled to a sequestration order (Cain v Whyte (1933) 48 CLR at 645-646; Rozenbes v Kronhill (1956) 95 CLR 407 at 414. But if the debtor satisfies the Court that he or she has a real claim against the petitioning creditor that is likely to succeed for an amount that is equal to or in excess of the amount owing to the creditor then the Court may decline to make a sequestration order, and make an order adjourning or dismissing the creditor’s petition (Re Schmidt; Ex Parte Anglewood Pty Ltd (1968) 13 FLR 111 at 115-116 (Gibbs J)).
If the claim relied upon by the debtor as providing sufficient cause to adjourn or dismiss the petition is for unliquidated damages then it will usually be appropriate to consider whether the debtor’s claim has sufficient merit to justify either the adjournment or the dismissal of the creditor’s petition (Re Schmidt, ibid). If the Court is satisfied that the debtor has a real claim, but is unable to be satisfied that the claim is one likely to succeed, then it may be more appropriate to adjourn the creditor’s petition in order to give the debtor an opportunity to fully litigate his or her claim (Re James; Ex Parte Carter Holt Harvey Roofing (Aust) Pty Ltd (No 2) (1994) 51 FLR 14 at 22 (Olney J)). But there may be cases in which the Court may still decide to dismiss the creditor’s petition even though it is not satisfied that the debtor’s claim will most likely succeed.
When considering the merit of the debtor’s claim, the Court does not usually do so as it would at trial. This is especially so if the claim is likely to give rise to issues of credit. The Court instead assesses the merit of the debtor’s claim, both in relation to liability and quantum, in light of the available material and the progress that the claim has made, if any, toward a trial.
Apart from the interests of the petitioning creditor and the debtor, the Court should also consider the interests of any other creditors, and the public generally, arising out of the debtor’s insolvency (Re Svir; Ex parte Commissioner of Taxation (1998) 83 FCR 314 at 317 (Burchett J)). However, it may not be in the creditor’s interest or, more generally, the public interest, to make a sequestration order in circumstances where the debtor’s insolvency is likely to be of only short duration (Ling v Enrobook Pty Ltd (1997) 74 FCR 19 at 26 (Davies, Wilcox and Branson JJ)).
[5] Clapham v Commonwealth Bank of Australia [2013] FCAFC 84.
Finally, from the almost venerable authority of Ling v Enrobook Pty Ltd the Full Court (Davies, Wilcox & Branson JJ) said (at p.26C-D; internal citations omitted; emphasis added):[6]
The above authorities do not, in our view, support the appellant's contention that the courts recognise a public interest in allowing a debtor to prosecute litigation commenced by the debtor. The public interest recognised by such authorities is that which, in broad terms, is reflected also in s40(1)(g) of the Act; that is, that a sequestration order ought only to be made on the basis of an indebtedness which is not counterbalanced by a claim by the debtor against the petitioning creditor. Such authorities provide no comfort to a debtor who asserts a claim, not against his or her creditor, but against a third party.
The authorities also show that satisfaction that the debtor is well advanced with litigation likely to result in the debtor being in a position to pay his or her debts may well provide a basis for a finding that there is a “sufficient cause” for a sequestration order not to be made…. But the authorities do not suggest that it is in the public interest to allow insolvent debtors to prosecute litigation generally. They only recognise that it is not in the public interest for a debtor to be forced into bankruptcy by reason of a state of insolvency likely to be of only short duration.
[6] Ling v Enrobook Pty Ltd (1997) 74 FCR 19.
I now move to principles that apply to review Applications, of the kind currently before the Court as filed by Mr Renet.
Among many other authorities, the Full Court decisions in Martin v Commonwealth Bank of Australia and Totev v Sfar confirm that a review application regarding the decision of a Registrar is not an appeal from that decision but a hearing de novo.[7] From those decisions, the following principles should be taken to apply to the current review application and the hearing de novo.
[7] Martin v Commonwealth Bank of Australia (2001) 217 ALR 634; Totev v Sfar (2008) 167 FCR 193. The decision and comments by Emmett J in Totev have been regularly affirmed, most recently by the Full Court in Zdrilic v Hickie (2016) 246 FCR 532 at [27] – [29]; Bechara v Bates (2021) 286 FCR 166 at [145] – [156].
In Totev v Sfar, Emmett J set out in some detail the requirements and distinctions that apply to, or which otherwise constitute, a hearing de novo.[8] For example, at [6] – [7], his Honour said (emphasis in original) (all references to “Federal Magistrates Court” and the Act and Rules then applicable should, of course, now be read or understood as referring to the latest iteration of the relevant Act and Rules as they now stand):[9]
[6] Section 104(2) of the Federal Magistrates Act provides that a party to a proceeding in which a registrar has exercised any of the powers of the Federal Magistrates Court under s 102(2), or under a delegation under s 103(1), may apply to the Federal Magistrates Court for a review of that exercise of power. Under s 104(3), the Federal Magistrates Court may, on an application under s 104(2), or on its own initiative, review an exercise of power by a registrar under s 102(2) or under a delegation under s 103(1) and may make any order or orders it thinks fit in relation to the matter in respect of which the power was exercised.
[7] Rule 20.03 of the General Rules provides that the review of an exercise of power by a registrar must proceed by way of a hearing de novo. On the review, the Court may receive as evidence any affidavit or exhibit tendered before the registrar and may receive further evidence and may receive, as evidence, any transcript of the proceeding before the registrar.
[8] See also the comments by Cowdroy J in Totev v Sfar at FCR [88] – [99]. More recently, see the detailed remarks of the Full Court in Bechara v Bates (2021) 286 FCR 166 passim. Likewise, see also Kimber v Owners of Strata Plan No.48216 (2017) 258 FCR 575 (“Kimber”) and Robson v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 286 FCR 494 (“Robson”). These latter two Full Court decisions examine in detail, among other things, various, important procedural considerations in review Applications generally, whether in relation to the issuing of a bankruptcy Notice (Kimber), or the making of a sequestration Orders (Robson).
[9] The new statutory and regulatory provisions are: Federal Circuit and Family Court of Australia Act 2021 (Cth) s.256(1) and (2); Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) Division 21.2 “Review of Registrars’ powers” (“the GFL Rules”); Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) Division 7.2 “Review of sequestration order.”
Then at [10] – [14], his Honour relevantly said (emphasis added):
[10] For a delegation of power to a registrar of the Federal Magistrates Court to be valid, the powers and functions of the registrar must be subject to review by a judge of the Federal Magistrates Court on questions of both fact and law. If the review of the exercise of the power by the registrar is by way of hearing de novo, the delegation will be valid (Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84 at 95). Indeed, on one view, nothing less than a hearing de novo would be sufficient. That is to say, there must be a complete rehearing of the facts and the law as they exist when the judge reviews the order made by the registrar; otherwise, the registrar, and not the judges of the Court, would be exercising the original jurisdiction of the Court (Harris v Caladine at 164).
[11] It may be arguable that subjecting the exercise of powers or functions by a registrar to an appeal would be sufficient (Harris v Caladine at 95). However, that is not the safeguard that has been adopted in relation to the delegation of powers and functions to registrars of the Federal Magistrates Court. It is clear from r 20.03 of the General Rules that the review of a registrar’s sequestration order is to be by way of a hearing de novo.
[12] A hearing de novo is different from an appeal stricto sensu and is different from an appeal by way of rehearing. In the case of an appeal stricto sensu, the question would be whether, upon the material before the registrar, the conclusion reached by the registrar was correct. In an appeal by way of rehearing, the appellate court would rehear the matter as at the date of the appeal, but on the evidence called before the registrar, subject to a power to receive further evidence where appropriate: the rights of the parties would be determined by reference to the circumstances, including the law, as they existed at the time of rehearing (Harris v Caladine at 125). In each case any question concerning the exercise of discretion would be subject to the restrictions imposed on an appellate court in reviewing the exercise of a discretion (see House v The King [1936] HCA 40; (1936) 55 CLR 499.
[13] In the case of a hearing de novo, however, the judge reviewing the order begins afresh and exercises for himself or herself any discretion exercised by the registrar. The parties commence the proceeding again, subject to any rules concerning the use of evidence adduced before the registrar. The hearing de novo involves the exercise of the original jurisdiction and the petitioner, in the case of a bankruptcy petition, must start again, call witnesses and make out the petitioner’s case (Harris v Caladine at 124).
[14] Because the hearing of an application for review of a sequestration order is a hearing de novo, it would not be sufficient for the reviewing judge to be satisfied that the registrar made no error and simply to dismiss the application for review. The judge who hears the review application must hear the petition afresh and must be satisfied as to the matters referred to in s52 of the Bankruptcy Act. Thus, the reviewing judge must herself or himself be satisfied with the proof of:
• the matters stated in the petition;
• the service of the petition; and
• the fact that the debt or debts on which the petitioning creditor relies is or are still owing.
The reviewing judge must also exercise afresh the discretions conferred by s 52(2).
Before proceeding, for completeness, it may be useful simply to note here those provisions of the Court Rules that concern Orders or judgment on default. These are found in Division 13.2 of the GFL Rules. In general terms, this Division provides for what courses a Court may take where there is/are default(s) by a party, such as failure to comply with Orders of the Court. Rule 13.04 detail the circumstances where a party is in default (e.g. failing to file a document as required, or as already noted, failing to comply with an Order of the Court), while Rule 13.05 refers to a range of “Orders on default.” Those Orders include a proceeding being stayed or dismissed. However, because there was neither an Application for summary dismissal, nor were there any submissions in this regard, it would be inapposite to proceed further to consider this course. In addition, there is significant recent authority that questions both the utility and the procedural applicability of summary dismissal in circumstances of a review Application of a Registrar’s decision.[10]
[10] See, for example, the firm remarks by the Full Court in Zdrilic v Hickie (2016) 246 FCR 532 especially at [30] – [32].
In Robson, Colvin J outlined in significant detail (the other four members of the Full Court agreeing) the proper process in a review Application, saying, at [63] and [65]:[11]
[63] … the de novo review is not to be seen as directed to a consideration of the correctness of the delegate's decision or redressing error by the delegate. On review, the Court hears the case again unaffected by what has gone before. However, the Court does not act as if there is a new appellate proceeding. The review task it undertakes is a determination again of an application that has already been listed for hearing and proceeds in the same manner that would be the case if the power had not been delegated. In consequence, on review, the Court can entertain new arguments, receive new evidence or adjourn the proceeding but only to the extent, and in the circumstances where, it would do so in a matter that had already been set down for determination. Further, the applicant on review is the applicant on the application irrespective of whether the applicant was successful before the delegate. The same onus arises as if the application was being heard for the first time. This has particular significance for the review of a sequestration order. The review is initiated by the debtor (now bankrupt by the order to be reviewed), but proceeds as an application by the creditor on its petition.
…
[65] Particular consequences arise from the character of the review which was described by Lander J in Pattison, correctly with respect, as a 'procedure sui generis': at [156]. As was observed in Bechara v Bates an order made by a registrar in the exercise of delegated judicial power takes effect without reservation when pronounced. It does so as an exercise of judicial power and (save for the prospect of review) operates with the same effect as if it had been made by a judge making the decision of the Court. Its past validity is not undone if a judge, on review, decides on the review that the order should not be made on the application. Rather, a review in which the judge reaches a different decision to the delegate results in the operation of the earlier, valid and operative, exercise of delegated judicial power coming to an end. At least from the point in time of the decision on review, the delegation which authorised the exercise of judicial power comes to an end. The act of the delegate is replaced by an exercise of judicial power by the judge. For that reason, even where, on review, the Court determines that the same order should be made as was made by the delegate it is usual for the Court on review to affirm the orders made by the delegate.
[11] See his Honour’s further considered examination of the earlier version, or equivalent provision of s.256 of the FCFCOA Act.
In the slightly earlier Full Court decision in Bechara v Bates, the Full Court also commented on the process and import of a hearing de novo. For current purposes, it is sufficient simply to record the following from the headnote and the internal references there given:[12]
(3) A bona fide application for review engages the Constitutional imperative to hear afresh the creditor’s petition. The creditor is the true applicant in a hearing de novo and carries the onus of proving matters and bringing forward evidence required by s 52(1) of the Bankruptcy Act. The debtor does not need to show error in the registrar’s decision and neither the Court nor the creditor can absolve themselves of responsibility respectively to hear and prosecute the creditor’s petition afresh by pointing to non-compliance with timetabling orders or failure to appear. [27], [59], [61], [62], [66], [74], [88], [92]…
(5) Applications for review of registrar’s orders do not invalidate, revoke or suspend the exercise of those orders or the delegated authority, which remains in existence whilst review is pending. If after de novo review, the judge concludes a sequestration order is appropriate, the judge dismisses the application leaving the registrar’s order in place and preferably, confirms or affirms the registrar’s order. If the petition is to be dismissed, the sequestration order is set aside or annulled. [88], [149], [150], [155]…
(7) If a review application is hopeless, it should be heard and disposed of promptly at a final hearing. Such is consistent with the character of the power being exercised by the Court on applications for de novo review of a delegated power, which should not affect or impede legitimate and proper case management. [91]-[92]
[12] Bechara v Bates (2021) 286 FCR 166 at [3], [5] and [7].
Consideration and disposition
In a number of recent decisions, the Full Court has noted the regularly encountered difficulties in review Applications that are filed by self-represented litigants. A summary of some of these problems was noted by the Full Court in Kimber, at [60] (emphasis added):[13]
The review application and the 30 May 2016 Affidavit are difficult documents. They do not comply with the Rules, they are repetitive and they contain complaints about Court staff and members of the executive committee of the Owners Corporation, the strata managers and Grace Lawyers which are personal and some are plainly scandalous. Her oral and written submissions are no less challenging. The exact nature of many of Ms Kimber’s complaints is hard to establish. Many of the matters she raises are either outside the scope of the Court’s jurisdiction on an application to set aside a bankruptcy notice (for instance, to change the outcome of the Local Court proceedings having regard to the course taken in attempts at mediation) or misconceived (in effect, treating the review application as an appeal from the Registrar’s decision). She has plainly struggled as a litigant in person, both with accepting the limits of the Court’s jurisdiction and the disciplines imposed by the FCA Act and the Rules designed to ensure fairness to all parties.
[13] Even more succinctly, Allsop CJ said, in Robson, at [19]: “… Not infrequently given the nature of the jurisdiction, litigants are self-represented and their documents, claims and the jurisprudential bases therefor may be confused or wanting in expression.”
Many of these same issues regarding the confusion of process and articulation of issues were plainly on display in the limited materials filed by Mr Renet in the current matter.
The judgment debt
Although not formalised, Mr Renet’s regular complaint (made primarily in open Court as opposed to in his written materials) related, in part, to the judgment debt in the Queanbeyan Local Court, which ultimately led to the bankruptcy proceedings and the sequestration Order. In relation to the judgment debt, I note that:
(a)The judgment was never appealed or Application made to set it aside;
(b)In his own submissions, Mr Renet confirmed that he was legally represented, at least for part of the litigation that resulted in the judgment debt (as noted below, he claims a significant sum, apparently by some sort of “cross-claim” arising from these legal fees); and
(c)Mr Renet regularly contended that a “settlement” between the parties regarding strata fees precluded the judgment debt standing.
The formulation of Mr Renet’s contention, set out in the preceding sub-paragraph (c), is drawn from an annexure to his Affidavit, filed 22nd July 2022, described as “Item 1 – Settlement”. This document, dated 4th April 2017, purports to reflect a settlement between the parties at that time regarding outstanding strata fees.
In the other Annexures to his Affidavit (all described as “Item” followed by a number), there is something of a history, and at other times, a conflation, of contest between the parties invariably over payment of strata fees by Mr Renet. For example, there is correspondence between Mr Renet and his then lawyer (Mr O’Keefe), dated 2nd September 2016, regarding him requiring legal representation concerning a civil matter (seemingly, again, over strata fees) and some criminal matter that Mr Renet alleges against the Strata Manager of the property in which Mr Renet’s unit is located. He contended in this correspondence that there had been a fraud perpetrated against him, which would result in the Strata Manager (or others involved) in being liable for imprisonment for 10 years.
Another annexure (described as “Item-5 Failed record of accord”) is described as “Owner ledger from 1/1/15 to 20/7/22”. Mr Renet is recorded as the “owner” of Unit 7 in the property complex. This document has obviously been produced (and provided) by the Strata Managers of the property, Civium Property Group. The final entry on this document shows a debit balance of $19,073.80 (at 1st April 2022) as the amount of strata fees owing by Mr Renet. The outstanding amount includes interest. This ledger statement records that, the “opening balance” as at 1st January 2015 was $0. As at 27th May 2015, the debit balance was $9,144.75; and as at 30th May 2021, the balance owing by Mr Renet for strata levies totalled (with interest) $14,773.51. I recall that the judgment debt of $12,365.19 was entered on 8th June 2021.
Two other annexures to Mr Renet’s Affidavit should be noted. First is an Affidavit of Ms Park, filed in the current proceedings on 21st June 2022. Mr Renet contends that this Affidavit is “false.” I consider this Affidavit below.
The second annexure to note here is “Item 8”, being an Affidavit of Mr Renet, filed in this proceeding, on 20th July 2022. This earlier Affidavit of Mr Renet has annexed to it what purports to be an Invoice (dated 15th July 2022), addressed to “Strata Plan 22143, Civium …” This invoice seems to claim “legal fees” he has incurred of $9,000.00, together with what seems to be his assessment of levies due, but notably with no component of interest for outstanding levies.
According to his written submissions, Mr Renet then contends that when one takes account of the 2017 settlement, his legal fees, and the outstanding strata fees (apparently without interest), the only amount due and payable by him is $447.10, which seems to cover the period up to 1st November 2022. As an observation only, the figures set out in his written submissions and those set out in his “Invoice” recorded above do not “add up”, that is, they are not readily reconcilable.
For the reasons set out above, the oral submission by Mr Renet on 19th August 2022 that there was some kind of deficiency regarding the judgment debt that was entered in the Queanbeyan Local Court on 8th June 2021, has no substance. No evidence was provided to support this assertion. And as already recorded, there was no appeal from that judgment, or Application to stay it or to set it aside.
The sequestration order
Mr Renet’s Affidavit, filed 31st May 2022, detailed how, in his view, he was unable to attend at Court, via Microsoft Teams, on 27th May 2022, the date upon which the sequestration Order was made. Pages 2 and 4 of the Annexure to this Affidavit appear to be “screen shots” of Mr Renet’s attempt to “dial in” to this “Teams” meeting. The “time stamp” on this document shows times of around 11.30am.
Mr Renet’s next Affidavit, filed 20th July 2022, in support of the current Review Application, stated, rather unintelligibly, “1. Bill for legal fees; 2. Value of Strata (MR – [presumably the initials of Mr Renet]) Levies” and “Legal obligation, not meet [sic] under Strata Scheme Management Act.” He then annexed the Invoice earlier referred to regarding his legal fees and his statement of strata fees, also noted above. The last page of this Annexure is a pro-forma reference to, and notification of, s.85(5) of the Strata Schemes Management Act 2015 that provides for the owners of a corporation to agree, at a general meeting, to enter into payment plans regarding overdue contributions.[14]
[14]
Mr Renet’s later Affidavit, filed 22nd July 2022, has been outlined earlier in these reasons under the heading “the judgment debt.” I need not, and will not, traverse it again.
In the light of the materials set out above, I need only note the following.
First, as recorded earlier in these reasons, there can be no doubt about the validity of the default judgment obtained by Strata Plan against Mr Renet in the Queanbeyan Local Court on 8th June 2021. There was no appeal against it, or Application to set aside that judgment.
Secondly, as stated in Strata Plan’s submissions, and recorded on the Court file, there is an Affidavit of Debt affirmed by Ms Battiste on 26th May 2022. An updated Affidavit of Debt, affirmed by Ms Battiste on 18th August 2022, was filed in Court on 19th August 2022.
Further, Ms Park deposed in her second Affidavit (filed 21st June 2022) that the settlement relied upon by Mr Renet in 2017 was, and is, unrelated to the outstanding strata levies that were the basis of the judgment debt in the Local Court.
Thirdly, Mr Renet has provided no clear or intelligible evidence (or submissions) that would, or could remotely, warrant the Court to challenge or otherwise question (a) the judgment of the Local Court, or (b) any of the processes in this Court before the Registrar that resulted in the sequestration Order made on 27th May 2022. Again noting that the current Application before the Court is a hearing de novo, I am relevantly satisfied that (a) there was a properly entered judgment debt, (b) Mr Renet was properly served with all notices by Strata Plan, and (c) the terms of s.52 of the Bankruptcy Act have been duly satisfied. Further, he was granted extra time to file material, and was advised to obtain legal advice. There is no evidence that he sought or obtained any advice regarding the bankruptcy proceeding.
Further, the evidence and the submissions on behalf of Strata Plan relevantly outline and confirm the proper processes and notices given to Mr Renet, and the significant opportunities he was given to pay the debt owing and/or properly to engage with the bankruptcy proceeding.
In addition to these reasons, I accept and adopt the submissions on behalf of Strata Plan.
As already noted, in Bechara v Bates the Full Court indicated the importance (as other Courts have also done) of both despatch in dealing with bankruptcy proceedings generally, but also in Review Applications in particular, and the need for the Court to have regard to compliance with Orders and proper process, including attendance at Court and ensuring, as far as possible, making sense of any such Application.
Further, I remind myself of the Full Court’s important comments in Bechara, at [88] and [89], where the Court said:
[88] … In an application for review of a sequestration order made by a registrar, if the debtor/bankrupt fails to take the opportunity to file evidence in support of the hearing de novo of the creditor’s petition or fails or refuses to appear at the date fixed for hearing, the proper course, and only proper course, to follow (if the adjournment is to be refused) is to deal with what is before the Court, that is the creditor’s petition prosecuted by the creditor. At that hearing evidence is led to satisfy s.52(1) of the Bankruptcy Act. If the Court would otherwise be minded to conclude that a sequestration order would have been appropriate at the date of rehearing, it dismisses the application for review leaving the registrar’s order in place and the date of the debtor being made bankrupt as the date of the registrar’s order and preferably, for the sake of good order, confirms or affirms the registrar’s order. It is a misconception of the nature of the application before the Court to dismiss an application for review of a sequestration order because of failure of a debtor to appear at a hearing of a creditor’s petition or the failure of the debtor to file in time pursuant to case management orders evidence that may go to s.52(2) of the Bankruptcy Act.
[89] The above is not to doubt for one moment that case management of applications for review is an important and legitimate consideration. The Circuit Court is entitled to make rules that govern procedures for an application for review. For the reasons we have already set out those procedures must conform with the fundamental nature of what is before the Court. If the application for review is of a sequestration order made by a registrar, the Court must recognise and appreciate that what is before it is the creditor’s application in the nature of a hearing de novo of the creditor’s petition. The application for review by the debtor/bankrupt engages the process of the Court hearing the creditor’s petition afresh. Of course, that process of getting the creditor’s petition to a hearing by the application for review can and should be case managed with despatch. But a dilatory debtor who fails to file evidence or does not appear at a date fixed for hearing which is properly not vacated or adjourned in the circumstances lays himself or herself open to a creditor’s petition being (re)heard in his or her absence; he or she does not lay himself or herself open to the application for review being dismissed without the hearing of the creditor’s petition, the prosecution of which is the responsibility of the creditor.
Having particular regard to this outline of principle, by way of summary from what has already been said earlier in these reasons:
(a)The evidence from the petitioning creditor before this Court (as it was before the Registrar) readily satisfies the requirements of s.52(1) of the Bankruptcy Act. This includes that the judgment debt is patently owed; the debtor has not paid any sum to satisfy it; his claim regarding a prior settlement (in 2017) is unsupported by the limited evidence he provided to the Court, as well as being clearly rebutted by the evidence from the petitioning creditor;
(b)On the basis of the evidence and submissions presented by both parties at the hearing de novo, and in the exercise of the Court’s discretion, I am relevantly satisfied that there has been compliance with the requirements of s.52(1) of the Act and that the original sequestration Order made by the Registrar should be confirmed.
Accordingly, for the reasons given, I confirm the Order of the Registrar dated 27th May 2022.
In all of the circumstances, and in consequence of confirmation of the sequestration Order, the Review Application, filed 31st May 2022, should, and will be, dismissed. Strata Plan should have its costs, fixed in the amount of $5,000.00. These costs are to be paid out of the estate of the Bankrupt.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of Judge W J Neville. Associate:
Dated: 16 November 2022
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