Von Risefer v Blue Cube Developments Pty Ltd

Case [2024] FCAFC 12

FEDERAL COURT OF AUSTRALIA

Von Risefer v Blue Cube Developments Pty Ltd [2024] FCAFC 12  

Appeal from: Blue Cube Developments Pty Ltd v Von Risefer [2022] FCA 1193
File number(s): VID 684 of 2022
Judgment of: WHEELAHAN, ANDERSON AND MCEVOY JJ
Date of judgment: 16 February 2024
Catchwords: BANKRUPTCY — sequestration order made by a Registrar and affirmed by primary judge – where no reason to go behind the judgment debt – sequestration order affirmed – no irregularities or breach of procedural requirements – adequate service of bankruptcy notices and creditor’s petition – no breach of duty to assist self-represented litigants – appeal dismissed – costs to be taxed and paid out of the bankrupt estates.
Legislation:

Bankruptcy Act 1966 (Cth) s 109(1)(a)

Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law s 18

Federal Court Rules 2011 (Cth) r 36.57
Cases cited:

Allison v Murphy [2021] FCAFC 232

AMF15 v Minister for Immigration and Border Protection [2016] FCAFC 68

Blue Cube Developments Pty Ltd v Von Risefer [2022] FCA 1193

Culleton v Balwyn Nominees Pty Ltd (No 2) [2017] FCAFC 12

Dietrich v The Queen (1992) 177 CLR 292; [1992] HCA 57

Doggett v Commonwealth Bank of Australia [2019] FCAFC 19

Greater Wollongong City Council v Cowan (1955) 93 CLR 435; [1955] HCA 16

Hamod v New South Wales [2011] NSWCA 375

Lowbeer v De Varda (2018) 264 FCR 228; [2018] FCAFC 115

Minogue v Human Rights and Equal Opportunity Commission (1999) 84 FCR 438; [1999] FCA 85

Petrie v Redmond [1943] St R Qd 71

Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28

SZRUR v Minister for Immigration and Border Protection (2013) 216 FCR 445; [2013] FCAFC 146

SZVCP v Minister for Immigration and Border Protection [2016] FCAFC 24

VUAX v Minister for Immigration and Multicultural Affairs (2004) 268 FCR 588; [2004] FCAFC 158

Wills v Australian Broadcasting Corporation (2009) 173 FCR 284; [2009] FCAFC 6

Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 77
Date of hearing: 22 May 2023
Counsel for the First Appellant: The First Appellant appeared in person
Counsel for the Second Appellant: The Second Appellant appeared in person
Counsel for the Respondent: Ms A Carruthers
Solicitor for the Respondent: LPF Legal

ORDERS

VID 684 of 2022
BETWEEN:

GEORGE VON RISEFER

First Appellant

ELIZABETH VON RISEFER

Second Appellant
AND:

BLUE CUBE DEVELOPMENTS PTY LTD

Respondent

ORDER MADE BY:

WHEELAHAN, ANDERSON AND MCEVOY JJ

DATE OF ORDER:

16 FEBRUARY 2024

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The respondent’s costs on appeal (including reserved costs) be taxed and paid out of the estates of the appellants in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS…

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AGLC
Von Risefer v Blue Cube Developments Pty Ltd [2024] FCAFC 12
Case
[2024] FCAFC 12
Decision Date

CaseChat Overview and Summary

In the matter of Von Risefer v Blue Cube Developments Pty Ltd, the Full Court of the Federal Court of Australia was tasked with reviewing the decision of a primary judge to affirm a sequestration order made by a Registrar against the appellants, Mr Alexander Von Risefer, Mrs Elizabeth Von Risefer, and Outdoor Kitchens Group Pty Ltd. The dispute revolves around the appellants' failure to comply with bankruptcy notices served by the respondent, Blue Cube Developments, which was predicated on a judgment debt stemming from a prior proceeding in the Magistrates' Court of Victoria. The legal issues before the court involved the validity of the sequestration order, the adequacy of the service of bankruptcy notices and the creditor’s petition, and whether the primary judge breached any duty to assist self-represented litigants.

The Full Court found no merit in the appellants' arguments that the primary judge erred in his conduct of the proceedings. Specifically, the court dismissed the claim that the appellants were denied an opportunity to bring a counterclaim, noting that no such counterclaim was ever filed. The court also rejected the contention that the creditor’s petition was invalid due to incorrect court headings, observing that the error was subsequently corrected and did not affect the validity of the proceeding. Furthermore, the court held that the primary judge did not breach his duty to assist the self-represented appellants, as evidenced by the judge’s efforts to accommodate their submissions and explain the nature of the proceeding.

Consequently, the appeal was dismissed, and the sequestration order was upheld. The Full Court ordered that the respondent’s costs of the appeal be taxed and paid out of the estates of the appellants, in accordance with the provisions of the Bankruptcy Act 1966 (Cth). This decision underscores the importance of following procedural requirements and the court's duty to ensure fair proceedings, even when dealing with self-represented litigants.

Orders

Orders of the court

1. The appeal be dismissed.

2. The respondent’s costs on appeal (including reserved costs) be taxed and paid out of the estates of the appellants in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the reasons that follow we have concluded that no error has been identified in the conduct of the review by the primary judge. The appeal will thus be dismissed with costs, and the sequestration order will remain undisturbed. BACKGROUND The act of bankruptcy relied on by Blue Cube Developments Pty Ltd in its creditor’s petition is the failure of the appellants to comply with the requirements of bankruptcy notices that were served on 28 August 2021. The bankruptcy notices were issued on 28 June 2021 and were addressed to the appellants jointly. It relies upon a judgment debt which is the product of orders entered in the Magistrates’ Court of Victoria on 26 April 2021 in the total amount of $101,938.85. That amount comprises a damages award of $43,564.98, together with statutory interest of $17,021.37 and costs of $41,352.50. As the primary judge observed, the judgment obtained by Blue Cube Developments in the Magistrates’ Court followed a protracted hearing conducted over nine days in September and October 2019 and February 2020. The five defendants to that proceeding were Outdoor Kitchens Group Pty Ltd, Mr Alexander Von Risefer, Mrs Elizabeth Von Risefer, Mr George Von Risefer and Kitchen Labs Pty Ltd. Mr George Von Risefer apparently acted for himself, and had leave to act for each of the corporations of which he was the director. Mrs Von Risefer acted for herself, and it is apparent that she was the primary spokesperson for all the defendants. The claim in the Magistrates’ Court was not advanced against Mr Alexander Von Risefer, apparently because his estate was the subject of a sequestration order. The Magistrates’ Court proceeding concerned a contract between Blue Cube Developments and either or both the corporate defendants which was entered into in October 2016. This contract was for the supply and installation of kitchen cabinets with stone bench tops and bathroom vanity cabinets with stone bench tops for a total price of $56,600, to be delivered and installed in 10 semi-detached townhouses that Blue Cube Developments was developing in Melbourne. A related claim for misleading or deceptive conduct was brought against Mr George Von Risefer and Mrs Von Risefer pursuant to s 18 of the Australian Consumer Law, being Schedule 2 to the Competition and Consumer Act 2010 (Cth). This claim was based on representations said to have been made by Mr George Von Risefer and Mrs Von Risefer about the delivery, installation and quality of the goods to be supplied in order to obtain various pre-payments. As will become relevant, despite having had the opportunity to do so, neither Mrs Von Risefer nor any of the other defendants prosecuted a set-off or counterclaim against Blue Cube Developments. After having received written submissions from the parties in the course of 2020, the Magistrate delivered ex tempore reasons on 20 April 2021. By reference to certain affidavit material in the present proceeding, and a partial transcript of the proceedings in the Magistrates’ Court, the primary judge accepted that the Magistrate found that Blue Cube Developments had established its case against the corporate entities for supply of defective products and as against Mr George Von Risefer and Mrs Von Risefer for misleading or deceptive conduct, and that Blue Cube Developments had suffered damage by reason of breach of contract and misleading or deceptive conduct. The Magistrate assessed damages in the amount of $43,567.98. Interest and costs were awarded in the amount of $16,949.73.

Evidence

Evidence Before The Court

Having reviewed the transcript of the hearing before the primary judge, and in light of his Honour’s reasons for judgment and the unparticularised nature of the appellants’ complaint, we do not accept that his Honour failed to assist the appellants as unrepresented litigants. Although the primary judge was clearly unimpressed by the appellants, his Honour’s detailed reasons demonstrate that he sought to consider and to address their submissions. As the respondent submits, on more than one occasion the primary judge extended the hearing in order to accommodate the appellants’ submissions. It is also clear that his Honour attempted to explain the nature of the proceeding to the appellants (see at [66], for example), although it would seem with limited success. In these circumstances we are unable to conclude that there is any substance to the claim that the primary judge fell short of his duty to ensure that the appellants did not suffer any disadvantage from exercising their rights to be self-represented. Ground nine thus fails also.Ground ten: refusal to accept an affidavit into evidence The appellants do not specify which affidavit or affidavits are the subject of this complaint. However, the respondent submits that the only affidavit which was not accepted into evidence was the 20 September 2022 affidavit of Mrs Von Risefer which the appellants sought to introduce into evidence on the second day of the hearing before the primary judge. His Honour explained at [15] that “[t]his time [counsel for the respondent] objected to the receipt of that document, not only on the ground of its late delivery but also because each party closed their respective cases on 15 September 2022…”. The respondent submits that his Honour’s reasons demonstrate that admission of the affidavit was not refused on the basis of any technical defect, but because service was unduly late, the proceeding was part heard, all parties’ evidence had concluded, and all parties had closed their cases six days prior. In the circumstances we do not consider that the decision of the primary judge not to admit this affidavit can properly be the subject of criticism. Indeed, in our view the course his Honour adopted was unexceptionable. Insofar as the appellants also complain in their amended notice of appeal that the primary judge “refused the application form B5 and affidavit sealed and filed 18 March 2022, in order to defend the sequestration order”, this complaint is also without foundation. It is clear, as the respondent submits, that the appellants’ 18 March 2022 form B5, the notice stating grounds of opposition to application, interim application or petition, was in fact before the primary judge. The relevant document was in the court book and is referred to expressly in his Honour’s reasons at [82]-[89]. Ground ten must fail also.Ground eleven: the petitioning creditor informing the Supreme Court of the sequestration order A further complaint advanced by the appellants is that, for some unarticulated reason, it was improper for the respondent’s solicitors to inform the Supreme Court that the sequestration order had been made.

Decision

Reasons for decision

For these reasons ground fourteen fails also.CONCLUSION None of the complaints which the appellants have pressed withstand scrutiny. The appellants have almost entirely failed to engage with the reasoning of the primary judge, and they have not directed the Court’s attention to any evidence which might provide a foundation for their complaints. Each of the appellants’ complaints concerning the reasoning of the primary judge having failed, the appeal will be dismissed. Consistently with the order made by the Full Court in Culleton v Balwyn Nominees Pty Ltd (No 2) [2017] FCAFC 12 at [10] (Allsop CJ, Dowsett and Besanko JJ), there will be an order that the respondent’s costs of the appeal (including reserved costs) be taxed and paid out of the estates of the appellants in accordance with s 109(1)(a) of the Bankruptcy Act.

Ratio Decidendi

Legal Principle Established

The respondent’s answers to the appellants’ claims in support of their appeal as summarised above in paragraph 10 are addressed individually below in our consideration of the appellants’ case as it was accepted as being put on appeal. CONSIDERATIONGround one: the conduct of the proceedings in the Magistrates’ Court The appellants complain that they were denied the opportunity to bring a counterclaim against the petitioning creditor. This complaint is unfounded. While the prospect of a counterclaim was canvassed in some detail in the material before the Magistrates’ Court, no such counterclaim was ever brought by the appellants and no relevant ruling was made by the Magistrate preventing the making of a counterclaim. This same argument was raised by the appellants before the primary judge. His Honour concluded by reference to the relevant evidence, and correctly in our respectful view, that: 4 … Despite Mrs Von Risefer foreshadowing, on more than one occasion during the course of the Magistrates’ Court proceedings, that she, and/or one of the other defendants, had and intended to prosecute a set-off or a counter-claim, none was ever pleaded and despite several adjournments granted by the magistrate for that to be done.…67 … I am quite satisfied that the magistrate conducted a procedurally fair hearing at which Mrs Von Risefer and Mr Von Risefer had more than adequate opportunity to present their defence. Further, despite the prospect of a set-off or counter-claim being raised in the Magistrates’ Court proceeding (and at least one adjournment having been granted to enable that to be done), the fact is that no set-off or counter-claim was filed in the proceeding. There is no reason to doubt the conclusion of the primary judge in this regard. On the evidence of the respondent’s solicitor, it is sufficiently clear that the Magistrate provided ample opportunity for the appellants to bring a counterclaim for the value of kitchen equipment and joinery following the termination of the contract that was the subject of the proceeding in that Court. No error on the part of the primary judge has been shown on the basis that the appellants were denied the opportunity to bring a counterclaim. Ground one must therefore fail.Ground two: error in the heading of the creditor’s petition The appellants’ next point focuses on the assertion that the creditor’s petition was invalid as it was filed in this Court with the wrong court heading and subsequently amended without leave of the Court. This argument was raised before the primary judge, who summarised the position as follows:90Despite the length of the grounds set out in the review application and the opposition to the creditor’s petition, even more contentions were advanced, particularly by Mrs Von Risefer at the hearing. They can be shortly dealt with as, once again, none is of any merit:…(c)Many submissions were made to the effect that the creditor’s petition is invalid and an abuse of process in that it was first issued in the Federal Circuit Court of Australia. This submission was expanded to embrace a contention that because some of the affidavits of service were titled in that court, it must follow that the entire proceeding is invalid. A creditor’s petition was filed in this Court, but incorrectly titled in the Federal Circuit Court, on 22 October 2021. When that error was noticed an amended and correctly titled petition was filed on 25 November 2021, which is the petition I am concerned with. And the fact that some of the affidavits that were read before me incorrectly referred to the Federal Circuit Court, most certainly does not make the content of those affidavits “invalid”,(d)A claim is made that the substituted service order for service of the creditor’s petition made by Registrar Hird on 30 November 2021 is invalid in that it was made upon documents filed “in the wrong court". That is not so: the sealed order was made in this Court. Mrs Von Risefer has managed to completely confuse herself by not appreciating that the applicant does not proceed upon the petition with the incorrect reference to the Federal Circuit Court as explained in the affidavit of Marianne My-An Phan made on 2 September 2022 at paragraphs [18] – [22], which evidence I accept and I find accordingly;