Vasiliou v Tasiopoulos Lambros and Co
[2005] FCA 1577
•29 SEPTEMBER 2005
FEDERAL COURT OF AUSTRALIA
Vasiliou v Tasiopoulos Lambros & Co [2005] FCA 1577
BANKRUPTCY – bankruptcy notice – whether should have been set aside – sequestration order – whether should have been made – whether error in judgments of federal magistrates
Bankruptcy Act 1966 (Cth) s 40(1)(g)
Wren v Mahoney (1972) 126 CLR 212 referred to
Andrew Vasiliou v Tasiopoulos Lambros and Co [2004] FMCA 572 affirmed
Vasiliou v Tasiopoulos Lambros & Co [2004] FMCA 670 affirmedANDREW VASILIOU v TASIOPOULOS LAMBROS & CO
VID 1147 of 2004
ANDREW VASILIOU v TASIOPOULOS LAMBROS & CO
VID 1348 of 2004
GRAY J
29 SEPTEMBER 2005
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1147 of 2004
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:
ANDREW VASILIOU
APPELLANTAND:
TASIOPOULOS LAMBROS & CO
RESPONDENTJUDGE:
GRAY J
DATE OF ORDER:
29 SEPTEMBER 2005
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2.The costs of the respondent, Tasiopoulos Lambros & Co, be taxed and, when taxed, be paid out of the estate of the bankrupt as costs of the petitioning creditor, in accordance with the Bankruptcy Act 1966 (Cth).
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1348 of 2004
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:
ANDREW VASILIOU
APPELLANTAND:
TASIOPOULOS LAMBROS & CO
RESPONDENTJUDGE:
GRAY J
DATE OF ORDER:
29 SEPTEMBER 2005
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The notice of motion filed on 14 December 2004 be dismissed.
3.The costs of the respondent, Tasiopoulos Lambros & Co, including the costs
of the notice of motion filed on 14 December 2004, be taxed and, when taxed, be paid out of the estate of the bankrupt as costs of the petitioning creditor, in accordance with the Bankruptcy Act 1966 (Cth).
4.The costs of the trustee in bankruptcy of the notice of motion filed on 14 December
2004 be paid by the bankrupt, and by the other applicant in the notice of motion, Vasiliki Apostolou.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1147 of 2004
VID 1348 of 2004ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:
ANDREW VASILIOU
APPELLANTAND:
TASIOPOULOS LAMBROS & CO
RESPONDENTJUDGE:
GRAY J
DATE:
29 SEPTEMBER 2005
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
The story that has led to the proceedings before me today began as long ago as 1999. In that year, and indeed prior to it, the firm of Tasiopoulos Lambros & Co, a firm of solicitors, was acting for Mr Andrew Vasiliou in relation to a proceeding in the Victorian Civil and Administrative Tribunal. Mr Vasiliou, who is the appellant in the proceedings before me, told me from the bar table today that, at one point, he declined to pay an additional $4000 to the firm of solicitors on account of future work, and attempted to procure an adjournment of the proceeding in the Tribunal. The Tribunal refused to grant an adjournment, in consequence of which Mr Vasiliou was unsuccessful in the Tribunal.
Mr Vasiliou was then sued by his solicitors, who claimed unpaid fees, together with interest and costs. He was sued in the Melbourne Magistrates’ Court. He was too ill to attend one pre-hearing conference, and the solicitors agreed to adjourn the pre-hearing conference to 17 January 2000. On that day, Mr Vasiliou also failed to appear. He says that he was still too ill, but the solicitors did not consent to a further adjournment. Unfortunately, his defence was struck out. On 25 January 2000, the solicitors entered judgment in the Melbourne Magistrates’ Court for a total of $23 220.82, which consisted of their claim of $20 831.50, interest of $1523.32, and costs of $866.
Within a very short time, on 31 January 2000, Mr Vasiliou applied to the Melbourne Magistrates’ Court for a re-hearing of the default judgment. That application was returnable on 23 February 2000. Mr Vasiliou failed to attend and it was adjourned to 8 March 2000. On that date, the application was heard and dismissed. In due course, the bankruptcy notice that is the subject of the first of the appeals before me was issued on 6 June 2003. After the time for service of that bankruptcy notice had been extended once, the bankruptcy notice was served on Mr Vasiliou on 24 May 2004.
On the basis that such service was valid, a basis that was contested by Mr Vasiliou, the time for compliance with that bankruptcy notice expired on 14 June 2004. On 15 June 2004, Mr Vasiliou filed an application in the Federal Magistrates Court of Australia seeking both an extension of time to comply with the bankruptcy notice, and the setting aside of the bankruptcy notice.
In support of that application, which was designated as MZ 756 of 2004, Mr Vasiliou filed a short, handwritten affidavit in which he indicated that he had applied to the Melbourne Magistrates’ Court to set aside the judgment, and to remove the proceeding to the Supreme Court of Victoria, so that a counterclaim of his could be dealt with. The affidavit gave no details as to any such counterclaim. By a second affidavit, also sworn on 15 June 2004, Mr Vasiliou indicated that the judgment entered against him was the result of a mix-up about attending court, at a time when he was very sick. He asserted that the judgment was incompetent, and that he had a counterclaim. Again, no details were given.
On 15 June 2004, the application to set aside the bankruptcy notice came before Registrar Connard. On that date, the registrar ordered that the time for compliance with the bankruptcy notice be extended until 4 pm on 29 June 2004. On 29 June 2004, the application was again before Registrar Connard. On that date, the registrar adjourned the further hearing of the application to 12 July 2004, and ordered that Mr Vasiliou file and serve any further affidavit on which he proposed to rely by 2 July 2004.
It is noteworthy that, on 29 June 2004, the registrar does not appear to have made any order that would have had the effect of further extending the time for compliance with the bankruptcy notice. Mr Vasiliou made strong submissions to me that it was his understanding that the adjournment involved such an extension. This caused me to look at the file of the Federal Magistrates Court relating to that application. On it, I found an internal document, a report of listing, in respect of the listing of the application on 29 June 2004. That report of listing contained a handwritten note. It was not clear to me whether that handwritten note was in the handwriting of the registrar himself. The handwriting differed from the recording of appearances, and of other details, in the report of listing. With the consent of the parties, I had enquiries made of Registrar Connard as to whether the note was in his handwriting. He has replied that it is in his handwriting, and that the other writing on the report of listing is that of his assistant. The note reads:
‘NB: - no order extending time made; issue arose about timing of application; ev. to be filed on this point and issue to be determined 12/7.
Re hrg app in MCV on 8/7/4 - on adj'd date outcome of MCV appn will be known.’I take this note to be a recording of the fact that the registrar consciously decided to make no order extending the time. Mr Vasiliou complains that he was led to understand that the registrar would make such an order. It seems to me that that issue is irrelevant to the present proceedings, because no order was in fact made. As a consequence, the time for compliance with the bankruptcy notice expired at 4 pm on that day, 29 June 2004. Mr Vasiliou did not comply with the bankruptcy notice by that time, by paying the amount demanded.
In the meantime, Mr Vasiliou’s further application to set aside the judgment of the Melbourne Magistrates’ Court was before that court. On 8 July 2004, it was adjourned until 26 July 2004, to enable Mr Vasiliou to file an affidavit explaining his delay in bringing the application.
In a further affidavit, filed in the Federal Magistrates Court in support of Mr Vasiliou’s application to set aside the bankruptcy notice, he said this about the judgment and the debt on which it was allegedly based:
‘The debt that the Applicants of the bankruptcy Notice support their claim is not owed at all and I do have a major claim against the law firm Tasiopoulos & Lambros Co [sic] and I am currently in process of pursuing that claim. I have a hearing day schedule [sic] before the Melbourne Magistrate [sic] Court to se [sic] aside judgement obtain [sic] and to transfer the hearing at [sic] the Supreme Court for a propel [sic] hearing.’
On 26 July 2004 Mr Vasiliou’s application to the Melbourne Magistrates’ Court to set aside the judgment was dismissed. On 2 August 2004 Registrar Mussett dismissed the application to set aside the bankruptcy notice. As he was entitled to do, Mr Vasiliou applied to the Federal Magistrates Court for review of the registrar’s decision. He filed that application on 4 August 2004. The application sought orders as follows:
‘I seek to have all orders set iside [sic]. I seek that the bankruptcy notices be set aside or its service made void.’
That application was adjourned once by Registrar Connard, on 16 August 2004, and came before Federal Magistrate Phipps.
By a further affidavit, which appears to have been filed on 4 August 2004, Mr Vasiliou placed further evidence before the federal magistrate. He first dealt with the issue of service, which does not appear to be relevant to the present appeals. As to the judgment debt, Mr Vasiliou said this:
‘The bankruptcy notice is base [sic] on an ongoing dispute of fees claimed by Tasiopoulos + Lambros that was obtain [sic] by order of default when I was seek [sic] in a hospital saffering [sic] a hurt [sic] attack. I am now in a prosses [sic] of an appeal at the Supreme Court there is a collusion between parties to send me bankrupt.’
On 30 August 2004, Federal Magistrate Phipps heard the application to review Registrar Mussett’s order refusing to set aside the bankruptcy notice. On that day, his Honour dismissed the application with costs. In his reasons for judgment, Andrew Vasiliou v Tasiopoulos Lambros and Co [2004] FMCA 572, his Honour identified as the issue that decided the application the question whether there was a valid judgment with any significant prospect of it being set aside, or any prospect at all of it being set aside. His Honour noted that he had evidence in affidavits of the applicant, and had been told, as agreed matters, certain things from the bar table. At [4], his Honour said:
‘The relevant matters are these. Judgment was obtained on 25 January 2000 in the Magistrates Court at Melbourne. That was a default judgment. The applicant, the debtor, applied to set aside that default judgment, and when that came on for hearing in the Melbourne Magistrates Court on 8 March 2000 the applicant debtor was not present and so the application was refused. What he sets out in his affidavits is that he was unwell at that stage and there was a period when he was hospitalised. Subsequent to the service of the bankruptcy notice on him, he made the application to this court to set aside the bankruptcy notice filed on 15 June 2004. He then made a further application to the Magistrates Court at Melbourne to set aside the judgment debt. That came on for hearing, and these are matters which I have been told from the bar table and they are matters of agreement, originally on 1 July 2004 and it was then adjourned to 26 July 2004. On 26 July 2004, that application was refused. The applicant has now made an application to the Supreme Court which he describes as an appeal to the Supreme Court but which might be more correctly described as an application to appeal.’
At [5], his Honour went on to find that the bankruptcy notice was otherwise a valid bankruptcy notice, and that no submissions had been made disputing its validity, other than submissions about the existence of the debt. His Honour identified s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (‘the Bankruptcy Act’) as the basis for the issue of the bankruptcy notice. His Honour then said at [6]:
‘The existence of the debt itself is not an issue for this court. The issue for this court is whether there is a judgment or debt. Other than a dispute about the debt there is, as far as I can see, no claim that there is a counterclaim or set-off which could not have been set up in the proceedings. From what the applicant has told me from the bar table, the debt is legal fees and he disputes whether the amount of work was done for which the money is claimed and whether it was done competently. Whatever defences might arise out of those two things, they could all have been raised in the proceedings in which the judgment or order was obtained.’
At [7], his Honour identified that there had been two applications to set aside the judgment of the Melbourne Magistrates’ Court and that, on the second one, Mr Vasiliou did appear and the application was dismissed. As to the application for leave to appeal to the Supreme Court, or any appeal to the Supreme Court, his Honour said that Mr Vasiliou had not put before the court anything that might suggest that an appeal was likely to proceed. Although his Honour saw himself as dealing with the issue of the validity of the bankruptcy notice, he did plainly address himself to the question whether the judgment on which the bankruptcy notice was made might have a chance of being set aside.
The solicitors then proceeded with their creditors’ petition. That came before Registrar Wood on 14 September 2004. The registrar made a sequestration order against the estate of Mr Vasiliou, in Mr Vasiliou’s absence. On 17 September 2004, Mr Vasiliou filed in the Federal Magistrates Court an application to review the sequestration order made by Registrar Wood. On the same day, he filed the first of the appeals before me today in proceeding no. V 1147 of 2004 in this Court, an appeal against the judgment of Federal Magistrate Phipps dismissing the application to review Registrar Mussett’s refusal to set aside the bankruptcy notice.
In relation to the application for review by a federal magistrate of the sequestration order, Mr Vasiliou filed two affidavits in the Federal Magistrates Court. In the first of them he sought to explain his absence from the proceeding in which Registrar Wood made the sequestration order, by saying that he had not received a notice to attend court that day and was not aware that a hearing was to take place. He referred to his appeal to the Supreme Court in respect of the judgment of the Melbourne Magistrates Court. As to the substance of the matter, in this affidavit all that he said was:
‘The Applicant – Tasiopoulos Lambros & Co has obtain [sic] Magistrate [sic] Court Orders while I was unfit to attend a Directions Hearing at that Court on defult [sic] judgement for amounts of money claims not truly owed to his firm and for work that faulsly [sic] claimed he did for me but in reality he didn’t. I am now in prossess [sic] to have this matter Appealed at the Supreme Court. An application for review has file [sic] today with the Supreme Court.’
That affidavit was filed on 17 September 2004 and the application to the Supreme Court was attached. The second affidavit filed by Mr Vasiliou in the Federal Magistrates Court, on 27 September 2004, in support of his application to review the sequestration order again referred to matters of service. It alleged that the solicitors and another creditor were colluding and demanding moneys that he did not owe to them. It alleged that in reality both of the creditors owed him money for work that he paid them to do that they did not do, and that he had paid for services they falsified. He alleged deliberate acts of misleading and misconduct. Apart from suggesting that they had inflicted on him ‘serious bad things’ and that he was in the process in the Supreme Court and the High Court of getting appropriate relief from both of them, Mr Vasiliou did not go into further detail about the nature of any defence that he might have in relation to the debt, the subject of the judgment of the Melbourne Magistrates’ Court.
In the meantime, Mr Vasiliou’s first application to the Supreme Court was dismissed by Master Evans on 6 September 2004. Mr Vasiliou says that that dismissal occurred because he had chosen the wrong kind of application to make. As I have said, he filed another application in the Supreme Court, and that was annexed to his affidavit of 17 September 2004. On 27 September 2004, Federal Magistrate O’Dwyer heard the application to review the sequestration order.
Two days later, on 29 September 2004, Mr Vasiliou’s second application to the Supreme Court was dismissed by Master Wheeler. This was on the basis that, because he was a bankrupt, any cause of action he had that might have founded such an application was really a cause of action vested in the trustee in bankruptcy, and it was not open to Mr Vasiliou to continue that proceeding without the cooperation of the trustee in bankruptcy. On 13 October 2004, Federal Magistrate O’Dwyer delivered judgment, dismissing the application for review filed on 17 September 2004, affirming the order of Registrar Wood made on 14 September 2004, which was the sequestration order, and ordering that the solicitors’ costs be paid out of the estate in the usual manner. See Vasiliou v Tasiopoulos Lambros & Co [2004] FMCA 670.
From this judgment, Mr Vasiliou has filed the second of the appeals that is before me today, the appeal in matter no. V 1348 of 2004. In the course of proceeding with the appeal, Mr Vasiliou applied by notice of motion, filed on 4 November 2004, for a stay of the sequestration order. That application was refused by Sundberg J on 11 November 2004.
It is fair to say that Mr Vasiliou has had some difficulty in endeavouring to identify errors in both the judgments of the Federal Magistrates Court from which he appeals. In his notice of appeal in matter no. V 1147 of 2004, his grounds were expressed in general terms: that the orders of Federal Magistrate Phipps were made in lieu of a conclusion of a review in the Supreme Court; that the orders made were contrary to the Bankruptcy Act; and that the orders were not final orders. When I pressed him in submissions to look at the reasons for judgment of Federal Magistrate Phipps and identify the errors made, Mr Vasiliou said that he identified: an error in not setting aside the bankruptcy notice; an error in exercising the discretion inappropriately by allowing the judgment of the Melbourne Magistrates’ Court to have priority; an error in treating the judgment of the Melbourne Magistrates’ Court as valid when it was subject to challenge in the Supreme Court; an error in placing excessive weight on the judgment of the Melbourne Magistrates’ Court, and its decision not to set that judgment aside; and also an error in failing to extend the time for compliance with the bankruptcy notice.
Some of the suggestions of error appear to arise from a misunderstanding of precisely what was before Federal Magistrate Phipps. As I have said, the application to review the decision of Registrar Mussett, refusing to set aside the bankruptcy notice, was confined in its terms to asking for an order that the bankruptcy notice be set aside. At least in terms of what he filed with the court on 4 August 2004, Mr Vasiliou did not ask the federal magistrate for an extension of time to comply with the bankruptcy notice. Indeed, there must be a real issue as to whether it was open to extend the time for compliance with the bankruptcy notice at that time, when, on any view as to the time at which the period for compliance with that notice expired, it had already done so. It does not appear to me to be possible for the Federal Magistrates Court to revive the period for compliance with a bankruptcy notice once it has already expired. The act of bankruptcy that comes about from a failure to comply with the bankruptcy notice within the time it specifies has already occurred, once the time has expired.
I am not able to detect any error in the reasons for judgment of Federal Magistrate Phipps.
The fact was that the material Mr Vasiliou placed before his Honour as to what defence he might have had to the claim for debt by the solicitors was very sparse. Mr Vasiliou has mentioned to me that he claims to have had an agreement with the solicitors as to fees. He has never gone into detail, whether before me or before the Federal Magistrates Court, as to the nature of that agreement, its terms, or how it came about. If that agreement was ever in writing, he has never sought to produce a copy of it, or to explain what it was that happened to the document.
There was so little material before Federal Magistrate Phipps to indicate that Mr Vasiliou would ever have been able to defeat the claim for legal fees that the federal magistrate was entitled to regard Mr Vasiliou as having no chance of succeeding in his endeavours to set aside the judgment of the Melbourne Magistrates’ Court. Indeed, his Honour was entitled to rely on the fact that Mr Vasiliou had made an unsuccessful application to set aside that judgment, on which he had been heard. His Honour was entitled to take the view that, if Mr Vasiliou had been able to disclose that he had an arguable defence, the Melbourne Magistrates’ Court might have been more disposed to allow him to set aside the judgment. His Honour was perfectly entitled to treat the judgment of the Melbourne Magistrates’ Court as a valid judgment, and as a final judgment, notwithstanding that there existed a faint possibility that it might one day be set aside. As a final judgment, it formed a proper basis for the bankruptcy notice.
Nor could his Honour be accused of having placed excessive weight on the judgment of the Melbourne Magistrates’ Court and on the decision not to set it aside in those circumstances. His Honour was not sitting on appeal from the Melbourne Magistrates’ Court. It was not open to him to say that the decision to refuse to set aside the judgment was a wrong decision. Nor was it open to him simply to ignore that decision and to accept the assertion that the debt was not really owing.
To the extent to which his Honour had a discretion to go behind the judgment, in determining whether the bankruptcy notice should be set aside, I am satisfied that his Honour considered properly the matters that went to that discretion. Most notably, they were the question of the weight to be given to the attempts to set aside the judgment, and to the absence of material that indicated that those attempts would have any prospect of success.
Being unable to detect error on the part of Federal Magistrate Phipps, I am required to dismiss the appeal from his Honour’s judgment.
I turn, then, to the appeal from the judgment of Federal Magistrate O’Dwyer, refusing to set aside the sequestration order. Mr Vasiliou’s notice of appeal in respect of that judgment identified as the grounds of the appeal the following: that the federal magistrate exercised his discretion inappropriately; that the federal magistrate went beyond his jurisdiction; that the federal magistrate erred in saying that the respondent had provided proof of the debt; and that the federal magistrate erred in concluding that the respondent was entitled to a sequestration order.
In an affidavit filed at the same time as the notice of appeal, Mr Vasiliou suggested that the judgment of Federal Magistrate O’Dwyer was unfair and outside his jurisdiction in dealing directly with a dispute that existed between parties. He alleged that Federal Magistrate O’Dwyer did not take into consideration ‘the samary [sic] of argument of the truth of the reality of the debt.’
Once again, I invited Mr Vasiliou in argument to go to the reasons for judgment of Federal Magistrate O’Dwyer, and to indicate where his Honour was in error. Mr Vasiliou then identified the following alleged errors in the reasons for judgment. The first appears at [14] of his Honour’s reasons for judgment. The allegation is that the federal magistrate was in error in refusing to go behind the judgment of the Melbourne Magistrates’ Court. The second error suggested was at [15], where Mr Vasiliou suggested that the federal magistrate had wrongly attributed to him the onus of proof. Mr Vasiliou said that the true position ought to be that the judgment creditor ought to have to prove the debt. Mr Vasiliou challenged the finding that the bankruptcy notice had been properly served on him on 24 May 2004. He also said that the federal magistrate had made an error in finding that he committed an act of bankruptcy on 29 June 2004. He identified as erroneous the finding at [18], that nothing was presented by way of evidence that persuaded the federal magistrate that he could not have confidence in the judgment that was the subject of the application. Mr Vasiliou contended that there were circumstances justifying the court going behind the judgment debt. Finally, Mr Vasiliou suggested that there was error in the federal magistrate’s judgment, in that he gave insufficient weight to the fact of the Supreme Court proceeding.
As I read the reasons for judgment of Federal Magistrate O’Dwyer, his Honour approached correctly the question whether he should go behind the judgment. His Honour quoted at length from the judgment of Barwick CJ in Wren v Mahoney (1972) 126 CLR 212 at 224-225. In the course of that passage, the Chief Justice made it clear that, in a sense, the court has a discretion whether to go behind the judgment, but that it will only exercise that discretion in favour of the judgment debtor when some good reason is shown for questioning whether behind the judgment there was, in truth and reality, a debt due to a petitioning creditor.
The federal magistrate applied those considerations to the proceeding before him. At [14] of his reasons for judgment he said:
‘Apart from making assertions that the Respondent has failed in its professional obligations, has colluded with the supporting creditor, has “inflicted upon me serious bad things”, and has charged for work not done, or charged excessively, the Applicant has provided no material that would raise a concern about the “truth and reality” of the judgment debt. His attempts to set aside the default judgment and the Bankruptcy Notice have failed to persuade competent tribunals that such should be done. In light of that, and the lack of any other evidence or material that the judgment debt is open to real challenge, I cannot be satisfied that I should exercise my discretion other than to accept the truth and reality of the judgment debt. Accordingly, I am not persuaded that I should go behind the judgment debt.’
I have examined the material that was before the federal magistrate by way of affidavit, for the purpose of determining whether his Honour made any error in relation to the quality of that material. As I have said previously, in all of the affidavits that Mr Vasiliou filed in the Federal Magistrates Court, he did not go into any detail about his allegations that he had a defence or a counterclaim in respect of the claim for fees by the solicitors. It can truly be said that Mr Vasiliou did not provide to the Federal Magistrates Court at any stage any material that would suggest that he could have succeeded had he been able to defend the proceeding in the Melbourne Magistrates’ Court. Mr Vasiliou attempted to argue today that he was unaware that he had any obligation to provide such material. As I suggested to him, it seems to me that he is an intelligent man, with substantial business experience, and experience in courts. The successive episodes of his proceedings in the Federal Magistrates Court, with the decision of Registrar Mussett refusing to set aside the bankruptcy notice, the judgment of Federal Magistrate Phipps refusing the application for review of that decision, and the decision of Registrar Wood granting a sequestration order, it defies reality to suggest that Mr Vasiliou would not have realised that, if he wished to succeed in the review before Federal Magistrate O’Dwyer, it was necessary for him to provide some detailed material as to exactly how he would have defeated the claim for fees by the solicitor.
In any event, such material was not there, and it can hardly be said that Federal Magistrate O’Dwyer made an error in reaching the conclusion that he did on the basis that no material was there to raise a concern about the truth and reality of the judgment. Once again, Federal Magistrate O’Dwyer was entitled to rely on the fact that Mr Vasiliou had made attempts to set aside the default judgment and had been unsuccessful. I am unable to detect any error in his Honour’s approach to the question of going behind the judgment.
The question of onus of proof comes down to this. In his judgment, the federal magistrate was not placing the onus of proof on Mr Vasiliou. He was placing it on the solicitors, to prove that they had a debt. His Honour found that the solicitors had satisfied the onus that they were entitled to rely on the default judgment obtained in the Melbourne Magistrates’ Court, that they had correctly proved service, that Mr Vasiliou had committed an act of bankruptcy, that the petition had been correctly served, and that they were therefore entitled to a sequestration order at the time when it was made.
As I have said, Mr Vasiliou challenged the finding that there was an act of bankruptcy on 29 June 2004. This is really unarguable, except to say that it may have been that the act of bankruptcy occurred at an earlier date. Whether or not Registrar Connard intended to extend the time for compliance with the bankruptcy notice, and changed his mind, or whether he never intended to do so, the fact is that the time for compliance was never extended. That being the case, it expired at 4.00 pm on 29 June 2004, and an act of bankruptcy was then automatically committed. There was no need, at that stage, for there to be any adjudication on whether it had been committed. Such an adjudication came later, before Registrar Wood, and again on review before Federal Magistrate O’Dwyer.
There was therefore no error in any of the findings identified by Mr Vasiliou. The sentence at [18] that reads:
‘Nothing was presented by way of evidence that persuaded me that I could not have confidence in the judgment which was the subject of this application, and that there are circumstances which justify the court going behind the judgment debt’
was a conclusion that Federal Magistrate O’Dwyer expressed on the matters that he had earlier discussed. It cannot be said that the federal magistrate was obliged to place more weight on the fact that Mr Vasiliou had applied to the Supreme Court. His Honour was entitled to rely on the fact that there was in existence a judgment of the Melbourne Magistrates’ Court, which was the basis for the bankruptcy notice, even though it was theoretically possible, as it always is, for such a judgment to be set aside by the court that gave it or by another court on appeal. A court is entitled to rely upon a judgment of another court, and is certainly not obliged to go behind it.
As to general allegations of unfairness and want of jurisdiction, and dealing with the dispute between other parties, they cannot be suggested to be errors on the part of Federal Magistrate O’Dwyer. He clearly had jurisdiction, invoked by Mr Vasiliou, to review the order of Registrar Wood. There is nothing to indicate that he exercised that jurisdiction unfairly. To the extent that he was concerned with what was said to be a dispute existing between other parties, Federal Magistrate O’Dwyer was necessarily concerned to deal with the proceeding that was before him. It was open to Federal Magistrate O’Dwyer to be satisfied that the solicitors had proved their claim and, as I have said, open to him to refuse to go behind the judgment, and to accept that, in truth and reality, there was a debt.
For these reasons, that appeal also must be dismissed.
Before I make orders, I will hear the parties on what should be done in relation to costs.
The orders I make in matter no. VID 1147 of 2004 are:
1. The appeal be dismissed.
2.The costs of the respondent, Tasiopoulos Lambros & Co, be taxed and, when taxed, be paid out of the estate of the bankrupt as costs of the petitioning creditor, in accordance with the Bankruptcy Act 1966 (Cth).
In matter no. VID 1348 of 2004, the orders I make are:
1. The appeal be dismissed.
2. The notice of motion filed on 14 December 2004 be dismissed.
3.
The costs of the respondent, Tasiopoulos Lambros & Co, including the costs
of the notice of motion filed on 14 December 2004, be taxed and, when taxed, be paid out of the estate of the bankrupt as costs of the petitioning creditor, in accordance with the Bankruptcy Act 1966 (Cth).
4.The costs of the trustee in bankruptcy of the notice of motion filed on 14 December
2004 be paid by the bankrupt, and by the other applicant in the notice of motion, Vasiliki Apostolou.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. Associate:
Dated: 25 November 2005
Counsel for the appellant: The appellant appeared in person Counsel for the respondent: M Galvin Solicitor for the respondent: Tasiopoulos Lambros & Co Solicitor for BJ Marchesi, trustee of the appellant’s bankrupt estate: M Lhuede (Piper Alderman)
Date of hearing: 29 September 2005 Date of judgment: 29 September 2005
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