Wollongong City Council v Falamaki
[2009] FMCA 1204
•8 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WOLLONGONG CITY COUNCIL v FALAMAKI | [2009] FMCA 1204 |
| BANKRUPTCY – Creditors Petition – Application by a McKenzie friend to appear for respondent debtor – leave granted limited to adjournment application – application for adjournment to allow the appearance of an expert witness to address Court on alleged “syntax fraud” in petition documentation – application dismissed – status of funds deposited at offices of the legal representatives of the applicant by respondent debtor. |
| Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(2), 44(1), 47(1A) Bankruptcy Regulations 1996 (Cth), reg.4.02 Federal Court Rules (Cth), O.6, r.17 Federal Magistrates Act 1999 (Cth), s.44 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.4.02 |
| Australian Automotive Repairers Association (Political Action Committee) Inc v NRMA Insurance Ltd (No 2) [2003] FCA 1301 Hadgkiss v Aldin [2006] FCA 1638 Kerr v American Express Australia Ltd [2009] FCA 1219 |
| Applicant: | WOLLONGONG CITY COUNCIL |
| Respondent: | MASOOD FALAMAKI |
| File Number: | SYG 1999 of 2009 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 19 November 2009 |
| Delivered at: | Sydney |
| Delivered on: | 8 December 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr V Bedrossian |
| Solicitors for the Applicant: | Fisher Cartwright Berriman |
| Lay advocate for the Respondent: | Ms L Williams (McKenzie friend) |
ORDERS
Lydia Williams is granted leave to appear as a McKenzie’s friend on behalf of the respondent debtor limited to the issue of the adjournment application.
The application filed by the person identified as Judge: David-Wynn: Miller is refused leave to appear as an expert witness or amicus curiae.
The funds deposited by Reza Falamaki to the bank account of the legal representatives of the applicant do not satisfy the debt under Bankruptcy Notice NN2397/2009.
An act of bankruptcy has occurred in this matter.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1999 of 2009
| WOLLONGONG CITY COUNCIL |
Applicant
And
| MASOOD FALAMAKI |
Respondent
REASONS FOR JUDGMENT
Background
A Creditor’s Petition was filed in the Federal Magistrates Court on
19 August 2009. Part 2 of the Creditor’s Petition, which is the Affidavit verifying the Petition, states that the respondent debtor failed to pay the debt or make an arrangement to the applicant’s satisfaction for payment of the debt within the time for compliance extended by the Court (on or before 31 July 2009) after service of Bankruptcy Notice NN2397/09 dated 11 June 2009.
This Petition is the result of a long running dispute between the applicant creditor, Wollongong City Council, and the respondent debtor, Dr Masood Falamaki, over approximately 12 years. This dispute relates to land use, housing and accommodation. Various proceedings have taken place in the High Court of Australia, the Land & Environment Court of New South Wales, the Supreme Court of New South Wales and the Local Court of New South Wales. As a result of these proceedings, a number of costs orders have been made and assessed in favour of Wollongong City Council. Dr Falamaki is of Middle Eastern origin and came to Australia as a migrant. The Court is advised that he holds a doctorate in structural engineering.
Dr Falamaki claims that in response to the Bankruptcy Notice, his son acting on his behalf paid $2,300 to the legal representatives of Wollongong City Council. Dr Falamaki has filed an affidavit which contains details of the procedure he followed to pay the debt. The Council disputes that the payment satisfies payment of the debt. This is dealt with below.
Lay advocacy
Lydia Williams sought leave of the Court to appear on behalf of Dr Falamaki. Ms Williams is known to the Court and does not hold a solicitor’s practising certificate. I brought to Ms Williams’ attention s.44 of the Federal Magistrates Act 1999 (Cth) which states:
A party to a proceeding before the Federal Magistrates Court is not entitled to be represented by another person unless:
(a) under the Judiciary Act 1903 , the other person is entitled to practise as a barrister or solicitor, or both, in a federal court; or
(b) under the regulations, the other person is taken to be an authorised representative; or
(c) another law of the Commonwealth authorises the other person to represent the party.
Ms Williams indicated to the Court that she held a limited Power of Attorney from Dr Falamaki in the following terms:
In pursuance of section 107(1) of the Instruments Act 1958 (Vic); Powers of Attorney Act 2003 (NSW); Powers of Attorney Act 1998 (Qld)
I, Masood Falamaki, of Suite 17, level 1, 3 Brady Street, Mosman 2088, hereby appoint Lydia Williams of 20/20-12 Ray Street Turramurra NSW 2147, to be my attorney in the matter number SYG 1999 / 09 (Wollongong City Council v: Masood Falamaki) in the FMCA, hereafter the matter.
I authorise my attorney to:
1. Represent and act on my behalf in the matter for mention or call over only.
2. Prepare for me and assist me to prepare documents and file them in court.
3. To do any other administrative works that I could lawfully authorise an attorney to do for me in the matter, with the exception of accepting the service of documents.
4. Arrange a competent person to appear on my behalf in court.
I do not authorise my attorney or any other person to accept service of legal documents on my behalf.
I reserve the right to revoke this authority at any time.
Mr Bedrossian, counsel for the applicant, indicated that he did not object to Ms Williams appearing as a McKenzie friend for the purpose of the adjournment application only. Mr Bedrossian brought the Court’s attention to the decision in Kerr v American Express Australia Ltd [2009] FCA 1219 at [5] where Collier J stated:
[5] It is clear that a power of attorney as held by Mr Kerr from Ms Kerr does not provide a lawful basis for a non-lawyer to act for a party in litigation in a Federal Court (cf Slack v Bottoms English Solicitors [2003] FCA 1337). However the court has discretion to grant leave to a person who is not a qualified legal practitioner to represent a litigant. Such a person is commonly known as a “Mackenzie friend”. I note that I consider it inappropriate that an application should be made by Mr Kerr to represent Ms Kerr without Ms Kerr being present. However I understand that in previous proceedings in this court Mr Kerr has represented Ms Kerr in her absence. For the purposes of today’s hearing, which is procedural only, I am prepared to entertain Mr Kerr’s application to represent Ms Kerr.
I note that this matter was referred to me by a Registrar of this Court from the bankruptcy list on 27 October 2009. On that date,
Mr Bedrossian and Ms Williams appeared for the respective parties. Ms Williams applied for an adjournment specifically in order for her to assist Dr Falamaki in obtaining legal representation. In addition
Ms Williams indicated that she needed time to assist Dr Falamaki in the collation and preparation of material relevant to these proceedings.
The Court file also shows that when the matter was listed earlier before Kavallaris R in the bankruptcy list on 29 September 2009, Dr Falamaki was represented by J Johnson of counsel, at which time an adjournment was sought and granted.
I acknowledge that Ms Williams has conveyed to the Court material indicating the circumstances of the adjournment application and for this limited purpose I will grant her the status of a McKenzie friend to appear for Dr Falamaki.
Exhibits
A number of documents were tendered during the hearing which have been marked as follows:
a)Exhibit A1 – Email from Dr Falamaki to Lloyd-Jones FM’s associates on 18 November 2009 at 2.55pm;
b)
Exhibit A2 – Email from K Cloake to Dr Falamaki on
18 November 2009 at 3.36pm;
c)
Exhibit A3 – Email from J Sefton to Dr Falamaki on
16 November 2009;
d)
Exhibit R1(A) – Letter from FCB Lawyers to Dr Falamaki on
20 August 2009;
e)Exhibit R1(B) – Creditor’s Petition;
f)Exhibit R1(C) – Affidavit of Service dated 19 August 2009;
g)Exhibit R1(D) – Email from J Fung/J Sefton to Dr Falamaki on 15 June 2009;
h)Exhibit R1(E) – Letter from J Sefton to Dr Falamaki on 15 June 2009;
i)Exhibit R1(F) – Bankruptcy Notice NN2397/2009;
j)Exhibit R1(G) – Order by Hedge R made on 5 May 2009;
k)Exhibit R1(H) – Email from J Sefton to J Fung on 16 June 2009;
l)Exhibit R1(I) – Affidavit of J Sefton sworn on 19 August 2009;
m)Exhibit R1(J) – Order by Kavallaris R made on 6 July 2009;
n)Exhibit R1(K) – Order by Driver FM made on 28 July 2009;
o)Exhibit R1(L) – Consent to Act as Trustee;
p)Exhibit R2 – Instruction Manual;
q)Exhibit R3 – Creditor’s Petition with mark-ups;
r)Exhibit R4 – Limited Power of Attorney;
s)Exhibit R5 – Amicus Curiae document.
Adjournment application
Ms Williams indicated to the Court that Dr Falamaki instructed her to seek a further adjournment of these proceedings. Mr Bedrossian opposed the application. The basis of Ms Williams’ application was substantially different to the application made on 27 October 2009 – which was essentially to enable Dr Falamaki to seek legal representation and prepare material for these proceedings. As a consequence of that earlier adjournment, Orders were made in the following form:
1. The matter is listed for directions on Friday 13 November 2009 at 9.30am.
2. A notice stating grounds of opposition to be filed by the respondent by Monday 9 November 2009.
3. Parties have liberty to apply on three days’ notice.
4. Costs be reserved.
I note that legal representation has not been obtained nor has Order 2 been complied with. Further that on 29 September 2009, Kavallaris R made Orders that a Notice of Grounds of Opposition and any further evidence were to be filed by 13 October 2009. An affidavit but no Grounds of Opposition have been filed by the respondent.
The nature of the current adjournment application to a date in February 2010 is to enable an expert witness described as “Judge: David-Wynn: Miller” on the issue of “syntax fraud”.
Ms Williams tendered Exhibit “A2” which she referred as being “the Amicus Curiae” prepared by Mr Miller. The accepted role of an amicus curiae is that of a person, not a representative of a party to the proceedings, being permitted to argue a point of law or fact before the Court, usually on behalf of some party indirectly interested: that is, a friend of the Court. It appears that the person who identifies himself as Judge: David-Wynn: Miller is attempting multiple roles in this case. First as that of a lay advocate for Dr Falamaki, arguing that the Creditor’s Petition is fraudulent due to syntax fraud, that of an expert witness presenting the technical argument in respect of syntax fraud and finally that of an amicus curae in assisting the Court to understand the offence of syntax fraud.
The issue of the appearance of lay advocates was considered in the by Nicholson J in Hadgkiss v Aldin [2006] FCA 1638 at [10] where His Honour stated:
[10] The powers of the Court pursuant to s 23 of the Federal Court Act to make orders granting leave for an unqualified advocate to appear were reviewed by Bennett J in Melaleuca of Australia and New Zealand Pty Ltd v Duck [2005] FCA 1481 (Melaleuca). It is not necessary here to set out again the other Rules and considerations to which her Honour made reference. She particularly had regard to the decision of the New South Wales Court of Appeal in Damjanovic v Maley (2002) 55 NSWLR 149 (Damjanovic), where their Honours found that there was nothing exceptional or special to warrant the grant of such leave. That test arrives from what was said by Lord Woolf MR in D v S (Rights of Audience) [1997] 1 FLR 724 at 725B-726G referred to in Paragon Finance PLC v Noueiri (2002) C.P. Rep 5 both of which were referred to by her Honour in Melaleuca. In Melaleuca her Honour examined a number of factors referred to by the Court of Appeal in Damjanovic in the exercise of her discretion on whether to grant the appropriate leave. She found there was no material before her to warrant the grant of leave. Bennett J applied the same reasoning in SZFCX v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 394 to ground a grant of leave. Factors found there to support the grant of leave were the complexity of the case, genuine difficulties experienced by the appellant in representing himself and the ability of the lay advocate to present the case better and more efficiently. Stone J in ‘ Pooncarie’ Barkandji (Paakantyi) People v NSW Minister for Land & Water Conservation [2006] FCA 25 concluded that the applicant for leave there had neither the discipline nor understanding to assist the persons he would represent or the Court so that the grant of leave should be refused.
I am not satisfied that Ms Williams demonstrates the requisite skill in this bankruptcy proceeding and is able to adequately present the debtor’s case. Accordingly I declined to grant her leave to appear as a lay advocate on Dr Falamaki’s behalf.
In respect to expert witnesses, a Practice Note (CM 7) has been issued by Black CJ of the Federal Court on 25 September 2009 replacing previous Practice Notes on this issue. It clearly sets out the requirements of any witness who proposes to give evidence in proceedings and who purports to provide evidence wholly or substantially based on specialised knowledge. None of the provisions in the Practice Note have been complied with nor has any outline of evidence been provided to the other side or to the Court. From the limited behaviour exhibited in the Courtroom, it appears that the members of this linguistic cult wish to lecture the Court on syntax fraud and analyse Court documents (including the Petition) to establish that fraud has been committed by the syntactical structure of the document. A brief perusal of the documents so analysed appear to allocate dramatic structures that bear absolutely no resemblance to traditional grammar taught in this country in the last half century.
An amicus curiae is a person who is not a party to a proceeding but who petitions the Court or is requested by the Court to file a brief action because that person has a strong interest in the subject matter. A party wishing to participate in this way must apply to the Court for leave to be joined or heard. In her paper “Interveners and Amicus Curiae in the High Court”, Kenny J reviews the changing attitude of that Court to a party being heard as amicus curiae.
The role of amicus curiae was also considered in Australian Automotive Repairers Association (Political Action Committee) Inc v NRMA Insurance Ltd (No 2) [2003] FCA 1301 by Lindgren J where a formal application was made for “leave to intervene for the purpose of presenting argument to assist the court, alternatively, for leave to intervene as amicus curiae”.
The relevant Federal Court Rule in respect of such an application is contained in O.6, r.17 which states:
Interveners
(1) The Court, at any stage of a proceeding, may give leave to a person (the intervener ) to intervene in the proceeding, on the terms and conditions, and with the rights, privileges and liabilities (including liabilities for costs), determined by the Court.
(2) In deciding whether to give leave, the Court must have regard to:
(a) whether the intervener's contribution will be useful and different from the contribution of the parties to the proceeding; and
(b) whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as they wish; and
(c) any other matter that the Court considers relevant.
(3) The role of the intervener is solely to assist the Court in its task of resolving the issues raised by the parties.
(4) For subrule (3), assisting the Court includes suggesting witnesses to be called by the Court, but does not include filing pleadings, leading evidence or examining witnesses.
(5) When giving leave, the Court must specify the form of assistance to be given by the intervener and the manner of participation of the intervener, and, in particular, must specify:
(a) the matters that the intervener may raise; and
(b) whether the intervener's submissions are to be oral, in writing, or both.
In summary, Dr Falamaki and Ms Williams are making an informal application for a person identifying himself as Judge: David-Wynn: Miller to intervene or to appear as amicus curiae in order to prove by evidence and draw the Court’s attention to a series of frauds which they describe and characterise as syntax fraud.
Justice Lindgren in Australian Automotive Repairers Association (Political Action Committee) Inc v NRMA Insurance Ltd (No 2) at [9] set out the circumstances under which leave can be granted for amicus curiae:
…Under general law principles, an intervener became a party to the proceeding “with the benefits and burdens of that status”: United States Tobacco Co v Minister for Consumer Affairs (1988) 20 FCR 520 (“US Tobacco”) at 534. Under general law principles, an intervener can “appeal, tender evidence and participate fully in all aspects of the argument”: Corporate Affairs Commission v Bradley (Commonwealth Intervener) [1974] 1 NSWLR 391 at 396 per Hutley JA, with whom Reynolds JA and Glass JA agreed, quoted with approval in US Tobacco at 534—535. But the assistance of an amicus curiae is accepted only on the footing that the person is willing to offer the court a submission on law or relevant fact, which will assist the court in a way in which the court would not otherwise have been assisted: Levy v State of Victoria (1997) 189 CLR 579 at 604 per Brennan CJ. In particular, an amicus curiae is not entitled to lead evidence: Bropho v Tickne r(1993) 40 FCR 165 at 172–173 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2001) 116 FCR 490 at [14]—[16]. O 6 r 17 of the Federal Court Rules, therefore, seems to have the effect of assimilating the position of an intervener to that of an amicus curiae.
I have ignored and put to one side the numerous statements delivered by Ms Williams and her supporters that the failure to hear and accept the argument in respect of syntax fraud would result in me also being guilty of fraud and breaching my judicial responsibilities. The apparent fervour of the members of this linguistic cult led by Mr Miller has the distinct character of a crusade – searching for a public platform to ventilate their views. This is not a person or persons adopting the traditional and accepted role of amicus curiae.
Ms Williams’ statement in respect of the position of amicus curiae seems completely misunderstood. The argument being advanced is that by filing a form stating that a person is an amicus curiae immediately joins them to the proceedings. In the circumstances I do not intend to grant leave for this person to appear in that capacity.
Fraud at common law or in equity concerns the use of false representations to gain an unjust advantage. Syntax is the grammatical arrangement of words showing their connection and relationship (a set of rules for analysis of this connection and relationship). The concept of fraud perpetrated by syntax is not a concept currently reflected in the Commonwealth or State statutes or at common law.
The preliminary argument advanced by Ms Williams and a large number of supporters present in the Courtroom, some of whom I am advised are specialists in the area, is that the Creditor’s Petition was fraudulent because of the structure of the syntax in that document. I enquired of Ms Williams whether her argument was that all Petitions issued were fraudulent because of their grammatical construction. She indicated that she did not wish to pursue this broader argument but wished to focus on the Petition currently before this Court.
It is well-settled that s.41(2) of the Bankruptcy Act 1966 (Cth) (“the Act”) provides that a Bankruptcy Notice must be in accordance with the form prescribed by the Bankruptcy Regulations 1996 (Cth). That is, all that s.41(2) of the Act makes essential to the validity of a Bankruptcy Notice is compliance with reg.4.02 and Form 1. Regulation 4.02 provides:
Form of bankruptcy notices
(1) For the purposes of subsection 41 (2) of the Act, the form of bankruptcy notice set out in Form 1 is prescribed.
(2) A bankruptcy notice must follow Form 1 in respect of its format (for example, bold or italic typeface, underlining and notes).
(3) Subregulation (2) is not to be taken as expressing an intention contrary to section 25C of the Acts Interpretation Act 1901.
Note Under section 25C of the Acts Interpretation Act 1901, where an Act prescribes a form, then, unless the contrary intention appears, strict compliance with the form is not required and substantial compliance is sufficient; see also paragraph 46 (1) (a) of that Act for the application of that Act to legislative instruments other than Acts.
In the case of a Creditor’s Petition, s.47(1A) of the Act requires:
(1A) If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed.
Rule 4.02 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) specifies the requirements for Creditor’s Petitions and supporting affidavits:
(1) A creditor's petition must be in accordance with Form 6.
Ms Williams’ advancement of arguments in respect of syntax fraud can only lead to one conclusion: that all Petitions filed under the provisions of the Act are in effect invalid.
The major procedural defect in her argument is that no affidavit material in respect of this issue has been filed in Court. None of the material tendered as Exhibits satisfy the requirements in respect of affidavit material. The legal representatives of the applicant creditor were not formally notified by the respondent debtor of his intention to advance arguments in respect of this issue.
Further the person identifying himself as Judge: David-Wynn: Miller, a citizen of the United States of America and who claims to be a member of the “World Court”, or the person present in Court who identified himself as Stephen-Mark: Lymbery stating that he was also Judge, Postmaster and Banker, have failed to file any documentation required of an expert witness.
In the circumstances I believe it is inappropriate to allow the ventilation of any submissions, arguments or claims in respect of syntax fraud. As this is the basis of the application for an adjournment, the application is dismissed.
Status of funds paid
Paragraph 1 of the Creditor’s Petition states:
The respondent debtor owes the applicant creditor the amount of TWO THOUSAND AND THREE HUNDRED DOLLARS ($2,300) being
the amount payable by order made by Registrar Hedge in the Federal Magistrates Court of Australia on 5 May 2009 in proceedings number (P)SYG505/2009 (which grounded a bankruptcy notice NN2397/09 dated 11 June 2009 and served on the respondent debtor on 15 June 2009 in circumstances where the respondent debtor’s application to set aside the said bankruptcy notice was on 28 July 2009 dismissed with costs by Driver FM, such order stayed if the said amount was paid on or before 31 July 2009 in accordance with the further order extending time for compliance).
Paragraph 4 of the Creditor’s Petition states:
The following act of bankruptcy was committed by the respondent debtor within 6 months before presentation of this petition:
On or before 31 July 2009, the respondent debtor failed to comply with the requirements of a bankruptcy notice NN2397/09 dated 11 June 2009 and served on him on 15 June 2009 or to satisfy the Court that he had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.
The affidavit of Masood Falamaki sworn and filed in these proceedings on 21 September 2009 contains Annexure “A” which is an Affidavit of Service sworn by Reza Falamaki:
1. I am the son of Dr Masood Falamaki.
2. At 2:47pm on 18.09.09 I caused a copy of a bundle of documents of 5 pages including the bank receipt of a debt payment (paid by Dr Masood Falamaki) amounting to $2,300 paid to the account to the lawyers of Wollongong City Council (FCB) to be served on the secretary of Mr Julian Sefton (Ms Emily Brett) a copy of this bundle of documents is attached and marked Annexure “A1”.
3. Ms Emily Brett was the acting secretary for FCB lawyers located at level 11, 83 Mount St, North Sydney, NSW 2060. The receipt signed by her is attached and marked as Annexure “A2”. In the affidavit of Julian Peter Sefton sworn 22 September and filed 23 September 2009 states:
The issue before the Court is the status of the above payment and whether that payment satisfies the Bankruptcy Notice.
An affidavit of Julian Peter Sefton sworn 23 September 2009 filed on behalf of the applicant creditor also contains evidence pertaining to the payment in the following terms:
1. I am an employed solicitor of FCB Lawyers and Consultants and have day-to-day carriage of these proceedings on behalf of the judgment creditor.
2. On 18 September 2009, Dr Falamaki purportedly paid an amount of $2,300 into the bank account of the firm not specifying which of the debts the amount was to be applied in satisfaction.
3. At no time on 18 September 2009 did Dr Falamaki speak to me regarding the payment of what conditions attached to same.
4. I have made enquiries of the other solicitors of the firm and I am informed and verily believe that Dr Falamaki did not speak to another solicitor of the firm regarding the payment or what conditions attached to same.
5. I seek leave to refer to the affidavit of Masood Falamaki affirmed 21 September 2009:
a) with respect to paragraph 2, I am informed by Emily Brett and verily believe that:
(i) the 5 pages referred to (Annexure A1) were not provided or left with her at reception as alleged; and
(ii) at the time the receipt was completed and signed by Emil Brett, she was on the phone and signed the receipt without reading its contents due to the fact she was distracted by the phone call and the persons insistence that the receipt was signed immediately.
6. I confirm that at no time was or is Emily Brett acting secretary for the deponent.
7. I confirm that she said monies were paid into a general bank account operated by the firm without any indication as to what the said sum was to be applied in satisfaction.
8. On 21 September 2009, I caused the said sum to be transferred to the trust account maintained by the firm.
9. The said monies have not been applied to any debt owing by Dr Falamaki to the Council.
10. At no time have I agreed to any condition that the said monies be applied to the debt underpinning the subject bankruptcy notice.
An act of bankruptcy is committed by non-compliance with a Bankruptcy Notice when the time prescribed in the Notice expires: s.40(1)(g) of the Act. The Bankruptcy Notice NN2397/2009 dated
11 June 2009 and served on the respondent debtor on 15 June 2009 required payment within 21 days (para.3 of the Notice). However, this was subsequently extended to 31 July 2009 by order of Driver FM. As payment was not received by this date, nor was there any arrangement entered into for the settlement of the debt, an act of bankruptcy was committed. If within the time for compliance with the Bankruptcy Notice a debtor and creditor enter into an arrangement to the creditor’s satisfaction for settlement of the debt, the debtor will not have committed an act of bankruptcy. This applies even where the debtor does not honour that arrangement. The evidence before the Court is that no discussions were held concerning an arrangement for settlement of the debt.
In the affidavit of Masood Falamaki sworn and filed on 21 September 2009 indicates that his son, Reza Falamaki, delivered documents to the offices of FCB indicating that $2,300 had been paid to the account of FCB at 2.47pm on 18 September 2009, which was 45 days after the required date of compliance.
I also note that there has been no claim by the debtor that he has a counter claim, set off or cross demand equal to or exceeding the amount of the judgment debt. At the directions hearing of 27 October 2009 when an adjournment application was made and granted to Dr Falamaki, I made the order that a Notice Stating Grounds of Opposition had to be filed by the respondent by 9 November 2009. This order has not been complied with. Consequently the Bankruptcy Notice is unchallenged and has not been complied with resulting in an act of bankruptcy.
The consequence of the act of bankruptcy is that at that time a large pre-existing amount was owed to Wollongong City Council. When Dr Falamaki’s son paid $2,300 it was not paid conditionally in any way. It was not conditioned on the basis that it was attributed against any particular debt. The affidavit of Dennis Williams sworn 22 September 2009 indicates a pre-existing debt in the vicinity of $90,000 that had already been assessed and was recoverable. The mere coincidence of the amounts does not mean that the debt the subject of the Petition has been paid. It is submitted that on the evidence before me I must accept that the cash payment into the bank account of Fisher Cartwright Berrimen (FCB) was paid gratuitously. There was no condition attached to it and no condition accepted by Wollongong City Council.
I accept the submission that there are only two ways in which the payment received by FCB could have brought an end to the debt:
a)That there was an actual agreement between the parties and it was to be paid and received in the way that it occurred. None of the evidence from Dr Falamaki establishes such an agreement.
b)That there was some conduct by FCB which induced Dr Falamaki to make payment in the manner he adopted. The evidence is that Dr Falamaki’s son paid the money before he made the relevant communication to FCB and had not received any confirmation from an authorised person on behalf of FCB that the money would satisfy a particular debt, or that it would satisfy any debt.
The conditions on which a creditor may issue a Petition is contained in s.44(1) of the Act which states:
(1) A creditor's petition shall not be presented against a debtor unless:
(a) there is owing by the debtor to the petitioning creditor a debt that amounts to $2,000 or 2 or more debts that amount in the aggregate to $2,000, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to $2,000;
(b) that debt, or each of those debts, as the case may be:
(i) is a liquidated sum due at law or in equity or partly at law and partly in equity; and
(ii) is payable either immediately or at a certain future time; and
(c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.
A petitioning creditor can proceed once the act of bankruptcy trigger has occurred. Because of the failure to comply with a Bankruptcy Notice a petitioning creditor can move on two or more debts accumulatively to make the relevant amount for the purposes of the Act. Once the trigger has occurred it can be one or more debts that give rise to the ability to Petition. I agree with the submission that the Bankruptcy Notice identified the amount of $2,300 and the fact that the Creditor’s Petition relied upon the failure to comply with that Bankruptcy Notice is a technical trigger for this Court to have jurisdiction to assess whether the debtor is solvent or insolvent. The public and creditors dealing with this person should be protected. I am satisfied that the creditor has complied with each and every step required under the Act. The affidavit of Dennis Williams indicates a large amount of other debts that are owed to the Wollongong City Council. Further Mr Williams’ affidavit indicates that other amounts are owing but at this time they are only estimates prepared by Mr Williams because those cost orders are not yet subject to final assessment.
I am satisfied that an act of bankruptcy has occurred and that the creditor was entitled to issue a Petition. Despite two separate orders of this Court to file a Notice Stating Grounds of Opposition, these orders have not yet been complied with. In the circumstances, there is no impediment to the issuing of a sequestration order provided the statutory requirements of that order are complied with.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
Date: 8 December 2009
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