Zdrilic v Hickie

Case [2014] FCCA 1593

FEDERAL CIRCUIT COURT OF AUSTRALIA

ZDRILIC & ANOR v HICKIE & ANOR [2014] FCCA 1593
Catchwords:
BANKRUPTCY – Application seeking review of Registrar’s decision to dismiss application to set aside a bankruptcy notice – Appeal proceedings in NSW Court of Appeal dismissed leading to Registrar’s dismissal of application to set aside bankruptcy notice – Application for review of registrar’s decision subsequently filed – Application for special leave to appeal filed in High Court – Relevant principles – Application for review dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(6A), 41(6C)

Federal Circuit Court Rules 2001 (Cth), rr.3.04, 20.01
Anderson v Kirk & Anor (2004) 82 ALD 668
Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264
Herchenroder v Smith [2003] FMCA 96
Hickie v Land Enviro Corp Pty Ltd [2014] NSWSC 472
James v Abrahams (1981) 34 ALR 657
Javeev Pty Ltd v Deane (1997) 72 FCR 398
Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd [2012] NSWSC 382
Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd [2013] NSWCA 35
Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd [2014] NSWCA 34
Miller v Nationwide News Pty Ltd [2008] FMCA 1576
O’Farrell v Network Entertainment Pty Ltd [2005] FMCA 1936
Portellos v GE Finance Australasia Pty Ltd [2013] FCCA 1044
Re Dalco; Ex parte Dalco v Deputy Commissioner of Taxation (1986) 67 ALR 605
Re Udowenko; Ex parte Mitchell (1996) 69 FCR 299
First Applicant: SAM ZDRILIC
Second Applicant: AMY ZDRILIC
First Respondent: DAVID HICKIE
Second Respondent: VOCIFA PTY LTD
File Number: SYG 800 of 2013
Judgment of: Judge Lloyd-Jones
Hearing date: 28 April 2014
Delivered at: Sydney
Delivered on: 24 July 2014

REPRESENTATION

The Applicants: The First Applicant appeared in person on behalf of both Applicants.
Solicitor for the Respondents: Ms V. Botsikas of Bartier Perry

ORDERS

  1. Pursuant to reg.20.01(2)(a) of the Federal Circuit Court Rules 2001 (Cth), the time for filing the applicants’ application for review filed on 27 March 2014 be extended to 27 March 2014.

  2. The application for review filed on 27 March 2014 be dismissed.

  3. Any creditor’s petition founded on the basis of a failure to comply with the requirements of Bankruptcy Notice No. BN 159172 of 2013 be referred to the docket of Judge Lloyd-Jones for case management and hearing.

  4. The applicants pay the respondents’ costs of and incidental to the application for review filed on 27 March 2014 as agreed or assessed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 800 of 2013

SAM ZDRILIC

First Applicant

AMY ZDRILIC

Second Applicant

And

DAVID HICKIE

First Respondent

VOCIFA PTY LTD

Second Respondent

REASONS FOR JUDGMENT

Introduction

  1. Before the Court is an application seeking review of the decision of a registrar of this Court dismissing an application by Sam and Amy Zdrilic (the “Applicants”) to have a bankruptcy notice set aside that had been issued against them and subsequently served on them by the respondents in these proceedings, David Hickie and Vocifa Pty Ltd (the…

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AGLC
Zdrilic v Hickie [2014] FCCA 1593
Case
[2014] FCCA 1593
Decision Date

CaseChat Overview and Summary

This case concerned a notice of motion filed by the defendants, Land Enviro Corp Pty Ltd, Sam Zdrilic, Amy Zdrilic, and Amy Holdings Pty Ltd, seeking to extend a stay of a costs order made in the Supreme Court of New South Wales. The dispute arose from earlier proceedings where the defendants' claims were dismissed, leading to a significant costs order in favour of the plaintiffs, Mr Hickie and Vocifa Pty Ltd. The defendants sought to stay the enforcement of this costs judgment pending the determination of their application for special leave to appeal to the High Court of Australia against a judgment of the NSW Court of Appeal.

The primary legal issues before the court were whether to grant a further stay of the costs judgment and whether to order the release of security paid into court. The court was required to consider the defendants' prospects of success in their proposed High Court appeal, the balance of convenience, and the plaintiffs' entitlement to the costs judgment and the security provided. The defendants' core argument revolved around their dissatisfaction with earlier findings of no agency, which they sought to re-litigate.

The court, applying the reasoning of Harrison J, found no basis to grant a continuation or extension of the stay on the costs judgment or to stay the Court of Appeal's orders. The court determined that the defendants had failed to demonstrate any arguable grounds for special leave to appeal to the High Court, as their case appeared to turn entirely on factual findings that were unlikely to attract the High Court's attention. The court also found that the balance of convenience favoured the plaintiffs, noting the insolvency of the corporate defendants and the lack of any identified risk of dissipation of the judgment sum.

Consequently, the court dismissed the defendants' notice of motion seeking a stay, ordering them to pay the plaintiffs' costs of that motion. The court also ordered that the $15,000 paid into court as security be paid out to the plaintiffs' solicitors, and ordered the defendants to pay the plaintiffs' costs associated with their motion for the release of these funds.

Orders

Orders of the court

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Background

Background to the litigation

It is convenient, for a number of reasons, to reproduce significant portions of Harrison J’s judgment. At [1]-[15] therein his Honour stated:1. By notice of motion filed on 25 March 2014, Land Enviro Corp Pty Ltd, Sam Zdrilic, Amy Zdrilic and Amy Holdings Pty Ltd (the defendants) seek the following orders:1. That a stay of the costs order in the Supreme Court of New South Wales proceedings under the file number 2013/0078308 be extended until 30 days after the High Court of Australia makes a determination in relation to the application for leave to appeal against order 4 of the judgment of the NSW Court of Appeal dated 4 March 2014, or if that application is successful, 30 days after the High Court‘s determination of the appeal.2. In the alternative to order 1, that order 4 of the judgment of the NSW Court of Appeal dated 4 March 2014 be stayed until 30 days after the High Court determination of the application for leave to appeal, or if the application is successful, 30 days after the High Court‘s determination of the appeal against order 4 of the NSW Court of Appeal judgment dated 4 March 2014.2. In order to put these claims in context, it is necessary briefly to trace the not uncomplicated history of the litigation so far.Background3. The judgment debt that is the subject of these proceedings was entered on 14 March 2013 and arises out of a costs order made in proceedings commenced on 26 March 2007, which were ultimately heard and determined by Stevenson J. Orders were sought in those proceedings to set aside a consent judgment dated 1 September 2004 dismissing earlier proceedings in the Equity Division in which Land Enviro Corp Pty Ltd was the sole plaintiff. By an amended statement of claim filed on 11 December 2002, Mr Hickie had been joined to those proceedings, but they were dismissed by consent on 1 September 2004. The plaintiff sought to re-litigate those proceedings.4. Stevenson J heard the matter between 6 February 2012 and 16 March 2012, over more than 25 days of hearing. The case against the plaintiffs alleged that Robert Renshall made actionable representations to the defendants. Stevenson J found that the alleged representations had either not been made or were not actionable if they had been. It was not alleged that Mr Hickie made any of the representations, either on his own behalf or on behalf of Vocifa. His Honour referred at [985] to the fact that the defendants‘ counsel had conceded as much. His Honour disposed of the case against the plaintiffs at [987] and [997]–[998] in these terms:[987] As to particular (c), Mr Jucovic accepted that a representation by Mr Renshall of his asserted authority to negotiate on behalf of Mr Hickie would not be sufficient to establish agency. Any such representation would have to come, expressly or implicitly, from Mr Hickie: Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [36].…[997] In those circumstances, I cannot see how Mr Zdrilic could reasonably have inferred that the representations allegedly made to him by Mr Renshall concerning the availability of funds (as opposed to negotiation of the terms of the Heads of Agreement) were made on behalf of Mr Hickie.[998] For that reason, my opinion is that HTT and Mr Renshall were not acting as Mr Hickie’s agent for relevant purposes, that is to say for the purposes of making the representations as to the availability of funds.See Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd [2012] NSWSC 382.5. His Honour published his reasons for judgment on 20 April 2012, dismissing the defendants’ claims pleaded in what by then had become their third amended statement of claim. No allegation was made in those proceedings that Mr Hickie or Vocifa Pty Ltd (the plaintiffs) had made any of the pleaded representations. The case against them was based upon allegations that those who made the representations were the plaintiffs’ agents, but that allegation was dismissed.6. In a separate judgment published by Stevenson J on 7 May 2012, his Honour ordered that the present defendants pay the costs of the present plaintiffs on the ordinary basis up to 1 September 2011 and on an indemnity basis thereafter. The plaintiffs in due course registered a judgment on 14 March 2013 for the assessed costs in the sum of $358,588.89. No challenge to that judgment was ever made.7. However, on 18 May 2012 the defendants served a notice of intention to appeal against the judgment of Stevenson J. By notice of motion filed on 8 November 2012 in the Court of Appeal, the defendants sought an order pursuant to UCPR 51.9(1)(b) extending the time for filing and serving a notice of appeal.8. Other than serving the notice of intention to appeal, the defendants did not advise the plaintiffs or otherwise indicate to them that they proposed to make an application for leave to appeal against his Honour‘s judgment out of time until they served their application to extend time to appeal. That application by the defendants was heard by Allsop P on 18 and 19 February 2013, and dismissed by orders made on 21 February 2013. His Honour ordered that the defendants pay the plaintiffs‘ costs of the application. On 6 March 2013, the defendants filed an application pursuant to s 46(4) of the Supreme Court Act 1970, seeking to discharge Allsop P‘s orders together with an order extending the time within which to file and serve their notice of appeal.9. On 12 April 2013, the defendants filed a notice of motion in the Common Law Division seeking an order that the judgment entered on 14 March 2013 be stayed until the proceedings in the Court of Appeal had been determined. On 10 May 2013, McCallum J granted a stay of enforcement of the costs judgment until 3 June 2013, conditional upon the defendants paying the sum of $15,000 into court by way of security for the plaintiffs‘ costs of the hearing of the defendants‘ s 46(4) application in the Court of Appeal. The defendants paid the sum of $15,000 into court on 28 May 2013.10. On 3 June 2013, McCallum J extended the stay up to and including 18 September 2013, which was the date upon which the s 46(4) application was due to be heard. On 4 October 2013, the plaintiffs undertook not to take any steps to enforce the costs judgment until the expiration of the period of 21 days after the Court of Appeal delivered judgment on the s 46(4) application. In the course of her judgment published on 6 June 2013, her Honour said this:[40] In those circumstances, I felt compelled to determine the application for a stay on the premise that it was not possible for me to form a judgment as to the applicants’ prospects of success in varying the order of Allsop P. I accordingly approached the application on the basis that there may well be very limited prospects of success but, conversely, that there may be some respectable point nestling within the complex and extensive material which will be put before the Court of Appeal.[41] Against those considerations, I concluded that the most important factors in favour of granting a stay were the fact that, if the stay were not granted, that would in all probability stymie the application under s 46(4) of the Supreme Court Act; the fact that that application is ready for hearing and has a hearing date; the relatively narrow scope of that application and the impossibility of excluding the conclusion that the application has reasonable prospects of success.[42] The most important factors against granting the stay were, in my consideration, the need to acknowledge that Mr Hickie and Vocifa are entitled to the benefit not only of the judgments of Stevenson J but of the costs judgment, which is not the subject of any appeal; the apparent risk that the applicants will not be able to satisfy that judgment and the plain prejudice of allowing further costs to be incurred in that circumstance.[43] Weighing those competing considerations, I formed the view that there was an appropriate basis for granting a stay that would be fair to all parties if the applicants were able to provide security in a modest sum to meet Mr Hickie’s legal costs of the hearing of the s 46(4) application in the Court of Appeal. For those reasons, I made the orders set out above.See Hickie v Land Enviro Corp Pty Ltd [2013] NSWSC 706.11. On 4 March 2014, the Court of Appeal dismissed the defendants’ s 46(4) application insofar as it related to the plaintiffs and ordered the defendants to pay the costs. (In an otherwise comprehensive appeal against the decision of Stevenson J in the Court of Appeal, the defendants had only alleged against the plaintiffs that his Honour had erred in not finding that Mr Renshall or his associates were the plaintiffs’ agents). Basten JA dealt with the disposition of the application insofar as it related to the plaintiffs as follows:…See Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd [2014] NSWCA 34.12. On 25 March 2014, the defendants filed a notice of motion seeking a further stay of the costs judgment and an application for special leave to appeal from the judgment of the Court of Appeal to the High Court. It is convenient to record the terms of the grounds of appeal that the defendants seek to agitate in that court. They are as follows:…13. The defendants have refused to consent to the release to the plaintiffs of the $15,000 paid into court in accordance with the order made by McCallum J on 10 May 2013. The full amount of the costs judgment remains outstanding.…15. On 5 April 2013 Sam Zdrilic and Amy Zdrilic were each served with bankruptcy notices. On 17 March 2013 each of them made an application to the Federal Court of Australia to set the notices aside. District Registrar Wall dismissed those applications on 18 March 2014. Sam Zdrilic and Amy Zdrilic filed an application for review of that decision in the Federal Court on 27 March 2014, which is also listed for hearing on 28 April 2014. The time for compliance with the bankruptcy notices has now expired.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Harrison J then provides his consideration in respect of the application before him. Notwithstanding the specific circumstances of the matter before his Honour, I am of the view his reasons are also of assistance in the matter before this Court. His Honour stated at [39]-[50]:Consideration39. Doing the best I can I am unable to see any basis at all either for a continuation or extension of the stay upon the costs judgment that favours the plaintiffs or for a stay of any of the Court of Appeal‘s recent orders.40. Mr Zdrilic has argued at length and in detail. He has propounded every conceivable argument in support of his application and then some. He is clearly passionate about what he perceives to have been a fraud practised upon him with devastating financial and emotional consequences. I have no doubt about the sincerity with which he holds to his views concerning what occurred and what he maintains is required to put things right.41. The difficulty for Mr Zdrilic, however, is that he is unable to convert his dissatisfaction with the decisions of Stevenson J or the Court of Appeal into some suitable argument to support the orders that he seeks. In large measure, Mr Zdrilic does no more than protest that the arguments that were rejected by earlier courts should now carry the day. Even putting aside for the sake of the argument that Mr Zdrilic will have to establish some particular matters to attract a grant of special leave, he has not demonstrated why the Court of Appeal was wrong. Mr Zdrilic has a tendency instead to give emphatic repetition to his salient points as if doing so will give them more force than they have previously received. As understandable as that approach may be, it does not further his cause.42. Mr Zdrilic also embraces selective portions of the reasoning of the Court of Appeal without coming to terms with the parts that do not favour him. Stevenson J held that Mr Hickie was not a principal responsible for the acts of misrepresenting agents. Basten JA agreed. Despite what Leeming JA said at [68] in the Court of Appeal judgment, Mr Zdrilic appears to ignore that at [69] his Honour also said this:[69] I agree with what Basten JA has said about the absence of a case against the Hickie interests, and his Honour‘s proposed orders as to costs…43. It will be recalled that Basten JA had earlier agreed with Stevenson J that there was no evidential basis for the agency. That was an unsurprising finding by the trial judge having regard to the quoted concession made by Queen‘s Counsel appearing for Mr Zdrilic that a representation by Mr Renshall of his asserted authority to negotiate on behalf of Mr Hickie would not be sufficient to establish agency. Basten JA reiterated that nothing said in the course of the proceedings in the Court of Appeal cast any doubt upon that finding. Leeming JA‘s agreement at [69] is directed to reinforcing that proposition. It is wholly inimical to the case Mr Zdrilic continues to propound.44. Nor does there appear to be any reasonable prospect that the decision of the Court of Appeal would attract attention as a special leave candidate. It seems clearly to be a case that turns wholly upon unexceptionable facts and is concerned with no particular issue of law of wider general interest or importance. Despite the manifold ways in which Mr Zdrilic has attempted to formulate his concerns, they ultimately distil entirely to a single complaint that the findings of no agency are wrong. That factual dispute is wholly unlikely to attract a grant of special leave to appeal to the High Court.45. Moreover, the balance of convenience now clearly favours the plaintiffs. The corporate defendants are insolvent. There is no relationship between the solvency of any of the defendants and the prospect that the costs judgment will be enforced. The subject matter of the stay is not co-extensive with the subject matter of the proposed appeal to the High Court, so that there is no risk that the appeal will prove to be abortive if the defendants are successful there. The defendants have not identified anything that approaches arguable grounds of appeal, or some matter that would attract a grant of special leave. There is no identified risk that the plaintiffs would dissipate the benefit of the costs judgment so that it was beyond the reach of the defendants in the (highly unlikely) event that it was overturned in due course. The defendants have never challenged the quantum of the costs judgment or the assessment process that generated it.46. I am not satisfied that the defendants have established or demonstrated any reason at all that warrants the exercise of discretion in their favour.The plaintiffs‘ motion47. The plaintiffs filed a notice of motion on 3 April 2014 seeking a single substantive order (erroneously suggesting on the title page that the order was sought on behalf of Land Enviro Corp) that the amount of $15,000 paid into court on 28 May 2013 on behalf of the defendants in compliance with the orders of McCallum J be paid to Bartier Perry on behalf of the plaintiffs. That order was made by way of security for the plaintiffs‘ costs of the hearing of the defendants‘ s 46(4) application in the Court of Appeal.48. The application is supported by the affidavit of Philip James Brand, the solicitor working in the office of Bartier Perry with the conduct of this matter on behalf of the plaintiffs, which was sworn 1 April 2014. Mr Brand deposed, among other things, to the fact that in his opinion as a solicitor with over 30 years‘ experience, the work undertaken by Bartier Perry and counsel retained by that firm for the plaintiffs would have generated party/party costs under the Legal Profession Act 2004 referable to the s 46(4) proceedings in excess of $15,000. Tax invoices from Mr Lever SC and Bartier Perry that are annexed to the affidavit support Mr Brand‘s opinions. Mr Brand was not cross-examined. The defendants did not actively oppose the order sought, otherwise than in the context of their principal prayers for relief.49. There is not in my opinion any demonstrated basis why the order sought by the plaintiffs should not be made.Conclusions and orders50. I consider that the following orders should be made:1. Dismiss the defendants‘ notice of motion filed 25 March 2014 with costs.2. Order that the amount of $15,000 paid into court on 28 May 2013 on behalf of the defendants be paid out to Bartier Perry, solicitors.3. Order the defendants to pay the plaintiffs‘ costs of their motion filed 3 April 2014, limited to the costs of preparation and filing of the notice of motion and the preparation, swearing and filing of the affidavit of Philip James Brand dated 1 April 2014.