Tuna Tasmania Pty Ltd v Allison

[2017] FCCA 583

FEDERAL CIRCUIT COURT OF AUSTRALIA

TUNA TASMANIA PTY LTD & ORS v ALLISON [2017] FCCA 583

Catchwords:

BANKRUPTCY – Application for Costs.

Legislation:

Bankruptcy Act 1966 (Cth) ss.32, 40(1)(d)(i)

First Applicant:

TUNA TASMANIA PTY LTD

(ACN 066 778 985)

Second Applicant: SHARON TINA FARRER (AS EXECUTOR OF THE ESTATE OF JOHN FREDERICK FARRER) (DECEASED)

Third Applicant: SHARON TINA FARRER

Fourth Applicant: LAWRENCES MOTORS PTY LTD
(ACN 050 492 745) AS TRUSTEE FOR THE FARRER SUPERANNUATION FUND AND AS TRUSTEE FOR THE FARRER SUPERANNUATION FUND (NO.2)

Fifth Applicant: HAVENFLASH PTY LTD
(ACN 065 284 802) AS TRUSTEE OF THE FARRER FAMILY TRUST

Respondent: PAUL FRANCIS ALLISON

File Number: LNG 77 of 2016

Judgment of: Judge McGuire

Hearing date: 20 March 2017

Date of Last Submission: 20 March 2017

Delivered at: Hobart

Delivered on: 29 March 2017

REPRESENTATION

Counsel for the Applicants: Mr Gunson Q.C

Solicitors for the Applicants: Timothy Williams

Counsel for the Respondent: Mr Morris

Solicitors for the Respondent: John P Murphy

ORDERS

1. The respondent’s application for costs is dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT HOBART

LNG 77 of 2016

TUNA TASMANIA PTY LTD (ACN 066 778 985)

First Applicant

SHARON TINA FARRER AS EXECUTOR OF THE ESTATE OF JOHN FREDERICK FARRER (DECEASED)

Second Applicant

SHARON TINA FARRER

Third Applicant

LAWRENCES MOTORS PTY LTD (ACN 050 492 745) AS TRUSTEE FOR THE FARRER SUPERANNUATION FUND AND AS TRUSTEE FOR THE FARRER SUPERANNUATION FUND (NO. 2)

Fourth Applicant

HAVENFLASH PTY LTD (ACN 065 284 802) AS TRUSTEE OF THE FARRER FAMILY TRUST

Fifth Applicant

And

PAUL FRANCIS ALLISON

Respondent

REASONS FOR JUDGMENT

1. The respondent, Mr Allison, now makes an application for costs on an indemnity basis such to be agreed or taxed resulting from the abandonment by the applicants/petitioning creditors of an application for a Creditor's Petition.

2. The application for costs is opposed.

3. The substantive application for a Creditor's Petition filed 16 December 2016 alleges the respondent to owe the applicant creditors $352,611.80 on two judgments for taxed costs out of the Supreme Court of Tasmania plus interest.

4. On 12 January 2017 the respondent entered a Notice Stating Opposition to the application with supporting affidavit. In both documents the respondent denied ownership of each of the items seized and levied by the Sheriff pursuant to three Writs of Fieri Facias by the petitioning creditors in June and August 2016 with the respondent, Mr Allison, named as the party liable to pay the amount stated in the Writs.  The latter two Writs were executed on property at the respondent’s residence and comprising of four motor vehicles, a tractor, a fire engine, a bus, a boat and trailer, and a caravan. The Sheriff holds the property.

5. At [15] of his affidavit of 12 January 2017, the respondent denied ownership of any assets other than personalty. He deposed in his affidavit as to the identities of the legal or beneficial owners of the property levied by the Sheriff.

6. By orders of 19 January 2017 Registrar Corperale listed the application for hearing before me on 21 December 2017 and that:

   i)On or before 4:30 p.m. on 30 January 2017 the respondent file and serve any further affidavit in support of his grounds of opposition;

   ii)On or before 4:30 p.m. on 13 February 2017, the applicant's file any affidavits in reply or any other Affidavit.

7. The hearing date was adjourned to 20 March 2017 in Hobart on notice sent by email to the parties on 25 January 2017. I made consequent  amended procedural orders as follows:

   i)The respondent is to file any further affidavits by 4:30 p.m. on 17 February 2017.

   ii)The applicants are to file any affidavit in reply or any further affidavits by 4:30 p.m. on 10 March 2017.

8. It is agreed that the respondent has lodged an Appeal in the Supreme Court of Tasmania such that if successful it is highly likely that the costs orders giving rise to the Creditor’s Petition might be set aside or at least in respect of the greater majority of the debt. Given the pending Appeal, I listed the matter for telephone mention on 7 March 2017.  Counsel for the respondent indicated by email a preference to adjourn the Creditor’s Petition pending the hearing of the Supreme Court Appeal. Counsel for the petitioning creditors argued for the matter to proceed and, consequently without consensus, the application for the Creditors Petition remain listed for hearing in Hobart on Monday
   20 March 2017 at 10.00 a.m.

9. On Thursday 16 March 2017 the petitioning creditors filed and served two further affidavits being from Jenifer Ann Irvine and Peter Geoffrey Graham. Ms Irvine is an employee of the Registrar of Motor Vehicles. Mr Graham is the Sheriff of the Supreme Court. A perusal of the content of each Affidavit shows evidence to be given or adduced in respect of the respondent’s alleged beneficial ownership of the items levied by the Writs of Fieri Facias pursuant to the requirements of section 40(1)(d)(i) of the Bankruptcy Act 1966 (Cth) (“the Act”).

10. Unarguably, these two affidavits were filed outside the time permitted by my orders and directions for the filing of material.  No leave of the court to file out of time was obtained or indeed sought.

11. On Friday 17 March 2017 the respondent filed a lengthy affidavit of 103 paragraphs and near 200 pages of annexures. This affidavit transparently attempts to address the issue of beneficial ownership of the vehicles being the subject of the levy.  I emphasise that the respondent had previously in his affidavit of 12 January 2017 denied legal or beneficial ownership of those items and had nominated the actual owners.  Consequently, his later affidavit sworn 16 March 2017 and filed and served 17 March 2017 purports to give detailed corroborative evidence of his assertion made 12 January 2017.

12. Again, arguably, this affidavit was filed by the respondent out of time and without leave of the court.

13. The respondent’s affidavit was served, firstly, in unsealed form and then by sealed copy on Friday 17 March 2017 being the last working day before the listed hearing.

14. I am told and I accept that some time on Sunday 19 March 2017 the petitioning creditors determined to abandon their application and advised the respondent’s counsel and the court by email on that day.

15. When the matter came before me at 10.00 a.m. on Monday 20 March 2017, the application for a Creditors Petition was dismissed by consent.  The respondent consequently seeks costs of and incidental to the proceedings.  The respondent has not had time to quantify such costs and, if successful, seeks an order that costs be as agreed or taxed.

16. I have taken oral submissions from Senior Counsel for both parties and have to hand the helpful written submissions in support of the application from the respondent.

17. Section 32 of the Act provides that I have a discretion to make an order for costs.

18. The respondent argues his claim for costs on the following bases:

    i)That notice of the decision to abandon the application was conveyed only on the day prior to the hearing and when all preparation had been completed and the respondent’s senior and junior Counsel had or were in the process of travelling to Tasmania from Queensland. 

    ii)That the Creditor’s Petition was always doomed to fail for want of any or any admissible evidence as to the existence of legal or beneficial ownership of property in the respondent.  The respondent says that the onus of proof in this respect sits with the petitioning creditor's and hence, whilst the lengthy affidavit served 17 March 2017 may have prompted the abandonment of the application, such is irrelevant in that the respondent was under no obligation to disclose his “'defence” and again noting his unambiguous denial of beneficial ownership in his affidavit as long ago as 12 January 2017.

    iii)Whilst not conceding that the petitioning creditor’s affidavits of 16 March 2017 establish prima facie ownership of the property, it was not unreasonable for the respondent to then answer the affidavits received on 16 March 2017 and which he did by his affidavit of the 17 March 2017.  Inherent in this submission is the concession by the Counsel for the respondent that they were previously possessed of the material in the affidavit but under no compulsion to disclose it to the legal representatives of the petitioning creditors, or at all, given the aforementioned onus which rests on the applicants. The implication from this submission is that should the applicants have complied with my orders and directions for the filing of documents then the respondent may have disclosed his material in a timely fashion and in accordance with those directions and then costs incurred in preparation of the trial and travel would not have been incurred. The same implied argument applies to the petitioning creditors insistence on proceeding with their application when the matter was mentioned before me on
    7 March 2017 and where an Appeal to the substantive orders was lodged and pending in the Supreme Court of Tasmania.

    iv)The respondent argues that even the new material under affidavit of 16 March 2017 does not establish even a prima facie case supporting proof that the levied property was the legal or beneficial property of the respondent.

19. The petitioning creditors, in arguing against a costs order, referred to the first affidavit of Peter Geoffrey Graham sworn the 28 February 2017. Mr Graham deposes that an initial Writ of Fieri Facias was filed on 17 June 2016 and executed by the Bailiff on 12 July 2016 in respect of property located at the premises of the respondent.  No challenge or inter-pleader was made by the respondent on this first levy. Indeed, none was necessary given evidence that the respondent paid the amount claimed in the first Writ and in full on 30 August 2016.

20. The respondent says that two further Writs of Fieri Facias were filed by the petitioning creditors on 31 August 2016 and executed by the Bailiff on 28 September 2016.  Mr Graham deposes to a telephone conversation with the respondent on that day and that “he (the respondent) advised that some of the items levied were not his” (my emphasis).

21. Consequently, Counsel for the petitioning creditors argues that there was prima facie admissible evidence being from the respondent himself of legal or beneficial ownership of the property. Specifically, the petitioning creditor argues that the court could make appropriate inferences of ownership by Mr Allison from the fact that he made the payment to release the property levied by the first Writ.  Secondly, the court can infer ownership by reason of Mr Allison’s statement that 'some' of the items did not belong to him implying that 'some' did.

22. Counsel for the petitioning creditors argues that the bald denial and assertions as to alternative ownership in the respondent’s affidavit of 12 January 2017 did not and should not give cause for the application to be abandoned and particularly given the matters set out above from Mr Graham's affidavit.

23. Counsel for the petitioning creditor's notes that the corroborating evidence in the respondent’s affidavit of 17 March 2017 was obviously available to the respondents prior to that date and it was only upon the receipt of this information, corroborative as it was of the assertions of 12 January 2017, that the petitioning creditors could reasonably and objectively consider their position which, of course, they could only do on the weekend of 18 and 19 March 2017.

Consideration

1. I accept that the petitioning creditors held the onus to prove on the balance of probabilities beneficial ownership of the levied property in Mr Allison.  I do not, however, accept the respondent's argument that there was no admissible evidence before the court prior to the swearing and filing of the respondent’s affidavit on 17 March 2017 being the last working day before the hearing of this matter.  I accept the submissions of Counsel for the petitioning creditors that the first affidavit of Mr Graham offers prima facie evidence of ownership in the form of, firstly, the payment by Mr Allison to release the property under the first levy and, secondly, the statement alleged to Mr Allison to the Sheriff that 'some of the property was not his'. 

2. There then followed the late filing of affidavits without the leave of the court on behalf of both parties.  I am unconvinced that there were circumstances of chronological relevance which necessitated the filing of the documents by either party. Firstly, it seems to me that the material in the affidavit of Ms Irvine and the second affidavit of Mr Graham was readily available much earlier.  Secondly, Counsel for the respondent candidly concedes that they were possessed of the material in their Affidavit eventually filed 17 March 27.  Nevertheless, I do not accept the submission of Counsel for the respondent that the filing of their affidavit material was necessitated only by the late filing of the crediting petitioner’s material. The content of the respondent’s affidavit of 17 March 2017 simply corroborates and details the assertions made in his affidavit of the 12 January 2017. Unambiguous orders had been made for the filing of affidavit material. Quite simply, this affidavit was filed contrary to the orders and directions and without leave of the court.

3. It is unfortunate that matters of geography necessitated the respondent’s Counsel travelling from Queensland to Tasmania probably during the time that the legal representatives for the petitioning creditors were determining to abandon the application. Nevertheless, it is for this very reason that orders and directions are made by courts for the filing of affidavit material I consider that such directions are, in fact court orders. They are not invitations. Consequently, I consider both parties culpable in filing material outside of the time ordered by the court and it is highly probable that should the legal representatives for both parties complied with my orders then the their clients would have been saved substantial unnecessary costs.

4. In all of the circumstances, I am not persuaded that that there should be an order for costs and the application by the respondent is dismissed.

I certify that the preceding twenty seven (27) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date: 29 March 2017