Zdrilic v Hickie

[2015] FCCA 2882

FEDERAL CIRCUIT COURT OF AUSTRALIA

ZDRILIC & ANOR  v HICKIE & ANOR [2015] FCCA 2882

Catchwords:
BANKRUPTCY – Application for Review of Registrar’s decision – sequestration order made following Orders by Judge Lloyd-Jones dismissing Notice Stating Grounds of Opposition – application to summarily dismiss the Application for Review.

Legislation:

Bankruptcy Act 1966, s.52

Federal Circuit Court of Australia Act1999, s.17A
Federal Circuit Court Rules 2001, r.13.10
Federal Court of Australia Act 1976, s.31A

Blair v Curran [1939] HCA 23
Carl Zeiss Stifting v Rayner & Keeler Ltd [No. 2] [1967] IAC 853
Hickie & Anor v Zdrilic & Anor [2015] FCCA 1329
Jefferson Ford Pty Ltd v For Motor Company of Australia Limited [2008] FCAFC 60
Spalla v St. George Motor Finance Ltd (No. 6) [2004] FCA 1699
Suda Ltd v Sims (No. 3) [2014] FCCA 2127
Tiufino v Warland [2000] NSWCA 110
Walton v Gardiner (1993) 177 CLR 378

First Applicant: SAM ZDRILIC

Second Applicant: AMY ZDRILIC

First Respondent: DAVID HICKIE

Second Respondent: VOCIFA PTY LIMITED ACN 002 076 235

File Number: SYG 2324 of 2014

Judgment of: Judge Altobelli

Hearing date: 17 September 2015

Date of Last Submission: 17 September 2015

Delivered at: Sydney

Delivered on: 26 November 2015

REPRESENTATION

The First Applicant appeared in person and on behalf of the Second Applicant

Solicitors for the Respondents: Bartier Perry

ORDERS

1. The Application for Review filed on 17 June 2015 be dismissed.

2. The Sequestration Order made against the estates of Sam Zdrilic and Amy Zdrilic on 27 March 2015 be confirmed.

3. The Creditor’s costs (including any reserved costs and the costs of the present proceedings) be taxed and paid from the estate of the Debtor in accordance with the Bankruptcy Act 1966.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2324 of 2014

SAM ZDRILIC

First Applicant

AMY ZDRILIC

Second Applicant

And

DAVID HICKIE

First Respondent

VOCIFA PTY LIMITED ACN 002 076 235

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. These reasons for judgment explain why the Court has dismissed an Application for Review filed by the Applicants on 17 June 2015.

Background

1. On 27 May 2015, a Registrar of this Court made sequestration Orders relating to the Applicants, ordered them to pay costs, but otherwise stayed the Orders for 21 days.

2. The Application for Review of the learned Registrar’s Orders was filed on 17 June 2015.

3. On 29 July 2015 the Respondent filed the present Application for Orders dismissing the Application for Review.

4. This matter has an extensive litigation history dating back to 2001. Reproduced in the first schedule to these reasons is a litigation chronology prepared by those representing the Respondents.  It largely speaks for itself.  The Applicants for review have suffered spectacular failures in their litigation before the Supreme Court (including the NSW Court of Appeal), Federal Court, High Court and this Court.

5. Perhaps the most recent comprehensive discourse about the litigation history in this matter is set out in the reasons for judgment of Judge Lloyd-Jones in Hickie & Anor v Zdrilic & Anor [2015] FCCA 1329 at [2]-[8]. There is no need to either set these matters out or even refer to them. The parties are well aware of the litigation history. It is important to record, however, that Judge Lloyd-Jones considered the present Applicant’s Notice Stating Grounds of Opposition to Creditors Petition and dismissed the same. Having made the order, he referred the Creditors Petition to a Registrar on the same day, who then made the sequestration Order. The case before Judge Lloyd-Jones was heard over two days on 20 and 23 February 2015. His Honour delivered comprehensive reasons on 27 May 2015. No appeal has been lodged in relation to the Orders made by His Honour.

The applicable law

1. Section 17A of the Federal Circuit Court of Australia Act1999 states:

   17A  Summary judgment

   (1)  The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:

   (a)  the first party is prosecuting the proceeding or that part of the proceeding; and

   (b)  the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

   (2)  The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:

   (a)  the first party is defending the proceeding or that part of the proceeding; and

   (b)  the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

   (3)  For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

   (a)  hopeless; or

   (b)  bound to fail;

   for it to have no reasonable prospect of success.

   (4)  This section does not limit any powers that the Federal Circuit Court of Australia has apart from this section.

2. Rule 13.10 of the Federal Circuit Court Rules 2001 (“FCC Rules) states:

   Disposal by summary dismissal

   The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:

   (a)  the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or

   (b)  the proceeding or claim for relief is frivolous or vexatious; or

   (c)  the proceeding or claim for relief is an abuse of the process of the Court.

   Note: For additional powers of the Court in relation to family law proceedings that are frivolous or vexatious, see sections 102QB and 118 of the Family Law Act.

3. In Suda Ltd v Sims (No.3) [2014] FCCA 2127, Judge Lucev stated at [20] and [21]:

   20. The power to give summary judgment under s.17A of the FCCA Act can probably be exercised on wider grounds than the power under r.13.10 of the FCC Rules, since the latter is not qualified by the statement that a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success. It has been suggested that s.17A of the FCCA Act provides for judgment or nothing, and is not brought into play by mere deficiencies in pleadings.

   21.    The words of s.17A of the FCCA Act mean what they say and there is little point in attempting to formulate other phrases to encapsulate their meaning. The Court must embark upon a “practical judgment … as to whether the applicant has more than a ‘fanciful’ prospect of success”. The task was described in Spencer as follows:

   … The … Court may exercise power … if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what    amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.

4. The High Court’s observations in Spencer can be applied to the “no reasonable prospect” provisions in r.13.10(a) of the FCC Rules.

5. In Jefferson Ford Pty Ltd v For Motor Company of Australia Limited [2008] FCAFC60 at [45] Rares J discussed s.31A of the Federal Court of Australia Act 1976, which is in the same terms as s.17A of the Federal Circuit Court of Australia Act 1999:

   The character of a judgment under s 31A is identified by the test which the section prescribes. The judgment is a determination that the proceeding or part of the proceeding

   
   

   "... has no reasonable prospect of success". Thus, when the Court gives judgment for a party under s 31A(1) or (2) it is exercising a jurisdiction similar to the implied or inherent power of the Court to protect its own processes from proceedings which are an abuse of those processes. By enacting s 31A, the Parliament broadened the categories of case in which the power summarily to determine proceedings could be exercised. It is inherent in the power conferred by s 31A that the Court need not, and does not ordinarily determine the proceedings on their merits after a full trial. A decision under s 31A is that the claim or defence has "no reasonable prospect of success". It is not that the claim or defence has been proved so that the right or cause of action or defence merges into judgment and loses its independent existence: Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 531-532 per Dixon J. Rather, the power conferred by the section authorises the Court to make a decision summarily that there is no reasonable prospect that if a trial were to take place the claim or defence would succeed. The section requires a prediction of the outcome of a trial on the merits but is not an actual adjudication of those merits.

6. Rares J further observed at [58]:

   Jefferson Ford argued that the use of the expression "give judgment" in ss 31A(1) and (2) indicated that the proper construction of the legislation should reflect a legislative intention of finality in the "judgment". However, the word "judgment" when used in s 31A incorporates the definition of "judgment, decree or order" in s 4 of the Act. While s 31A is of general application, it was introduced by the Migration Litigation Reform Act2005 (Cth). It is safe to infer that one of the purposes of the Parliament in enacting s 31A and its cognate provisions was to enable each of the High Court, the Federal Magistrates Court and this Court to deal under s 31A or its analogues where appropriate with any matter within its jurisdiction. Given that a frequent issue in litigation under the Migration Act 1958 (Cth) was whether constitutional writ relief ought be granted to an applicant, the expression "give judgment" in ss 31A(1) and (2) must have been intended to include a power enabling the Court, expeditiously and without a full trial, to either grant constitutional writ relief or dismiss proceedings in which that relief was sought.

The evidence

1. The Applicants relied on the following documents:

   ·Application for Review filed 17 June 2015;

   ·Notice to Creditors filed 17 June 2015;

   ·Affidavit of Sam Zdrilic filed 17 June 2015;

   ·Affidavit of Service of Sam Zdrilic filed 3 July 2015;

   ·Affidavit of Sam Zdrilic dated 3 July 2015;

   ·Affidavit of Philip James Brand dated 28 July 2015;

   ·Affidavit of Sam Zrdilic filed 10 August 2015;

   ·Affidavit of Sam Zrdilic filed 10 August 2015;

   ·Affidavit of Sam Zrdilic filed 26 August 2015;

   ·Exhibit folder marked “SZ-3”;

   ·Exhibit folder marked “SZ4”;

   ·Applicant’s Main Submissions dated 2 September 2015;

   ·Applicant’s Abuse of Position Submissions filed 2 September 2015;

   ·Applicant’s False Statements submissions filed 2 September 2015

   ·Zdrilic Parties submissions (Application in a Case) filed 2 September 2015; and

   ·Case Outline filed 14 September 2015.

2. The Respondents relied upon the following documents:

   ·Bankruptcy Notice issued 21 March 2013;

   ·Affidavit of Service of Bankruptcy Notice of Andrew Saad sworn 9 April 2013;

   ·Creditor’s Petition filed 20 August 2014;

   ·Affidavit Verifying Petition of William Holman Andrews sworn 20 August 2014;

   ·Affidavit Verifying Creditor’s Petition filed 20 August 2014;

   ·Affidavit of Service of Creditor’s Petition of Andrew Saad filed 9 December 2014;

   ·Affidavit of Service of Creditor’s Petition of Andrew Saad filed 9 December 2014;

   ·Affidavit of Service of Philip James Brand sworn 25 May 2015;

   ·Affidavit of Search of Snezana Roskov sworn 26 May 2015;

   ·Affidavit of Debt of David Hickie sworn 27 May 2015;

   ·Application in a Case filed 29 July 2015;

   ·Affidavit in Support of Application in a Case of Philip James Brand filed 29 July 2015;

   ·Affidavit of Search of Snezana Roskov filed in Court 17 September 2015;

   ·Affidavit of Debt of David Hickie filed in Court 17 September 2015;

   ·Outline of Submissions Application in a Case for Dismissal of Application for Review filed in Court 17 August 2015; and

   ·Case Outline filed 9 September 2015.

Respondent’s contentions

1. In short, the Respondents to the Application for Review contend that the matters raised by the Applicants for review have no reasonable prospect of success and that the Application is in itself an abuse of process.  They submit that the Application for Review is merely an attempt to re-litigate the issues already determined by Judge Lloyd-Jones.  This is precluded by reference to principles of issue estoppel: Blair v Curran [1939] HCA 23 at 531-533 and Carl Zeiss Stifting v Rayner & Keeler Ltd [No. 2] [1967] IAC 853 per Lord Guest.  They submit that the Application for Review is in any event an abuse of process, even if issue estoppel did not apply: Tiufino v Warland [2000] NSWCA 110 (3 May 2000) per Handley JA at [50]; Spalla v St. George Motor Finance Ltd (No. 6) [2004] FCA 1699 per French J at [66]-[69]; Walton v Gardiner (1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ.

2. The practical substance of the Respondents’ contentions is that the grounds relied on by the Applicants for review are the same, or substantially the same grounds, as they relied on before Judge Lloyd-Jones, without success.  Indeed they contend the reality is that the grounds relied on by the Applicants for review have, in one iteration or another, been agitated without success in the Supreme Court of NSW, the NSW Court of Appeal, the Federal Court and the High Court, as well as before Judge Lloyd-Jones in this Court.

Applicant’s contentions

1. Mr Zdrilic represented both his wife and himself in this matter. He is clearly an intelligent and articulate man.  The Court had emphasised to Mr Zdrilic on 17 August 2015, when this matter was listed for mention, that it was not interested in hearing arguments that had not succeeded in the superior courts or before Judge Lloyd-Jones.  Mr Zdrilic assured the Court that this was not the case.  He repeated this assurance when the matter commenced on 17 September 2015.

2. As set out above, the material filed on behalf of the Applicants for review was substantial. The submissions made and material in support amounted to hundreds of pages. The submissions specifically deal with the issue of summary dismissal.

3. The Orders proposed by the Applicants for review are set out at [28] of the Case Outline document filed 14 September 2015 as follows:

   Orders sought

   a. Order that the Application in a Case be dismissed

   b. Order that the sequestration order be set aside and the petition dismissed.

   c. Order (find) that the Court below and Justice Stevenson miscarried.

   d. Order that the case be sent back for determination of damages or that the case before Stevenson J be re-tried.

   e. Any other order the Court thinks appropriate.

4. Orders (c) and (d) are plainly misconceived.

5. Mr Zdrilic was pressed in oral argument to identify precisely what new grounds he relied on in support of his application.  It was very difficult to keep him focussed on this issue.  At one point, when pressed, he conceded that the “arguments are different because they are described differently”.  He referred the Court to various paragraphs in his Affidavit, for example, [10]-[12] of the Affidavit filed 26 August 2015.

6. Doing the very best the Court can to understand what he was saying was different, indeed striving to understand what the Applicants for review may have been meaning to say, and trying to imagine what else could be argued on behalf of the Applicants for review, the Court simply could not discern any new ground of opposition to the Creditors Petition that had not already been dealt with by Judge Lloyd-Jones or agitated without success elsewhere.

Discussion

1. There is no doubt that the Applicants for review genuinely believe that there have been grave injustices in relation to the various proceedings involving them and their associated corporations. That does not change the reality that they have been unsuccessful in every case. The fact of the judgment debt against them is incontrovertible. They never put in contention their insolvency. Indeed, there is no contention that the formal requirements set out in s.52(1) of the Bankruptcy Act 1966 have not been complied with. They did not put in contention any of the evidence filed in support of the Creditors Petition. In an extensive judgment, Judge Lloyd-Jones deals with all of the issues the Applicants for review raise, but dismisses them. No new issues are raised before the Court.

2. This Court recognises that to give summary judgment against the Applicants for review is a very serious step.  Barring an appeal, it ends the bankruptcy litigation.  Indeed, bankruptcy for the Applicants will have significant implications on their capacity to pursue further litigation, as well as in many other respects.  The legislation is clear.  The Applicants have no reasonable prospects of success.  They appear to merely seek to regurgitate arguments previously made in other Courts without success.  The Application for Review is plainly an abuse of process. Other Courts have determined against them the matters now once again sought to be raised by the Applicants.  The litigation must end at some time.  The legal system cannot sustain the luxury of quixotic litigants who consume finite judicial resources to the detriment of other litigants.

Conclusion

1. The Application for Review should be summarily dismissed pursuant to s.17A of the Federal Circuit Court of Australia Act 1999 and r.13.10 of the FCC Rules 2001.

2. To the extent that it is necessary for this Court, in the circumstances of this case, to consider the Creditors Petition, the Court is satisfied that the evidence before it would have justified the making of a fresh sequestration order against the Applicants for review, as the requirements of s.52 of the Bankruptcy Act, have been established.  However, one is already in existence, so that will simply be confirmed.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Altobelli

Associate: 

Date:     26 November 2015

Schedule One

2001	LEC commences Supreme Court proceedings 5396 of 2001 (the 2001 proceedings).
11 December 2002	David Hickie joined as a defendant to the 2001 proceedings.
1 September 2004	The 2001 proceedings dismissed by consent orders.
26 March 2007	Supreme Court proceedings 2007 / 254173 (the proceedings at first instance) commenced, seeking to set aside the consent dismissal of the 2001 proceedings and to re-litigate the 2001 proceedings.
6 February 2012 – 16 March 2012	The proceedings at first instance heard by Stevenson J.
20 April 2012	Stevenson J dismisses the proceedings at first instance.
7 May 2012	Stevenson J orders LEC / Zdrilic to pay the costs of Hickie / Vocifa of the proceedings at first instance.
6 November 2012	Hickie / Vocifa file application for assessment of party / party costs.
8 November 2012	LEC / Zdrilic file application seeking an order to extend the time to appeal the decision of Stevenson J in the proceedings at first instance (CA 2012 / 156726) (application to extend time to appeal).
18 and 19 February 2013	Allsop P hears application to extend time to appeal.
21 February 2013	Allsop P dismisses application to extend time to appeal, with costs.
6 March 2013	LEC / Zdrilic file application for review of the decision of Allsop P (Court of Appeal review application).
14 March 2013	Certificates of determination of assessment of the party / party costs of the proceedings at first instance registered as a judgment of the Supreme Court (2013 / 78308) (the costs judgment).
18 Mach 2013	Creditor’s statutory demands based on the costs judgment served on LEC and Amy Holdings.
21 March 2013	Bankruptcy notice BN 159172 based on the costs judgment issued.
5 April 2013	Bankruptcy notice served on Zdrilic.
8 April 2013	LEC / Amy Holdings file applications to set aside statutory demands (2013 / 104194 and 2013 / 106377) (application to set aside statutory demand).
12 April 2013	LEC / Zdrilic file application to stay the costs judgment pending determination of Court of Appeal proceedings 2012 / 156726 (the first stay application).
17 April 2013	Zdrilic files application to set aside bankruptcy notice (SYG 800 / 2013) (application to set aside bankruptcy notice).
10 May 2013	McCallum J grants a stay of enforcement of the costs judgment until 3 June 2013 conditional on LEC / Zdrilic paying into Court the amount of $15,000 by way of security for costs in respect of the Court of Appeal review application.
3 June 2013	McCallum J extends the stay of enforcement of the costs judgment to 18 September 2013.
18 September 2013	Court of Appeal hears the Court of Appeal review application.
10 December 2013	Time to comply with bankruptcy notice extended to 18 March 2014.
4 March 2014	Court of Appeal dismisses Court of Appeal review application, with costs.
18 March 2014	Application to set aside bankruptcy notice dismissed by Registrar.
18 March 2014	Zdrilic commits acts of bankruptcy by failing to comply with bankruptcy notice.
25 March 2014	LEC / Zdrilic file application for special leave to appeal to the High Court in respect of the dismissal of the Court of Appeal review application (HC No. 554 / 2014) (special leave application).
25 March 2014	LEC / Zdrilic file application for stay of enforcement of the costs judgment pending the determination of the special leave to appeal to the High Court application (the second stay application).
27 March 2014	Zdrilic files application for review of decision of Registrar dismissing application to set aside bankruptcy notice (dismissal review application).
29 April 2014	Harrison J dismisses the second stay application, with costs.
8 May 2014	LEC / Zdrilic file notice of intention to appeal Harrison J’s dismissal of the second stay application.
12 May 2014 / 19 June 2014	Brereton J hears application to set aside statutory demand.
17 July 2014	LEC / Zdrilic file notice of appeal in respect of Harrison J dismissal of the second stay application and application to stay the costs judgment (Court of Appeal stay application) (CA 2014 / 138849).
24 July 2014	Lloyd-Jones J dismisses dismissal review application, with costs.
28 July 2014	LEC / Zdrilic file application in the Court of Appeal for leave to appeal Harrison J’s dismissal of the second stay application (CA 2014 / 223231).
15 August 2014	High Court dismisses LEC / Zdrilic’s application for special leave to appeal.
20 August 2014	Hickie / Vocifa file creditor’s petition – Sam Zdrilic and Amy Zdrilic (SYG 2324 / 2014) (the creditor’s petition).
27 August 2014	Brereton J dismisses application to set aside statutory demand, with costs.
9 September 2014	Hickie / Vocifa file applications for winding up of LEC / Amy Holdings (NSD 918 / 2014 and NSD 919 / 2014) (the winding up application).
15 September 2014	Zdrilic files application opposing creditor’s petition.
29 September 2014	LEC / Amy Holdings file affidavit with grounds of opposition to winding up application.
17 October 2014	Court of Appeal dismisses LEC / Zdrilic’s application for leave to appeal against Harrison J’s dismissal of the second stay application (CA 2014 / 223231) and their application for a stay in the Court of Appeal (CA 2014 / 138849).
24 November 2014	Jacobson J hears LEC / Amy Holdings winding up application.
17 December 2014	Jacobson J orders the winding up of LEC / Amy Holdings, with costs.
21 January 2015	Zdrilic (in the name of LEC / Amy Holdings) files appeal against winding up order of Jacobson J and application for stay of winding up.
29 January 2015	Foster J hears application for stay of winding up of LEC / Amy Holdings.