Wade v AMI Australia Holdings Pty Ltd

[2010] FMCA 330

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WADE v AMI AUSTRALIA HOLDINGS PTY LTD [2010] FMCA 330

BANKRUPTCY – Application to set aside a Bankruptcy Notice – application of s.41(6A) and s.41(6C) – application dismissed.

Bankruptcy Act 1966, ss.41
Trade Practices Act 1974 (Cth), ss.52, 53, 75

Dougan v Conias [2000] FCA 1556
Joseph Richard Bryant v Commonwealth Bank of Australia (1994) 217 ALR 251
Re Conte; Ex Parte Conte v Commissioner of Taxation (1990) 27 FCR 120

McDonald, Henley and Meek, Australian Bankruptcy Law and Practice, Mc Wade Gronno (6^th Edition) 1-2688

Applicant: GEORGINA WADE

Respondent: AMI AUSTRALIA HOLDINGS PTY LTD

File Number: SYG 550 of 2010

Judgment of: Lloyd-Jones FM

Hearing date: 30 April 2010

Delivered at: Sydney

Delivered on: 17 May 2010

REPRESENTATION

The Applicant: Mr P J Begley (holding a prescribed Power of Attorney granted by Georgina Wade)

Counsel for the Respondent: Mr Bores

Solicitors for the Respondent: Mr P R Hudson of Bruce Stuart Demarco

ORDERS

1. The Application filed on 15 March 2010 is dismissed.

2. The Applicant to pay the Respondent’s costs, fixed in the sum of $1500.00.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 550 of 2010

GEORGINA WADE

Applicant

And

AMI AUSTRALIA HOLDINGS PTY LTD

Respondent

REASONS FOR JUDGMENT

1. This is an application filed on 15 March 2010 by Ms Georgina Wade seeking orders to set-aside Bankruptcy Notice NN266/2010.  The Applicant is a self represented litigant who appeared by herself on the first occasion when this matter was referred to this Court by the Registrar conducting the Bankruptcy list.  On that occasion the matter was adjourned to enable Ms Wade to seek legal assistance. When the matter returned to the Court, a Mr P J Begley held a prescribed Power of Attorney, issued by Ms Wade.  For the reasons set out below, the Application to Set -Aside was dismissed with costs.  I believe it was in both parties’ interest to know with some certainty the future progress of this matter.  Consequently, I made orders at the completion of the hearing and indicated that I would publish my reasons for those orders.

Background

1. In setting out the following background material I have either paraphrased or quoted directly from the affidavit of Peter Raymond Hudson, solicitor in the employ of Bruce Stuart Dimarco the firm retained by AMI Australian Holdings Pty Ltd (ACN 095 238 645) (“AMI Australia”).  I have not made further direct attribution as this would make the summary unwieldy.  The information is provided to assist in the understanding of the nature of the application, not to establish any evidentiary point. 

2. AMI Australia was the First Applicant in Federal Court proceedings NSD 2448 of 2007 and the Applicant in these present proceedings, Ms Wade, was the Fifth Respondent in those proceedings.  On 4 December 2009, judgment was delivered by His Honour Justice Flick.  On 22 December 2009 the final orders made in the Federal Court proceedings required Ms Wade to, amongst other things, pay to AMI Australia damages in the amount of $220,000.00, together with pre-judgment interest of $26,996.71.

3. On 22 January 2010 a Bankruptcy Notice was issued to Ms Wade at the request of AMI Australia in respect to the amount of the judgment and pre-judgment interest.   Mr Hudson in his affidavit attests to personally serving Ms Wade with a copy of the Bankruptcy Notice.

4. The Federal Court proceedings concerned a contravention of the Trade Practices Act 1974 (Cth) and passing off by an organisation known as Bade Medical Institute (Aust) Pty Ltd and Worldwide Internet Services (Aust) Pty Ltd. Ms Wade was found to be a person involved in and a person knowingly concerned in the contravention by these two organisations of s.52 and s.53(d) of the Trade Practices Act1974 (Cth) by reasons of her conduct and the fact of knowing the manner of which the Bade Medical Institute was conducting and promoting its business (within the meaning of s.75(b) of the Trade Practices Act 1974).

The proceedings before this Court

1. On 15 March 2010 Ms Wade filed an application seeking orders that the Bankruptcy Notice Number NN266/2010 which was served on her on 3 March 2010 be set aside.  In the supporting affidavit sworn and filed on the same date, Ms Wade acknowledges that on 22 December 2009 Justice Flick of the Federal Court made judgment against her.  She states she has since filed a Notice of Appeal in relation to this judgment on their belief that there was an error in the hearing of the case in relation to obtaining evidence.  She seeks the Federal Court judgment to be set aside and the case reheard. 

2. During the proceedings before this Court on 30 April 2010 a copy of the Notice of Appeal number NSD 059 of 2010 filed on 29 January 2010 was provided to the Court.  I will discuss this appeal further below.

3. The application in this Court was initially listed before the duty Registrar on Tuesday 23 March 2010 at 9:45am.  Ms Wade did not appear on that occasion nor was she represented.  Registrar Hedge made the following orders

   1.  By consent, the application to set aside Bankruptcy Notice No. N266/10 be adjourned until 9:45 on 30 March 2010.

   2.  Time for compliance with the requirements of Bankruptcy Notice No N266/10 be extended up to and including 30 March 2010.

   3.  Usual order in respect of notification of Georgina Wade in respect of details of time, date and place of adjourned hearing and details of any other orders made today.

   4.  The applciant is to file and serve any affidavits in reply intended to be relied upon by 29 March 2010.

   5.  Any Notice of Opposition to application dated 15 March 2010 and any affidavit in support to be filed and served by 24 March 2010.

   6.  Costs be reserved.

4. On 30 March 2010 Ms Wade attended the Registrar’s list hearing and the matter was referred to this Court at that time.  Ms Wade appeared before me and briefly described her situation.  She indicated that her application to set aside was based on the filing of had filed an appeal in the Federal Court proceedings.  No other grounds for setting aside the Bankruptcy Notice were forthcoming.  It was immediately apparent that Ms Wade had very limited knowledge of what she was seeking in these proceedings and readily admitted her confusion and lack of knowledge of what to do to advance her case.  In the circumstances, I adjourned the hearing to 30 April 2010 and advised Ms Wade that she should seek legal advice as to how to advance her matter, in particular how to address the serious implications of bankruptcy proceedings.   She indicated to the Court that she would pursue this avenue. 

5. When the matter returned to Court, a Mr P J Begley appeared for Ms Wade and provided to the Court the prescribed Power of Attorney in respect of his appearance.  He indicated that Ms Wade was unable to appear due to severe anxiety and stress brought on by her husband’s illness who was undergoing extensive terminal cancer treatment at St Vincent’s Hospital which included aggressive chemotherapy and t-cell treatment.  Mr Begley supplied the Court with a medical certificate covering Ms Wade’s absence.  He indicated that Ms Wade had sought legal advice as suggested, but the people that she consulted were not helpful.  Mr Begley requested that this matter be stood over until the hearing of the Federal Court appeal proceedings on 16 May 2010.  

Consideration

1. Mr Bores, appearing for AMI Australia, directed the Court’s attention to the application which only seeks an order setting aside the Bankruptcy Notice. This is not an application for an extension of time for compliance with the Notice and although the Court gave Ms Wade time to obtain advice, whether it was helpful or not, no application has been made to amend or seek an order seeking to extend the time for compliance.  Nor does Ms Wade’s affidavit evidence, upon which she seeks the Bankruptcy Notice be set aside make reference to any statutory cause or anything other than the general cause. 

2. Although not pleaded, I acknowledge this is a self-represented litigant with little knowledge of the proceedings which she is attempting to advance. This application being brought with the reliance of the appeal proceedings before the Federal Court appears to have been advanced under s.41(6A) of the Bankruptcy Act 1966 (Cth). The section states:

   41(6A) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice:

   (a)  proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

   (b)  an application has been made to the Court to set aside the bankruptcy notice;

   the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.

   41(6C)  Where:

   (a)  a debtor applies to the Court for an extension of the time for complying with a bankruptcy notice on the ground that proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; and

   (b)  the Court is of the opinion that the proceedings to set aside the judgment or order:

   (i)  have not been instituted bona fide ; or

   (ii)  are not being prosecuted with due diligence;

   the Court shall not extend the time for compliance with the bankruptcy notice.

3. The affidavit of Peter Raymond Hudson sworn 29 April 2010 indicates that the appeal proceedings are characterised by non-appearance and inactivity on the party of the Wades.  The appeal papers have not been settled, notwithstanding a number of appointments to do so.  I rely upon the following paragraphs from Mr Hudson’s affidavit

   (3)  AMI is First Defendant in Appeal Proceedings No: NSD 59/2010 (“the Appeal Proceedings”) and the Applicant in these proceedings (“Ms Wade”) is the Second Applicant in the Appeal Proceedings. 

   (4)     At 9:30am on 3 February 2010, the Appeal Proceedings were listed for a Callover before Justice Moore, at which time the Appeal Proceedings were listed for hearing on 13 May 2010 before Justice Marshall, Justice Cowdroy and Justice Buchanan.

   (5)     Annexed and marked “A” is a copy of the letter from Matthew Alderton, Legal Case Manager, NSW Appeals Unit, to BSD [Bruce Stuart Demarco Lawyers] dated 5 February 2010.  I observe from annexure A that “the appellant [was] required to file (in the Registry), and serve on the respondent a draft index of each part of the appeal papers and a chronological list of documents received in evidence that the appellant proposes to include in the appeal papers on or before 24 February 2010 (O 52 r 27 of the Federal Court Rules)”

   (6)     BSD was not served with a draft index, nor a chronological list of documents as contemplated by the letter reproduced in Annexure A, prior to the index conference on 3 March 2010.

   (7)     At 9:30am on 3 March 2010, the Appeal Proceedings were listed for an Index Conference before Deputy District Registrar Tom Morgan (“Registrar Morgan”).  I appeared on behalf of AMI at the Index Conference.  Dr Buddy Beaini, the Cross-Appellant in the Appeal Proceedings appeared on his own behalf.  David Wade, the First Applicant in the appeal proceedings appeared on his own behalf.  Ms Wade appeared on her own behalf. The appeal papers were not settled on that day and Registrar Morgan listed the Appeal Proceedings on 8 April 2010 for a further Index Conference.

   (8)     At 11:00am on 8 April 2010, the Appeal Proceedings were listed for a further Index Conference before Registrar Morgan.  I appeared for AMI.  There was no appearance for any of Mr Wade, Ms Wade or Dr Beaini. The Index Conference was relisted at 11:00am on 13 April 2010.

   (9)     At 11:00am on 13 April 2010, the Appeal Proceedings were listed for a further Index Conference before Registrar Morgan.  I appeared for AMI.  Dr Beaini appeared on his own behalf. There was no appearance for either Mr Wade or Ms Wade.  Annexed and marked “B” is a copy from Registrar Morgan to Mr Wade, Ms Wade and Dr Beaini (cc BSD) dated 13 April 2010.  The Index Conference was further adjourned to 21 April 2010 at 12:30pm.

   (10)   I observe from Annexure B, Registrar Morgan’s advice that “there was no attendance nor any communication from Mrs Wade Indicating that she would not be able to attend”. I further observe from Annexure B that Mr Wade, Ms Wade and Dr Beaini were ordered to, inter alia, “provide [AMI’s] solicitor with a revised Draft index by 19 April 2010”.

   (11)   To the best of my knowledge, information and belief, BSD has not been served with any revised draft index as contemplated by the orders made by Registrar Morgan on 13 April 2010.

   (12)   At 12:30pm on 21 April 2010, the Appeal Proceedings were listed for a further Index Conference before Registrar Morgan.  I appeared for AMI.  Ms Wade appeared on her own behalf.  Joshua Gambell appeared for Mr Wade. There was no appearance by Dr Beaini.

   (13)   When addressing Registrar Morgan, Mr Gambell said words to the following effect:  “I appear as a friend of Mr Wade’s. Mr Wade is too unwell to attend Court and will not be fit to appear in this matter or to prepare the appeal books for at least 6 weeks”

   (14)   Registrar Morgan ordered that the Index Conference be adjourned until 12:00pm on 5 May 2010.

   (15)  On 19 April 2010, I received the following documents by facsimile from Mr Wade and Ms Wade:

   (a)  A Notice of Motion filed by Mr Wade on 19 April 2010 seeking an order that the Appeal Proceedings be adjourned to 27 July 2010 “as the main witness/defendant is undergoing extensive terminal cancer treatment at St Vincent’s Hospital which is requiring hospital admission for 4 – 6 weeks, as per last treatment recovery time from such aggressive chemotherapy and tcell treatment will require 4 – 6 weeks recovery time”

   (b)  Notice of Motion filed by Ms Wade on 19 April 2010 seeking the same order as quoted in sub-paragraph 15(a) above.

   (c) Affidavit of David John Wade sworn on “20/04/10”

   (d)     Affidavit of Georgina Wade sworn on “20/04/10”

4. On 29 April 2010 at 10:15am, the Notices of Motion referred to in paragraph 15 were listed for hearing before Justice Cowdroy who made the following orders:

   1.  The Full Court hearing fixed for 13 May 2010 be vacated.

   2.  Unless the appeal indices are settled and other necessary preparation is undertaken by 24 June 2010, the respondents be at liberty to file a Notice of Motion seeking to strike out the appeal for want of prosecution pursuant to O52 r38 of the Federal Court Rules.

5. The application before Cowdroy J was not attended by Ms Wade. 

6. Peter Raymond Hudson in his affidavit of 29 April 2010 indicates that an examination of the Insolvency Trustee Service Australia on 27 April 2010 indicated that a Creditor’s Petition was filed by a third party in respect of Ms Wade on 6 April 2010 and that the Creditor’s Petition was listed for hearing on 20 May 2010 in proceedings number SYG836/2010.

7. There is no express power in the Bankruptcy Act1966 (Cth) (“the Act”) to set aside a Bankruptcy Notice. The power arises by necessary implication and is within the general powers of the Court conferred by s.30(1): Joseph Richard Bryant v Commonwealth Bank of Australia (1994) 217 ALR 251 per Davies, Foster and O’Loughlin JJ at [7]. The application to set aside complies with the formalities of such an application in that the application has been filed on the Form 5 and is accompanied by the Bankruptcy Notice and an affidavit stating the grounds in support of the application together with the date of the service of the Bankruptcy Notice. The supporting affidavit identifies a single ground being that the Notice of Appeal in relation to the Federal Court judgment has been filed. The ground of that appeal is simply stated that Ms Wade has formed the view that there was an error in that hearing which related to the obtaining of evidence. The affidavit makes not further elaboration in respect of the basis of this ground.

   
   

   A copy of the Notice of Appeal filed in the Federal Court on 27 January 2010 was provided to the Court.  This document does expand on the single issue raised in the application to set aside, however the affidavit of Mr Hudson which is reproduced above clearly demonstrates that the appeal process has not been diligently pursued and a failure to comply with the Federal Court’s timetabling. 

8. If the Court is of the view that the appeal being relied upon for the extension of time to comply with the Bankruptcy Notice is not being prosecuted with due diligence the Court has no discretion to extend time under s.41(6A): Dougan v Conias [2000] FCA 1556 per Cooper J at [24] – [25]

   [24] In my view, s41(6C) of the Act requires that the proceedings to set aside judgment be prosecuted with due diligence as a necessary incident of any application to extend time under s41(6A). The making of such an application cannot relieve the Applicant from the obligation to prosecute the proceedings to set aside the judgment with due diligence.

   [25] The effect of s41(6C) is such that the Court cannot extend the time for compliance with the bankruptcy notice where it is of the opinion that the proceedings to set aside the judgment are not being prosecuted with due diligence. In the present case, s41(6C) operates to prevent the Court making the orders sought.

9. In McDonald, Henley and Meek, Australian Bankruptcy Law and Practice, Mc Wade Gronno (6^th Edition) 1-2688, the authors expressed the view that s.41(6C) can be indirectly relevant to an application to extend time under s.41(6A)(b) in that the Court is entitled to take into account whether a debtor has instituted, and is prosecuting diligently, an application to set a judgment aside: Re Conte; Ex Parte Conte v Commissioner of Taxation (1990) 27 FCR 120.

10. In the circumstances I am not satisfied that Ms Wade is pursuing the appeal in the Federal Court with due diligence.  I acknowledge Mr Wade’s illness however, Ms Wade claims to be unemployed and Ms Wade is not burdened with work commitments nr was there any indication that she is involved in the care of Mr Wade as she lists her residential in Newcastle while Mr Wade lists his in Sydney. She does not appear to be pursuing the preparation of the appeal proceedings with any vigour and has not appeared before the Registrar when the matter has been listed for directions hearing.  Nor does it appear that any steps have been taken in the preparation of documents originally required for filing some months ago.  I believe the most appropriate course is that the application filed by Ms Wade seeking to set aside the Bankruptcy Notice is dismissed.  I do not think that there is any benefit in granting further adjournments and extending the time of compliance when the likelihood of the appeal progressing is diminishing. 

    
    

    I acknowledge that this leaves open the possibility of AMI Australia establishing an act of bankruptcy if nothing happens in respect of the Creditor’s Petition that has already been presented by a third party.  The possibility still exists for Ms Wade, upon the presentation of any Petition by AMI Australia, to agitate the issue of validity of the Bankruptcy Notice as a reason why a Sequestration Order ought not be made.

11. The application to set aside the Bankruptcy Notice dated 15 March 2010 is dismissed and the Applicant is to pay the Respondent’s costs set in the sum of $1,500.00.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM

Associate: 

Date:  17 May 2010