Williams v Teoh - [2012] FMCA 1138

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WILLIAMS v TEOH

[2012] FMCA 1138

BANKRUPTCY – Creditor’s petition – judgment debt based on costs orders in unsuccessful litigation between neighbours – numerous attempts at appeal – no grounds for going behind judgment or dismissing petition – insufficient evidence showing ability and willingness to pay debt from assets – creditor should not be left to normal processes of execution – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.37(2), 52(1), 52(2), 52(2)(a), 52(2)(b), 52(3)
Legal Profession Act 2004 (NSW), s.368(5)
Uniform Civil Procedure Rules 2005 (NSW), r.36.10

Eykamp v Deputy Commissioner of Taxation [2010] FCA 797
Petratos v Provident Capital Limited [2009] FMCA 1168
Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163, [1980] FCA 66
Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372, [1980] FCA 138
St George Bank Ltd v Helfenbaum [1999] FCA 1337
Teoh v Hunters Hill Council (No 7) [2012] NSWCA 356
Teoh v Hunters Hill Council (No 6) [2012] NSWCA 260
Teoh v Hunters Hill Council (No 5) [2012] NSWCA 75
Teoh v Hunters Hill Council (No 4) [2011] NSWCA 324
Teoh v Hunters Hill Council (Unreported, Supreme Court of New South Wales Court of Appeal, Allsop P, Beazley JA and Handley AJA, 10 March 2011)
Teoh v Hunters Hill Council and Anor (No 2) [2010] NSWCA 321
Teoh v Hunters Hill Council and Anor (Unreported, Supreme Court of New South Wales Court of Appeal, Young JA, 2 August 2010)
Teoh v Hunters Hill Council (Unreported, Supreme Court of New South Wales Court of Appeal, Tobias and Campbell JJA, 10 March 2010)
Teoh v Hunters Hill Council and Another (No.3) [2009] NSWLEC 121
Teoh v Hunters Hill Council [2009] NSWLEC 54
Teoh v Hunters Hill Council and Another [2008] NSWLEC 263
Totev v Sfar (2006) 230 ALR 236, [2006] FCA 470
Trojan v Corporation of Hindmarsh (1987) 16 FCR 37, [1987] FCA 276
Wolff v Donovan (1991) 29 FCR 480, [1991] FCA 222

Applicant:

ROSS ERNEST WILLIAMS

Respondent:

ELAINE SEIN MEE TEOH

File Number:

SYG 1821 of 2012

Judgment of:

Smith FM

Hearing date:

20 November 2012

Delivered at:

Sydney

Delivered on:

20 November 2012

REPRESENTATION

Counsel for the Applicant:

Mr R Czinner

Solicitors for the Applicant:

Ronald S Czinner & Co

Counsel for the Respondent:

Respondent in person

ORDERS

A sequestration order be made against the estate of Elaine Sein Mee Teoh.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 29 June 2012.
Note that a consent to act as trustee has been signed by Christopher John Palmer.
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 1821 of 2012

ROSS ERNEST WILLIAMS

Applicant

And

ELAINE SEIN MEE TEOH

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

This judgment explains why I have decided that I should make a sequestration order today in relation to Mrs Teoh’s estate, on the petition of Mr Williams. The bankruptcy notice and petition are based on indebtedness arising from costs orders in favour of Mr Williams, made in extensive and unsuccessful litigation brought against him by Mrs Teoh.
Mrs Teoh and her husband are neighbours of Mr Williams and his family. In 2007, Mrs Teoh lodged objections to applications by Mr Williams for permission from Hunters Hill Local Council (“the Council”) to build a second storey addition to his house. In particular, she objected on the ground that it would obstruct the access of sunlight to her house and yard. A requirement for the Council to address such considerations arose under a relevant section of the Council’s development control plan, headed “Solar Access”. Among the considerations pointed to in that policy was a direction:
7.4.2 General Requirements
New development must not eliminate more than one third of the existing sunlight to adjacent properties at ground level, measured at 9.00 am, 12 noon and 3.00 pm of the winter solstice. Buildings are to be designed to minimise loss of sunlight to adjacent buildings. Shadowing from trees will not usually be taken into account. …
(emphasis in original)
The policy also provided that, in addition to this requirement, other effects on the interference with a neighbour’s access to sunlight, particularly in winter and particularly on north sides of adjacent buildings, were required to be considered.
Mrs Teoh presented arguments and photographs to the Council based on her assessment of the shadow diagrams submitted by Mr Williams and his advisors, to show that there would be unacceptable interference with her enjoyment of sunlight. In particular, there would be obstruction of sunlight which at some periods of the year came through her north facing windows.
The Council, however, proceeded to give development permission, and Mrs Teoh commenced proceedings in the New South Wales Land and Environment Court. Those proceedings were ‘class 4’ challenges to the Council’s consent, meaning that the grounds of the challenge were confined to judicial review of administrative decisions. In this respect, Mrs Teoh’s case was that the Council’s decision was made without evidence or material justifying its decision about her objections, or was so unreasonable that no reasonable decision‑maker could have made the decision, or was based upon a mistaken interpretation or application of the restriction on interference with more than one‑third of existing sunlight which I have quoted above.
The proceeding eventually came on for hearing before Sheahan J, and Mrs Teoh instructed counsel to appear at the hearing, although she had been representing herself throughout most of the proceedings. His Honour received evidence and heard submissions from her counsel, and also counsel for the Hunters Hill Council, and counsel for Mr Williams. On 16 September 2008, he delivered judgment (see Teoh v Hunters Hill Council and Another [2008] NSWLEC 263). His Honour discussed the relevant principles of law bearing on the grounds of judicial review which were invoked, and made concise findings explaining why he was not persuaded by any of the challenges to the Council’s decision. Among his findings were:
24It is simply not correct to say that the existing level of overshadowing and the added impact of implementing the development consent were not adequately quantified for the purposes of assessing the development application on its merits, and for compliance with the Development Control Plan. All this information was before the Council as it made its decision – reading together the development application, the submitted plans, survey information, Statement of Environmental Effects, submissions and objections (including from Mrs Teoh, and including photographs, etc – see fol 112), and the Council’s own resource information.
25Further, there is no substance in the Applicant’s argument that the term “adjacent properties at ground level” in the first paragraph of 7.4.2 of the Development Control Plan should be read down to exclude any built improvements on that level. The provision goes on to deal specifically with the buildings and, indeed, trees on the overshadowed property.
…
27Fourthly, the Applicant brought before neither the Council nor the Court any evidence to cast doubt on the accuracy or reliability of the shadow diagrams used in the assessment process.
28Fifthly, the evidence is entirely indicative of the conclusion that the Council’s consideration was thorough and fair in every respect. Mrs Teoh may well be disappointed by the Council’s decision, but the Court can find no reviewable error in it and should dismiss all four challenges.
His Honour reserved costs.
No appeal was brought from his Honour’s judgment by Mrs Teoh, but the following year she filed motions seeking orders that the Land and Environment Court “reopen this matter on the ground of fraud” and other grounds. Those motions were summarily dismissed by Biscoe J on procedural grounds (see Teoh v Hunters Hill Council [2009] NSWLEC 54).
Mrs Teoh filed further motions to reopen the matter. These were addressed by Sheahan J in a second judgment delivered on 31 July 2009, after hearing Mrs Teoh who presented her case in person (see Teoh v Hunters Hill Council and Another (No.3) [2009] NSWLEC 121). His Honour, referred to various procedural difficulties facing Mrs Teoh’s motions. He also referred to his difficulties as a result of Mrs Teoh filing “an incredible amount of material, in a variety of quite extraordinary forms”.
I might say that this capacity of Mrs Teoh has manifested itself in all of her subsequent court litigation, including the present proceedings, rendering it very difficult for judicial officers to understand Mrs Teoh’s arguments and factual contentions. Mrs Teoh has subsequently presented the same additional material to the Court of Appeal, and at today’s hearing she has presented much of it again in a disorganised and repetitive manner.
In his second judgment, Sheahan J discussed the rules and principles, under which a court’s powers to reopen a judgment which has been entered are limited and exceptional. However, it appears to me from his Honour’s subsequent discussion that he also endeavoured, in an untechnical fashion, to try to come to grips with Mrs Teoh’s real grievances with his previous judgment. This included by considering all her submissions about the evidence, and her complaints about how it had been addressed previously by her own counsel. Mrs Teoh had contended that there was additional evidence which she had come across, additional arguments which she had thought about, and inadequacies in the presentation of her previous case by her counsel.
Sheahan J addressed Mrs Teoh’s grievances, and concluded:
110The court concludes that, despite the torrent of material placed before it, Mrs Teoh has made out none of her claims for a reopening of these proceedings – neither fraud, nor any of the three legs of UCPR 36.15(1), namely irregularity, illegality, or lack of good faith. No material evidence was discovered after the trial, or after the costs hearing, which would affect the court’s substantive decision.
His Honour then addressed the applications of Mr Williams and the Council for their costs in all the proceedings. His Honour applied the general principle that costs should follow the event. He was not persuaded that Mrs Teoh’s litigation should be regarded as “public interest litigation”, and his Honour was also satisfied that it was appropriate to award costs in favour of both of the respondents who had actively participated in the proceedings. His Honour did not accept that costs should be ordered against Mrs Teoh on an indemnity basis. His Honour therefore ordered costs in the following terms:
Orders
146The orders of the court are, therefore:
(1)The Applicant’s Notices of Motion of 4 May 2009 and 14 July 2009 seeking to reopen these proceedings are dismissed.
(2)The applicant is ordered to pay both respondents’ costs of the proceedings, including their costs of:
(a)     the original hearing on 5 June 2008.
(b)     all interlocutory proceedings and directions hearings before and since that date.
(c)     the hearing on costs before Sheahan J on 3 February 2009.
(d)     the hearing of the applicant’s Notices of Motion by Biscoe J on 27 March 2009.
(e)     the hearing of the Applicant’s later Notices of Motion by Sheahan J on 14 July 2009.
on a party‑party basis, as agreed, or as assessed according to law.
Mrs Teoh did not accept his Honour’s second judgment, and sought to ventilate her concerns about Sheahan J’s first judgment and his second judgment in the NSW Court of Appeal. She did so by way of applications for leave to appeal from the orders made by Sheahan J in his second judgment in 2009. She repeatedly declined suggestions from the bench that she was really seeking leave out of time to appeal from the 2008 judgment, notwithstanding that it appears to me, and constantly appeared to the judges in the Court of Appeal, that essentially she was re‑litigating the factual background bearing on the grounds of judicial review which had been addressed by Sheahan J in 2008, rather than the limited basis upon which Sheahan J in 2009 had available powers to reopen that judgment.
Mrs Teoh’s first application came before Tobias and Campbell JJA on 10 March 2010, and their Honours published a judgment refusing leave with costs (see Teoh v Hunters Hill Council (Unreported, Supreme Court of New South Wales Court of Appeal, Tobias and Campbell JJA, 10 March 2010). It is clear from their judgment that their Honours separately considered her objections to the cost orders made by Sheahan J, and that their refusal of leave to appeal encompassed his Honour’s reasoning in relation to costs. They said:
9The applicant also claimed in her written submissions that she brought the 2008 proceedings challenging the validity of the consent granted to the second respondent by the Council in the public interest and, as a consequence, it was public interest litigation which would not attract an order for costs against her with respect to those proceedings, notwithstanding that her challenge to the validity of that consent was unsuccessful. His Honour dealt with the question of public interest litigation at [119]‑[133] of his 2008 judgment, ultimately determining that even if there was some public interest element, it did not automatically follow that his costs discretion should be exercised only in favour of the applicant.
10Even if litigation does have a public interest element, the court still has a discretion depending on the circumstances to order the unsuccessful party to pay the successful party’s costs. His Honour understood that and dealt with it in some detail in the paragraphs of his 2009 judgment to which I have referred in the preceding paragraph. In my view, being a matter of his discretion, I do not see that there is any prospect of it being established that his Honour’s exercise of that discretion miscarried.
11It may be noted in this regard that the applicant’s property adjoins that of the second respondent on its southern side so that she was concerned, understandably, as to the shadow impact the proposed development would have on her property. She made substantial representations to the Council and the Council officers before the consent was granted in order to seek to persuade them to reject the application due to the shadowing impact the proposed development would have on her property. In that she was unsuccessful.
12Although, therefore, there may be a public interest element to the litigation, insofar as the question arose as to the proper understanding of the relevant provisions of the Council’s Development Control Plan relating to solar access, nevertheless the applicant had a strong personal interest in the outcome of the litigation which his Honour was entitled to and did take into account in exercising his discretion with respect to the costs of the 2008 proceedings. As I have indicated, I do not consider that the applicant has any likely prospects of succeeding in challenging his Honour’s exercise of that discretion.
Mrs Teoh filed a second application to the Court of Appeal, which was listed before a single justice, Young JA, and was refused by him with costs on 2 August 2010. It appears from his judgment that Mrs Teoh may have presented some additional material, but he did not consider that it affected the assessment which had been arrived at in the previous judgment (see Teoh v Hunters Hill Council and Anor (Unreported, Supreme Court of New South Wales Court of Appeal, Young JA, 2 August 2010).
Mrs Teoh filed a third application for leave to appeal from Sheahan J’s 2009 judgment, which was listed before Allsop P, Beazley JA and Handley AJA on 25 November 2010. Their Honours again refused leave with costs, and gave reasons (see Teoh v Hunters Hill Council and Anor (No 2) [2010] NSWCA 321). Handley AJA gave the leading judgment. His Honour addressed the basis on which Sheahan J had power to reopen his earlier judgment, and concluded:
18The decision of two judges of the Court on 10 March 2010, to refuse leave to appeal from the judgment of Sheahan J of 13 July 2009 [sic: 31 July 2009], resolved that controversy. The Court’s reasons for judgment reveal no error of fact or principle. The applicant has not been able to advance a new ground or a new argument which could possibly justify this Court in taking the extraordinary step of setting aside the order of 10 March and granting leave to appeal.
However, Mrs Teoh did not accept that outcome and filed a fourth application for leave to appeal. That application was heard by the bench as previously constituted, and their Honours gave a judgment on 18 October 2011, after hearing Mrs Teoh’s full submissions in support of what appears to have been a very extensive amount of additional material, some of which again has been presented to me today. They also received submissions from counsel who appeared to assist the Court as amicus curiae (see Teoh v Hunters Hill Council (No 4) [2011] NSWCA 324)]. It is clear from the judgment of Handley AJA given on that occasion that Mrs Teoh was given a further opportunity to point to some new factual or other reason for doubting the judgments given by Sheahan J in 2008 and 2009, and also the previous judgments of the Court of Appeal. Their Honours noted that “most of her oral submissions were directed to alleged errors by Council officers and Sheahan J in the first case in their interpretation and application of the relevant Development Control Plan”. It is clear from Mrs Teoh’s submissions to me today, and from all the material that she previously presented to earlier courts, that the same matters remain Mrs Teoh’s basic concerns.
However, Handley AJA said:
29In my judgment Mrs Teoh has failed to establish an arguable case of error in Sheahan J No. 2 which would justify the grant of leave to appeal. There may or may not have been some error in Sheahan J No. 1 but she has never challenged that decision in this Court.
30Mrs Teoh has failed three times to persuade this Court that she has arguable grounds for leave to appeal from Sheahan J No. 2. She must understand that a fourth application on the same grounds and materials would be vexatious and an abuse of process.
As a result of the opinion of the Court that the repetition of Mrs Teoh’s applications was becoming vexatious, their Honours directed that the Registrar should refer any subsequent application to a Judge to determine in chambers whether the respondent would be required to respond.
Mrs Teoh did make a further application for leave, and the papers were referred again to a bench of three justices of Allsop P, Beazley JA and Handley AJA. Their Honours considered the papers in chambers and gave judgment in Teoh v Hunters Hill Council (No 5) [2012] NSWCA 75 (“Teoh (No 5”)) on 12 April 2012. Their Honours again recited the history of the matter, and the relevant considerations bearing on Mrs Teoh’s continuing allegations of fraud. Their Honours said:
33Nothing filed in support of this motion discloses any other basis for reopening our judgment of 18 October 2011. There is no evidence of any change of circumstances and no fresh argument. Nor does the material disclose a basis for concluding that the orders in Sheahan J No 1 were given, made or entered “irregularly, illegally or against good faith” within UCPR Pt 36 r 36.15(1).
…
35There is no reason to doubt the correctness of the decision of this Court of 18 October 2011 or the decision in Sheahan J No 2 that the requirements of UCPR Pt 36 r 36.15(1) had not been established in relation to the judgment and orders in Sheahan J No 1.
36The final orders in Sheahan J No 1 have been perfected and the Land and Environment Court has no power, on the grounds alleged, to set them aside under its inherent jurisdiction. On any appeal this Court would have no greater power.
37The notice of motion of 1 November 2011 is therefore an abuse of process and must be summarily dismissed. Lest there be any misunderstanding we make it clear that Order (2) made by this Court on 18 October 2011 remains in force.

Meanwhile, cost orders previously obtained by Mr Williams in the Land and Environment Court and the Supreme Court were the subject of assessment under the Legal Profession Act 2004 (NSW). In this process, a cost assessor received and considered submissions from Mrs Teoh, and then issued two certificates on 10 August 2011. One certified the amount of $112,258.48 as a fair and reasonable amount of party costs under various costs orders. The other certificate required Mrs Teoh to pay the amount of $5296.26 being the costs of the cost assessment.
The two certificates were registered in the Supreme Court by Mr Williams after the Court of Appeal had given its judgment in Teoh (No 5). On 23 May 2012, the Supreme Court made and entered judgment against Mrs Teoh in favour of Mr Williams for the total amount of the two cost certificates being $117,554.74, pursuant to s.368(5) of the Legal Profession Act 2004 (NSW) and r.36.10 of the Uniform Civil Procedure Rules 2005 (NSW).
Based upon that judgment, Mr Williams obtained a bankruptcy notice, which specified a debt owing in that amount, without any added interest or costs, and this notice was served personally on Mrs Teoh on 8 June 2012. Mrs Teoh did not comply with the requirements of the bankruptcy notice on or before the date specified, and therefore on 29 June 2012, she committed an act of bankruptcy, which was available to Mr Williams and other creditors should they wish to proceed in bankruptcy.
A petition based upon that act of bankruptcy and the continued non‑payment of the outstanding costs was filed by Mr Williams in this Court on 23 August 2012. It is not contended by Mrs Teoh today at the hearing of the petition that the act of bankruptcy relied on did not occur, nor that she has paid any part of the debt arising under the Supreme Court judgment on the costs certificates.
Mrs Teoh has explained her non‑payment of this debt on the basis that she continues to dispute Sheahan J’s orders made in 2008, and to seek to set it aside, notwithstanding all the orders which have rebuffed all her applications to reopen that matter. It is clear that she remains convinced as to the merits of all her arguments, notwithstanding the repeated judgments of the Court of Appeal explaining otherwise.
Indeed, there was a pending further application to the Court of Appeal at the time that the creditor’s petition was filed. She had filed a further notice of motion on 26 April 2012, which was again referred to a bench of three justices, being Allsop P, Beazley and Meagher JJA, for consideration on the papers in accordance with the previous directions. Their Honours gave judgment dismissing that application on 23 August 2012 (see Teoh v Hunters Hill Council (No 6) [2012] NSWCA 260). Their judgment again recited the background, referred to all the material which had been lodged in support of it by Mrs Teoh, including reference to recent events and her current submissions. Their Honour’s concluded:
15It is apparent from this material that the notice of motion seeks to challenge either the findings made by Sheahan J in Sheahan No 1 or in Sheahan No 2. If it is the former, the applicant has never appealed from that judgment. If it is the latter, the applicant has not raised any new matter that has not been adverted to in her earlier application. The material upon which the applicant seeks to rely was all material that ought to have been adduced in the original proceedings. We reiterate that there has never been an appeal from the decision in the original proceedings. Nor has the applicant referred to any factual matter relating to either of those proceedings, in one forum or the other, that has not been raised in previous applications before the Court.
16In her affidavit of 13 June 2012, the applicant raised matters under the following subject headings, “A litigant‑in‑person’s disadvantages”; “Procedural Unfairness/Opportunity to Prepare”; “Fraud had been raised one month Prior to hearing”; and “Hardship/Stay of Bankruptcy”.
17None of the matters raised in this affidavit provides a cogent reason why the Court should not dismiss the present application as an abuse of process. This is apparent from the brief overview of the applicant’s submissions which follows.
18In the “Introduction” to her written submissions dated 13 June 2012, the applicant contended she was seeking a different remedy in her notice of motion than in her previous applications. At section II(i), she stated that the new remedy was sought on the grounds of apprehended bias. The applicant stated alternatively that she relied on the costs issue, for which she needed more time. The applicant next submitted, by way of “Preliminaries”, that she would need to rely on all previous papers she had filed in the matter. At this stage, the Court file contains hundreds of pages of documents. The applicant did not identify the documents upon which she intended to rely. In Teoh v Hunters Hill Council (No 4), Handley AJA pointed out, at [33]:
“This Court is fully aware of the circumstances in Mrs Teoh’s last two applications and we are broadly familiar with the circumstances in Sheahan J No. 2 and Court of Appeal No. 1. This material, all on the public record, forms the basis for my conclusion that a fourth application by Mrs Teoh based on the same materials is likely to be an abuse of process and vexatious.”
It is an abuse of process to require the Court to read this material yet again.
Their Honours also addressed other points made by Mrs Teoh. The Court thought that all the points Mrs Teoh raised had already been dealt with by the Court in earlier applications, and that the new motion was an abuse of process, which should be dismissed.
Notwithstanding this outcome, and the pendency of the petition in this Court, Mrs Teoh filed yet a new notice of motion in the Court of Appeal seeking to reopen her previous applications and the setting aside of the underlying Land and Environment Court judgments. That application was filed on 12 October 2012. It was referred to the previous bench of the Court of Appeal for consideration on the papers, and their Honours dismissed it on 2 November 2012, giving brief reasons (see Teoh v Hunters Hill Council (No 7) [2012] NSWCA 356).
It is clear that Mrs Teoh had at last exhausted their Honours’ judicial patience. They said:
3It would be an imposition on the time of the Court that could be devoted to other litigants’ concerns to set out once again the history of the litigation and Mrs Teoh’s refusal to accept the finality of the litigation.
4On 12 October 2012, Mrs Teoh filed a notice of motion seeking reopening of previous applications and the setting aside of the underlying Land and Environment Court judgment. Reliance was placed on the Supreme Court Act 1970, s 46(4).
5The simple answer to the notice of motion filed on 12 October 2012 is that the Court is now functus officio. Orders have been made. Mrs Teoh’s appeal has been finalised. The applications brought by Mrs Teoh are now finished.
6Mrs Teoh asked that Allsop P and Beazley JA disqualify themselves in this application. There is no basis to do so.
Meanwhile in this Court, Mrs Teoh had filed an appearance and a notice of grounds of opposition supported by evidence, essentially reproducing and repeating the documents given to Sheahan J in 2009 and to the Court of Appeal in subsequent applications.
Her notice of grounds of opposition contends:
1)the respondent is solvent and has assets far greater than the debt; the solicitor is aware of this now (as of 24 August, 2012)
2)the purpose is to pressure the respondent into paying the judgment debt and it is not economically explicable to risk the costs of these proceedings/ the applicant would not be prejudiced by this amount to pay the legal costs being outstanding
3)the applicant’s solicitor should abide the outcome of the further foreshadowed notice of motion or other proceeding (HCA) as this is a public law matter and the
4)the applicant has a collateral purpose in putting pressure on the respondent for which there is evidence inferable despite no explicit or convincing reason being given
5)the respondent seeks to go behind the judgments which awarded these costs to the applicant
On the first return date of the petition on 3 October 2012, the petition was adjourned by consent. On 15 October 2012, it was referred to me for hearing. However, I accepted Mrs Teoh’s application for an adjournment, and gave her a further opportunity to present evidence in support of her grounds of opposition. In particular I directed:
1.All evidence in chief in the proceeding shall be given by way of affidavits. Evidence in chief which has not been filed in accordance with the following timetable will not be admitted at the hearing without the leave of the Court.
2.The respondent, Mrs Teoh, must file and serve all additional affidavits in support of her grounds of opposition no later than 31 October 2012.
I listed the matter for hearing today, and it is my recollection (although a transcript is not available to me today), that I made very clear to Mrs Teoh that the matter was likely to be heard and decided today, including on the issues of solvency, and that she should file all her evidence in support of that ground and other grounds in accordance with my directions. On that occasion, as today, Mrs Teoh was accompanied at court by her husband.
Mrs Teoh did file additional affidavits, written submissions, and volumes of material which had been previously presented to other courts. Her written submission again canvassed all her contentions alleging impropriety in relation to Mr Williams’ conduct and that of the Council, concerning the Council consent to development approval and all the subsequent litigation at every stage. Mrs Teoh has also cited some authorities to me, and I have taken into account all of her evidence and submissions.
I took the opportunity over almost the whole period of the hearing this morning, to explore with Mrs Teoh her basis for contending that she has good grounds for challenging the earlier judgments and costs orders made by Sheahan J, or for bringing new proceedings to set aside the 2008 judgment or otherwise to bring fresh proceedings against Mr Williams and/or the Council based upon impropriety in relation to their conduct concerning the grant of development approval to Mr Williams, in particular in relation to the Council’s consideration of the Council’s solar access policy. I invited Mrs Teoh to take me to the best pieces of her evidence, and her best arguments, which might show me that she had prospect of any sort in relation to such proceeding, ignoring all the technical issues which might now face such proceedings. It appears to me that she took me to the same evidence and arguments as had been presented to Sheahan J in 2008 and 2009, and to the Court of Appeal subsequently. However, as did they, I endeavoured to find substance in her submissions.
By taking this approach, I accepted that a bankruptcy court has a power to ‘go behind’ a judgment relied upon by a petitioning creditor, and to assess the merits of suggested other claims against the creditor. However, the authorities have indicated that the Court is reluctant to go behind a judgment, and to exercise a discretion to embark afresh on a trial of the underlying issues, in the absence of good reasons for questioning the judgment debt which has been relied upon in the petition. It is particularly reluctant to do so, where the debtor’s objections have already been ventilated in contested proceedings at first instance and in an appeal court (see the authorities discussed in Wolff v Donovan (1991) 29 FCR 480, [1991] FCA 222).
I do not propose to detail my discussion with Mrs Teoh. In particular, she took me to various pieces of evidence concerning how Mr Williams had presented his shadow diagrams in support of building approval, how she had considered them at the time, how she has further considered them over subsequent years, and how she raised issues at Council level and how they were responded to. She also took me to some pieces of evidence which she claimed were not submitted to Sheahan J in 2008, but were fully canvassed before his Honour in 2009.
I have to say that on my examination of the pieces of evidence to which Mrs Teoh took me, I could find not a skerrick of evidence suggesting that there was any impropriety on the part of Mr Williams, or his agents, or the Council, or its officers, which might have led to different outcomes in the Land & Environment Court in 2008, or which might now provide Mrs Teoh with grounds for impugning the judgment made in 2008, or for commencing new proceedings against any of the persons involved.
After considering all of her submissions both orally and in writing, I am unpersuaded that she has raised anywhere near the threshold required before a bankruptcy court would be inclined to look behind the cost judgment, in so far as it was the consequence of her losing her action in the Land & Environment Court, nor in so far as it followed her failure to obtain leave to appeal from the 2009 judgment. Nor has she raised any sufficient doubt about the assessment of costs arising from those judgments, noting in this respect that she has not appealed from the costs assessment.
Nor do I consider that her submissions have raised any basis for exercising the discretion under s.52(2)(b) to dismiss the petition for “other sufficient cause”. In particular, Mrs Teoh has not raised any basis for her contentions of fraud and impropriety and invalidity of Council decisions and Mr Williams’ involvement in them, which might come within the line of cases which was addressed by Allsop J in Totev v Sfar (2006) 230 ALR 236, [2006] FCA 470, including Sundberg J’s well known judgment in St George Bank Ltd v Helfenbaum [1999] FCA 1337, which was cited to me by Mrs Teoh. That line of cases allows the Court to dismiss a petition if it is satisfied that a debtor has a “real claim against the creditor that is likely to succeed”. Other judgments cited by Allsop J suggest that a claim in this respect should have been properly formulated, commenced in another Court, and be well advanced in its preparation. Manifestly, in my opinion, the material and submissions of Mrs Teoh presented to me today fall very far short of pointing to any such claims. They point only to a repetition of arguments which have been found to be hopeless by Sheahan J and the Court of Appeal.
I therefore conclude that no substance has been shown to support Grounds 2, 3, 4 and 5 of the notice of opposition. These essentially sought to build upon persuading the Court that Mrs Teoh had good grounds for questioning the judgments upon which the cost orders were based, and for characterising Mr Williams’ opposition to her complaints, and his bankruptcy proceedings themselves, as an abuse of process.
In relation to abuse of process as a ground of opposition to a petition, Mrs Teoh referred to my own judgment in Petratos v Provident Capital Limited [2009] FMCA 1168 at [19] through [23], in which I concluded:
23.Whatever the foundations for the ground, it appears to me that recent authorities, including the two I have cited above and other cases including Watts v Adelaide Bank Limited [2009] FCA 420, and Cavoli v Etl [2007] FCA 1191, and Yang v Mead [2009] FCA 1202, show that the debtor needs to be able to establish an improper motive of the creditor from evidence which demonstrates that there is no legitimate justification for the serving of a bankruptcy notice in the particular circumstances. Compelling circumstantial evidence of motive is usually required. For example, where a creditor has knowledge that a debtor is clearly solvent, is able to pay the judgment debt from his liquid resources, has made reasonable offers for payment or security, and there is no apparent commercial explanation for the serving of a bankruptcy notice, the court might in the particular context infer an improper purpose for serving a bankruptcy notice. In such a case, threats of insolvency procedures might appear to have no purpose, and to be made with no intention to carry those procedures into effect. An improper collateral purpose might be inferred, even in the absence of any disclosure of the creditor’s true purpose.
However, I am unable to discern in the evidence before me any reason for impugning Mr Williams’ pursuit of Mrs Teoh through bankruptcy proceedings. Mr Williams undoubtedly is a creditor under costs orders which have been duly assessed in a substantial amount, arising from repeated lack of success by Mrs Teoh in several courts. He has a creditor’s right to endeavour to recover that money, and there is no evidence that there is a proper foundation for impugning Mr Williams’ decision to instruct a solicitor to seek recovery of that debt through insolvency proceedings.
In particular, there is no evidence suggesting that Mr Williams had clear knowledge that Mrs Teoh was herself solvent and had funds or readily realisable assets available for recovery through other processes of execution. There is just no evidence that Mr Williams is aware of anything about Mrs Teoh’s financial position, except that Mrs Teoh lives with her husband in the neighbouring house which they own jointly.
Mrs Teoh did not file any adequate evidence of solvency in this Court, except by asserting in an affidavit sworn on 30 October 2012:
1a.I am solvent. I have no outstanding debts. Each credit card statement is paid off monthly. My husband Eric and I have never had to pay the additional interest incurred for late payment for the time we have had credit cards (40 years.) We own our home in Hunters Hill outright (tab1). The judgment debt arose from my suit against Hunters Hill Council and the applicant.
This reference to documentary evidence appears to be to two documents contained in a folder filed by Mrs Teoh, none of which concerns the title to the property occupied by Mr and Mrs Teoh or its unencumbered value. They are two banking records, one of which shows Mrs Teoh on 30 September 2012 had cash in an investment account in her name with a closing balance of $17,408.24. The second document is a term deposit certificate issued on 14 May 2012 by a bank, suggesting that there was at that time a deposit made in the name of Mr and Mrs Teoh of an amount of $96,647.39, which was due to mature on 10 November 2012.
In effect, Mrs Teoh’s affidavit invited Mr Williams and the Court to infer, merely from the presence of those two deposits, an ability to pay the present debt, even if neither she nor her husband had shown willingness to make these assets available for payment of her indebtedness under the costs orders. However, I do not consider that this evidence was sufficient to cause me to refuse to make a sequestration order in the exercise of my discretion under s.52(2)(a).
Mrs Teoh’s affidavits contained no evidence as to the title of the property at Hunters Hill, or the title of any other properties that she might own, or of any other assets that she might own, whether in her own name or jointly with her husband. No evidence was filed from her husband as to how he might be willing to join in the disposition of jointly held assets, and how this might be achieved promptly. There was no evidence at all about other creditors, except the general assertion of the absence of them. There was no evidence as to the assessment of other cost orders against Mrs Teoh in the course of her litigation which are not covered by the present assessment, including those in favour of the Council.
In the course of her closing submissions, Mrs Teoh commenced to tender pieces of paper which had not been foreshadowed in her affidavits or as exhibits to her affidavits. These included some Valuer General valuations of jointly held property and some evidence of shareholdings, and other documents. The solicitor for Mr Williams objected to these tenders on the grounds that they have not been filed in accordance with my previous directions, and that he and his client were prejudiced by an inability to review and test the facts asserted in these documents. I upheld those objections. It seemed to me that Mrs Teoh had been given reasonable opportunities to present properly formulated evidence of her claimed solvency, and that it would not be a fair procedure to allow the proposed unmethodical and unforeshadowed tender of further evidence.

Moreover, it appeared to me that the pieces of paper which Mrs Teoh attempted to tender would not have answered the basic concerns as to whether the Court could be satisfied today, in terms of s.52(2)(a) of the Bankruptcy Act that “she is able to pay her debts” from her own unencumbered and readily available money. At best it might show that Mr and Mrs Teoh were a couple with ample assets, but it was not accompanied by any evidence showing how it was intended that these assets would be readily converted into funds for the payment of the debt owing to Mr Williams, particularly if this process would be involuntary.
In this respect, Buchanan J said in Eykamp v Deputy Commissioner of Taxation [2010] FCA 797:
7Under an earlier definition in the Act considered in Sandell v Porter (1966) 115 CLR 666 it was necessary for a debtor to be able to pay debts as they fell due out of the debtor’s own money. Such monies extended to those capable of being procured by sale, by mortgage or pledge of assets of the debtor’s within a relatively short time. A more flexible position now obtains. I note that in International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 Katz J favoured the view that the necessity to pay a debt from a person’s own money continued to be an important element in the scheme established under the Act (see e.g. s 124(3)(a) of the Act). However, with respect, so far as it concerns consideration of whether a person is, or is not, solvent, I prefer the view taken by Palmer J in Lewis v Doran (2004) 184 FLR 454 at [116] (see on appeal Lewis v Doran (2005) 219 ALR 555 at [109]–[112]) to which I subscribed, with the agreement of Marshall and Tracey JJ, in Whitton at [34]‑[38]. Accordingly it would not be impermissible to pay regard to the fact that Mrs Eykamp could raise sufficient money to pay the debt, whether or not that was the direct result of sale, mortgage or pledge of her assets. However, whatever mechanism is employed to secure the necessary funds, and satisfy the Court that it provides adequate evidence of solvency, it remains necessary that it produce results within a realistic time frame (Sandell v Porter at 670, Hall v Poolman [2007] NSWSC 1330; 65 ACSR 123 at [187]).
In my opinion, Mrs Teoh failed today to present evidence which established her intention and ability to pay either this debt or any other debt currently owing in a reasonable time frame, from cash immediately available or by the use of assets owned by her which would be readily convertible into cash.
In the course of her concluding submissions today, Mrs Teoh maintained the assertion that she and her husband owned many assets exceeding the amount of the judgment debt. She maintained, in effect, that the sole reason why she had not taken any steps to pay Mr Williams was that she was resolved to keep litigating against Mr Williams in relation to the judgments upon which the costs order was based, including by further applications in the Supreme Court and to the High Court. There is today no evidence of any outstanding such application, but it is well imaginable that Mrs Teoh might not yet have given up her pursuit of her grievances through litigation.
Although Mrs Teoh may not have appreciated it, these submissions raised considerations in relation to the exercise of the discretion under s.52(2), which have been discussed in a line of authorities concerning recalcitrant debtors. These principles arose from observations by Deane J in Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163, [1980] FCA 66, which were considered on appeal in Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372, [1980] FCA 138, and were discussed by a Full Court in Trojan v Corporation of Hindmarsh (1987) 16 FCR 37, [1987] FCA 276.
In Trojan, their Honours pointed out that in Sarina, the Full Court accepted that a bankruptcy court has a discretion, which it is not bound to exercise, to dismiss a petition upon satisfaction by a debtor that he is able to pay his debts, but is merely refusing to do so, in circumstances where it was uncontested that he owned assets which were available to the creditor for execution under regular processes for the enforcement of judgment debts. In Trojan, their Honours pointed to the added difficulties facing a creditor, where the assets pointed to by a debtor are only available through the cooperation of a joint owner or by the exercise of discretion or conditional upon unknown future events. Their Honours suggested that the Court should consider the practical availability to the creditor of “the ordinary remedies by way of execution and garnishee against a debtor who has demonstrated ample assets and income available for the application of those remedies” (see page 46).
In the present case, all the evidence on solvency presented by Mrs Teoh, including the evidence she sought to tender, leaves me with the same impression which their Honours described in Trojan at page 47:
The same considerations emphasise how different the situation in the present case is from that which was involved in the Sarina case. If, in the present case, the respondent had been remitted to its rights of recovery in respect of its judgments by means other than bankruptcy, it would have faced enormous difficulties in enforcing those rights so as to recover from the appellant who, so far as the respondent is concerned, is indebted to the full amount of the judgments. In those circumstances, as distinct from a case where ample assets were available upon which to levy execution, the principle laid down in the Sarina case would not necessarily be satisfied by a sterile demonstration of an ability to achieve a payment which was not in reality at all likely to be compelled. Section 52(2)(a) envisages a situation which will probably bear fruit in payment. It is not easy to see any other reason why the legislature saw fit to make a demonstration of ability to pay only a discretionary ground of dismissal of a petition, and not an absolute bar to its success. At all events, cases such as the present fall fairly within the reach of a proper judicial discretion of the kind conferred by the section. Far from being an authority in the appellant’s favour, the Sarina case, when properly understood, affirms the existence of a discretion which in the very different circumstances of the present case a court could hardly contemplate exercising otherwise than in favour of the respondent. However, since his Honour rightly held that the asset in Court was not sufficient to satisfy him that the appellant was able to pay his debts, no question of the exercise of his discretion on the footing of satisfaction of the appellant’s ability to pay his debts arose.
In the present circumstances, and taking into account Mrs Teoh’s demonstrated propensity for protracted and expensive litigation against Mr Williams, in my opinion, the discretion to proceed to make a sequestration order should be exercised today. Mr Williams has been unable to achieve finality in the litigation brought by Mrs Teoh, but he has, at least, achieved finality in relation to some cost orders. There is no clear prospects held out by Mrs Teoh today that he would be able to execute and recover on that costs judgment through normal processes of execution without encountering difficulties, and there is every prospect that if he attempted to do so he would face a repetition of the past litigation brought by Mrs Teoh. Mrs Teoh has not established to my satisfaction that there is an alternative and preferable manner of recovering these costs, except by the appointment of a trustee in bankruptcy, with all the powers of investigation and enforcement under that Act.
In my opinion, in all the circumstances, it is just and reasonable for me to make a sequestration order today, upon my satisfaction that Mr Williams has established all the preconditions for the making of a sequestration order set out in s.52(1) of the Bankruptcy Act and other provisions of that Act and the Regulations. I am not persuaded that Mrs Teoh has raised any ground for rejecting Mr Williams’ affidavits of debt, nor that she has established any discretionary ground for dismissing the petition. I therefore propose to proceed to make a sequestration order.
At the conclusion of Mrs Teoh’s submissions, I raised with her whether, in the event that I decided to make a sequestration order, I should allow her an opportunity to discuss her position with her husband and her financial advisors during the period of a stay on the operation of the order under s.52(3). The Court has limited power to order such a stay “not exceeding 21 days”. This Court has no other power to stay a sequestration order, including in support of an appeal (see s.37(2) of the Bankruptcy Act). I made the suggestion because it appeared to me that there might be a possibility that she might face reality in relation to the need to pay this debt, rather than incur the added bother and expenses which will necessarily arise from the appointment of a trustee in bankruptcy. However, Mrs Teoh did not welcome this suggestion, and I can understand her state of mind.
Her responses to the idea, and my consideration of all of the circumstances shown in the evidence, lead me to conclude that there would not be any real purpose in my ordering such a limited stay. It would not alter her status under the Bankruptcy Act. It would not alter the appointment of the trustee. It would not alter the need, if she wishes to escape speedily from bankruptcy, for her to discuss with her trustee how to procure an early annulment of the bankruptcy. On balance, it appears to me that a stay under s.52(3) might do no more than add an extra layer of confusion and uncertainty to the effect of making a sequestration order today. I have therefore decided not to order such a stay.
In relation to costs, Mrs Teoh asks that Mr Williams’ costs should not be awarded out of the estate, but that there should be no order as to costs in relation to the petition. She submitted that she has only lost her grounds of objection because she has not filed sufficient evidence to persuade me to accept her contentions, including as to the various defects affecting the proceedings of the Council and Mr Williams in relation to the development consent. However, the fact is Mrs Teoh has lost her grounds of opposition on the evidence and arguments which she has presented to the Court today. I can see no reason why the normal costs order should not be made in accordance with the outcome of the petition.

I certify that the preceding sixty‑one (61) paragraphs are a true copy of the reasons for judgment of Smith FM

Date: 3 December 2012