Yap v Granich & Associates

Case [1999] FCA 1867

FEDERAL COURT OF AUSTRALIA
Yap v Granich & Associates [1999] FCA 1867

BANKRUPTCY – appeal against dismissal of motion for review and annulment of sequestration order – judgment debt based on costs order in unsuccessful proceedings against former solicitors – whether cause to go behind judgment.

Bankruptcy Act 1966 (Cth), s 153B

Wren v Mahony (1972) 126 CLR 212 referred to

YAP v GRANICH & ASSOCIATES
W 81 of 1999

SPENDER, WHITLAM & CARR JJ
29 NOVEMBER 1999
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W 81 OF 1999

On appeal from a Judge of the Federal Court of Australia

BETWEEN:

YAP CHENG SEE
Appellant

AND:

GRANICH & ASSOCIATES
Respondent

JUDGE:

SPENDER, WHITLAM & CARR JJ

DATE OF ORDER:

29 NOVEMBER 1999

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

The appeal is dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W 81 OF 1999

On appeal from a Judge of the Federal Court of Australia

BETWEEN:

YAP CHENG SEE
Appellant

AND:

GRANICH & ASSOCIATES
Respondent

JUDGE:

SPENDER, WHITLAM & CARR JJ

DATE:

29 NOVEMBER 1999

PLACE:

PERTH

REASONS FOR JUDGMENT

SPENDER J:

  1. I agree with the reasons for judgment of Carr J.  Mrs Yap, at the conclusion of her extensive written submissions, said:

    “In the light of the evidence [to which very extensive reference had been made] the sequestration order ought to have been made.  The bankruptcy should be annulled.”

  2. A court of bankruptcy will be astute to see that behind a judgment which founds a creditor's petition there is “in truth and reality” a debt owing by the debtor to the petitioner.  Of the court's discretion to accept a creditor's judgment as proof of the debt relied on to found the creditor's petition, Barwick CJ said, in the well-known case of Wren v Mahony (1972) 126 CLR 212 at 224:

    “The Court's discretion in my opinion, is a discretion to accept the judgment as satisfactory proof of that debt.  That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner.”

  3. Windeyer and Owen JJ agreed with the judgment of Barwick CJ. 

  4. Having regard to the curial history of the order of Commissioner Martin QC made by the District Court of Western Australia on 7 May 1996, which has been outlined by Carr J, in my opinion it is quite impossible to conclude that French J was in error in the conclusion that he reached.

  5. This is not a case in which it can be said that the sequestration order ought not to have been made.  On the material before the Registrar and on the material now before us, it ought to have been made.

  6. I also agree that the appeal should be dismissed.

    WHITLAM J:  

  7. I agree with the judgment of Carr J and also…

Continue reading Yap v Granich & Associates

Sign in free to access the full text

Details
AGLC
Yap v Granich & Associates [1999] FCA 1867
Case
[1999] FCA 1867
Decision Date

CaseChat Overview and Summary

In the matter of Yap v Granich & Associates, the appellant, Mrs Yap, sought to challenge a sequestration order made against her estate and to annul her bankruptcy. The appeal was dismissed by the trial judge, and Mrs Yap now appeals that decision. The central issue before the Court was whether the sequestration order should be annulled under section 153B of the Bankruptcy Act 1966 (Cth), which allows for the annulment of a sequestration order if the Court is satisfied that it ought not to have been made. Mrs Yap argued that the sequestration order should be annulled because the underlying judgment debt, upon which it was based, was obtained through fraud or was otherwise void. The Court considered Mrs Yap’s submissions, which included allegations of negligence and misconduct by the respondent, Granich & Associates, as well as claims of overpayment and misrepresentation by the creditor, P. Vivante & Co Pty Ltd.

The Court found that Mrs Yap’s allegations were highly implausible and that her credibility had already been questioned in previous proceedings. The Court noted that where a judgment follows a full trial, it will not be reopened unless there is a prima facie case of fraud, collusion, or miscarriage of justice. Given that Mrs Yap had already exhausted her appeal options regarding the underlying judgment, the Court held that it was not open to her to challenge the judgment in these proceedings. The Court concluded that all conditions necessary for the making of the sequestration order had been satisfied, and thus, the order ought to have been made. Consequently, the appeal was dismissed with costs.

Orders

Orders of the court

The appeal is dismissed with costs.

Background

Background to the litigation

This is an appeal from a decision of a judge of this Court who, on 30 July 1999, dismissed the appellant’s motion to review a sequestration order, made against her estate on 10 December 1998, and to annul her bankruptcy.Factual Background The following factual background is taken largely from the reasons of the learned trial judge: On 15 March 1989 a company named P. Vivante & Co Pty Ltd sued the appellant in the District Court of Western Australia for the recovery of a debt of $39,034.17, said to have been owing pursuant to a deed of acknowledgment of debt. The appellant failed to enter an appearance and, on 10 April 1989, a default judgment was obtained against her. A writ of fi fa was issued on 26 April 1989 and some of the appellant’s property was seized. The appellant approached Messrs Melsom Robson & Co, Chartered Accountants for help, and the processes of Part X of the Bankruptcy Act 1966 (Cth) were invoked on her behalf. The Part X proceedings were later abandoned. In February 1992 a bailiff called and left his card at the appellant’s front door informing her that her house would be sold to satisfy the District Court default judgment. On 10 April 1992, three years after the default judgment had been obtained against her, the appellant made an application, in person, to have the default judgment set aside. On 29 May 1992 the appellant’s application to set aside the default judgment was dismissed on the basis of her non-appearance at court. A further application to have the default judgment set aside was made by her on the same day. The application was heard before Registrar Kingsley on 23 June 1992. The default judgment was set aside and the appellant was granted leave to defend the action. However, leave was conditioned upon the appellant being required to pay $39,000 into court by 7 July 1992, failing which the plaintiff would again be able to enter default judgment against her. The appellant failed to comply with the condition imposed by Registrar Kingsley, but sought to appeal against Registrar Kingsley’s order. On 3, 10 and 21 August 1992 Judge Viol heard the appellant’s application for leave to appeal out of time against Registrar Kingsley’s order. By then the appellant had engaged the respondent, Messrs Granich & Associates, barristers and solicitors, to act on her behalf. Judge Viol observed that the application for leave to appeal was made broadly on two grounds:1.That the appellant was unrepresented at the time the proceedings originally took place and that, had she been represented, a different order might have been made;2.That there was fresh evidence available suggesting an overpayment by her to P Vivante & Co Pty Ltd, and therefore that the sum originally claimed was not owing and that it would be unfair in the circumstances for the condition imposed by Registrar Kingsley to continue to exist. Judge Viol, however, dismissed the application, concluding that there was no sufficient basis for leave to be granted to the appellant to file and serve a notice of appeal out of time against the orders and, in particular, the condition imposed by Registrar Kingsley.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The power to annul a sequestration order is found in s 153B of the Bankruptcy Act which provides:“153B. If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.”The Decision at First Instance The trial judge said that the core question was whether the Court could go behind the judgment debt upon which the bankruptcy notice and the creditor’s petition were based. His Honour said that the affidavit filed by the appellant (sworn on 11 May 1998) in opposition to the creditor’s petition, focussed on the conduct of the respondent in the application before Judge Viol in the District Court for leave to appeal out of time against the order made by Registrar Kingsley. In that affidavit the appellant asserted the negligence of the respondent in various respects. The appellant also went into the background of dealings between Akibilt Pty Ltd (a company of which the appellant was a director) and P. Vivante & Co Pty Ltd, including alleged loans made to the latter company or to a Mr Vivante. The appellant repeatedly asserted that the action brought against her by P Vivante & Co Pty Ltd was “void” and referred to the alleged invalidity and unenforceability of the deed of acknowledgment of debt. The trial judge found that the issues raised by the appellant of the alleged negligence of the respondent and the underlying issues of the dealings with Vivante had been canvassed by Commissioner Martin in his reasons for judgment in the unsuccessful action brought by the appellant against the respondent. His Honour said that in her affidavit the appellant had sought to re-agitate before the District Registrar, issues which had been decided adversely to her in those proceedings and the question of her liability to P Vivante & Co Pty Ltd. His Honour said that these issues were further agitated in her affidavit dated 2 November 1998 in opposition to the creditor’s petition, which endeavoured to assert that the judgment adverse to her in the proceedings against the respondent had been obtained by fraud. In that affidavit the appellant canvassed the issues between herself and P Vivante & Co Pty Ltd and, in particular, loans allegedly made to Mr P Vivante or his company. She asserted that counsel for the respondent had deliberately concealed facts involving the respondent’s breach of duty and had deliberately misrepresented a concession by the respondent that one cheque for $4,170 had been left out of the schedule to her affidavit prepared by the respondent in the earlier proceedings, when in fact seven cheques amounting to $62,490 had been left out. She accused counsel for the respondent of having “deliberately and artfully misrepresented the facts”. She accused Mr Smallbone of deliberately lying in the proceedings in connection with a decision she had taken to abort the Part X proceedings. At the end of her affidavit the appellant said:“I have shown that Mr Smallbone lied, Mr Vivante lied and Mr Ainslie QC deliberately misrepresented facts to concealed (sic) the J Creditor’s breach of duty to me/my cause of action. Therefore, the Judgment it obtained on 7.5.96 was obtained by fraud”The trial judge held that:“The assertion that the judgment was obtained by fraud is, in truth, an assertion that the judgment was obtained on perjured evidence and misleading statements by counsel. The allegations are, on the face of it, highly implausible. The fact is her own credibility was found wanting by the Commissioner. The remedy for the asserted injustice was by way of appeal and her pursuit and the outcome of the appeal process has already been outlined. It is not now open to Mrs Yap to use these proceedings to endeavour to impugn the judgment upon which the judgment debt is based. It is to be noted also that in this case no question arises about the existence of any antecedent debt to found the judgment. The debt arose directly out of the order of the Commissioner in the District Court that Mrs Yap pay the legal costs of her unsuccessful action against Granich & Associates.Where a judgment has followed a full investigation at trial in which both parties participated, the Court will not reopen the matter unless a prima facie case of fraud or collusion or miscarriage of justice is made out – see Miles v The Shelf Company of Australia (unrep, Fed Court, Sundberg J, VG7674 of 1997) [sic]. In a case in which the relevant judgment flows from a trial before another court and the appeal process has been exhausted, it is a rare case in which the Court will go behind the judgment. The position is not quite as restrictive in the case of a default judgment.In my opinion this is not a case in which it can be said that the sequestration order ought not to have been made. On the materials before the Registrar and before me it ought to have been made. All the conditions necessary for the making of the order had been satisfied at the time that it was made and whether Mrs Yap's motion is taken to be relying upon O 77 or s 153B or both, the motion will be dismissed” Grounds of Appeal

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.