Crocker v Infa-Secure Pty Ltd [2018] FCA 84 | Case summary

LOGAN J: 1 On 22 July 2016, a Registrar made a sequestration order under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) against the estate of Ms Debra Ann Crocker. As she was entitled, Ms Crocker sought the review of the Registrar's decision by the Court. As it transpired, I constituted the Court for the purpose of conducting that review. On 2 November 2016, I dismissed, with costs, Ms Crocker's review application: Infa-Secure Pty Ltd v Crocker [2016] FCA 1319 (bankruptcy judgement). 2 Ms Crocker has now applied for the annulment of her bankruptcy (QUD 668 of 2017). The riposte of Infa-Secure Pty Ltd (Infa-Secure), which was the petitioning creditor, to that application is not just to seek its summary dismissal pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA Act) but also, by separate application (QUD 706 of 2017), to seek a vexatious proceedings order against her pursuant to s 37AO of the FCA Act. It was convenient to hear and now is to determine the two applications made by Infa-Secure together, not just because of an overlap in relevant evidence but also because the fate of the s 37AO application is, in part, informed by the disposition of the s 31A application. Neither party made any objection to my determining the present applications in light of my earlier association. Nor do I apprehend that there is any reason, arising from that association, for me not to determine them. 3 Though she appeared at the case management hearing at which the hearing date for the present hearing of Infa-Secure's applications was fixed and later filed a series of written submissions, Ms Crocker did not appear on the hearing of those applications. That absence of an appearance had been foreshadowed in correspondence which she sent to the Registrar. In that correspondence she stated that she was content for the applications to be heard in her absence. 4 A bankruptcy may be annulled either by operation of the Bankruptcy Act, as with the acceptance of a proposal by special resolution of a bankrupt's creditors (s 74) or by the payment of all of a bankrupt's debts in full (s 153A) or it may occur by order of the Court (s 153B). Materially for present purposes, in relation to the annulling of a bankruptcy following the making of a sequestration order, s 153B(1) provides: Annulment by Court If the Court is satisfied that a sequestration order ought not to have been made … the Court may make an order annulling the bankruptcy. 5 In Re Williams (1968) 13 FLR 10, at 23 and with reference to the then equivalent of s 153B of the Bankruptcy Act, Gibbs J described what the nature of the jurisdiction to annul a bankruptcy in this way: In determining the question whether the sequestration order ought not to have been made, the court is entitled to consider not only the case as disclosed at the time the order was made, but as it would have been disclosed had all the true facts been before the Court on the making of the order. If the Court is satisfied that the order ought not to have been made, it is not bound as a matter of course to annul the order, but must consider in the light of all the circumstances of the case whether the order ought to be annulled. This remains the approach pursuant to the present conferral by s 153B of the annulment jurisdiction: Stankiewicz v Plata [2000] FCA 1185. 6 Satisfaction that a sequestration order ought not to have been made is not only necessarily case specific but also not the subject of any statutory specification as to what might permissibly ground such satisfaction. In these circumstances, the following list, taken from prior authority, of categories of case, which, in the past, have yielded satisfaction that a sequestration order ought not to have been made cannot be exhaustive: an erroneous refusal to adjourn the creditor's petition upon which the sequestration order was made; where the creditor's petition was an abuse of process or the obtaining of the sequestration order was a fraud on the Court; where the judgement upon which the bankruptcy notice and then sequestration order were based has been set aside; where the bankrupt in truth owes no debt to the petitioning creditor, with the court being able in an appropriate case to go behind any judgement in respect of that debt to ascertain whether in truth that debt exists; where the sequestration order has been made against the incorrect person; where the bankruptcy notice is invalid; where the bankrupt was in fact solvent at the time when the sequestration order was made. 7 The Court retains a discretion as to whether to annul a bankruptcy, even if persuaded that a sequestration order ought not to have been made: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243. In Francis v Eggleston Mitchell Lawyers Pty Ltd [2013] FCA 564 at [26] Marshall J offered a necessarily non-exhaustive summary of circumstances which, in earlier cases, had been regarded as warranting an adverse exercise of that discretion. Factors such as whether the issue put forward as a basis for being satisfied the sequestration order ought not to have been made were capable of being raised at the time of the hearing of the petition, whether the bankrupt was legally represented then, the bankrupt's conduct over the course of the bankruptcy and the commercial morality of the bankrupt's conduct prior to bankruptcy are some which, in the past, have been regarded as relevant to the exercise of the court's discretion. 8 The relevant, underlying debt in the present case is grounded in a certificate of taxation given by the Registrar pursuant to r 40.20 of the Federal Court Rules 2011 (Cth), which fixes Infa-Secure's costs as between party and party in an earlier proceeding in the Court (QUD 647 of 2014) in which Ms Crocker was an applicant at $34,925.55. 9 As I related in the bankruptcy judgement, the originating application in QUD 647 of 2014, which was filed, on 3 December 2014, did not assign discrete respondent party numbers to any of the named respondents. Of the named respondents, it is only "Infa Secure Pty Ltd" that has the addition, "Pty Ltd". In respect of the other named respondents there is no indication on the face of that originating application that any one of them is a body corporate. The named respondents to QUD 647 of 2014 are, in the title of the originating application, merely grouped together as, "Respondents". On 19 December 2014 a "notice of acting-appointment of lawyer" was filed on behalf of Infa-Secure in in QUD 647 of 2014. The effect of the giving of that notice under the rules was that, by operation of r 10.11, Infa-Secure was deemed to have been served with the originating application. The notice is in these terms: [Infa-Secure], the first respondent, has appointed Andros Chrysiliou of Chrysiliou Lawyers to represent the first respondent in the proceeding. It is a feature of this filed notice of acting that it bears a title for the proceeding QUD 647 of 2014 which specifies Infa-Secure, with its designated Australian Company Number, as, "First Respondent". An additional feature of the title of that notice is the resort to the practice, authorised under the rules, of referring to multiple respondents as "others named in a schedule". As to this, I observed in the bankruptcy judgment: Orthodox though the methodology employed may be, the notice, nonetheless, assigns to the proceeding a different title to that employed by Ms Crocker when the originating application was drawn by her and subsequently filed in Court. By that I mean that the originating application does not in terms refer either as first respondent or otherwise to a corporation by the name Infa-Secure. Rather, a corporation with the name Infa Secure is named as one of a number of persons collectively grouped as respondents. 10 Perhaps Infa-Secure's alteration of the heading anticipated an amendment for which it proposed to apply at the first directions hearing on 5 February 2015. As it was, the making of any such application was overtaken by the filing by Ms Crocker, on 30 December 2014, of a notice of discontinuance as against the First Respondent in QUD 647 of 2014. Ms Crocker entitled that notice, and it was accepted for filing, in a form which shows, "Respondents", and then designates, "Infa Secure and others". By that notice, Ms Crocker discontinued the proceeding against, "The first respondent Infa Secure Pty Ltd". 11 Ms Crocker discontinued that proceeding as against the First Respondent of her own volition and without there being any consent that there be no order as to costs. That had the result that, unless she was relieved of its operation, the First Respondent in QUD 647 of 2014 was entitled to the benefit of the operation of r 26.12(7) of the Federal Court Rules, which provides: Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under sub-rule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim; or part of the claim; that is discontinued. 12 In QUD 647 of 2014, Ms Crocker later made what was treated as an application to be relieved of the operation of r 26.12(7) of the Federal Court Rules. That application was dismissed on the merits by Reeves J on 11 June 2015: Crocker v Toys R Us (Australia) Pty Ltd (No 2) [2015] FCA 727. A subsequent application by Ms Crocker for an extension of time within which to apply for leave to appeal and a related application for leave to appeal in respect of that judgement was dismissed by Collier J: see Crocker v Toys R Us (Australia) Pty Ltd [2016] FCA 1103. 13 In the bankruptcy judgement, I concluded, on the evidence, which materially included a number of searches of the records of the Australian Securities and Investments Commission, that there is no legal entity by the name "Infa Secure Pty Ltd" and, more particularly, that there was no corporate entity of that name. I found that there was a corporate entity, Infa-Secure, with the Australian Company Number specified in the notice of acting. I concluded: 16 Given the imprecision of description which Ms Crocker chose in entitling her originating application, it does not appear to me to be unreasonable for Infa-Secure to have regarded itself as the party intended to be named. That being so, Ms Crocker is, with respect, in many ways the author or her own misfortune. Infa-Secure gave notice of a lawyer acting for it and what followed thereafter in terms of the costs debt which arose occurred by operation of the rules and as a sequel to Ms Crocker's notice of discontinuance. 14 There was no appeal from the bankruptcy judgement by Ms Crocker. 15 Ms Crocker filed an affidavit in support of her annulment application. That affidavit is replete with large allegations of fraud and other criminal conduct extending back many years by those controlling Infa-Secure, as well as unprofessional conduct on the part of the lawyers representing it in earlier proceedings in this court. It is neither necessary nor desirable to detail these allegations. Suffice it to say, they have their origins in a claimed infringement of trade mark rights and copyright said to be held by Ms Crocker in respect of a device used to secure children's car seats, prams, high chairs, swings and strollers. In relation to Infa-Secure, it is apparent from her affidavit that Ms Crocker's perception of impropriety stems from a misreading and related misunderstanding on her part of an entry in the Australian Business Register (the ABN Register) maintained by the Commissioner of Taxation for the purposes of legislation under his administration. The entry forms part of exhibit DAC1 to Ms Crocker's affidavit. 16 Under the heading, "entity name", the ABN Register records two trusts and related periods of currency. As to these "entities", it records, under the heading, "Trading Name", Infa-Secure on and from 27 August 2009 and Infa Products Pty Ltd from 2000 until 27 August 2009. It is apparent from her affidavit that Ms Crocker believes that "Infa Secure Pty Ltd" is but a trading name and that the business shown in the ABN register is not and never has been conducted by a company. 17 As I have already related, the conclusion reached on the evidence in the bankruptcy judgement on the evidence was that there was never a company "Infa Secure Pty Ltd". Ms Crocker has not in her affidavit produced any evidence which would suggest otherwise. Further, unless one understands that the ABN Register is maintained for taxation administration purposes and that the term "entity" as used in that register can include a trust (definition of "entity", paragraph (g) in s 184.1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), adopted by s 41 for the purposes of the A New Tax System (Australian Business Number) Act 1999 (Cth)) even though, under the general law, a trust is but an obligation in equity assumed by a legal entity, the entry in the register is apt to mislead. Yet further, and also misleadingly, what the ABN register terms a "trading name" is, in truth, a legal entity namely, a body corporate by the name Infa-Secure. By "legal entity", I refer to a person treated in law as having legal personality. Such a person may be an individual or a body corporate. In Infa-Secure's case, it is the latter. 18 However misleading the ABN Register may be for other than taxation administration related purposes, a feature of it which is notable for present purposes is that a hyphen is used in the recording of Infa-Secure. 19 There is no basis for an annulment of Ms Crocker's bankruptcy disclosed in her affidavit. While I accept that a creditor's petition which constituted a fraud on the Court might well provide a basis for a conclusion that a sequestration order ought not to have been made, Ms Crocker has put forward nothing which would support any prospect of such a conclusion being made. All that she has put forward is a rehearsal of reasons why she alleges that Infa-Secure was not entitled to its costs in QUD 647 of 2014 as a sequel to her filing her notice of discontinuance. As to there being any basis for that conclusion, she made no persuasive case before Reeves J, or in her application before Collier J or, as the bankruptcy judgement discloses, earlier before me. There is not and never has been any substance in Ms Crocker's allegation (found apart from in her affidavit, in paragraph 5 of her statement of claim) that Infa-Secure is not a company, only a "trading name" and that it has been fraudulently "inserted" into earlier proceedings in the Court. 20 Ms Crocker has offered no evidence of her solvency either as at the time when the sequestration order was made or, for that matter, now. 21 In Spencer v Commonwealth of Australia (2010) 241 CLR 118 at [22] it was observed of the power conferred by s 31A of the FCA Act: The section authorises summary disposition of proceedings on a variety of bases under its general rubric. It will apply to the case in which the pleadings disclose no reasonable cause of action and their deficiency is incurable. It will include the case in which there is unanswerable or unanswered evidence of a fact fatal to the pleaded case and any case which might be propounded by permissible amendment. It will include the class of case in the longstanding category of cases which are "frivolous or vexatious or an abuse of process". The application of s 31A is not, in terms, limited to those categories. Each of the particular categories within the embrace of s 31A mentioned in the passage quoted is applicable in this instance. The central tenant of her statement of claim, which is that Infa-Secure has never had any standing to proceed against her for any debt and has been put forward by those controlling it as a means of preventing the exposure of an alleged wrong relating to her asserted intellectual property rights by those controlling it being exposed is doomed to fail. No amendment of the pleading will change that. And that central tenant is but a repetition of issues decided against her in earlier judgements of the Court. Her annulment application is frivolous or vexatious. 22 For these reasons, Ms Crocker's annulment application should be dismissed summarily pursuant to s 31A of the FCA Act. 23 That her annulment application is frivolous or vexatious does make the filing of an application by Infa-Secure for a vexatious proceedings order appropriate. Arising from that application, the further question becomes whether such an order should be made? 24 The right to claim an exercise of judicial power for the resolution of an alleged grievance known to law is an important civil liberty. That is so whether the alleged grievance is grounded in private law, as with tort or contract claims or a statutory cause of action conferred on a person or grounded in public law and has as its purpose ensuring legality of action by an officer or agency of the Executive. So it is a serious thing to restrict that right. But the right is not and, even prior to the enactment of s 37AO of the FCA Act was not, an unqualified one. Further, a correlative of a right to claim an exercise of judicial power is finality via that exercise for all of the parties concerned. As to these several propositions, see the earlier judgements of the Full Court in Fuller v Toms (2015) 234 FCR 535 and Kowalski v Mitsubishi Motors Australia Ltd (2011) 198 FCR 153. 25 In Bird v Registrar, Federal Court of Australia [2016] FCAFC 188, I made, with the general agreement of Reeves and Markovic JJ, the following observations in respect of s 37AO of the FCA Act: 28 A number of terms within s 37AO are either defined or have been the subject of prior judicial consideration as to their meaning. Materially, s 37AM of the Federal Court of Australia Act provides, in respect of the term, "institute": "institute", in relation to proceedings, includes: (a) for civil proceedings--the taking of a step or the making of an application that may be necessary before proceedings can be started against a party; The term "proceeding" is defined in s 4 of the Federal Court of Australia Act to include an appeal such as this appeal. The expression "vexatious proceeding" is defined in s 37AM of the Federal Court of Australia Act to include: "a proceeding instituted or pursued in a court or tribunal without reasonable ground". The word "vexatious" has been held to include proceedings "which are scandalous, which disclose no reasonable cause of action, which are oppressive, which are embarrassing, or which are an abuse of the process of the court": see Gallo v Attorney-General (unreported, Supreme Court of Victoria, Full Court, Starke J, with whom Crockett and Beach JJ agreed, 4 September 1984, at 12) and Garrett v Federal Commissioner of Taxation (2015) 147 ALR 342; [2015] FCA 117 at [4] per Pagone J. The word "frequently" involves "…no numerical threshold...and the question whether a person has "frequently" instituted or conducted vexatious proceedings must be answered by reference to the circumstances of each particular case": see Mathews v Queensland [2015] FCA 1488 at [85] per Reeves J and HWY Rent Pty Ltd v HWY Rentals (in liq) (No 2) [2014] FCA 449 at [114] per Perry J. 26 In terms of the definition of "proceeding" in s 4 of the FCA Act and the definition of "institute" found in s 37M(1)(a) of that Act, each of the following is a "proceeding" "instituted" by Ms Crocker: the application to be relieved of the operation of r 26.12(7) of the Rules, the extension of time and related leave to appeal application heard and determined by Collier J, the review application earlier heard and determined by me and the bankruptcy annulment application. I consider, having regard to these, that Ms Crocker has instituted proceedings in this Court "frequently". The present case is similar to Fuller v Toms (2015) 234 FCR 535 at [77] (Barker J) (affirmed on appeal by the Full Court in the case cited above) in that it is an attempt to re-litigate an issue already determined against the person. 27 The substantive application in QUD 647 of 2014 is also a "proceeding" "instituted" by Ms Crocker but, save in respect of the application in that proceeding to be relieved of the operation of r 26.12(7) of the Rules and one later event, I do not propose to have regard to later events relating to that proceeding for the purposes of determining the fate of Infa-Secure's s 37AO application. Ms Crocker is also a respondent to QUD 9 of 2015, brought by Infa-Secure, judgment in which is presently reserved. 28 I have considered whether, in light of that reservation of judgement, it would be premature to make any order under s 37AO of the FCA Act. What persuades me that it is not is that Ms Crocker has persisted in bringing applications against Infa-Secure, as the bankruptcy review application and the bankruptcy annulment applications attest. To give judgment in respect of the s 37AO application will have no effect on the Court's ability to determine the issues which are raised in QUD 9 of 2015. 29 The later event relating to QUD 647 of 2014 which I do take into account concerns Ms Crocker's having been found guilty of contempt of court in respect of breaches by her of an undertaking given by her to the Court on 12 January 2015 in QUD 647 of 2014. On 13 August 2015, Reeves J found Ms Crocker guilty of 27 charges of contempt, relating to 27 breaches of that undertaking. Those breaches occurred between 15 January and 28 February 2015: see Infa-Secure Pty Limited v Crocker [2015] FCA 830. On 13 November 2015, Ms Crocker pleaded guilty before Reeves J to two further charges of contempt of this Court involving breaches of the same undertaking, which occurred during July 2015. In his later reasons for judgement in respect of penalty, Infa-Secure Pty Limited v Crocker (No 2) [2016] FCA 202 at [2], Reeves J observed of these breaches: All of these breaches related to a series of email communications Ms Crocker sent to various retailers in January, February and July 2015 making serious allegations about Infa-Secure, its personnel and its lawyers. Those emails included assertions that Infa-Secure and the persons mentioned above were guilty of theft and fraud, among many other things. 30 Ms Crocker has repeated allegations of theft and fraud against Infa-Secure (and those who control it) in her affidavit and in the statement of claim (as well as in her written submissions). The affidavit contains no evidence to support these. One feature of the annulment application is that it has been used by Ms Crocker as a vehicle for the re-making of these unsupported allegations. When one adds this to the frequent, unmeritorious endeavours by Ms Crocker to re-litigate issues decided against her in her unmeritorious application to be relieved of the operation of r 26.12(7) of the Rules, the case truly is one for the making of an order under s 37AO of the FCA Act, serious though the imposition of such a restriction is. In terms of s 37AO(1) of the FCA Act, she has "frequently instituted … vexatious proceedings". A corollary is that there should be a restriction in respect of the availability to a non-party of the statement of claim, Ms Crocker's affidavit and of her written submissions as filed in the bankruptcy annulment proceeding. 31 That Ms Crocker is disposed not just frequently to re-litigate issues decided in favour of Infa-Secure but, in so doing, not to confine unsupported allegations of fraud and other misconduct to acts of that company persuades me that the order ought not just to relate to the institution of proceedings to which that company is a proposed party but be more general. That QUD 9 of 2015 is not yet finally determined and may possibly become the subject of an appeal by Ms Crocker persuades me that any order under s 37AO(2)(b) of the FCA Act should be subject to an exception to take account of the contingency of some post-judgement interlocutory application or in respect of an appeal. In terms of s 37AO(2)(c) of the FCA Act, such an exception is, in the circumstances, "appropriate". 32 There will be orders accordingly. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Crocker v Infa-Secure Pty Ltd

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