Young v Hughes Trueman Pty Ltd - [2016] FCCA 989

FEDERAL CIRCUIT COURT OF AUSTRALIA

YOUNG v HUGHES TRUEMAN PTY LTD & ANOR

[2016] FCCA 989

Catchwords:
BANKRUPTCY – Application to set aside bankruptcy notice – bankruptcy notice issued on the basis of an order for costs made in a State court – long history of litigation – unfounded allegation of conspiracy – application dismissed.

Legislation:

Acts Interpretation Act1901 (Cth), s.15C

Bankruptcy Act 1966 (Cth), ss.30(1)(b), 40(1), 41(7)

Cases cited:
Bryant v Commonwealth Bank of Australia (1994) 217 ALR 251
Glew v Harrowell (2003) 198 ALR 331; [2003] FCA 373
Jagatramka v Coeclerici Asia (Pte) Ltd (No 2) (2015) 302 FLR 320; [2015] FCCA 2743
Olivieri v Stafford (1989) 24 FCR 413
Young v Hones [2015] HCASL 73
Young v Hones [2014] NSWCA 337
Young v Hones (No. 2) [2013] NSWSC 1429
Young v King [2013] NSWCA 364
Young v King [2004] NSWLEC 93
Young v King (No. 4) [2012] NSWLEC 236
Young v King (No. 6) [2015] NSWLEC 111
Young v King (No. 8) [2015] NSWLEC 187
Young v King (No. 9) [2016] NSWLEC 4

Applicant:

MARGO YOUNG

First Respondent:

HUGHES TRUEMAN PTY LTD

Second Respondent:

STEPHEN JOHN PERRENS

File Number:

SYG 2427 of 2015

Judgment of:

Judge Smith

Hearing date:

16 March 2016

Date of Last Submission:

16 March 2016

Delivered at:

Sydney

Delivered on:

29 April 2016

REPRESENTATION

Solicitor for the Applicant:

Mr R. Newell, L.C. Muriniti & Associates

Counsel for the Respondents:

Mr S. Gray

Solicitors for the Respondents:

Kennedys (Australasia) Pty Ltd

ORDERS

The application be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2427 of 2015

MARGO YOUNG

Applicant

And

HUGHES TRUEMAN PTY LTD

First Respondent

STEPHEN JOHN PERRENS

Second Respondent

REASONS FOR JUDGMENT

Background

The background facts in these proceedings have been set out in a number of judgments. The following is taken from the judgment of Ward JA in Young v Hones [2014] NSWCA 337 at [41] – [43].
[41]Ms Young is a pensioner who lives in Forestville. She was involved in Land and Environment Court proceedings in 2003/4 in relation to her complaint as to building works carried out on her neighbours’ property. Those works included excavation on the boundary of Ms Young’s property, the construction of a granny flat on the neighbours’ land and a “massed footing” and retaining wall on the boundary. Ms Young’s complaint was as to the impact of the works on drainage from her property, which is up slope from her neighbours’ property.
[42]The Land and Environment Court proceedings were resolved in 2004 following a settlement reached by the parties shortly after the hearing commenced. The only issue left outstanding in that settlement was as to who should bear the costs of the proceedings. That issue was determined in favour of Ms Young (Young v King [2004] NSWLEC 93) by McClellan CJ at [the Land and Environment Court] (as his Honour then was) following a short hearing in the course of which evidence was given by expert engineers called by each of the parties.
[43]Settlement of the substantive dispute involved the acceptance by Ms Young of an undertaking by her neighbours to lodge a development application for works to their property that the experts for the respective parties had agreed needed to be done in order to rectify the environmental problems caused or likely to be caused by what were conceded, at least in part, to have been unauthorised works on the neighbours’ property.
Ms Young soon became disillusioned with the terms of the settlement. She eventually took a number of steps intended, she thought, to ameliorate her position. First, in 2008, she applied to the Land and Environment Court to set aside the consent orders. The application was based on allegations of collusion, fraud and conspiracy. At the heart of the complaint was the assertion that a document (“Exhibit A”) agreed to by the experts for the parties as the basis for the settlement was fraudulent: see Young v King (No. 6) [2015] NSWLEC 111 at [221] – [223].
That application was summarily dismissed by Sheahan J in 2012: Young v King (No. 4) [2012] NSWLEC 236. Ms Young successfully appealed that decision and the matter was remitted to Sheahan J for determination: Young v King [2013] NSWCA 364. After a further hearing in September and October 2014 Sheahan J gave judgment on 9 July 2015, again dismissing the application: Young v King (No. 6). It may be noted that the only respondents to this point in the proceedings were the neighbours.
By this time Ms Young had also commenced proceedings in the District Court of New South Wales seeking damages against her neighbours and the local council.
In February 2010 she commenced proceedings in the Common Law Division of the Supreme Court of New South Wales against her solicitors, barrister, the expert engineering firm engaged by her in the original Land and Environment Court proceedings as well as the employee of that firm who had given evidence in those proceedings. The last two of the defendants are the respondents in these proceedings.
On 27 September 2013 Garling J determined those proceedings by way of separate questions: Young v Hones (No. 2) [2013] NSWSC 1429. Ms Young’s appeal from that decision was dismissed with costs: Young v Hones [2014] NSWCA 337. Ms Young’s application to the High Court for special leave to appeal from that decision was refused on 6 May 2015: Young v Hones [2015] HCASL 73.
On 1 May 2014 Garling J made further orders in the proceedings including that Ms Young pay the costs of the respondents to these proceedings fixed in the sum of $110,000.
On 23 July 2015 after a number of further hearings in the Land and Environment Court and special leave being rejected by the High Court, bankruptcy notice BN 183071 was issued at the request of the respondents on the basis of the order for costs made by Garling J in their favour.

Application to this Court

Ms Young seeks orders setting aside the bankruptcy notice pursuant to s.41(7) of the Bankruptcy Act1966 (Cth). That sub-section relevantly provides:
(7)Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.
That provision does not in fact give jurisdiction to this Court to set aside a bankruptcy notice. However, as there is no other express provision in the Act that does so, the source of the power is said to arise from sub-s.30(1)(b) which provides:
(1) The Court:
…
(b)may make such orders … as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.
(See Olivieri v Stafford (1989) 24 FCR 413 and, more recently, Bryant v Commonwealth Bank of Australia (1994) 217 ALR 251 at 253 per Davies, Foster and O’Loughlin JJ; Jagatramka v Coeclerici Asia (Pte) Ltd (No 2) (2015) 302 FLR 320; [2015] FCCA 2743 at [19] per Judge Manousaridis. I would add that s.15C of the Acts Interpretation Act1901 (Cth) assists in identifying the source of the power.)
Section 40(1) of the Act provides that a person commits an act of bankruptcy:
…
(g)if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i)where the notice was served in Australia--within the time specified in the notice; or
(ii)where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
The effect of that section has been described in various ways which sometimes overlap. It was described by Lindgren J in Glew v Harrowell (2003) 198 ALR 331; [2003] FCA 373. At [12] his Honour said that the effect of the section was, in broad terms that a debtor must satisfy the Court that the counter-claim, set-off or cross-demand is made in good faith and that:
[12] … there is sufficient substance to the counterclaim, set-off or cross demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy.
The applicant says that she has a counter-claim, set-off or cross-demand that exceeds the amount of the judgment on which the bankruptcy notice was based. Simply put, the applicant’s claim is that the respondents caused her to incur costs in the application before Sheahan J in the Land and Environment Court that I have described briefly above. She says that those costs are $3,000,000 although there is no evidence to support that other than the numerous decisions made in those proceedings.
It will be recalled that Ms Young’s application to set aside the consent orders was brought against her neighbours who were the only respondents to the proceedings. It was based on an allegation that they, together with the whole local council (or perhaps just the development team), her solicitors, her barrister, her neighbours’ solicitor and barrister, the respondents and the engineers engaged by her neighbours were all involved in a conspiracy to defraud her. A conspiracy, it was said, to ensure that the drain was placed on her land and not on the neighbours’ land.
As already noted, Sheahan J dismissed the application. His Honour found that there was no evidence to support the allegations of conspiracy or fraud. He ordered the applicant to pay her neighbours’ costs. Perhaps contemplating that the neighbours might wish to seek costs on an indemnity basis against the applicant and, possibly, her lawyers, he granted leave to file an application concerning costs. What he could not reasonably have contemplated was that it would be the unsuccessful applicant who was to file an application for costs. If that were not remarkable enough, the applicant sought costs not only against her successful neighbours, but against all of their alleged co-conspirators including the respondents. The basis of that extraordinary application was that there had been a conspiracy to defraud her and so each of the conspirators had caused her to incur the costs of seeking to set aside the orders made by consent. That is, it was based on precisely the same claim as the application which had failed.
Eight of the eighteen respondents to Ms Young’s costs application sought, and obtained summary dismissal of that application: Young v King (No. 8) [2015] NSWLEC 187. The respondents were amongst those who did not. They allowed the applicant, in essence, to run her case again and she did. She lost, again. This time, Justice Sheahan found that the application was an abuse of process: Young v King (No. 9) [2016] NSWLEC 4 at [93].
Undeterred, the applicant has sought leave to appeal from both the decision to refuse to set aside the consent orders and the decision on the application for costs against the respondents (amongst many others). In essence, the applicant argues that she should have the opportunity to pursue that application for leave to appeal. She says that it has strong prospects. In my view, her right to pursue that avenue should not be preferred to the right of the respondents to insist on satisfaction of the bankruptcy notice.
First, there is no basis whatsoever for the underlying allegation of conspiracy. It is unarguable and should not, on any view, have ever been argued by members of the legal profession. Justice Sheahan was correct to find that the application for costs was an abuse of process.
Secondly, the argument that Sheahan J gave inadequate reasons for his judgment is plainly wrong and would not, in any event, have provided any basis for setting aside the bankruptcy notice in those proceedings.
Thirdly, there are strong discretionary grounds upon which leave to appeal might be refused. Those include the fact that it concerns an application for costs against non-parties in long drawn out and multi-faceted proceedings.
Fourthly, even if there were some chance of leave to appeal being granted, and the appeal succeeding, that is still insufficient in my view to justify the setting aside of the bankruptcy notice: the costs claim is for joint and several responsibility against many parties whereas the judgment underlying the bankruptcy notice is in favour of only the respondents in these proceedings. Further, the allegations against the second respondent are such that there is unlikely to be any indemnity of him by the first respondent as his employer.
Finally, there is no admissible evidence that establishes, to my satisfaction, that any award of costs in favour of the applicant against the respondents in the Land and Environment Court would exceed the amount of the bankruptcy notice. No costs agreement was tendered, and no time sheets or tax invoices were relied on. It is remarkable, if it true, that a pensioner has accrued a liability to her lawyers for legal fees in the amount of $3,000,000 because of a drain.

Conclusion

This application was ill-conceived, ill-prepared and poorly presented. Mr Newell, who has represented the applicant in numerous cases in numerous jurisdictions since 2008, and who appeared for her in these proceedings submitted that the matter was complicated and difficult. He was wrong. It is simple. There is no evidence of a conspiracy of any sort and no basis whatsoever for setting aside the bankruptcy notice. The application is dismissed.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Judge Smith

Associate:

Date: 29 April 2016