Gardiner-Jones v Proprietors of Strata Plan No 3102

REASONS FOR JUDGMENT (No 2) 1 On 25 May 2000 in proceeding N 7079 of 2000 Moore J made a sequestration order against the estate of the present applicant ("Ms Gardiner-Jones") and ordered that the costs (including reserved costs if any) of the applicant creditor (the present respondent "the Body Corporate") be taxed and paid from the estate of Ms Gardiner-Jones in accordance with the Bankruptcy Act 1966 (Cth). 2 I will follow the unusual course of setting out all seven paragraphs of his Honour's reasons for judgment: "I am presently dealing with a creditor's petition filed by the Proprietors of Strata Plan Number 3102 ('the judgment creditor') seeking a sequestration order against Norma Phyllis Gardiner-Jones, or Gardener-Jones N P, based on the failure of Ms Gardiner-Jones to comply with a bankruptcy notice served on her on 3 August 1999, the bankruptcy notice having issued on 15 April 1999. The bankruptcy notice was based on a judgment entered in favour of the judgment creditor on 9 July 1998 in the sum of $8622.77 which represented, I apprehend, outstanding strata levies payable by Ms Gardiner-Jones to the judgment creditor concerning a building in which she owns a unit which is her home. That is a matter I will return to later. Mr Charles, solicitor for the judgment creditor, has taken me through the material upon which he relies. I am satisfied that the documents that are required to be served on Ms Gardiner-Jones have been served and I am otherwise satisfied as to the various matters I must be satisfied about under s 52 of the Bankruptcy Act 1966 (Cth). Accordingly, I have reached a point where the judgment creditor has established grounds for the making of a sequestration order. When the matter was last before me, I made it plain to Ms Gardiner-Jones that these proceedings, potentially for her, had serious consequences including, potentially, the sale of the unit which is her home but which is also the indirect source of the judgment debt arising from the Local Court proceedings. I then invited Ms Gardiner-Jones to seek legal assistance, a step apparently she has not taken. I also indicated to her that she may wish to put on material for the next occasion, that is today, raising matters that might be relevant to whether a sequestration order should be made. She has not appeared today, though she was informed by my Associate that she should either appear or have someone appear on her behalf to provide some evidence to support a contention she made to my Associate that she had injured herself and was unable to attend. Neither of these things has occurred. The material that Ms Gardiner-Jones has put on between the time the matter was last before me and now, does nothing to disclose either the existence of any legitimate cross-claim or the like or to satisfy me that notwithstanding the act of bankruptcy arising from the failure to comply with the bankruptcy notice, she is solvent. The court has a discretion that may be exercised in appropriate circumstances to not make a sequestration order. In this case, the circumstances of Ms Gardiner-Jones cause me some concern. It appears that she is either unwilling or unable, or both, to pay levies due to the judgment creditor concerning the property in which she lives. I am not entirely satisfied that she understands the import of these proceedings though I have not reached a level of satisfaction that would move me to refrain from making a sequestration order. However, the consequences of doing so potentially are serious for Ms Gardiner-Jones in the sense that there is the real possibility of her only or principal asset being sold to satisfy her debts with the result that she may be dispossessed of the unit which is presently her home. All I can indicate publicly is that I hope, as Mr Charles suggests might occur, that her personal circumstances will be looked at with some care by her trustee when her estate comes to be administered as a consequence of the order I am about to make. I make orders in accordance with the short minutes of order handed up by Mr Charles which I now initial. In so doing I note that the act of bankruptcy occurred on 24 August 1999." 3 On 3 August 2000 Ms Gardiner-Jones filed the application which commenced this proceeding seeking an extension of time in which to file and serve a notice of appeal from his Honour's orders of 25 May. I will follow the unusual course of setting out as follows all six paragraphs of my reasons for judgment of 21 August 2000: "The applicant applies for an extension of time in which to file and serve a notice of appeal from a judgment of Moore J given on 25 May 2000. The application for the extension of time was filed on 3 August 2000. The form of process by which the application was brought stated that the application would be heard by the Court at 9.30 am this morning but it bore an endorsement 'for directions only'. The application was originally given a return date of Thursday, 24 August but it came to be appreciated that due to a Judge's Meeting to take place on that day, that date was inappropriate. Accordingly on 4 August the Registrar wrote to both parties advising that the return date was altered to today at 9.30 am. The applicant has not appeared although called outside the Court. Mr Charles, solicitor for the respondent, asks that the application be dismissed. Order 10 subr 3(2) of the Federal Court Rules provides: 'If no applicant appears before the Court on a directions hearing, the Court may dismiss the application or make any other order which it thinks proper.' Accordingly, I have power to dismiss the application and the question is whether I should do so. An affidavit by the applicant which was filed on 3 August 2000 in support of the application does not explain why she did not file a notice of appeal within the period allowed by the Rules. Moreover, a form of notice of appeal annexed to her application for the extension of time does not identify any error of law in the judgment of Moore J. Finally, it seeks an order which the Court would not make. It is true that the proposed notice of appeal refers to the applicant's inability to appear before Moore J on 25 May 2000. But because of the other matters mentioned, on the papers presently before the Court the application for extension of time would not be granted. It is possible that if the applicant were present more would appear which would lead ultimately to the application for extension of time going to a hearing. However, I think the justice of the case will be served if I dismiss the application and order that the order of dismissal not be entered for fourteen days during which time the applicant could, if she so wishes, file a notice of motion returnable on a date which I will mention asking that my order of dismissal be set aside. The orders of the Court are as follows: (1) the application be dismissed; (2) the applicant pay the respondent's costs; (3) orders 1 and 2 not be entered if the applicant, on or before Monday 4 September 2000, files a notice of motion returnable on Thursday 7 September 2000 seeking an order setting aside orders 1 and 2; (4) the solicitor for the respondent notify the applicant of the making of orders 1, 2 and 3. 4 On 1 September 2000 Ms Gardiner-Jones filed a notice of motion seeking the following relief: "1. Against Body Corporate Proprietors/Owners of Home Units Nos 7,11,10 adjoining/above and below (for massive damage to Gardiner Jones Unit No 9) including their renovation work from 1988-2000. In addition, compensation for repairs to unusable valuable furniture (irreplaceable) irresponsibly seized and badly damaged in 1993 by Body Corporate and Strata Manager Mr B Simmonds of S Philton Real Estate Agent, Bondi NSW. 2. Reimbursement of costs incurred by Gardiner Jones i.e. legal, building inspectors', court attendances and other disbursements commencing 1988 and ongoing litigation result of internal/external damage to respondent's home unit no. 9." There was filed with that notice of motion an affidavit by Ms Gardiner-Jones in support of 1 September, in which she deposed to damage to her strata title unit and assault. The affidavit then proceeded as follows: "2. Failure to attend the Court at 9.30am on Monday 21 August, 2000 in lieu of the previously set date of Thursday 24 August last, was due to not having received District Registrar's letter dated 4 August 2000 until late afternoon that day. On Wednesday 23 August 2000 visited Registrar's office and gave details. 3. Having served by post application for extension of time to file and serve notice of appeal dated 3 August, 2000 on Paul A Brown & Co., Solicitors, Glebe NSW 2037, I withheld accompanying affidavit which would have been handed to them personally on 24 August 2000 by Gardiner Jones. Postage charges have to be defrayed in this regard, as one mentioned to Judge Lindgren's Associate when telephoning to her on Tuesday 29 August 2000." 5 This morning Ms Gardiner-Jones has appeared in person and Mr Charles, solicitor, has appeared for the Body Corporate. Mr Charles said that he would wish to file affidavit evidence to oppose the application, which I have treated as an application for an order setting aside my orders of 21 August. However, in the course of discussion enough common factual material has emerged for me to be able to deal with the matter now. 6 The Body Corporate obtained the judgment which founded the bankruptcy notice in the Local Court on 9 July 1998. It was a judgment for strata levies. In the Local Court proceeding Ms Gardiner-Jones cross claimed for damages in respect of damage to her "home unit" in the building. The cross claim was dismissed on the merits and judgment was given for the Body Corporate on the main claim. 7 Ms Gardiner-Jones has not suggested that there is any error in the judgment of Moore J. Her draft notice of appeal seeks the following order: "Against body corporate for irresponsible damage from 1988 to date including renovating proprietors of home units 7,11,10, to unit number 9 - Strata Plan 3102. Including monetary compensation for valuable furniture and costs." Her complaint is, in substance, that notwithstanding the dismissal of her cross claim in the Local Court proceeding, the Body Corporate is in fact liable to her in damages in connection, in some way, with damage to her home unit. It may be that she does have a claim in respect of the period subsequent to the hearing and determination in the Local Court proceeding, although Mr Charles asserts that the Body Corporate has a claim to recover levies also in respect of that period, since Ms Gardiner-Jones has resolutely refused to pay all strata levies. 8 Section 40 of the Bankruptcy Act 1966 (Cth) provides, as is well known, in par (1)(g) for the commission of an act of bankruptcy by non-compliance with a bankruptcy notice. In so far as par (g) refers to a counter claim, set off or cross demand equal to or exceeding the amount of the judgment debt, it refers only to a counter claim, set off or cross demand that could not have been set up in the action or proceeding in which the judgment or order founding the bankruptcy notice was obtained. In the present case Ms Gardiner-Jones' grievance concerns the way in which the cross claim which she could and did make in the Local Court proceeding was dealt with. 9 In my view it would needlessly perpetuate the running up of costs for Ms Gardiner-Jones to be given the extension of time to file a notice of appeal which has no prospects of success. 10 I did raise with Ms Gardiner-Jones the possibility of her paying out the amount of the judgment and leaving the question of any claim that she may have in respect of events since the Local Court judgment and, as well, the question of levies that have accrued since then, to a fresh proceeding to be commenced. I have tried to explain to her that it could be in her interests if she wishes to avoid bankruptcy to do so, but it is clear to me that she will not pursue this possibility. 11 Ms Gardiner-Jones has said that she did not receive the letter from the Registry dated 4 August advising her of the change of hearing date from 24 August to 21 August until the afternoon of 23 August, that is, after the hearing had taken place before me on 21 August. Ordinarily this would lead to my setting aside the earlier orders but since I have explored the substance of the application for an extension of time thoroughly with Ms Gardiner-Jones on the hearing this morning, I will not take that course. 12 In the result the Court orders that: