Dudzinski v Kellow

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

GENERAL 1 This is an appeal from a sequestration order made against the estate of the appellant on 20 February 2003. The history of these proceedings is rehearsed in detail in the reasons of Spender J at first instance. It is necessary only to provide a brief summary. 2 On 8 April 1999 Drummond J struck out all but three claims made by the appellant in proceedings QG 168/97, such order being made pursuant to O 20 r 2 of the Federal Court Rules. His Honour considered that the claims disclosed no reasonable cause of action. The remaining claims were within the jurisdiction of the District Court and were stayed for that reason. The appellant sought leave to appeal. On 27 August 1999, the Full Court refused that application with costs. 3 On 7 January 2000 the District Registrar issued an estimate of costs pursuant to O 62 r 46. The appellant sought leave to file a notice of objection to the estimate without giving security as required by par (d) of O 62 subr 6(3). On 23 February 2000, a Deputy District Registrar declined that motion. Her decision was upheld by Spender J on 24 May 2000. A certificate of taxation was issued on 29 February 2000. The amount certified was $17,700. 4 A bankruptcy notice was issued on 19 December 2001. An application to set it aside or to extend time for compliance was dismissed by Spender J on 22 May 2002. That decision was upheld by the Full Court on 21 November 2002. 5 On 22 November 2002 the respondents filed a creditor's petition in bankruptcy, relying on the bankruptcy notice. A sequestration order was made on 20 February 2003.

Preliminary matters 6 The present notice of appeal was filed on or about 17 March 2003. At that time the District Registrar appointed 9 April 2003 as the date for settling the appeal papers. On 4 June 2003 the appellant purported to file a supplementary notice of appeal pursuant to O 52 subr 21(1). That rule requires that any such supplementary notice be filed prior to the date for settlement of the appeal papers. The purported supplementary notice was therefore out of time. At the hearing of the appeal counsel for the respondents agreed that the appeal should proceed upon the basis of the supplementary notice. The appellant was given leave to amend his notice accordingly. 7 At the commencement of the hearing the appellant took a number of preliminary points. Firstly he asked each member of the court to disqualify him- or herself from hearing the appeal. Each member of the court declined, giving brief reasons. It is not necessary to say any more about that aspect of the matter. 8 On 10 July 2003 the appellant had applied to Dowsett J for an adjournment of the hearing of this appeal. His Honour refused the application. The appellant then applied to Kiefel J for leave to appeal from that decision. Leave was refused. Before us, the appellant initially sought to "appeal" from those various orders. It was suggested that his purpose would be better served if he were to renew his application for an adjournment. This he did. The court declined the application. We now publish our reasons for that decision. 9 The primary ground for seeking an adjournment was that the appellant and his wife were required to vacate their residence in mid-July and experienced some difficulty in finding other accommodation. The appellant claimed that this had interfered with his preparation for the appeal. This same ground had been ventilated before Dowsett J. As appears from his Honour's reasons, the appellant then said that he had known since about 4 June that he would have to vacate the premises by 16 July. We understood him to say that he moved to other premises on or about that date. Thus he had approximately a month thereafter during which he could prepare for this appeal. Further, he was aware for some weeks prior to 16 July that he would have to move on that date. Indeed, he said that he had been advised of the date of hearing of the appeal on 30 April 2003. 10 Whilst it would no doubt have been more convenient for Mr Dudzinski if the appeal had been heard at some other time, it did not follow that he was entitled to an adjournment. The interests of the respondents had also to be kept in mind. We considered that there had been more than ample time to prepare for the appeal. Although his change of residence may have been inconvenient, we did not consider that it justified an adjournment. In those circumstances we refused his application. 11 The appellant then indicated that he wished to cross-examine certain of the respondents' witnesses. Although he did not put the matter in this way, it seemed to us that the only way in which he could do so would be by applying to lead further evidence, even if he hoped to extract that evidence by way of cross-examination. There are clearly many difficulties inherent in that course. It was pointed out to him that he had not proceeded in accordance with O 52 r 36. The appellant made no attempt to identify the evidence which he hoped to lead, nor to explain why he had not dealt with the matter at first instance. In those circumstances his motion to receive new evidence (if there was such a motion) was refused.

Grounds of appeal 12 The appellant's grounds of appeal and his outline of argument are, in places, argumentative and confused. The grounds appear to include: Ÿ That Spender J incorrectly failed to "go behind" the judgments of the Full Court and Drummond J; Ÿ Reliance upon a claim which the appellant asserts against Centrelink; Ÿ Reliance upon the claims which were stayed by Drummond J; Ÿ That the bankruptcy notice was void because it was based on more than one judgment; Ÿ That the petition was not signed by the creditors but by their solicitor; Ÿ That only one of the joint creditors "caused issuing of the petition"; Ÿ That the petition was not signed by all judgment creditors or with their authority; Ÿ Various complaints of fraud, collusion, bias, perception of bias and other similar allegations; Ÿ Denial of natural justice; Ÿ Failure by the Deputy District Registrar to hear the appellant's objections concerning the bill of costs; Ÿ Objections to the bill of costs; Ÿ That Spender J upheld the decision of the Deputy District Registrar, refusing to waive the requirement for security in connection with the appellant's objections to the bill of costs; Ÿ Refusal by the respondents to produce certain documents; and Ÿ Vague complaints concerning proceedings in the Human Rights and Equal Opportunity Commission ("HREOC"). 13 We have not set out all of the grounds raised or hinted at in the notice of appeal and outline of argument. We have tried to summarise those which appear to be at least superficially capable of rational argument. We will, however, try to deal with these grounds in a more systematic way.

Fraud, collusion, bias, perceptions of bias and other similar allegations 14 Such allegations are always treated seriously. Were any of them to be made out, it would probably follow that the proceedings had miscarried, leading to the setting aside of the sequestration order and possibly, the bankruptcy notice. However, as far as we can see, there is no evidence of any of these matters. The appellant asserts them, with some vehemence, but that is not enough. The allegations are directed against various members of the Court, at least one of the Deputy District Registrars and the respondents' solicitors. The allegations of fraud and collusion are, like the allegations of bias and/or perception of bias, based upon nothing more than the fact that the appellant has been consistently unsuccessful in this, and perhaps other litigation in this Court. He appears to consider that any disagreement with a position advanced by him is evidence of misconduct of some kind. It is unfortunate that the appellant should feel this way, but such perceptions, unjustified by any objective facts, cannot be allowed to disrupt the administration of justice. In the absence of any particularity in the allegations, or any admissible evidence in support of them, we do not propose to consider them further.

DENIAL OF NATURAL JUSTICE 15 In the notice of appeal, the appellant complains that he was not heard on 22 June 1998 in action QG168/97. These were the proceedings before Drummond J. There is no detail of the alleged denial of natural justice but in any event, it is a matter which could and should have been resolved, at the very latest, in the hearing at which he sought leave to appeal from his Honour's judgment. We do not understand him to suggest that he was not heard on that occasion. There is also an allegation of denial of natural justice in proceedings before a Deputy District Registrar. This appears to refer to the proceedings leading to the certificate as to the costs of the Full Court application. There are no details of the complaint. Any irregularity should have been raised before Spender J when he was seized of the matter. 16 The appellant also asserts that he has been denied an opportunity to set off against the amount of the costs order the amounts of the claims which were stayed by Drummond J. This is not a "natural justice" point, but it may be relevant to the making of the sequestration order. We will address it in that context. 17 Finally, the appellant complains of the conduct of the respondents' solicitors. Apart from some undefined complaints in par 3.12(O) of the amended notice, he asserts in par 3.12(P) that supporting documents relating to the estimate of costs were not attached to the relevant bill of costs as required by O 62 r 40. There is no detailed description of the allegedly omitted documents, nor any admissible evidence of their omission. In any event, this is not a "natural justice" point. It seems to be a result of the appellant's failure to give security as required by the relevant rule.

THE BANKRUPTCY NOTICE 18 As mentioned above, the appellant has previously challenged the validity of the bankruptcy notice. Spender J upheld such validity, and his Honour's decision was upheld by the Full Court. It is not entirely clear whether the appellant has an outstanding application for special leave to appeal from that decision, but the existence of such an application would not affect the validity of the petition or the sequestration order. In our view the validity of the bankruptcy notice as between the parties to these proceedings has been conclusively resolved, subject only to any proceedings in the High Court. See Makhoul v Barnes (1995) 60 FCR 572 at 582. We do not propose to give any further attention to that matter. However some issues which arose in connection with those earlier proceedings may also arise in connection with the hearing and determination of the petition, to which we now turn.

THE PETITION 19 Pursuant to s 44 of the Bankruptcy Act 1966 (Cth) (the "Bankruptcy Act") a creditor's petition may be presented by a creditor who is owed an amount of not less than $2,000. Where a debt is owed to more than one creditor jointly, all must present the petition. See Australian Workers' Union & Ors v Bowen (1946) 72 CLR 575. Section 52 provides relevantly as follows: "(1) At the hearing of a creditor's petition, the Court shall require proof of: (a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient); (b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing; and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor. (1A) … (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition." 20 Apart from certain procedural matters to which we will refer separately, we consider that the issues which fell for consideration before Spender J upon the hearing of the petition were:

Ÿ The status of the respondents as joint petitioners;

Ÿ Whether or not the matters stated in the petition were established;

Ÿ Whether or not the relevant debt was still owing; and

Ÿ Whether there was any sufficient cause pursuant to par 52(2)(b) for declining to make a sequestration order.

21 The appellant might also have sought to prove his solvency for the purposes of par 52(2)(a). He seems not to have done so at first instance. No such ground appears in his amended notice of intention to oppose the petition. At [14] of his Honour's reasons, Spender J observed that the matter had not been raised. Nonetheless the appellant seems at least to hint at it in par 19 of his submissions on appeal. It is not raised in the amended notice of appeal. We do not consider that the appellant should be allowed to raise this new factual matter. In any event, the material is not sufficient to establish solvency. 22 We will now deal separately with each aspect of s 52 which remains in issue.

STATUS OF THE RESPONDENTS 23 The appellant sought to attack the status of the respondents as petitioners upon two broad bases, namely:

Ÿ That the amount of the judgment debt was not owing; and

Ÿ That the appellant had claims which would reduce or extinguish the amount of the debt.

Existence and amount of the debt 24 The appellant asserts that on the hearing of the petition, Spender J ought to have "gone behind" the judgment of Drummond J and that of the Full Court. He seems to suggest that Drummond J had proceeded in his absence and that the decision was not made "on the merits". He at least implies that this alleged defect also infected the Full Court decision. This argument obviously owes something to a reading of the cases in bankruptcy. On the hearing of a bankruptcy petition the Court may examine the circumstances surrounding a judgment debt to see whether or not it is truly owing. However this will not occur in every case. Such a course has been followed when judgment has been given in the absence of the debtor and/or without a full determination on the merits. Counsel for the respondents informed us that the appellant has not previously complained that he was not heard on any relevant occasion. In any event, as we have observed, any such irregularity should have been raised in the application for leave to appeal. The decision of Drummond J to strike out the claims was a decision on the merits. His Honour concluded that the facts pleaded would not ground a claim. The decision to stay the claims against Dr Stock and Professor Hogarth was probably not made on the merits of those claims. 25 However the real point is that the debt arose as a result of the Full Court's order concerning the costs of the application for leave to appeal. The appellant has not suggested that he did not attend the hearing in the Full Court. The decision was made "on the merits" in that it reflected the outcome of the application for leave. The order was made in exercise of a discretion conferred by s 43 of the Federal Court of Australia Act (1976) (Cth). If one "went behind" the judgment, one would find only that the debt arose as a result of an exercise of the Court's discretion. That would not in any sense affect the availability of the debt for present purposes. 26 The appellant also asserts that Spender J ought to have gone behind the certificate of taxation. In other words it is submitted that His Honour should have entertained objections to the bill of costs which the appellant was not permitted to pursue before the Deputy District Registrar because of his failure to provide security as required by the rules. A bankruptcy court will not always go behind a judgment. In the present case, the appellant did not seek to explain why he had not given security. More importantly, there is nothing in the material which suggests a basis for inferring that any miscarriage occurred in the process leading to the certificate. The appellant asserts that he is dissatisfied with some aspects of the bill, but that is not the same thing as establishing a basis for going behind the certificate. No cogent ground of objection is demonstrated by admissible evidence. In any event, as Spender J demonstrated at [40] and [41], to the extent that the appellant challenged the bill, he claimed only a possible reduction of the total to $10,000. Even this challenge was unsworn. 27 It is asserted that the debt is based upon more than one judgment and therefore cannot found a bankruptcy petition. This argument may owe something to the decision of Emmett J in Owners of Strata Plan No 5459 v Mason & Anor (1999) 91 FCR 92. His Honour held that the amounts of two judgment debts cannot be claimed in one bankruptcy notice. The appellant suggests that the present judgment debt is the product of the judgments of Drummond J, the Full Court and the Deputy District Registrar. This is simply incorrect. There is only one debt. It arose from the order of the Full Court. The decision of Drummond J had no direct role in its creation. The Deputy District Registrar merely quantified it. The point is misconceived.

Other claims 28 Claims against Dr Stock (in negligence and for assault) and against Professor Hogarth (for negligence) were stayed by Drummond J. The appellant asserts that the amounts of these claims exceed the debt owed to the respondents jointly. He previously sought to set up such claims in answer to the bankruptcy notice. Spender J and the Full Court considered that the claims did not constitute a counterclaim, set off or cross demand for the purposes of par 40(1)(g) of the Bankruptcy Act because such claims were against only some of the joint creditors. See Stec v Orfanos [1999] FCA 457 at par 24. The appellant now seeks to raise the same argument in opposing the sequestration order. Although he was not specific, we assume that the argument goes to the status of the joint creditors as petitioners. It may also be relevant to questions arising under subs 52(2). The appellant submits that the considerations which prevented his relying on such claims in answer to the bankruptcy notice do not apply for present purposes. We see no reason why that should be so. It would be absurd if joint creditors could issue a bankruptcy notice but not present and prosecute a petition based upon non-compliance with it. In any event, such evidence as there is concerning these claims suggests that they are neither bona fide nor substantial. 29 The only material supporting or explaining these claims, which we have been able to locate, appears in a document referred to during the hearing of the appeal as "affidavit A". It is, in substance, the record prepared for the appeal from the decision of Drummond J. The claims arose out of the appellant's attempt to obtain exemption from completing a requirement of a course which he was undertaking at Griffith University. Dr Stock was a member of the Faculty of Environmental Sciences. Professor Hogarth was the head of that faculty. Professor Hogarth referred the appellant's application to Dr Stock for investigation. Dr Stock formed the view that the application should not be approved. Professor Hogarth formed the same view. The appellant submits that these decisions were "negligent" and caused him harm. However the appellant demonstrates no basis for the allegation of negligence. His attempt to quantify any likely award of damages is also less than convincing. 30 The appellant also claims that Dr Stock assaulted him. The appellant asserts that: "Than Errol Stock stand up nearly touching face of the Applicant and in very hostile way, without any (witnesses) … (the doors were closed) said to the Applicant "get out, now!" showing to the Applicant exit door by His finger very close to Applicant's face. Errol Stock's eyes did narrow and show hatred. In Applicant's view is that if He would not leave quickly (in seconds), a battery would result." 31 Whilst this may constitute an assault, it is obviously a trivial one (assuming that the incident occurred as the appellant asserts) and could not possibly sound in any significant award of damages. 32 The appellant refers in support of this argument to the decision of the High Court in Gye v McIntyre (1990-1991) 171 CLR 609 and that of the Full Court of this Court in Day & Dent Constructions Pty Ltd (In Liquidation) v North Australian Properties Pty Ltd (Provisional Liquidator Appointed) (1981) 34 ALR 595. Both cases concerned the proper construction of s 86 of the Bankruptcy Act. There is no apparent reason for applying them to the present case. At one stage, the appellant seemed also to suggest that he had a right of set off pursuant to s 86. Clearly, the section has no present application. The appellant also refers to a claim which he asserts against Centrelink. Such claim could have no relevance to the status of the respondents as joint petitioners. In any event, the material discloses virtually nothing about it. 33 We are satisfied that the respondents had the requisite status to present the petition.

PROOF OF THE MATTERS PRESCRIBED BY SUBS 52(1) 34 The affidavit of Colin McAndrew filed on 5 December 2002 verifies pars 1, 2, 3 and 4 of the petition. No question concerning service of the petition has been raised. Nevertheless, the appellant complains of absence of the affidavit of service required by par 52(1)(b). The complaint is unjustified. The relevant affidavit is that of Phillip Leslie Grogan filed on 19 December 2002 and referred to at TS 2 ll 44-45 (AB [Vol 2] p 624). On 18 February 2003 Mr McAndrew swore that the debt was still owing, that affidavit being on behalf of himself and the other joint creditors. The hearing occurred on that date. The affidavit was filed in Court at the hearing. Clearly, subs 52(1) was satisfied. Although the appellant asserts that the relevant debt is not owing, we do not understand that to be an assertion of satisfaction. It is rather an assertion that the debt has never existed.

SUBSECTION 52(2) 35 Subsection 52(2) permits the court to dismiss the petition if the debtor demonstrates that he or she is able to pay his or her debts or for other sufficient cause. We have given our reasons for concluding that solvency was not raised at first instance and should not now be raised. The appellant has not clearly identified the aspects of the case upon which he relies in seeking to demonstrate that Spender J ought to have exercised the discretion in his favour. We assume that he relies on the whole of his case. It may be that the appellant's claims against Dr Stock and Professor Hogarth and that against Centrelink would be relevant to the exercise of this discretion. However, we have observed there is little or no evidence concerning the merits or quanta of those claims. 36 It is suggested that Spender J ought to have declined to make a sequestration order because the appellant had applied for special leave to appeal to the High Court from the Full Court decision upholding the bankruptcy notice. As was pointed out in argument, his Honour was also aware that Callinan J had declined to stay the petition pending the prosecution of that application. The existence of such an application will not necessarily lead this Court to stay its hand in the absence of any order of the High Court. Each matter will be determined on its own merits. 37 The appellant also submits that if he is bankrupt, his claims against Dr Stock and Professor Hogarth will not be pursued. His Honour considered that the claims would become the responsibility of the trustee in bankruptcy. 38 The appellant also refers to his dispute concerning the amount of the certificate of taxation. As we have said, there is no evidence suggesting any reason for doubting its correctness. In any event, the appellant's unsworn claim is only that the amount is overstated by $7000. That matter may also be addressed by the trustee in bankruptcy. 39 Spender J had a discretion to refuse to make a sequestration order. Such discretion could be exercised only if the circumstances identified in either par 52(2)(a) or (b) were established. His Honour considered the various matters raised by the appellant and exercised his discretion accordingly. The proper approach by an appellate court to an appeal from the exercise of a discretion is to be found in House v The King (1936) 55 CLR 499 at 504-505. We can detect no error in his Honour's decision to make the sequestration order.

Human rights and equal opportunity commission 40 There are numerous references in the grounds of appeal and in the outline to proceedings in the HREOC. They reflect the appellant's dissatisfaction with the outcome of those proceedings and/or his perception that he has been denied an opportunity to have the decision reviewed. The reference is presumably to the proceedings described by Spender J in [20], [22], [24], [25] and [27] of his reasons. We cannot see that they have any relevance for present purposes.

Formal matters 41 It is submitted that: "… there was not evidence before His Honour that the alleged creditor's petition was in compliance with form 150 and Order 77, subrule 16(1) and that McAndrew verified paras 1, 3 and 4 of the Petition Q7022/02". 42 Spender J dealt with these matters at [15] when he found: "The creditors' petition is in compliance with form 150 and O 77, Subrule 16(1) of the Federal Court Rules. The matters in paragraphs 1, 2 and 3 of the creditors' petition have been verified by the affidavit of Colin McAndrew, the Pro-Vice-Chancellor of Griffith University sworn 18 February 2003. Griffith University is one of the joint creditors. All of the other joint creditors are, or were, in the employ of Griffith University." 43 We observe that Mr McAndrew also verified par 4 of the petition. The appellant has not sought to identify any specific error in those findings. 44 At [16], his Honour continued: "It is convenient if I deal now with one of Mr Dudzinski's contentions, namely, that Minter Ellison did not have authority of all the creditors petitioning for his sequestration. Mr Edward James Goodwin, a solicitor with the firm of Minter Ellison, has given sworn evidence that he had written instructions from each of the joint petitioning creditors to pursue these bankruptcy proceedings, and I accept that that is so. I note s 308 of the Act, which provides for the usual rule concerning agency as follows: "Subject to this Act, for the purposes of this Act: … (d) any person may act by his or her agent duly authorised in that behalf." " 45 Once again the appellant seeks to re-ventilate this question without indicating the respect in which he alleges error. 46 An associated ground is raised in par 3.11 of the amended notice of appeal. It seems to be suggested that because Griffith University may have paid the costs of the appeal which are the subject-matter of the bankruptcy notice, it is the true creditor and the other respondents are therefore not competent to present the petition. It seems unlikely that the addition of unnecessary joint petitioners could in any way have affected the validity of the proceedings. At most it may have been necessary to amend the petition. However the true point is that the costs order was made in favour of all of the respondents. It does not matter that they may have made some private arrangement as to how the costs were to be met as amongst themselves. 47 A further irregularity is said to be that a solicitor signed the petition on behalf of the petitioning creditors. Spender J rejected this argument, citing an earlier decision of his own in that regard, namely Australia & New Zealand Banking Group Ltd v Hubner [1999] FCA 1346 at [38]. Subsection 47(1A) requires that a petition be in any form prescribed by the rules of court. Order 77 subrule 16(1) provides that a petition shall be in the form identified as "Form 150". The form itself contemplates signature by a solicitor. There is nothing in this ground. Paragraph 3.12(D) of the amended notice of appeal asserts that one of the joint creditors has "caused issuing of the petition". As his Honour pointed out, the relevant solicitor swore that he had written instructions from all of the petitioning creditors. There is nothing in this point. 48 In par 5 of the appellant's outline he claims that the petitioning creditors failed to comply with O 77 r 18. That rule requires that the affidavit verifying the petition state whether an application has been made for an order setting aside the bankruptcy notice or to extend time for compliance, and whether any such application has been finally decided. In the present case, Edwin James Goodwin swore that "An application in relation to the bankruptcy notice has been made. However, the application has been dismissed." In Mr McAndrew's affidavit verifying pars 1 - 4 of the petition, he swore in par 3 that an application had been made seeking orders setting aside the bankruptcy notice and extending time for compliance with it. In par 6 he swore that Spender J had dismissed the application, and in par 12 he swore thatthe Full Court had dismissed an appeal from that order. The relevant orders were exhibited as required by O 77 subr 18(3). There is nothing in this point. 49 The appellant also makes three points as to conduct subsequent to the making of the sequestration order. Paragraphs 8, 9 and 10 of the outline are as follows: "(8) The applicants (alleged) creditor's lawyers failed to advise in writing the official trustee on 20/2/2003 of the fact that the sequestration order was made Q7022/02 on that day by Spender J and, (9) The applicants (alleged) creditor's lawyers failed to enter the order Q7022/02 of 20/2/2003 in accordance with Form 152, within 1 dayafter the order was made and what is a mandatory requirement of 77, para 21(b). (10) The applicant creditor's lawyers filed (sic) to enter on the same day of sequestration order in accordance with form 152, ie within one day after the order was made." 50 There is no admissible evidence to support these assertions. In any event, there is no reason to believe that the validity of the order made by Spender J was dependent upon compliance by the respondents' solicitors with the provisions of O 77 r 21. 51 The appeal should be dismissed with costs. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of The Court.

Associate: Dated: 5 September 2003 Counsel for the Appellant: The Appellant appeared in Person.