The Owners Strata Plan No 11723 v Singh

[2012] FMCA 308

FEDERAL MAGISTRATES COURT OF AUSTRALIA

THE OWNERS STRATA PLAN NO 11723  v SINGH & ANOR [2012] FMCA 308

BANKRUPTCY – Creditor’s petition – extensive litigation in the Local Court and District Court – no grounds established for going behind judgment debt – no grounds of opposition established – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.52, 309
Civil Procedure Act 2005 (NSW), s.140
Strata Schemes Management Act 1996 (NSW), ss.80, 80D
Strata Schemes Management Regulation 2010 (NSW), reg.15

Olivieri v Stafford and Ors (1981) 91 ALR 91
Rinbac v Owners Corporation Strata Plan 64972 [2010] NSWSC 656
Worchild v Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240

Applicant: THE OWNERS STRATA PLAN NO 11723

First Respondent: JAGJIT SINGH

Second Respondent: SARBJIT KAUR

File Number: SYG 2032 of 2011

Judgment of: Smith FM

Hearing date: 5 April 2012

Delivered at: Sydney

Delivered on: 5 April 2012

REPRESENTATION

Counsel for the Applicant: Mr D Radman

Solicitors for the Applicant: Grace Lawyers

Counsel for the Respondents: First Respondent in person, and on behalf of Second Respondent.

ORDERS

1. A sequestration order be made against the estates of Jagjit Singh and Sarbjit Kaur.

2. The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtors in accordance with the Bankruptcy Act 1966 (Cth).

3. Note that the date of the acts of bankruptcy is 24 August 2011.

4. Note that a consent to act as trustee has been signed by Terry Grant van der Velde and Paul Desmond Sweeney.

5. The applicant must give a copy of this order to the Official Receiver within 2 working days.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 2032 of 2011

THE OWNERS - STRATA PLAN NO 11723

Applicant

And

JAGJIT SINGH

First Respondent

SARBJIT KAUR

Second Respondent

REASONS FOR JUDGMENT

1. This judgment explains my reasons for making a sequestration order in relation to Mr Singh and his wife, Ms Kaur, on the creditor’s petition of The Owners of Strata Plan Number 11723 (‘the Owners’).  Throughout all the proceedings in this Court, and probably in other courts, Ms Kaur has relied on her husband to present her case.  She has not appeared today, and her husband sought to represent her. 

2. The court file is now bulky, and evidences a considerable amount of activity which has occurred in other courts in a dispute between the Owners and Mr Singh and Ms Kaur.  Regrettably, Mr Singh is a person who has difficulty simplifying his thoughts and presenting them in an intelligible fashion to other people.  He has filed a great deal of material relating to his efforts to oppose the Owners’ recovery of outstanding and accruing levies and expenses, and this has been met by detailed material filed by the solicitor for the Owners explaining the background.  Doing the best I can to identify the real issues that are raised relevant to the Bankruptcy Act jurisdiction which I am exercising, I have not been able to identify any good ground of opposition nor any good reason for exercising a discretion to refuse or adjourn the petition.

3. The creditor’s petition, as amended recently to take account of a very minor arithmetic error, relies on a current total indebtedness by Mr Singh and Ms Kaur in the sum of $21,444.61. The petition sets out in detail how that amount is constituted by the amount of a judgment debt obtained in the Local Court of New South Wales on 6 May 2011, together with subsequently accruing quarterly administration fund and sinking fund levies owed by Mr Singh and Ms Kaur to the Owners, and legal expenses recoverable under s.80 of the Strata Schemes Management Act 1996 (NSW).

4. I accept all the evidence filed by the Owners verifying the amounts set out in the petition, insofar as they are not covered by the judgment debt, and I have not been able to detect in Mr Singh’s evidence, material and submissions a substantive challenge to those elements in the indebtedness.  Nor, as I shall explain, have I detected a good reason for going behind the judgment debt entered in the Local Court, notwithstanding that this has been the focus of Mr Singh’s challenges to the bankruptcy petition.

5. The creditor’s petition relies on acts of bankruptcy committed by Mr Singh and Ms Kaur on 24 August 2011, when each of them failed to comply with a bankruptcy notice which was served by various means upon each of them, pursuant to an order for substituted service made by a registrar under s.309 of the Bankruptcy Act 1966 (NSW).  Pursuant to that order, they are both deemed to have failed to comply with the bankruptcy notice, which I am satisfied by various affidavits was duly served in accordance with the registrar’s order.  I am therefore satisfied that they have committed acts of bankruptcy on 24 August 2011, and that their entitlement to a sequestration order is made out. 

6. I am satisfied as to the other requirements of the Bankruptcy Act and Rules in relation to the exercise of power under s.52 of the Bankruptcy Act to make sequestration orders in relation to both of their estates.

7. To explain why I have not been satisfied as to the existence of any ground of objection raised by Mr Singh, I need to set out more details about the background to the matter.  The events in the Local Court, District Court and Supreme Court concerning the Owners’ default judgment are found in what appears to me to be an accurately compiled narration of the evidence, prepared by the solicitor for the Owners, to which I have made some minor corrections.  I shall highlight the key events:

   Local Court Proceedings

   6)The Applicant issued a Statement of Claim in the Small Claims Division of the Local Court of New South Wales on 6 August 2010 in proceedings number 2010/00283692 (the Local Court Proceedings) seeking to recover unpaid levies, interest and costs owed by the Respondents in relation to the property located at Unit 7/33 Bowden Street, Harris Park (the subject property).

   7)A Defence was filed by the Respondents on 17 September 2010 and the matter listed for pre trial review hearing.

   8)At the first pre trial review hearing on 12 November 2010, the matter was adjourned to 14 January 2011 to enable the Respondents to file a statement of cross-claim and for the Applicant to file an amended statement of claim. A statement of cross-claim was filed by the Respondents on 12 November 2010.

   9)An Amended Statement of Claim was filed by the Applicant on 2 December 2010.

   10)At the second pre trial review hearing on 14 January 2011, the matter was adjourned to 18 February 2011 to allow the Respondents to provide further and better particulars of their Statement of Cross-claim. A costs order was made against the Respondents in favour of the Applicant in the sum of $125.00.

   11)At the third pre trial review hearing on 18 February 2011, the Respondents did not appear in the Local Court and the Defence and Statement of Cross-claim were struck out by the Local Court. A costs order was made against the Respondents in favour of the Applicant in the sum of $250.00.

   12)On 1 March 2011 the Respondents filed a Notice of Motion and affidavit in support seeking to Review the Registrar’s decision on 18 February 2011 to strike out the Defence and Statement of Cross-claim.

   13)A hearing de novo and on the merits was conducted on 24 March 2011 before Assessor Olischlager of the Downing Centre Local Court for the Respondents’ Application to Review the Registrar’s decision. Based on the evidence before the Assessor, the Respondents’ application was refused.

   14)On 28 March 2011 the Applicant filed a Notice of Motion for Default Judgment on its mixed claim for levies, interest and costs together with an Affidavit of Sylvia Quang dated 28 March 2011 and Affidavit of Daniel Radman dated 28 March 2011.

   15)The filing of a motion for a mixed claim requires an assessment by the Local Court before judgment is obtained. Following an assessment by the Local Court, judgment was entered on 6 May 2011 against the Respondents in the Local Court Proceedings in the sum of $14,251.68 which included an unliquidated claim of $7,463.05 for costs incurred by the Applicant pursuant to section 80 of the Strata Schemes Management Act 1996 (NSW).

   16)A Notice of Motion and affidavit in support was filed by the Respondents in the Local Court on 2 June 2011. The Respondents’ Notice of Motion sought to set aside the default judgment and also sought to again review the Registrar’s decision to strike out the Defence and Statement of Cross-claim.

   17)A hearing on the merits was conducted on 30 June 2011 before Local Court Magistrate Townsend for the Respondents’ Notice of Motion. Following a review of the evidence and an assessment of the judgment debt, orders were made refusing the Respondents’ Notice of Motion.

   District Court Proceedings

   18)On 23 August 2011 the Respondents commenced proceedings in the District Court Case 2011/271370 by filing a Summons seeking to appeal the default judgment entered by the Local Court of New South Wales on 6 May 2011 (the District Court Proceedings).

   19)On 29 September 2011 the Respondents filed a Notice of Motion seeking a stay on the enforcement of the Local Court Judgment until the appeal has been decided in the District Court Proceedings.

   20)On 7 October 2011 at the hearing of the Respondents’ Notice of Motion seeking a stay on the enforcement of the Local Court Judgment, Delaney DCJ made an order that the Respondents file an amended Summons Commencing an Appeal by 14 October 2011 and a stay be ordered on the execution of the Small Claims judgment to 4pm 28 October 2011.

   21)On 13 October 2011 the Respondents filed an Amended Summons Commencing an Appeal in the District Court Proceedings.

   22)On 26 October 2011, the Applicant filed a Notice of Motion in the District Court Proceedings seeking to strike out the Respondents’ Amended Summons Commencing an Appeal pursuant to Rule 14.28 of the Uniform Civil Procedure Rules 2005 (NSW).

   23)The matter was heard before Delaney DCJ on 28 October 2011 and judgment was reserved. The stay lapsed on 28 October 2011 and no further order was made in relation to a stay on the execution of the Local Court judgment.

   24)On 18 November 2011 written judgment was handed down in the District Court Proceedings.  Delaney DCJ ordered the Respondents’ Amended Summons Commencing an Appeal struck out with an order for costs in favour of the Applicant. The matter was adjourned to 2 February 2012 for directions.

   25)On 30 January 2012 the Respondents filed a further Summons Commencing an Appeal in the District Court Proceedings.

   26)Following an oral application on behalf of the Applicant to strike out the Summons Commencing an appeal filed on 30 January 2012, on 2 February 2012 Delaney DCJ made orders to strike out the further Summons Commencing an Appeal filed by the Respondents on 30 January 2012 with costs in favour of the Applicant and orders that any stay of execution on the Local Court judgment be lifted. No further action can be taken in the District Court Proceedings until all costs orders are paid.

   27)No further action has been taken by the Respondents in the District Court Proceedings and the costs orders remain unpaid.

   Federal Magistrates Court Proceedings

   28)On 17 May 2011, Bankruptcy Notice NN3395 of 2011 was issued against the Respondents in the sum of $14,297.85.

   29)On 12 July 2011 the Federal Magistrates Court made orders for substituted service of the Bankruptcy Notice against the Respondents,

   30)The Respondents were deemed served with the Bankruptcy Notice on 3 August 2011 in accordance with the orders made by the Federal Magistrates Court on 12 July 2011.

   31)An act on bankruptcy was committed by each of the Respondents on 24 August 2011.

   32)On 9 September 2011 the Applicant presented a Creditor’s Petition in these Federal Magistrates Court against the Respondents in the amount of $21,444.85 (the Bankruptcy Proceedings).

   33)On 20 September 2011 the First Respondent was personally served with the Creditor’s Petition and supporting documents.

   34)On 10 October 2011 the Second Respondent was personally served with the Creditor’s Petition and supporting documents.

   35)On 14 October 2011 the Respondents filed a Notice Stating Grounds of Opposition to the Creditor’s Petition.

   36)At the creditor’s petition hearing on 19 October 2011 the matter was adjourned to 1 November 2011 for directions hearing.

   37)On 1 November 2011 the Bankruptcy Proceedings are adjourned to 29 November 2011 for further directions before a Federal Magistrate. Orders are made for the filing and service of evidence by the Respondents and the Applicant.

   38)On 29 November 2011 the Federal Magistrates Court makes order for the filing and service of evidence and the Bankruptcy Proceedings are listed for hearing on 13 March 2012.

8. It is to be noted that there was no stay on execution operating in relation to the Local Court default judgment entered on 6 May 2011 at and between the dates of the issue of the bankruptcy notice and its service, nor when the petition was filed.  A stay operated only for a period in October 2011, in which Delaney DCJ allowed Mr Singh and Ms Kaur to re-plead their appeal.  There is no currently operating restraint on execution under any court order.

9. Mr Singh’s most recent formulation of his grounds of opposition is as follows:

   1.Filing a case in the Honorable Local Court on 06 August 2010 without passing a resolution at a general meeting in clear violation of operation and effect of S 80D of the Strata Schemes Management Act 1996 and Reg 15 of the Strata Schemes Management Regulation 2005 applicable at that time.

   2.Incorrect State of Claim made on 06 August 2010. Discrepancies pointed out not rectified but fabricated documents attached to justify discrepancies in amended Statement of Claim on 02 December 2010 with huge legal cost and further much more discrepancies. Fabricated document attached found fundamentally against LEGAL PROFESSION ACT 2004 - SECT 329.

   3.Defence of respondent (then defendant) struck on 18 February 201l violating requirements under LOCAL COURT RULES 2009 - REQ 2.4 and LOCAL COURT RULES 2009 - REQ 2.5. At no stage opportunity to respondent defend his case by considering his defence given.

   4.Due to large scale manipulations made to documents and documents are either not served or served late or very selectively served so that these manipulations were not seen by self represented respondent (then defendant) and exposed.

   5.Bright and Duggan unable to produce copy of agreement under which holding office during AGM on 20 January 2011. Resolution to terminate the services of Bright and Duggan and also withdraw cases frivolously initiated against member Jagjit Singh was passed by signing four out of five members present.

   6.On not handing over charge by Bright and Duggan a notice for conducting of EGM under STRATA SCHEMES MANAGEMENT ACT 1996 - SCHEDULE 2, Part 1, Division 3, Clause 31(3) was given on 12/02/11 signed by a one-quarter of the aggregate unit entitlements which include Chairman and Secretary of Owners Corporation. As per Para 2 of the EGM notice, revoke all delegations of the Owners Corporations function made it pursuant to section 28 of the Strata Schemes Management Act 1996 (to Bright and Duggan) was put on agenda. However Bright and Duggan refused supplying Strata Roll to members, not circulated agenda exactly as asked by members. However still EGM held on 04 March 2011 chaired by Chairman in absence of Bright and Duggan participating and again resolution terminating their services and appointing Comfort Living Strata as new managing agent passed.

   7.Copy of Agreement supplied in court on 24 March 2011 after issue raised by respondent found to be invalid. The agreement not signed by those shown authorised in executive meeting and also claimed signatories were never on the Strata Roll of Owners Corporation. Page numbers very haphazard with missing pages and with no signature on annexure/exhibits. False Affidavit that the claimed signatory to agreement has two names was filed by Bright and Duggan on 30 Jun 2011 to which declaration by member claimed signatory not having signed agreement was given on to respondent. Copy of Strata Roll supplied on 30 Jun 2011.

   8.Default Judgment obtained on 06 May 2011 without getting huge legal amount claimed assessed and not authorised as per LEGAL PROFESSION REGULATION 2005 - SCHEDULE 2. Ambiguous Judgment obtained from Registrar without filing correct Affidavit as per UNIFORM CIVIL PROCEDURE RULES 2005 - REG 16.6 and also giving false statements in Affidavit filed such as at Para 31 that “The Defendants have been aware of the costs which the Plaintiff has been seeking to recover from them pursuant to Section 80 of the Act for some time”. The cost awarded violates the LOCAL COURT RULES 2009 - REG 2.9 also violates the spirit of CIVIL PROCEDURE ACT 2005 - SECT 60 pertaining to Proportionality of costs. Clarification on this ambiguous Judgment asked from Honorable Registrar Local Court but correct bifurcation under various head not communicated.

   9.On 17 May 2011, in spite Bright and Duggan services being terminated and all powers withdrawn by Owners Corporation, issued Notice of Bankruptcy to respondents by getting into an agreement with a solicitor. The Notice of Bankruptcy can only be issued by authorized agent of the Judgment Creditor as can be seen from the form of ITSA. On 17 March 2011 neither Bright and Duggan was an authorized agent of creditor being terminated nor can it hire any solicitor by getting into an agreement. So the Notice of Bankruptcy filed by Bright and Duggan is null and void.

   10.The repeated manipulations and submissions of fabricated documents or false Affidavits by the applicant (then plaintiff) in obtaining the Default Judgment is clearly a case of Judgment obtained by fraud and thus not final. Letter from Chairman Strata Owners Corporation to present managing agent on 06 October 2011 also elaborate on these aspects. Also it has been claimed by the solicitor in hearing of Appeal in District Court on 24 October 2011 that the Owners Corporation has not provided amended Appeal and other documents served by respondent. As Chairman also directing in his letter on 06 Oct 2011 not to further proceed against the respondents and also not committing to any legal services either from Bright and Duggan hired legal agencies or otherwise. However solicitors are claiming and insisting on respondent in front of Honorable Judges to serve the documents directly. This will lead to lack of responsibility in case of awards of any nature made in favour of respondent in legal channels of appeals/remedies available.

   11.The amount claimed in Creditors Petition is different(more) than demanded in Notice of Bankruptcy and additional amounts claimed neither have justification in law nor ever intimated by courts.

   12.The sole aim of expediency is to deny respondent opportunity to avail Appeal as of right under LOCAL COURT ACT 2007 - SECT 39 against this Default Judgment in Honorable District Court with above facts and other channel of remedies for such a case. Further the respondents are having enough liquidity and serve at respectable post the initiating of these Bankruptcy Proceedings are totally unwarranted.

   Mr Singh has filed numerous affidavits and written submissions, but I could not find in them a more concise or intelligible summary of his contentions.  The solicitor for the Owners endeavoured to do so, by producing the following summary of his understanding of the grounds of opposition:

   (a)That the default judgment relied upon by the Applicant was incorrect;

   (b)That Bankruptcy Notice NN3395 of 2011 did not state the correct address of the Applicant and is void;

   (c)That Bright and Duggan Pty Ltd as the strata managing agent of the Applicant did not have authority to instruct the Applicant’s solicitors to issue the Bankruptcy Notice;

   (d)That these proceedings were instituted by Bright and Duggan Pty Ltd who did not have authority to act on behalf of the Applicant;

   (e)That the Applicant’s solicitor have maintained these proceedings without the authority of the Applicant;

   (f)That the amounts claimed in the Creditor’s Petition are different to the amounts stated in the Bankruptcy Notice and have no justification in law; and

   (g)That the Court should exercise its discretion to dismiss the Creditor’s Petition to avoid denying the Respondents an opportunity to appeal the default judgment of the Local Court proceedings 2010/00283693.

1. Notwithstanding the many references by Mr Singh in his documents to fabrications, errors and defects, I have been unable to identify clearly in my mind how he argues that the default judgment obtained in the local court “was incorrect”.  There seems to be a number of streams in his submissions which overlap and are repeated and give rise to a great deal of confusion. 

2. One of Mr Singh’s arguments appears to be that there is an inconsistency in documents issued by the Local Court concerning how the amounts of the claim, interest, fees, and the costs which were included in the default judgment were calculated.  He points to a letter he received from the Local Court registry dated 15 August 2011, which arrived at a calculation which in total differs from the total amount shown in the certificate of default judgment by about $60.  Exactly how that discrepancy arose is obscure to me.  I am satisfied only that there is an unexplained discrepancy in the letter from the registry.  However, I am not satisfied that this raises any good reason for going behind the amount set out in the certificate of judgment of the Local Court, upon which the bankruptcy notice was based and this petition in part relies on.  The correspondence from the Local Court itself has no particular legal authority or significance. 

3. Moreover, I accept the submission of the solicitor for the Owners, that a minor discrepancy revealed in the amount of the Local Court judgment, which had legal effect and is sufficient in itself to found the bankruptcy proceedings, should not now cause me to exercise the Court’s discretion to go behind the judgment to investigate its calculation, where it appears that undoubtedly there is a real debt owing in an amount upon which the bankruptcy proceedings could properly be based. 

4. The other reasons by which Mr Singh appears to invite the Court to go behind the Local Court judgment appear to relate to internal management matters in relation to the body corporate, its employment of strata agents, the conduct of meetings, and the instructing of the solicitors to act on behalf of the Owners in the debt recovery and bankruptcy proceedings. 

5. Unfortunately, I have not been able to find anywhere in Mr Singh’s material or his submissions to me today an intelligible isolation of a particular complaint in these respects, which I could uphold.  Indeed, I find it impossible for me to try to address his contentions with more detail, apart from the matters which I will touch upon further below.

6. I am fully satisfied by the affidavit and oral evidence given by the two strata title managers, and am not persuaded that Mr Singh has shown any reason not to accept any part of it. They, in my opinion, correctly identified the sources of their respective authorities under management agreements, including authority to instruct a solicitor in relation to recovery of amounts owing to the Owners, and to take bankruptcy proceedings. I can see no reason for going behind their authority and examining other internal affairs of the body corporate, even if there were defects in those proceedings concerning other matters. I am not at all persuaded that there is any reason to think that there has been non-compliance with the provisions of s.80D of the Strata Schemes Management Act, as read with regulation 15 of the Strata Schemes Management Regulation 2010 (NSW).

7. In relation to Mr Singh’s various criticisms of the procedures followed in the Local Court, it appears to me that at no stage has there been a denial of procedural fairness, and in any event Mr Singh had ample opportunity to rectify any departures from procedural fairness in the course of his applications in the Local Court for review of the default judgment, and in the District Court in the course of the proceedings before Delaney DCJ.  In saying that, I have taken it into account his Honour’s judgment that given on 18 November 2011, when giving Mr Singh a further opportunity intelligibly to formulate grounds of appeal.

8. Ultimately, it appears that on 2 February 2012, Delaney DCJ was unable to detect any basis for entertaining an appeal based on a lengthy and unintelligible amended notice of grounds of appeal, which was filed pursuant to his Honour’s previous orders.  His Honour therefore, as the chronology above indicates, struck out the appeal proceedings entirely, lifted any outstanding stay, ordered costs, and put a bar on any further revival of the appeal proceedings until costs were paid.  The evidence indicates that none of those steps have occurred. 

9. The appeal proceedings in the District Court have therefore come to an end, but in my opinion they have come to an end due to the inability of Mr Singh to present intelligible grounds of appeal to the District Court.  They have not come to the end by reason of any unfairness or improper procedure within the New South Wales court system.

10. Taking into account all the evidence and submissions about what occurred in the Local Court and the District Court, in my opinion, that evidence provides good reason for this Court not to go behind the default judgment upon which the bankruptcy notice was based and upon which the petition is partly based.  In this respect, I accept the submissions of the Owners that the contested review proceedings in the Local Court provided a sufficient hearing on the merits of all of Mr Singh’s disputes with the Owners about his underlying indebtedness, so as to bring the matter within the category of cases where the Court generally declines to go behind a judgment debt (see Olivieri v Stafford and Ors (1981) 91 ALR 91).

11. I am unable to find any substance in Mr Singh’s challenge to the form of the bankruptcy notice.  I am satisfied that it was sufficiently completed in relation to the address of the Owners, and when specifying the address to which payment was required to be made.  The notice could have left no confusion in relation to the latter address.  I can see no arguable error vitiating the bankruptcy notice in respect of those references, notwithstanding that the first reference is to the managing agent’s address, and the second is to the Owners’ solicitor’s address.  In my opinion, completion of the bankruptcy notice in this way is consistent with authority (see Worchild v Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240).

12. Mr Singh’s challenge to the authority of the strata agents to instruct the solicitors at the various stages of the bankruptcy proceedings is, in my submission, lacking in substance.  I am satisfied by the evidence of the two agents and the documents to which they referred, that although a vote was passed by the body corporate on 4 March 2011 to terminate the authority of the first agent, that agent continued to have authority under the terms of its agreement which was exercised for a further three months until 4 June 2011, when the appointment of the new agent commenced and took effect.  The first agent therefore had authority to give instructions for the issuing of the bankruptcy notice.  That agent’s instructions to the solicitor were then ratified by the new agent, when giving instructions to the solicitor to seek orders for the substituted service of the bankruptcy notice.  I am satisfied that from thereon the present proceedings have been conducted by the solicitors on behalf of the Owners with sufficient authority.

13. I can find no substance in the other grounds of opposition insofar as they allege invalidly conducted meetings, unauthorised actions, etcetera, in relation to the conduct of the Owners.  Mr Singh attempted in cross-examination to try to give substance to these allegations, but neither I nor the witnesses could understand his questioning.  To the extent that the witnesses were able to respond, in my opinion, their answers confirmed the propriety of the proceedings of the body corporate and its agencies, rather than otherwise. 

14. I am therefore satisfied that entitlement by the Owners to the making of a sequestration order has been established. Mr Singh and Ms Kaur have not attempted to present a case in relation to the discretion to decline to make that order under s.52(2)(a), by showing that they are able to meet their debts. They have presented no evidence at all as to their financial situation. I am therefore not satisfied that they are not insolvent and not appropriately the subject of sequestration orders.

15. I am not satisfied that any of the circumstances under which the default judgment was obtained, and has been maintained in the Local Court, and was not set aside on appeal to the District Court, give rise to any “other sufficient cause” for declining to make a sequestration order. 

16. Mr Singh has not contested that, in effect, his efforts to exercise rights of appeal to the District Court have come to an end.  He, however, submits that the Court should further adjourn the petition due to his filing on 23 March 2012 a summons in the Supreme Court of New South Wales naming the Owners as respondent, and seeking relief formulated as:

    1That Case in Honourable District Court (No 201100271370) is transferred Honourable Supreme Court.

    2That Local Court be directed to set aside Default Judgment dated 06 May 2011 being found incorrect as the bifurcation provided do not total to amount mentioned.

    3That Plaintiff not be penalised for any proceedings post this incorrect Default Judgment delivered by Honourable Local Court.

    4That Proceedings in the Federal Magistrates Court based on this incorrect Default Judgment be stopped.

    5.That costs be the costs in the cause.

17. Mr Singh claims to have based this application upon the Supreme Court’s jurisdiction under s.140 of the Civil Procedure Act 2005 (NSW). It relevantly provides:

    (1) The Supreme Court may, of its own motion or on application by a party to proceedings before the District Court or the Local Court, order that the proceedings, including any cross-claim in the proceedings, be transferred to the Supreme Court.

    …

    (4) Proceedings in the Local Court are not to be transferred to a higher court under this section unless the higher court is satisfied that there is sufficient reason for hearing the proceedings in the higher court.

18. The purposes of s.140 were described by Brereton J in Rinbac v Owners Corporation Strata Plan 64972 [2010] NSWSC 656 at [11]:

    11. The purpose of Civil Procedure Act, s 140, is to permit the removal from a lower court to a higher court of proceedings in the lower court where there is good reason to do so. Typically, that has been where there has been a risk that a jurisdictional limit affecting the lower court would be exceeded, where there are complex and important issues, and where the proceedings involve allegations of significant notoriety or public importance. But there is nothing in or about s 140 which confers on a transferee court additional jurisdiction that it does not otherwise have. This is to be distinguished, for example, from s 149 (which, in the case of a transfer from a higher court to a lower court, gives the lower court all the relevant jurisdiction of the higher court), and similarly, s 149E (which in the case of transfer of proceedings between the Supreme Court and the Land and Environment Court, gives the transferee court all the jurisdiction of the transferor court). But as I have said, there is nothing in connection with transfers from a lower court to a higher court that gives the higher court jurisdiction that it did not otherwise have.

19. I accept the submission of the solicitor for the Owners that on his Honour’s reasoning, there are good reasons to doubt whether the Supreme Court will accept jurisdiction to entertain the summons filed by Mr Singh and Ms Kaur.  Moreover, I am also firmly of the opinion that there is no reasonable prospect that the Supreme Court would be satisfied that there would be a “sufficient reason” for it to embark on that jurisdiction, even if it had it.  

20. In my opinion, Mr Singh has been afforded more than enough time to challenge the Local Court judgment in the District Court during the pendency of the bankruptcy proceedings, and was afforded more than reasonable opportunities to formulate his arguments before Delaney DCJ.  As I’ve explained, he has been unable to show either the District Court or this Court that there any good grounds for going behind the judgment. 

21. Taking into account all the evidence and submissions that are before me today, I am not persuaded that I should further adjourn the petition, or decline to make a sequestration order today, and I consider that it is appropriate to do so.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Smith FM

Date:  17 April 2012