Woolley v Vok

[2012] FMCA 228

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WOOLLEY v VOK [2012] FMCA 228

BANKRUPTCY – Creditor’s petition – whether debtor was personally present in Australia at the time of the act of bankruptcy – whether court should go behind judgment on which bankruptcy notice based – service of creditor’s petition – whether cross claim and other matters raised by applicant amount to sufficient cause not to make a sequestration order.

Bankruptcy Act 1966 (Cth), ss.40, 41, 43, 52, 115, 306
Federal Court Rules (Cth), O.11, r.16
Federal Court Rules 2011 (Cth), r.10.11
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.4.05
Federal Magistrates Court Rules 2001 (Cth), rr.6.04, 6.06

Boyle v Sacker (1888) L.R. 39 Ch. D. 249
Cain v Whyte (1933) 48 CLR 639; [1932] HCA 6
Carver v de Robillard (2006) 5 ABC(NS) 21; [2006] FCA 1041
Commonwealth Bank of Australia v Jeans (No.2) (2005) 3 ABC(NS) 712; [2005] FCA 978
Corney v Brien (1951) 84 CLR 343; [1951] HCA 31
de Robillard v Carver (2007) 159 FCR 38; [2007] FCAFC 73
ICM Agriculture Pty Ltd (ACN 006 077 765) v Young (2009) 260 ALR 515; [2009] FCA 1169
In re L.H.F. Wools Ltd [1970] Ch. 27; [1969] 3 W.L.R. 100
Jeray v Blue Mountains City Council and Others (No.2) (2010) 180 LGERA 1; [2010] NSWCA 367
Kirk v Ashdown [1999] FCA 522
Makhoul v Barnes (1995) 60 FCR 572
McDonald v McDonald (1965) 113 CLR 529; [1965] HCA 45
Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; [2002] HCA 11
Minogue v Human Rights and Equal Opportunity Commission (1999) 84 FCR 438; [1999] FCA 85
Monroe Schneider Associates (Inc) and Another v No 1 Raberem Pty Ltd and Others (No 2) (1992) 37 FCR 234; (1992) 109 ALR 137
Platcher v Joseph [2004] FCAFC 68
Prestia, in the matter of Australia and New Zealand Banking Group Limited v Prestia [2001] FCA 792
Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433; [1980] FCA 78
Re Florance; Ex parte TurimettaProperties Pty Ltd (1979) 28 ALR 403; [1979] FCA 58
Re James and Another; Ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (1993) 46 FCR 183
Re Kostezky; Ex parte Milder Elfman Szmerling Krycer Pty (1996) 67 FCR 101; [1996] FCA 455
Re Schmidt; Ex parte Anglewood Pty. Ltd. (1968) 13 FLR 111
Re Woodley; Ex parte Bank of New South Wales [1971] ALR 155
Richardson v Leonard Cohen & Co [2008] FCA 1392
Rigg v Baker (2006) 155 FCR 531; [2006] FCAFC 179
Rixon v Bryett (2001) 112 FCR 295; [2001] FCA 963
St George Bank Ltd v Helfenbaum [1999] FCA 1337
Thomas v St George Bank Ltd [1999] FCA 166
Totev v Sfar and Another (2006) 230 ALR 236; [2006] FCA 470
Totev v Sfar and Another (2008) 167 FCR 193; [2008] FCAFC 35
Webb v Hunter (1995) 59 FCR 24; [1995] FCA 1443
Williams and Others v Spautz (1992) 174 CLR 509; [1992] HCA 34
Wolff v Donovan (1991) 29 FCR 480; [1991] FCA 222
Woolley v Vok (No.3) [2011] 1054
Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5

Applicant: GREGORY WOOLLEY

Respondent: PETER VOK

File Number: SYG 658 of 2011

Judgment of: Barnes FM

Hearing date: 7 December 2011

Date for Last Submissions: 8 February 2012

Delivered at: Sydney

Delivered on: 23 March 2012

REPRESENTATION

Counsel for the Applicant: Mr J Hynes

Solicitors for the Applicant: Henry Davis York

Respondent: In person

ORDERS

1. A sequestration order be made against the estate of Peter Vok. 

2. The applicant creditor’s costs including any reserved costs be taxed in accordance with the Federal Court Rules and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).

3. A copy of the sequestration order be given to the Official Receiver in Sydney by the applicant creditor within two working days. 

THE COURT NOTES THAT:

1. The date of the act of bankruptcy is 7 October 2010. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 658 of 2011

GREGORY WOOLLEY

Applicant

And

PETER VOK

Respondent

REASONS FOR JUDGMENT

1. On 7 April 2011 the applicant creditor, Gregory Woolley, filed and presented a creditor’s petition seeking that a sequestration order be made against the estate of the respondent debtor, Peter Vok.  The petition relied on what was said to be a debt of $55,228.62 owing to Mr Woolley pursuant to a judgment of the Local Court of New South Wales of 2 September 2010. 

2. The respondent filed a notice stating grounds of opposition to the petition on 26 September 2011 and two supporting affidavits, one sworn by Mr Vok’s father, George Vok, and one by Mr Vok.  The applicant filed and relied on a number of affidavits and written submissions.  Orders were subsequently made to enable Mr Vok to file and serve further affidavit evidence and written submissions in relation to the grounds in the notice of opposition before the hearing.  The parties were also given the opportunity to file written submissions after the hearing and Mr Vok was subsequently granted an extension of time in which to do so. 

3. It is convenient to consider the grounds in the notice of opposition first.  I have considered not only the grounds raised in the notice of opposition but also the matters raised in Mr Vok’s written and oral submissions.

4. The first ground in the notice of opposition is as follows:

   Section 43 of the Bankruptcy Act 1966

   At the time the alleged bankruptcy act was committed the Respondent:

   a.  Was not ordinarily resident in Australia

   b.  Did not have a dwelling and did not have a house or place of residence in Australia

   c.  Was not carrying business (sic) in Australia either personally or by means of an agent or manager

   d. Was not a member of a firm or partnership carrying on business in Australia by means of a partner or partners of an agent or manager within the meaning of section 43 of the Bankruptcy Act 1966 and the Court does not have jurisdiction to make a sequestration order against the estate of the Respondent

   e.  All communication conducted between the Respondent, the judgment creditor and his legal representatives was on email address [email protected]

   The server is located in Hong Kong. 

   f.   The Respondent is not aware of any outstanding debts in Australia or elsewhere.

5. Section 43(1) of the Bankruptcy Act 1966 (Cth) is as follows:

   Subject to this Act, where:

   (a) a debtor has committed an act of bankruptcy; and

   (b) at the time when the act of bankruptcy was committed, the debtor:

   (i) was personally present or ordinarily resident in Australia;

   (ii) had a dwelling-house or place of business in Australia;

   (iii) was carrying on business in Australia, either personally or by means of an agent or manager; or

   (iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;

   the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

6. In the creditor’s petition the date of the act of bankruptcy was said to have been 7 October 2010 on the basis that the respondent debtor failed to comply on or before that date with the requirements of a bankruptcy notice served on him on 16 September 2010 or to satisfy the court that he had a counter-claim, set-off or cross-demand equal to or exceeding the amount claimed in the bankruptcy notice that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.

7. In his notice of opposition the respondent did not take issue with the date of the act of bankruptcy. Rather, he asserted that at the time of the alleged act of bankruptcy (7 October 2010) he was not ordinarily resident within Australia. He appeared to contend that the requirements of s.43 of the Bankruptcy Act were not otherwise satisfied. In his affidavit of 25 September 2011 Mr Vok claimed that, at the time of the alleged act of bankruptcy he had a “place of business in China”, was “conducting business in China [and] had a place of residence in China”. 

8. However, while Mr Vok claimed that he was not ordinarily resident in Australia at that time, he did not claim, either in the notice of opposition or in his affidavit evidence, that he was not personally present in Australia as at 7 October 2010. 

9. The first requirement in s.43(1) of the Bankruptcy Act is that the debtor has committed an act of bankruptcy. I am satisfied that Bankruptcy Notice NN3910/2010 was issued on 15 September 2010 and served personally on Mr Vok on 16 September 2010 as attested to in the affidavit of Barbara Brown sworn on 17 September 2010. Service of the bankruptcy notice was not disputed in the notice of opposition.

10. The bankruptcy notice required compliance within 21 days after service. Mr Vok did not comply with the requirements of the notice within such period or satisfy the court that he had a counter-claim, set-off or cross demand as specified in s.40(1)(g) of the Act. Without more that would, as the creditor’s petition asserts, mean that the debtor committed an act of bankruptcy on 7 October 2010 (and thus that s.43(1)(a) was satisfied).

11. However it is necessary to address a matter that arose in the course of the hearing, albeit it was not raised by Mr Vok.  It became apparent that there was an issue as to whether the creditor’s petition was correct in referring to the date of the alleged act of bankruptcy as being 7 October 2010, because on 7 October 2010 Mr Vok commenced proceedings in the Federal Court of Australia seeking orders that the bankruptcy notice be set aside.  A copy of his application to the Federal Court is in evidence before the court.  The application stated that Mr Vok had “filed a Notice to Appeal in the Appeal Court” and that he had a cross-claim.  He also sought orders that the time for compliance with the bankruptcy notice be extended up to such time as the decision in the Appeal Court and the cross-claim were determined.  There is no evidence of any order extending the time for compliance with the bankruptcy notice.  Nor is there evidence of any affidavit accompanying the application to set aside the bankruptcy notice. 

12. Mr Vok filed an affidavit in the Federal Court on 13 October 2010 in which he stated that he had filed a notice of intention to appeal (not an appeal) in the Supreme Court of New South Wales on 7 October 2010 in relation to a decision of Hall J of 17 September 2010 on appeal from the judgment of the Local Court on which the bankruptcy notice was based.  He also claimed he had a “valid” cross-claim against the creditor, but did not provide particulars of the asserted cross claim. 

13. On 1 November 2010 a document described as a cross-claim was filed by Mr Vok in the Federal Court in the proceedings to set aside the bankruptcy notice.  There is no evidence of any other proceedings between the parties in the Federal Court.  A copy of the cross-claim filed in the Federal Court on 1 November 2010 was tendered in these proceedings. 

14. On 3 November 2010 a Registrar of the Federal Court dismissed Mr Vok’s application to set aside the bankruptcy notice and also ordered that, to the extent necessary pursuant to O.11 r.16 of the Federal Court Rules, the “mistakenly filed” cross-claim be struck out.  No written reasons were provided.  Mr Vok did not seek review of the Registrar’s decision. 

15. Insofar as the applicant creditor submitted that s.115(1A) operated to render 7 October 2010 the date of the act of bankruptcy, I note that s.115(1A) deals with relation back and commencement of the bankruptcy, not with the date of the act of bankruptcy relied on in the creditor’s petition.

16. On the evidence before the court I am not satisfied that there was a deemed extension of time for compliance with the bankruptcy notice, pursuant to s.41(7) of the Bankruptcy Act. As indicated, there is no evidence of an affidavit having been filed at the time of the application to set aside the bankruptcy notice containing details of the asserted cross-claim or of any appeal. Further, Mr Vok’s affidavit of 13 October 2010 did no more than assert the existence of a counter-claim of an undisclosed nature and amount. Even on a benevolent construction (see Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433; [1980] FCA 78) it did not contain evidence that there was an effective, bona fide and real counter-claim, set-off or cross demand such as to enliven s.41(7) (see Re James and Another; Ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (1993) 46 FCR 183 and Thomas v St George Bank Ltd [1999] FCA 166).

17. The document entitled Cross-Claim filed in the Federal Court on 1 November 2010 asserted the existence of a cross-claim against Mr Woolley for damages for breach of contract in an amount of over $2 million.  Mr Vok claimed in post-hearing submissions that he also filed an affidavit of his father and submissions addressing the asserted cross-claim.  However he did not suggest and the evidence before the court does not show that such claim could not have been set up in the original Local Court proceedings that led to the judgment that formed the basis for the bankruptcy.  On the contrary, the asserted claim was said to have arisen at the time of and as a consequence of part of the circumstances in which the debt the subject of those proceedings arose. 

18. Mr Vok also appeared to suggest in oral submissions that he had filed a cross-claim in the Local Court.  He was given the opportunity after the hearing to file a sealed copy of any cross-claim filed in the Local Court in the proceedings on which the bankruptcy notice was based.  He did not do so.  There was no discussion of a cross-claim in the judgments of the Local Court and Supreme Court.  I am not satisfied on the evidence before the court that there was a cross-claim filed in the Local Court proceedings. 

19. It has not been established that Mr Vok’s application to set aside the bankruptcy notice was effective to extend the time for compliance with the bankruptcy notice under s.41(7) of the Act (see Webb v Hunter (1995) 59 FCR 24; [1995] FCA 1443 and Rixon v Bryett (2001) 112 FCR 295; [2001] FCA 963. There is no evidence to suggest that the time for compliance with the bankruptcy notice was extended by the Federal Court under the provisions of s.41(6A) of the Bankruptcy Act. On the evidence before the court the date of the act of bankruptcy is, as stated in the creditor’s petition, 7 October 2010.

20. I note that if the time for compliance had been extended, an act of bankruptcy would have been committed on 3 November 2010 when the Federal Court dismissed Mr Vok’s application to set aside the bankruptcy notice. 

21. Hence, it is necessary to consider whether any of the requirements of s.43(1)(b) of the Bankruptcy Act were met as at 7 October 2010. The provisions of subparagraph (i) to (iv) of s.43(1)(b) are expressed as alternatives. Mr Vok filed both the application to set aside the bankruptcy notice and the notice of intention to appeal to the New South Wales Court of Appeal on 7 October 2010. In his relatively contemporaneous affidavit of 13 October 2010 sworn in Sydney and filed in relation to his application to the Federal Court, he attested that he filed both the applications on 7 October 2010. Even if this is not to be taken as a claim that he filed the documents himself, it is notable that Mr Vok did not claim in his notice of opposition or in his affidavit evidence that he was not personally present in Australia on 7 October 2010.

22. In addition, the evidence of Mr Sullivan (the solicitor with carriage of the matter for the applicant) is that, to the best of his knowledge, Mr Vok was personally present in Australia on 7 October 2010. 

23. In the absence of a claim by or evidence from Mr Vok that he was not personally present in Australia on 7 October 2010 I am satisfied on the evidence before the court that as at the date of the act of bankruptcy alleged in the petition, that is 7 October 2010, Mr Vok was personally present in Australia and that s.43(1)(b)(i) was satisfied.

24. Moreover, from a review of the files of the solicitor for the applicant, Mr Sullivan stated that Mr Vok attended in person at the Federal Court on 3 November 2010 when the Registrar dismissed his application to set aside the bankruptcy notice.  Mr Vok did not dispute this.  If the date of the act of bankruptcy was 3 November 2010 I am satisfied that Mr Vok was personally present in Australia on that date. 

25. Ground one in the notice of opposition addressed ways other than personal presence in Australia in which s.43(1)(b) of the Bankruptcy Act could be met. However, whether or not Mr Vok was ordinarily resident in Australia, had a dwelling or was carrying on business in Australia or was otherwise within the alternative methods of satisfying s.43(1)(b) at the relevant date, I am satisfied that the requirements of s.43(1)(b)(i) are met on the basis that Mr Vok was personally present in Australia at the time of the act of bankruptcy and hence that the court has jurisdiction to make a sequestration order.

26. It was also generally asserted in ground one that Mr Vok was “not aware” of any outstanding debts in Australia or elsewhere. This claim does not satisfy the court that Mr Vok is able to pay his debts within s.52(2)(a) of the Bankruptcy Act or that for other sufficient cause a sequestration order ought not to be made (s.52(2)(b)). Mr Vok has not put full evidence of his financial position before the court. His assertions that he did not incur debts (notwithstanding the judgment debt owed to Mr Woolley) and that he was not insolvent and could raise funds from an (undisclosed) current investor in AT Group International Ltd and from a bank do not on the limited evidence before the court satisfy s.52(2)(a) or (b) of the Bankruptcy Act.

27. As discussed below, I am satisfied that the debt on which the petitioning creditor relies is still owing.  Ground one in the notice of opposition to the petition is not made out. 

Whether to go behind the Local Court judgment

1. Grounds two, three, four and five in the notice of opposition are relevant to the issue of whether the court should go behind the Local Court judgment that formed the basis for the bankruptcy notice. 

2. Ground two in the notice of opposition is as follows:

   Section 52 of the Bankruptcy Act 1966

   The judgment obtained by the Judgment Creditor in the Local Court on 2^nd February 2010 should not be accepted by the Court and should be reviewed:

   a.  The Respondent asks this Court to go behind the judgment and relies on Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212 per Barwick CJ where his Honour states:

   ‘But it has been made quite clear by the decisions of the past that where reason is shown for questioning whether behind the judgment or as it is said, as the consideration for it, there was in truth and reality a debt due to the petitioning creditor, the Court of Bankruptcy can no longer accept the judgment as such satisfactory proof.’

3. Ground three is as follows:

   The Sequestration Order ought not to be made

   a.  There is no debt in truth and reality due to the Petitioning Creditor.  The Respondent relies on the extract from the Transcript obtained by the Respondent of the Local Court hearing on 2^nd February 2010

   The issues:

   The Respondent asked Mr Woolley, the Petitioning Creditor under cross examination:

   Page 23 (5 and 10)

   Question: “The $50,000 advance was actually transferred by a company called JGL Investments Pty Ltd on instructions from Kafig to AT Group on 9^th October, is that right?”

   Answer: “That sounds correct, yes”

   Page 24 (15)

   Question: “I firstly asked you did you remit it personally from your personal account to my personal account?

   Answer: “No”

   Page 24 (25)

   Question: “So again I confirm that so Kafig – Do you agree that Kafig Pty Ltd became the creditor on 9^th December 2006?”

   Answer: “Indirectly”

   Page 25(25)

   Question: “There’s no deed of assignment to the debt executed from Kafig Pty Ltd to you, was there?”

   Answer: “No formal deed of assignment, No”

   b. Final judgment and the Local Court judgment were obtained in circumstances involving fraud, collusion or a miscarriage of justice.

   (i)There was no debt in truth and reality due to petitioning  creditor at the time of judgment

   (ii)The Petitioning Creditor had no standing in the proceedings he commenced in local court on 2^nd February 2010 and could not have initiated such proceedings

   (iii)Creditor’s Petition should be dismissed on the basis that the debt did not exist at the time of judgment. 

   (iv)The Respondent relies on facts contained in:

   * The Transcript of the Proceedings in the Local Court

   * The Respondent’s Affidavits and the Affidavits of the Petitioning Creditor

   c. The Respondent was denied Procedural Fairness and Natural Justice

   (i)The Respondent filed and served a Notice of Motion in the Local Court on 9^th November 2009 seeking to vary the timetable.  The Notice of Motion was set for hearing on 15^th December 2009.  The Notice of Motion was not heard as Magistrate Heilpern could not locate the file. 

   (ii)The Respondent’s request for adjournment on 2^nd February 2010 was refused.  The Respondent refers to:

   In Minister for Immigration v Bhardwaj, the High Court held

   that a denial of procedural fairness by the decision-maker failing, accidentally, to consider the applicant’s request for an adjournment, and deciding the application adversely, resulted in no decision at all.  These circumstances constituted a constructive failure to exercise jurisdiction, as the decision-maker failed to afford him a hearing of the kind the legislation required the applicant be given.  The decision-maker was thus not functus officio and could proceed to hear the matter afresh, as it did. 

   (iii)The Respondent’s Amended Defence was not allowed in and was struck out at the hearing on 2^nd February 2010

1. Ground four also takes issue with whether Mr Woolley was the creditor.  It is as follows:

   Invalid Bankruptcy Notice

   a. On 3^rd December 2007, the Respondent received an email from the Petitioning Creditor, Greg Woolley, forwarding an email from Mr. Jason Henry which said:

   “Just tidying up Kafig’s accounts.  I note that there is a $50,000 receivable from AT Group International Ltd based out of Hong Kong.  The contact was Peter Vok…”

   b. The Australian Accounting Standards define ‘accounts receivable’:

   “The entries in the accounts receivable ledger represent amounts of money a creditor is owed.  These amounts are usually the result of the sale of assets or services a creditor provided.  The transaction results in a revenue account increase and an increase in an asset account which is called Accounts Receivable”. 

   It further defines an asset as:

   “Future economic benefits controlled by the entity as result of past transactions or other past events; and the capacity of the entity to benefit from the asset in the pursuit of the entity’s objectives and to deny the access of others to that benefit”. 

   c. The Creditor is Kafig Pty Ltd and not the petitioning creditor, Mr. Woolley

2. Associated with this contention, ground five in the notice of opposition is as follows:

   Bankruptcy Notice, Creditors Petition manifest an abuse of process

   The concept of “abuse of process” was considered extensively by the High Court in Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509. The decision makes it clear that:

   “central to the tort of abuse of process is the requirement that the party who has instituted the proceeding has done so for a purpose or to effect an object beyond that which the legal process offers.” 

   “It is an abuse of process if a person is bringing proceedings assuming a standing which he does not have and seeks orders to which he is not entitled” 

   There is no debt in truth and reality due to the petitioning creditor.

3. In post hearing written submissions Mr Vok also contended that as a self-represented person in the Local Court and Federal Court proceedings he had “been a victim of circumstances which permitted [a] miscarriage of justice”.  In particular, Mr Vok claimed that he had a “legitimate and real expectation” that the Local Court, having allegedly lost documents filed in respect of a notice of motion filed by him seeking an amendment to a timetable for filing documents, would have granted him an adjournment to allow time for the court to locate the documents and relist the matter, and also that the magistrate hearing the Local Court case “would have familiarised himself with [his] affidavits and submissions prior to the hearing so that he could provide some assistance to [Mr Vok in relation] to the court process and court rules”.  These claims are discussed further below as well as the consideration of such matters by the Supreme Court on appeal from the Local Court. 

4. I have considered the issues raised in all the grounds and in Mr Vok’s submissions, including the contention that a sequestration order ought not to be made because there was in truth and reality no debt due to the petitioning creditor.  The essence of Mr Vok’s contention is that Mr Woolley was not the creditor. 

5. In order to address the grounds in the notice of opposition it is relevant to summarise the nature of the claims made by Mr Woolley in the Local Court proceedings, the judgment of the Local Court and of the Supreme Court on appeal.

6. In the Statement of Claim relied on by Mr Woolley in the Local Court it was pleaded that by an agreement of 5 October 2006, Mr Woolley agreed to loan AT Group International Limited (AT) $50,000 for the purpose of its business activities and that Mr Vok (a director of AT) guaranteed to Mr Woolley repayment of the loan by AT.  The Statement of Claim pleaded that AT failed to make payment of the outstanding amount owed on the loan by 5 October 2007 in compliance with the agreement, that AT only repaid $5,000 of the loan, and that by letter from the solicitor for Mr Woolley to AT and to Mr Vok of 3 June 2008, Mr Woolley demanded from AT and from Mr Vok the sum of $45,000, being the total amount then owing under the agreement and guarantee.  Notwithstanding the issue of a statutory demand under the Hong Kong Companies Ordinance demanding the amount from AT, the amount remained outstanding.  By letter of 20 April 2009 Mr Woolley demanded from Mr Vok the sum of $45,000 under the guarantee which was not paid. 

7. In his Defence filed on 12 June 2009, Mr Vok admitted that he guaranteed to Mr Woolley repayment of the loan by AT Group, but relied on what he described as the “full agreement made on 5^th October 2006”.  Subsequently Mr Vok sought to rely on an Amended Defence filed on 28 January 2010 which raised a claim that the money was advanced by Kafig Pty Ltd, not by Mr Woolley.  The Amended Defence was struck out at the hearing on 2 February 2010. 

8. The matter proceeded to hearing in the Local Court.  Mr Woolley was cross-examined.  The transcript is in evidence in these proceedings as is the judgment of 1 March 2010. 

9. At first instance, Chief Magistrate Price found that it was an express term of the loan that Mr Vok would be personally responsible to Mr Woolley for repayment of the loan.  His Honour canvassed the evidence before the Local Court as to the circumstances in which the loan was entered into, including an email from Mr Vok of 6 October 2006 and a letter from AT to Mr Woolley agreeing “to receive payment of A$50,000 being a twelve month interest free loan, personally guaranteed by Peter Vok”.  His Honour also had regard to subsequent correspondence in which Mr Woolley, through his solicitors, sought repayment of the loan, Mr Vok’s response that he was “not in a position to repay the full amount” (as at 13 August 2008), his indication on 5 May 2009 that he wanted to repay the balance but had “no funds available” but that “otherwise [he] would” make repayment, and a similar indication in December 2007 and January 2008.  In other words, his Honour had regard to evidence of Mr Vok’s acknowledgment of his liability to Mr Woolley. 

10. His Honour addressed an assertion by Mr Vok that the payment represented a deposit on an investment in the company by Mr Woolley (this appears to be what the Defence described as the full argument) and the contention that the words “personally guaranteed by Peter Vok” could not be considered as his personal guarantee.  However His Honour concluded that “the money was no more no less than a Loan” from Mr Woolley to the company, repayment of which was guaranteed by Mr Vok and gave judgment for Mr Woolley.

11. Mr Vok appealed from the judgment of the Local Court.  He contended that Chief Magistrate Price had erred by not properly considering all of the evidence before him; by disallowing his Amended Defence which was said to have been filed as a consequence of the plaintiff’s non-observance of court orders; by not considering evidence adduced during cross-examination of Mr Woolley; and by allowing Mr Woolley’s affidavits and other documents in evidence on the basis that this was said to be contrary to earlier orders of the court.  These grounds canvassed the procedural fairness concerns that Mr Vok has also raised in these proceedings in relation to the decision of the Local Court as a basis for going behind the judgment.  The appeal was heard on 16 September 2010. 

12. I note that over the objection of Mr Woolley, Hall J allowed Mr Vok at the hearing of the appeal to amend his summons on the basis that this would allow Mr Vok to have all the matters he wished to raise before the court.   Hence he has had the opportunity to raise all of his concerns about the Local Court procedure and judgment before the Supreme Court.  In particular Mr Vok alleged that the magistrate was biased, that he was denied procedural fairness and also that the magistrate had erred. 

13. On 17 September 2010 Hall J delivered judgment (unreported). A copy of the judgment is in evidence before the court.  Hall J referred to the fact that there were nine appeal grounds “framed in the most extensive terms”, including allegations of “administrative errors, bias, denial of procedural fairness, allegedly untrue and improper statements by counsel for Mr Woolley before the Local Court, jurisdictional error, unreasonable and irrational decision-making, perverse findings of primary fact, failure to properly consider the evidence and error in permitting [Mr Woolley] to rely upon evidence said to have been contrary to earlier directions”.  Similar claims are raised in these proceedings. 

14. These claims were considered by Hall J.  In particular, his Honour considered Mr Vok’s contention that Mr Woolley had no standing to bring the proceedings against Mr Vok on the basis that he was not, in fact, a party to the loan, on the basis that the money was advanced by Mr Woolley’s employer, Kafig Pty Ltd (Kafig).  This is the central argument that Mr Vok seeks to rely on in these proceedings. 

15. Hall J outlined the factual evidence before the court in relation to the nature of the transaction, including, in particular, the evidence of the letter from Mr Vok to Mr Woolley of 6 October 2006 in which he stated:

    This is to confirm our agreement reached on 5 October 2006, whereby we agree to receive payment of A$50,000 being a 12 month interest free loan, personally guaranteed by Peter Vok.

16. His Honour also had regard to Mr Vok’s subsequent references in correspondence to his inability to meet his outstanding liability, and his failure at that time to raise any issue to the effect that Mr Woolley was not a party to the agreement or about whether there was a loan or that the $50,000 had been paid by way of an investment.  His Honour referred to the fact that on 14 December 2007 Mr Vok paid the amount of $5,000 to Mr Woolley in respect of the debt. 

17. Hall J found that Mr Vok had in his correspondence made unqualified admissions as to his personal liability to pay Mr Woolley the moneys in question, consistent with the formal admissions he made in his Defence filed on 12 June 2009.  His Honour had regard to the fact that the issue of Mr Woolley’s standing only arose close to the Local Court hearing date (in Mr Vok’s submissions of 12 January 2010 and the Amended Defence dated 28 January 2010). 

18. His Honour found no basis for Mr Vok’s complaints in relation to the Local Court’s admission into evidence of Mr Woolley’s affidavit evidence of January 2010 and other material in circumstances where Mr Vok had not objected and had not sought further time and where the evidence in question was in reply to that of Mr Vok.  Further, Hall J considered the claim that the striking out of the Amended Defence in “some undefined way…manifested bias”, but found no substance in this allegation in circumstances where the evidence showed that the magistrate had carefully considered the matter. 

19. The issue of whether Mr Woolley had standing to bring the claim had been raised in the Amended Defence, which disputed whether there was a loan agreement or that Mr Woolley was a party to it.  Mr Vok asserted that because he could not rely on the Amended Defence he was in some way denied procedural fairness and not permitted to have the case heard on its merits.

20. However, Hall J pointed to the fact that there was no evidence before the magistrate to explain or justify why Mr Vok should be granted leave to withdraw the admissions he had made in his Defence or to provide a justification for being permitted to withdraw such admissions.  Nor was there any new evidence as Mr Vok had contended in the Amended Defence which was filed at a very late stage and sought to introduce new issues that had not been previously raised.

21. As Hall J stated, the question of permitting Mr Vok to rely on the Amended Defence was an exercise of judicial discretion by the magistrate.  His Honour found no error in the relevant sense had been established in such discretionary decision making.

22. Nonetheless, Hall J dealt in some detail with the issue of Mr Woolley’s standing to bring the proceedings in the Local Court, including the evidence of Mr Woolley in cross-examination before the Local Court that is relied on by Mr Vok in these proceedings. 

23. As discussed further below, Hall J found no substance in Mr Vok’s contention that Mr Woolley was not the creditor. 

24. His Honour also addressed what he described as the “catalogue of complaints made by Mr Vok in relation to alleged administrative errors, procedural fairness issues and bias”, but found that he was “firmly” of the view that “no breach of procedural fairness requirements [had] occurred in the conduct of the proceedings before the Local Court” and that “the allegations of bias [we]re baseless”.  His Honour gave detailed reasons for such findings in relation to each of the complaints made by Mr Woolley.  His complaints about alleged improper conduct by counsel for the plaintiff were found to be “incorrect and without any substance whatsoever” such that they should “never have been made”.

25. Hall J concluded that no question of law or mixed question of fact and law arose and that no basis had been established for the grant of any of the relief sought by Mr Vok.  The appeal was dismissed.

26. While Mr Vok filed a notice of intention to appeal, there is no evidence that he in fact appealed from the judgment of Hall J. 

27. Mr Vok now asks the court to go behind the judgment of the Local Court on the basis that substantial reasons are given for questioning whether in truth and reality a debt was due from him to Mr Woolley.  In the alternative he contends that the circumstances are such that for other sufficient case a sequestration order should not be made. 

28. Insofar as Mr Vok asked the court to go behind the judgment that was the basis for the bankruptcy notice I note that prior to the commencement of the hearing I advised the parties that I saw it as appropriate in the particular circumstances of this case that, as discussed in Wolff v Donovan (1991) 29 FCR 480; [1991] FCA 222 per Lee and Hill JJ (and see Makhoul v Barnes (1995) 60 FCR 572 at 584), the court should adopt a two-stage process in relation to the issue of whether it should go behind the judgment, inquiring first at the hearing of 7 December 2011 as to whether there was sufficient reason shown to question the existence of a real debt behind the judgment. If I was not satisfied that there was sufficient reason to question the existence of a real debt behind the judgment, and having heard all the matters relevant to the creditor’s petition, I would determine whether or not to make a sequestration order. If I was so satisfied, the issue of Mr Vok’s liability to Mr Woolley would have been determined at a later date (at which time the parties would have had the opportunity to call further evidence). This occurred in circumstances where on 7 December 2011, prior to the hearing of this matter, the court dealt with an application by the petitioning creditor to set aside a subpoena addressed to a non-party (Mr Henry the Chief Financial Officer of Kafig Pty Ltd) to produce documents that was issued by Mr Vok on 26 October 2011, after the creditor’s petition was listed for hearing. The subpoena was set aside. Mr Vok’s subsequent oral application to issue a subpoena to give evidence addressed to the same person was also dismissed (see Woolley v Vok (No.3) [2011] 1054. 

29. Mr Vok in effect sought the production of material for the purposes of obtaining information to determine whether he had a case about the identity of the creditor having regard to the nature of the arrangement for payment of the loan to a company associated with him that was the basis for the Local Court judgment in order to put such further material before this court if it reheard the factual issue that had been before the Local Court about whether the debt was owed to Mr Woolley 

30. Mr Vok raised a number of matters in support of the proposition that there were substantial reasons for questioning whether he owed a debt to Mr Woolley.  In essence he relies on the arguments and issues canvassed in the Supreme Court. 

31. Apart from procedural concerns, Mr Vok sought to rely on the 2007 and 2010 correspondence from Mr Henry to Mr Woolley in support of the proposition that the debt was not owed to Mr Woolley but rather to Kafig Pty Ltd (or that the court should go behind the judgment to determine whether this was so on the basis that if the debt was shown in Kafig’s accounts this indicated that Kafig was the creditor, not Mr Woolley).  Mr Vok contended that this evidence (and the fact that he was not given leave to rely on the Amended Defence filed in the Local Court on 28 January 2010) was such that the court constituted circumstances such as to warrant going behind the Local Court judgment to determine whether there was a debt owed to Mr Woolley.  I have however considered those matters individually and cumulatively. 

32. In considering whether there are substantial reasons for doubting whether there really is a debt due to the creditor or whether the court should in its discretion accept the judgment of the Local Court as proof of the debt that formed the basis for the bankruptcy notice and hence the creditor’s petition, I have borne in mind that the categories of situations in which the court will go behind a judgment are not closed.  I have had regard to all material before the court.  However it is of relevance that the judgment in question was obtained after a trial of all the issues.  If a judgment has been obtained by default without a real trial of the issues the court will more readily look behind it (Corney v Brien (1951) 84 CLR 343; [1951] HCA 31). The Local Court judgment was not a default judgment, but rather a judgment delivered after a contested hearing. The court will be less ready to go behind such a judgment in the absence of fraud or injustice. It is also relevant to have regard to the fact that the applicant had and exercised a right of appeal to the Supreme Court in which he raised the concerns in relation to the judgment of the Local Court that, in substance, he raises in these proceedings as the basis on which the court is asked to go behind the judgment.

33. Particular reliance was placed by Mr Vok on the fact that in the Local Court proceedings Mr Woolley responded to questions put to him by his counsel (in re-examination) when asked about the consequences of his resignation “from Kafig and LJCB and JGL and that group of companies” in May 2009 by stating:

    One of the consequences was that the loan account that I ran up with Kafig at that point in time was squared up.

34. The re-examination continued:

    Q  It was settled?

    A  It was settled.

    Q  So is Kafig owed any money by you now?

    A  No, it’s square.  At that point in time Kafig owed me money and it reduced the amount that it owed me at that – that it paid me at that time by $50,000 on the basis that it would have no longer any – it wouldn’t sit on its books, as we’ve said before, but it would actually be a debt that I would seek to recover.

35. Mr Vok submitted that up until 28 May 2009, Mr Woolley was an employee of JGL and Kafig, that the advance of $50,000 to AT was recorded as a debt owed by AT on the books of Kafig and that hence Kafig was the creditor and the debt was an asset of Kafig (or at least that the court should go behind the judgment of the Local Court to determine who was the creditor).  He claimed that insofar as Mr Woolley was said to have suggested that he had purchased the debt from Kafig on 28 May 2009, he had produced no evidence to support such a claim, either at that time, or in response to a request for further information thereafter. 

36. Mr Vok submitted that while Mr Woolley had initiated proceedings against him in the Local Court on 4 May 2009, at that date he was not the creditor and that he had no standing and could not bring the Local Court proceedings. 

37. Insofar as Mr Vok relies on the evidence before the Local Court (including Mr Woolley’s evidence in cross-examination), this evidence was considered in the Local Court and also on appeal.  Mr Vok’s contentions about the effect of this evidence were rejected on appeal. 

1. The fact that Mr Vok disagrees with the Local Court’s finding that Mr Woolley was the creditor and the findings on appeal does not provide a basis to go behind the judgment. 

2. Mr Vok also submitted that the proceedings in the Local Court proceeded on the basis that Mr Woolley had advanced $50,000 to AT based on the fact at the start of the hearing Chief Magistrate Price made the following statement (transcript p.1): 

   HIS HONOUR:   Correct me if I am wrong, but my brief reading of this is that Mr Woolley advanced a sum of money to a proprietary limited entity, AT Group International Ltd, for $50,000 on certain terms.  There was some form of guarantee so far as you as a director of the company was concerned so far as responsibility for that.  The plaintiff, I think, alleged that $A5,000 was paid and the claim relates to the balance of $45,000.

   Have I got it basically right, Mr Hynes? [Mr Hynes was counsel for the plaintiff, Mr Woolley]

   HYNES:   I think you’ve got it precisely right other than it was advanced to Hong Kong, the company.  That was Mr Vok’s company, but other than that --

   HIS HONOUR:   I did read that.

   HYNES:   --it’s 100% right.

3. Mr Vok suggested that this was a statement to him, although in fact his Honour asked counsel for Mr Woolley if his understanding was basically right.  Mr Vok contended that he was a self-represented defendant in the Local Court and that these statements and the whole of the transcript of the proceedings in the Local Court demonstrated that the proceedings were not an “equal contest” and appeared to suggest that the proceedings were conducted on the assumption that Mr Woolley was the creditor. 

4. The fact that the start of the hearing in the Local Court the magistrate sought to clarify the basis for Mr Woolley’s claim does not show a lack of procedural fairness (either of itself or in conjunction with the other concerns raised by Mr Vok) or that the hearing proceeded on any assumption that Mr Woolley was the creditor such as to warrant going behind the judgment.  Again, it is relevant that Mr Vok’s claims about bias and a lack of procedural fairness were considered on appeal. 

5. Mr Vok also appeared to take issue with both the amount of documentation filed by the solicitors for Mr Woolley in the Local Court and the fact that he was not given leave to rely on the Amended Defence filed on 28 January 2010 in which he denied most of the assertions in the statement of claim, including that a payment of $5,000 was made to Mr Woolley or that the amount of $45,000 was owing to Mr Woolley under the agreement and guarantee as at 3 June 2008.  These matters were considered by the Supreme Court.  Hall J rejected Mr Vok’s contentions about the admission of evidence relied on by Mr Woolley in rely to Mr Vok’s evidence, noting that he had not objected or sought further time to deal with it.  Mr Vok’s disagreement with such a procedural ruling does not warrant going behind the judgment. 

6. Mr Vok also relied on the fact that on 3 December 2007 he received an email from Mr Woolley forwarding an email from Mr Jason Henry CFO of Kafig Pty Ltd to Mr Woolley.  This email was referred  to in Mr Vok’s affidavit of 22 December 2009 filed in the Local Court proceedings and in that affidavit Mr Vok raised the suggestion (paragraph 23 of the affidavit of 22 December 2009 which is an annexure to Mr Vok’s affidavit of 5 December 2011 filed in these proceedings) that Mr Henry’s email suggested that the $50,000 paid to AT was “a debt on Kafig Pty Ltd books”. 

7. Insofar as Mr Vok relies on Mr Henry’s letter and a subsequent letter from Mr Henry to Mr Woolley dated 25 January 2010 (which was also before the Local Court) such correspondence was considered by both Local Court and the Supreme Court.  The reasoning of Hall J as to whether Mr Woolley was the creditor based on the evidence before the Local Court (not only these two letters) is persuasive.  For the reasons that follow, these letters do not, either alone or in conjunction with all the material before this court, demonstrate substantial reasons for going behind the judgment. 

8. On the other hand, insofar as Mr Vok takes issue with the admission of the letter of 25 January 2010 into evidence in the Local Court (as well as Mr Woolley’s affidavit of that date) that issue was also considered by the Supreme Court on appeal.  It does not provide a basis to go behind the Local Court judgment. 

9. The email of 3 December 2007 noted that a $50,000 receivable from AT was recorded in Kafig’s accounts being an advance of 5 October 2006 for 12 months.  Mr Vok had the opportunity to address this evidence in the Local Court proceedings. 

10. The letter of 25 January 2010 was also before the Local Court.  In that letter (headed Settlement of Loan Account) Mr Henry confirmed to Mr Woolley that at his request Kafig had made available (via a related entity JGL Investments Pty Ltd) the sum of $50,000 to be advanced to AT.  The advance was said to be recorded in Mr Woolley’s loan account with Kafig.  Mr Henry confirmed that Mr Woolley had been liable to reimburse this amount to Kafig and that this was taken into account when his loan account with Kafig was settled on his resignation in May 2009. 

11. Mr Vok submitted that there were “doubts” about the existence of any loan account and about the evidence the document was intended to manifest.  He referred to the fact that Mr Woolley was cross-examined by him in the Local Court about this document as set out above.  Mr Vok expressed a concern about how the letter was communicated to Mr Woolley, on the basis that it would have been signed by Mr Henry in Melbourne (presumably on the basis that the letter appears on letterhead of Kafig Pty Ltd with a Melbourne address).  According to Mr Vok it was not mailed to Mr Woolley (apparently because the address was that of Kafig and not Mr Woolley’s lawyers or may not be correct).  It was asserted that “the only way it could have come into Mr Woolley’s possession was by email or by fax,” notwithstanding that no email had been produced by the applicant to evidence the document’s transmission or time of transmission and no fax or original of the document had been produced.

12. In these proceedings issue was taken with the fact that the letter of 25 January 2010 was not included as an annexure to Mr Woolley’s affidavit in the Local Court proceedings.  Mr Vok appeared to raise an issue as to whether Mr Woolley was aware that the signature was the signature of Mr Henry.  It was submitted that there were doubts about the document’s authenticity in the absence of affidavit evidence from Mr Henry and having regard to the fact that the letter appeared to have been produced at Mr Woolley’s request.  It is not clear how the method of communication is relevant.  Insofar as Mr Vok’s contention is that Mr Woolley did not establish that he was the creditor, this is contrary to the findings of the Local Court and the Supreme Court. 

13. Hall J dealt with the issue of Mr Woolley’s standing and Mr Vok’s contentions that are repeated in these proceedings.  Such reasoning is in point.  His Honour stated at [101] – [106]:

    Mr Woolley explained in his initial affidavit the internal arrangements made within his group of companies for the payment out of the $50,000.  In paragraph 7, he stated that, on 6 October 2006, he caused to be deposited $50,000 by international funds transfer from his business account in the name of JGL Investments Pty Limited to Mr Vok’s business account in the name of AT Group. 

    Mr Vok, in his affidavit sworn 22 December 2009, raised a number of matters.  In paragraph 12 he set out a conversation he alleged that he with Mr Woolley concerning the $50,000 advance.  He claimed that, based on the conversations he said occurred, the advance was not by way of a loan but was by way of investment and that it was Mr Woolley who asked that it be made a loan.  Before December 2009, he had not raised the issue of “investment”.  I note that this was raised before Mr Woolley’s affidavit of 25 January 2010 was served. 

    In paragraph 25 of the same affidavit, Mr Vok himself raised an issue about the source from which the $50,000 was paid, in particular, the fact that there had been a direction to pay $50,000 given to JGL Investments and the debt of $50,000 was entered in the books of Kafig. 

    Mr Woolley’s affidavit of 25 January 2010 was an affidavit in reply to evidence given by Mr Vok himself on the question as to the source or payee of the $50,000 advance.  It was in that context Mr Woolley gave an explanation as to how, within his group of companies, the financial transaction had been arranged (paragraphs 19 to 23).  It was properly evidence in reply to Mr Vok having raised in December 2009 the role of JGL Investments and Kafig and was not “new” evidence as Mr Vok argued before the Local Court on the application to strike out the Amended Defence. 

    Mr Woolley was cross-examined about the financial arrangements on 2 February 2010 (transcript p.24) and later at p.25.  He explained that he was the CEO of the LJCB Investment Group and that Kafig was effectively a subsidiary of LJCB Investment Group of which he had control.  He instructed Kafig which then instructed JGL, effectively, its banking entity, to make the transfer.  Accordingly, Kafig theoretically had the money as a receivable from AT Group or from Mr Vok or from both.  He said he guaranteed Kafig.  The payment was recorded in his expenses and loan account with Kafig.  It was for that reason that the payment of $50,000 appeared initially on Kafig’s books.  Accordingly, under the arrangements, he was liable to Kafig to reimburse it that amount.  This was, in fact, done in the manner described in evidence.  By these arrangements, Mr Woolley assume responsibility for the $50,000.  It was not a case, as Mr Vok seemed only in recent times to believe that the payment of $50,000 was an independent transaction between Kafig and AT group and himself. 

    Accordingly, the inter-company arrangements simply went to the source from which the funds were derived (creating an indebtedness in Mr Woolley via his loan account with Kafig) and did not constitute evidence that the contract for the advance was, in fact, made with entities other than Mr Woolley. 

14. Prior to the Local Court proceedings and on the initial pleadings no issue was raised as to Mr Vok’s liability to Mr Woolley.  Indeed, he acknowledged such liability to Mr Woolley.  It cannot be said because the magistrate did not allow the Amended Defence to be relied upon that this constituted an injustice such as to warrant going behind the judgment.  Hall J considered all the various issues raised by Mr Vok in relation to the Local Court decision and procedures which he now seeks to raise in these proceedings, including the general issue of procedural fairness.  I have borne in mind that the fact that the debtor unsuccessfully appealed is not conclusive as to whether the court should go behind a judgment, but as pointed out in Richardson v Leonard Cohen & Co [2008] FCA 1392 the repeated failure of the debtor’s contentions at first instance and on appeal supports the conclusion that such contentions are unsustainable or not genuinely arguable.

15. As indicated, it appears to be asserted by Mr Vok that on the evidence before the Local Court Mr Woolley has not established that Mr Vok owed a debt to him, that he should not have been permitted to rely on the letter of 25 January 2010 in the Local Court and that the issues raised are sufficient to warrant this court going behind the Local Court judgment on this basis and, in effect, rehearing the matter.  At the same time Mr Vok sought to rely on the statement recording the advance attached to the letter of 25 January 2010 in support of the proposition that the debt was owed to Kafig. 

16. Insofar as this may be seen as a contention that Mr Woolley had to prove that a debt was due to him in these proceedings, it is well established that a court of bankruptcy is “not a court for determining actions in debt” (Prestia, in the matter of Australia and New Zealand Banking Group Limited v Prestia [2001] FCA 792 at [18] per Hely J) and that the court has a discretion to accept a creditor’s judgment as proof of the debt relied on to found the creditor’s petition (Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5 at 225 per Barwick CJ).

17. The unsubstantiated assertions Mr Vok makes about the authenticity of the letter of 25 January 2010 (which was in evidence before the Local Court) do not go towards establishing or constitute sufficient reasons to doubt whether there was really a debt due to Mr Woolley.  This is not a case in which there is fresh previously unobtainable evidence that would suggest a verdict opposite to that of the Local Court (cf McDonald v McDonald (1965) 113 CLR 529; [1965] HCA 45 and Monroe Schneider Associates (Inc) and Another v No 1 Raberem Pty Ltd and Others (No 2) (1992) 37 FCR 234; (1992) 109 ALR 137 and also see Kirk v Ashdown [1999] FCA 522). Rather, Mr Vok seeks to reagitate the issue determined by the Local Court and addressed on appeal. I find the reasoning of Hall J persuasive in that respect. Mr Vok has not established sufficient reason for questioning whether the debt is due to Mr Woolley on the basis of the material before this court. The fact that Mr Vok has recently attempted to obtain possible evidence to support his case by way of a subpoena issued to Mr Henry is not such as to establish that any such evidence exists or such as to warrant going behind the judgment.

18. Nor is there any evidence to support Mr Vok’s allegation that (having regard to the evidence before the Local Court and the transcript) the judgment was obtained in circumstances involving fraud, collusion or a miscarriage of justice.  As Chief Magistrate Price and Hall J both pointed out, there was a considerable amount of evidence of unqualified admissions by Mr Vok as to his personal liability to Mr Woolley (detailed in the judgment of Hall J at [57] – [72]).  Magistrate Price considered this evidence.  Hall J saw no error or lack of procedural fairness in that approach. 

19. Mr Vok had the opportunity to have his concerns in this respect considered on appeal.  I see no substance in Mr Vok’s contentions about a lack of procedural fairness such as to warrant going behind the judgment of the Local Court. 

20. Mr Vok also took issue with the manner in which the Local Court dealt with a notice of motion.  His evidence is that on 9 November 2009 he filed a notice of motion requesting a new timetable for the filing of evidence on the basis that he was unable to adhere to the timetable that was set because he normally resided outside Australia and certain documents he required had to be sourced from third parties.  9 November 2009 was the day before his evidence was to be filed.  According to the evidence of Mr Vok’s father, George Vok (in an affidavit sworn on 25 September 2011), he was handling the Local Court matter on behalf of his son.  He received a notice of listing of the notice of motion on about 12 November 2009 listing it on 15 December 2009.  The evidence of Mr Vok Senior is that on that day the magistrate indicated that it was a review date (consistent with the notice of listing for that date) and when Mr Vok Senior said that it should be a notice of motion, the magistrate said he did not have a notice of motion on the file and the hearing proceeded as a review date hearing.  Mr Vok appears to assert that his notice of motion was not dealt with and that this was an irregularity in the proceedings.  However it appears from the material before the court that Mr Vok was in fact given the opportunity to file further affidavit evidence in December 2009.  The concern that he raises is not such as to warrant going behind the Local Court judgment. 

21. I have had particular regard to Mr Vok’s contention that he was denied procedural fairness because he was precluded from relying on the Amended Defence in which he disputed that there was a loan agreement or that Mr Woolley was a party to it. 

22. Mr Vok has not explained why the reasoning of Hall J in relation to this issue is not in point in the context of determining whether to go behind the judgment of the Local Court.  As set out above, Hall J referred to the absence of evidence from Mr Vok explaining or justifying why he should be granted leave to withdraw the admissions he made in his Defence; observed that Mr Woolley’s evidence of 25 January 2010 was not “new” evidence; that the Amended Defence was filed at a very late stage (before a hearing scheduled for 2 February 2010) and that it sought to introduce new issues, and that the question of permitting Mr Vok to rely on it was an exercise of judicial discretion. 

23. A debtor is bound by the way in which he “has chosen to conduct” the Local Court proceedings.  The fact that the magistrate properly prevented Mr Vok from withdrawing admissions (as the Amended Defence sought to do) in the interests of the administration of justice is not such as to warrant going behind the judgment (see Commonwealth Bank of Australia v Jeans (No 2) (2005) 3 ABC(NS) 712; [2005] FCA 978).

24. The same may be said in relation to the approach of the magistrate at first instance to the other procedural matters that Mr Vok seeks to rely upon in these proceedings.  Again, I note that Hall J considered these complaints in detail.  It has not been established that there was any irregularity or deficiency of procedure in the proceedings at first instance such as to warrant going behind the judgment. 

25. The contentions that the debt was not assigned or that there is no evidence that Mr Woolley “purchased” the debt do not advance matters as there was no reliance by the creditor on such matters.  The separate contention that the bankruptcy notice was invalid because Kafig was the creditor is not made out on the evidence before the court. 

26. In all the circumstances it has not been established that substantial reasons have been given for questioning whether behind the judgment of the Local Court there was, in truth and reality, a debt due to Mr Woolley.  I am not persuaded on the evidence before the court that the court should go behind the judgment.  Rather it should accept the Local Court judgment as proof of the debt relied on in the bankruptcy notice. 

27. As indicated, insofar as these grounds and Mr Vok’s submissions otherwise involve an assertion that there was fraud, collusion or a miscarriage of justice, there is nothing in the material before the court to warrant such a conclusion.  Nor has it been established that Mr Vok was otherwise denied procedural fairness or natural justice in the Local Court proceedings such that the sequestration order ought not to be made.  Again, the reasoning of Hall J in relation to the concerns expressed by Mr Vok is persuasive.  The fact that there was not a variation of timetable as sought by Mr Vok and that his Amended Defence was struck out were discretionary maters for the magistrate.  It has not been established that there was a genuinely arguable claim of a denial of procedural fairness. 

28. I have had regard to Mr Vok’s contention that in circumstances where he was self-represented the procedure adopted in the Local Court (and the Federal Court) did not give him a fair hearing of his case on its merits and that this is relevant to whether this court should go behind the judgment of the Local Court. 

29. The Full Court of the Federal Court considered the duty of a court to an unrepresented litigant in Minogue v Human Rights and Equal Opportunity Commission (1999) 84 FCR 438; [1999] FCA 85 at [26] – [29] as follows:

    Unrepresented litigants present difficult issues for courts and for individual judges. As the majority observed in Cachia v Hanes (1994) 179 CLR 403 at 415:

    "Whilst the right of a litigant to appear in person is fundamental, it would be disregarding the obvious to fail to recognise that the presence of litigants in person in increasing numbers is creating a problem for the courts".

    Increasing attention is being devoted to the policy issues created by the increasing numbers of litigants in person. See, for example, Australian Law Reform Commission, The Unrepresented Party (Background Paper 4, December 1996).

    In Neil v Nott (1994) 121 ALR 148; 68 ALJR 509, the High Court considered whether the trial judge's exercise of discretion to refuse an extension of time for lodging an application for maintenance and support under the Administration and Probate Act 1958 (Vic). The Court observed (at 150) that a

    "frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy".

    In Abram v Bank of New Zealand [1996] ATPR 41-507, at 42347, a Full Federal Court, faced with an unrepresented litigant's claim that the trial Judge had not given him appropriate assistance to present his case, made this comment:

    "What a judge must do to assist a litigant in person depends on the litigant, the nature of the case, and the litigant's intelligence and understanding of the case".

    We respectfully agree with this observation. Because the duty of the judge varies according to the factors identified by the Full Court in Abram, the duty to assist an unrepresented accused in criminal proceedings is likely to be more extensive than that imposed on a judge hearing civil proceedings in which one or more of the parties are not legally represented: cf MacPherson v The Queen (1981) 147 CLR 512; D A Ipp, "Judicial Intervention in the Trial Process" (1995) 69 Australian Law Journal 365 at 369-370.

    The general principles governing the role of the judge in civil proceedings involving an unrepresented litigant have been stated in Rajski v Scitec Corporation Pty Ltd, (unreported, Court of Appeal, NSW, Full Court, No CA 146 of 1986, 16 June 1986).   Samuels JA said this (at 14):

    "In my view, the advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored. But the court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent. ...At all events, the absence of legal representation on one side ought not to induce a court to deprive the other side of one jot of its lawful entitlement. ...An unrepresented party is as much subject to the rules as any other litigant. The court must be patient in explaining them and may be lenient in the standard of compliance which it exacts. But it must see that the rules are obeyed, subject to any proper exceptions. To do otherwise, or to regard a litigant in person as enjoying a privileged status, would be quite unfair to the represented opponent."

    Mahoney JA made the following observation (at 27):

    "Where a party appears in person, he will ordinarily be at a disadvantage. That does not mean that the court will give to the other party less than he is entitled to. Nor will it confer upon the party in person advantages which, if he were represented, he would not have. But the court will, I think, be careful to examine what is put to it by a party in person to ensure that he has not, because of the lack of legal skill, failed to claim rights or to put forward arguments which otherwise he might have done."

    These comments have been referred to with approval in subsequent cases: see In the Marriage of Johnson (1997) 139 FLR 384 (Fam Ct/FC), at 406 (and cases cited there); Morton v Vouris (1996) 21 ACSR 497, at 513-514, per Sackville J. There is nothing in Neil v Nott inconsistent with what was said in Rajski v Scitec Corporation.

    A trial judge often faces something of a dilemma. While he or she may be bound to provide some advice and assistance to an unrepresented litigant, the authorities make it clear that the Judge should not intervene to such an extent that he or she cannot maintain a position of neutrality in the litigation: Burwood Municipal Council v Harvey (1995) 86 LGERA 389 at 397 (NSW CA), per Kirby P. However, the boundaries of legitimate intervention are flexible and will be influenced by the need for intervention to ensure a fair and just trial: Panagopoulos v Southern Healthcare Network (unreported, 15 September 1997, Supreme Court, Vic, Smith J) at 6.

    (also see Platcher v Joseph [2004] FCAFC 68 at [104] – [105] and Jeray v Blue Mountains City Council and Others (No 2) (2010) 180 LGERA 1; [2010] NSWCA 367).

1. However the matters raised by Mr Vok in relation to whether the Local Court afforded him a fair hearing as a self-represented litigant are not such as to satisfy me that this court should go behind the judgment of the Local Court.  Mr Vok raised the essence of such matters in the Supreme Court.  Hall J dealt with his claims about alleged administrative errors, admission of documents into error, the striking out of the Amended Defence and bias on the part of the magistrate as well as the wider issue of whether a fair hearing and procedural fairness was afforded to Mr Vok as a self-represented litigant in the Local Court.  Hall J had the benefit of examining the transcript, the affidavit evidence before the Local Court as well as extensive written submissions of Mr Vok.  His Honour was “firmly of the view” that no breach of procedural fairness requirements occurred in the conduct of the Local Court proceedings (at [110]).  He gave detailed reasons for such findings, which are persuasive.  It is not apparent that the fact that Mr Vok was self-represented in the Supreme Court raises any concern about whether he had a fair hearing. 

2. Mr Vok seeks to raise the same issues again in these proceedings.  He has not established that any of the procedures or rulings of the Local Court created any substantive issues affecting a fair trial or that any issue arose in relation to the duty of a court to an unrepresented litigant such as to warrant going behind the judgment.  He did not appeal from the decision of the Supreme Court.  His concern about the fairness of the Federal Court procedure seems to relate to the fact that the document described as a cross-claim was accepted for filing.  It has not been established that the procedure of the Federal Court in relation to the application to set aside the bankruptcy notice was of concern in any way relevant to whether this court should go behind the Local Court judgment.  If Mr Vok had any dissatisfaction with the decision of the registrar of the Federal Court he could have sought review by the Federal Court.  It is not for this court to review such a decision. 

3. I have considered all of the issues raised by Mr Vok individually and cumulatively.  It has not been established that the Local Court judgment was obtained by fraud, collusion or miscarriage of justice.  Nor am I satisfied that the issues Mr Vok raised in the Supreme Court or in these proceedings are otherwise such as to warrant going behind the Local Court judgment. 

4. The judgment in question was not a default judgment, but rather a judgment of the Local Court delivered after a hearing. It was upheld on appeal. It has not been established that the circumstances are such that substantial reasons are given for questioning whether the Local Court judgment represented a real debt owed to Mr Woolley or that there is otherwise reason to go behind the judgment. I am satisfied that the court should exercise its discretion to accept the petitioning creditor’s judgment as proof of the debt relied on within s.52(1) of the Bankruptcy Act.

5. Further, the matters raised by Mr Vok about the procedures or decision of the Local Court and/or the Federal Court are not such as to constitute other sufficient cause not to make a sequestration order (see Cain v Whyte (1933) 48 CLR 639; [1932] HCA 6). Insofar as Mr Vok may be taken to be asserting that there was some abuse of process by Mr Woolley in petitioning for a sequestration order that has not been established (see Williams and Others v Spautz (1992) 174 CLR 509; [1992] HCA 34).

6. Grounds two, three, four and five in the notice of opposition are not made out. 

Whether there is a cross claim such as to constitute other sufficient cause

1. Ground six in the notice of opposition is that Mr Vok has a cross demand as follows:

   During the period of October 2005 to December 2006, the Applicant to invest in Respondent’s business and acquire shares in that business (sic).  The Applicant failed to perform the promise.  As a result, the Respondent suffered loss and that loss is subject to this Cross Demand.

2. Mr Vok’s contention is that he has a claim for damages for breach of contract, interest pursuant to the Civil Procedure Act 2005 (NSW) and costs and any orders the court may make.

3. The claim that the advance of $50,000 was by way of an investment rather than a loan was before the Local Court.  Chief Magistrate Price preferred the evidence of Mr Woolley, accepting that there was a loan.  The reiteration of such an “investment” contention of itself does not constitute other sufficient cause not to make a sequestration order. 

4. Nor is the evidence before the court otherwise such as to satisfy me that for other sufficient reason, the sequestration order ought not to be made. I have had regard to the fact that the issue under s.52(2)(b) of the Bankruptcy Act is not the same as that in question when a counter-claim, set-off or cross demand is asserted in the context of an application to set aside a bankruptcy notice. I have also borne in mind that other sufficient cause may be established in circumstances where a debtor has a claim against the creditor, or someone else, for an amount equal to or exceeding the amount that the debtor owes the creditor. However in such circumstances the debtor must show that the claim is a genuine and serious one, which he or she has not reasonably been able to litigate (In re L.H.F. Wools Ltd [1970] Ch. 27; [1969] 3 W.L.R. 100).

5. The fact that Mr Vok filed such a cross claim in the Federal Court does not establish that he had a claim with sufficient validity to warrant dismissing the petition.  Mr Vok has not established that the asserted claim is a “real claim” that is “likely to succeed” having “sufficient validity...to justify dismissal or adjournment of the petition” (see Re Schmidt; Ex parte Anglewood Pty. Ltd. (1968) 13 FLR 111 at 116; Re Kostezky; Ex parte Milder Elfman Szmerling Krycer Pty (1996) 67 FCR 101 at 106; [1996] FCA 455, St George Bank Ltd v Helfenbaum [1999] FCA 1337 at 13; Totev v Sfar and Another (2006) 230 ALR 236; [2006] FCA 470 and ICM Agriculture Pty Ltd (ACN 006 077 765) v Young (2009) 260 ALR 515; [2009] FCA 1169 at [85]).

6. In any event, the mere existence of an arguable claim does not, of itself, necessarily constitute other sufficient cause (Rigg v Baker (2006) 155 FCR 531; [2006] FCAFC 179, Totev v Sfar and Another (2008) 167 FCR 193; [2008] FCAFC 35 at [85] – [87] and ICM v Young at [85]) as the determination of this question depends on assessing the particular facts in each case in conjunction with the interests of the petitioning creditor (Totev v Sfar at [86]).

7. There is no suggestion that there is presently any litigation between Mr Vok and Mr Woolley (or indeed against any other person) in any court in which he has good prospects of success.  Nor has there been any explanation for the fact that the asserted cross-claim against Mr Woolley has not been prosecuted, beyond the attempt to raise it in the Federal Court. 

8. There is no evidence to explain why Mr Vok has not been able to litigate any such asserted claim (beyond the “investment” defence considered in the Local Court).  The fact that he mistakenly filed a document headed Cross Claim in the Federal Court (when the only proceedings in foot on that court consisted of his own application to set aside the bankruptcy notice) does not explain why such a claim has not been brought in the appropriate forum or, indeed, why it could not have been raised in the Local Court proceedings given that the circumstances said to give rise to such a claim occurred prior to that time. 

9. Ground six in the notice of opposition is not made out. 

Other issues

1. Mr Vok is a self-represented litigant. While he did not raise technical issues about the creditor satisfying the court of the requirements in s.52(1) of the Bankruptcy Act, two issues emerged in the course of the hearing which were addressed in post-hearing submissions by the creditor. Mr Vok had the opportunity to address such issues.

2. The first of these was the issue of the date of the act of bankruptcy.  It is discussed above.  The second related to service of the creditor’s petition dated 7 April 2011.  Personal service of the creditor’s petition and the associated affidavits was not effected on Mr Vok.  Rather, service occurred by way of email, as set out in an affidavit of Mr Chapman sworn on 6 December 2011.  In addition, in his affidavit of 31 July 2011, Mr Vok attested to the fact that his father had read to him documents that had been sent to him care of his father (as his nominated authorised representative) by mail.  These documents were also annexed to Mr Vok’s affidavit.  They consisted of the creditor’s petition and the associated documents together with a copy of the letter serving such documents on Mr Vok. 

3. Mr Vok has served numerous affidavits in the creditor’s petition proceedings.  He exercised liberty to apply and appeared on 1 December 2011 and at the hearing on 7 December 2011, having previously been represented by his father.

4. Under s.52(1)(b) of the Bankruptcy Act, the court is to require proof of service of the creditor’s petition. Under r.6.06 of the Federal Magistrates Court Rules 2001 (Cth), a creditor’s petition as an originating document must be served personally on a debtor, unless an order for substituted service is obtained. The court can, however, dispense with compliance with the Rules. Rule 4.05 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) provides for the creditor’s petition and supporting affidavits to be served on the respondent debtor at least five days before the date fixed for the hearing unless the court otherwise orders. 

5. However, depending on the circumstances, a failure to prove all the elements of service can be a technical defect which the court can cure in the exercise of its discretion if satisfied that the petitioning and supporting affidavits actually came to the debtor’s attention (see s.306(1) of the Bankruptcy Act; Re Woodley; Ex parte Bank of New South Wales [1971] ALR 155 and Re Florance; Ex parte TurimettaProperties Pty Ltd (1979) 28 ALR 403; [1979] FCA 58).

6. Under r.6.04 of the Federal Magistrates Court Rules the court has power to authorise service of a document in a way that is not provided for in the Rules or to find that a document has been served in fact or served on a particular day. In de Robillard v Carver (2007) 159 FCR 38; [2007] FCAFC 73, Buchanan J in the Full Federal Court stated in relation to the comparable provision in the then applicable Federal Court Rules that in light of a debtor’s appearance at and participation in the hearing of the creditor’s petition, there was no substance in the contention that the debtor was not properly served with the creditor’s petition and that there could be no doubt that the petition was taken to have been served on him personally (at [86]).

7. The Full Court in de Robillard v Carver did not disturb the findings of Lindgren J at first instance (see Carver v de Robillard (2006) 5 ABC(NS) 21; [2006] FCA 1041) in relation to deemed service of the creditor’s petition (which had been served by DX delivery, fax and electronic mail). Lindgren J had had regard (at [39]) to the fact that the debtor had entered an appearance, had arguably raised a defence when filing a notice of grounds of opposition and that he had not taken any issue in relation to service of the petition. The debtor had appeared before the court in response to the process. His Honour pointed out that even apart from an express provision in the Rules, it had long been held that an objection to service must be taken promptly and that appearing in court to answer the merits of the case precluded the taking of such an objection subsequently (see Boyle v Sacker (1888) L.R. 39 Ch. D. 249).

8. In such circumstances Lindgren J found that by operation of the applicable Federal Court Rule, the creditor’s petition was taken to have been served personally on the debtor, but that if that were not the case then on the basis of the general principle it was no longer open for the debtor to rely on the absence of personal service. If necessary, his Honour would have made a formal order under s.306 of the Bankruptcy Act.

9. The same may be said in this case. Mr Vok appeared (albeit initially through his father). He filed a notice of opposition. He did not raise any ground as to service of the petition. There is evidence before the court that he was served by email and that the creditor’s petition posted to his father was brought to his attention. He physically exhibited the creditor’s petition and the associated affidavit material in his affidavit of 31 July 2011. He has served numerous affidavits in the creditor’s petition proceedings. Significantly, he appeared at the hearing of the creditor’s petition on 1 December 2011 and 7 December 2011. In these circumstances, even if the failure to serve the petition and affidavits personally without a substituted service order was technically a defect, I am satisfied that the petition came to the debtor’s attention and that he suffered no prejudice by any deficiency. If necessary, any such defect would be cured under s.306(1) of the Bankruptcy Act.

10. This makes it unnecessary to consider the applicant’s alternative submission that r.10.11 of the Federal Court Rules 2011 (Cth) which only came into effect on 1 August 2011 and which provides for deemed service of an originating application on a respondent who appears before the court in response to an originating application is applicable in circumstances where the purported service took place before that date.

Section 52 of the Bankruptcy Act

1. I am satisfied with proof of service of the petition within s.52(1)(b) of the Bankruptcy Act. I am satisfied with the proof of the matters stated in the petition and with the fact that the debt on which the petitioning creditor relies is still owing. As discussed above, the date of the act of bankruptcy is, as stated in the creditor’s petition, 7 October 2010.

2. I have considered generally, based on all of the respondent’s submissions, whether I am satisfied of either of the matters provided for in s.52(2) of the Bankruptcy Act. However Mr Vok has not put evidence before the court such as to establish that he is able to pay his debts. Nor on the material before the court am I satisfied that for other sufficient cause a sequestration order ought not to be made.

3. Accordingly, a sequestration order should be made against the estate of Mr Peter Vok.

I certify that the preceding one-hundred and twenty-four (124) paragraphs are a true copy of the reasons for judgment of Barnes FM

Date:  23 March 2012