Kordatos v Sweeney

the application 9 On 5 March 2004, the Federal Magistrate was dismissed as a respondent and the matter remains against the trustee alone. 10 In support of the application the applicant filed an affidavit sworn 11 December 2003 which exhibited correspondence from the Honourable Philip Ruddock the Commonwealth Attorney General dated 13 November 2003 which recorded that a letter of complaint dated 4 October 2003 from the applicant had been referred to the Chief Federal Magistrate for her attention. The applicant also exhibited a draft notice of appeal in Form 55. He deposes that he received this form from the Victorian Registry of this Court and indeed the form is one applicable to an appeal lodged in that registry. 11 The applicant filled in the notice of appeal in handwriting and attached to it a letter to the Chief Federal Magistrate which set out his grounds of appeal and orders sought. The applicant deposes that he sent the appeal papers by post on 24 November 2003 together with the prescribed fee of $1,148 to the Victorian District Registry of this Court in Melbourne. The application for leave to extend time was filed in the Queensland District Registry on 17 December 2003. 12 The draft notice of appeal covers a wide range of matters but may be summarised as attempting to raise as grounds: (a) an alleged conflict of interest on the part of the Federal Magistrate in being President of the Queensland Law Society when the applicant filed a complaint against his former solicitor, a Mr Gray. (b) a denial by the Federal Magistrate of an opportunity to the applicant to call witnesses in order to prove payments by the applicant to the Australian Taxation Office which he alleges meant that a dividend should not have been made to the Australian Taxation Office and to prove a payment of $15,000 to Mr Gray which the applicant alleges and the respondent denies was made by the respondent as trustee. (c) complaints as to the conduct of the administration including failing to take steps to initiate a police investigation into the affairs of Mr Gray. (d) allegations of perjury on the part of the respondent in his denial that he has paid $15,000 to Mr Gray. (e) failure of the Federal Magistrate to give any weight to a statement of the respondent that he paid money to Mr Gray in order to get Mr Gray to forego his mortgage over the applicant's house. (f) that the Federal Magistrate erred in finding in par 13 of his reasons that the sum of $80,000 was accounted for and that no payment of $15,000 was made to the solicitor, Mr Gray. (g) that the Federal Magistrate erred in not ordering the respondent to provide details of all money he received from the applicant when the applicant's material supported such an application. (h) that the Federal Magistrate erred in not understanding that there was a balance owing to the applicant which the respondent should have paid to the applicant and which he had failed to do. 13 The draft notice of appeal concludes seeking the following relief: 'ORDERS SOUGHT: 1. For the decision to be set aside. 2. For an apology to be offered to the Applicant. 3. For the Court to Order a Police and taxation investigation of the way the first Respondent handled the Applicant's Estate. The Applicant believes that the first Respondent committed perjury and he is also an accessory to crime because he failed to report the activities of Mr Gray to the Queensland Law Society and to the Police. 4. Judge Bauman (sic) should be stood down and asked to apply for his job once he has proved to the satisfaction of the Board of Magistrate Judges that he is fit enough to perform his duties as a Judge. The Applicant requests that the following amounts be refunded to him plus interest: Amount unaccounted for by the first Respondent: $20,646.28 Australian Taxation Office: $2,134.00 Filing fees: $1,148.00? (Please let me know immediately of the exact amount payable for the Appeal and to whom the cheque is payable) Filing fees: $250.00 Cost of subpoena issued against Arthur Carrick ITSA $604.00 (subject to Confirmation) Any additional amount which in the opinion of the Court is considered appropriate to compensate the Applicant for stress and strain.' 14 The respondent trustee opposes the grant of an extension of time to file and serve a notice of appeal. He submits that there are no special reasons for extending the time because the applicant has not satisfactorily explained his failure to file and serve the notice of appeal within time and that, in any event, the appeal is without any merit.

APPLICABLE PRINCIPLES 15 The requirements as to the filing and service of notices of appeal are contained in O 52 r 15(1) of the Federal Court Rules. A notice of appeal is to be filed and served within 21 days after the date when the judgment appealed from was pronounced. A failure to file and serve the notice of appeal within the 21 day period requires that leave be obtained from the Court to extend the time. The power of the Court to extend time is contained in O 52 r 15(2). That rule provides that the Court or a Judge 'for special reasons may at any time give leave to file and serve a notice of appeal'. 16 The requirements of 'special reasons' were considered by a Full Court of this Court in Jess v Scott (1986) 12 FCR 187. The Court said (at 195): 'What is needed to justify an extension of time is indicated in r 15(2) by the words "for special reasons". It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression "for special reasons" implies something narrower than this. … It should not be overlooked that r 15(2) enables leave to be given "at any time"; the "special reasons" relevant to such a power cannot but describe an elastic test, suitable for application across a range of situations, from an oversight of a day to a neglect persisted in during a prolonged period. It would require something very persuasive indeed to justify a grant of leave after, for example, a year; equally, it may be said, something much less significant might justify leave where a party is a few days late. "Special reasons" must be understood in a sense capable of accommodating both types of situation. It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served.' 17 Even where special reasons can be identified the Court retains a discretion to grant or refuse to grant the extension. Factors to be taken into account include the importance of the question sought to be raised by the proposed appeal, the bona fides of the proposed appeal and the prima facie strength of the proposed ground of appeal: see Jess v Scott at 188; Howard v Australian Electoral Commission [2000] FCA 1767 at [7]; QAAH v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 9 at [6] - [8].

RESOLUTION OF THE APPLICATION 18 The applicant filed two further affidavits in support of his application. One was filed on 26 March 2004 and a further affidavit was filed on 1 April 2004. 19 In his affidavit filed 26 March 2004, the applicant alleges that he was led to believe, through correspondence with the Honourable Philip Ruddock and the Registrar of the Federal Court in Melbourne, that the then Chief Federal Magistrate in Melbourne Ms Bryant was 'the right person to handle his appeal'. There was nothing in the letter of the Attorney-General which would give rise to that expectation. The letter was written and dated 13 November 2003 and refers to a letter dated 4 October 2003 written by the applicant to the former Attorney-General, the Honourable Daryl Williams AM QC complaining of the handling of proceedings in the Federal Magistrates Court and the delay in obtaining a judgment. The letter of complaint was made 12 days before the judgment was delivered. The Attorney-General advised the applicant that the complaint had been forwarded to the Chief Federal Magistrate for her attention. The letter concluded, 'You may also wish to consider your rights of appeal in this case.' 20 In par 5 of his affidavit filed 1 April 2004 the applicant deposes to a conversation with the Federal Court Registry in Brisbane wherein he was told that the decision of the Federal Magistrate would be handed down on 15 October 2003. He deposes that he asked that a copy of the decision be sent to him. He did not attend the Federal Magistrates Court on 15 October 2003. The Court has before it a copy of a letter dated 16 October 2003 to the applicant from the Federal Magistrates Court enclosing a copy of the decision given on 15 October 2003. 21 The applicant deposes that the copy of the decision was sent to an incorrect address and was returned to the Federal Court Registry. However, the address on the letter from the Federal Magistrates Court enclosing the reasons for decision is the same address as shown on the documents the applicant has filed in this Court in the present application. The applicant does not depose when he received the decision and reasons of the Federal Magistrate. Nor does he depose as to the date on which and circumstances in which he received pro forma notices of appeal from the Victorian District Registry of this Court or why he posted his appeal papers to Melbourne on 24 November 2003. 22 The applicant was required to file and serve his notice of appeal by 6 November 2003. The time for filing and serving the notice of appeal had expired before the applicant received the letter of Attorney-General Ruddock, when on the applicant's material the involvement of the Chief Federal Magistrate at Melbourne was first raised. The applicant fails to make out any reasonable basis for failing to take steps to file and serve the notice of appeal in the Brisbane Registry of this Court in the period 15 October 2003 up to and including 6 November 2003. 23 Even if I were satisfied that a reasonable explanation existed I would not in the exercise of my discretion grant the extension sought. The applicant now seeks to raise new issues beyond those raised in the notice of appeal which he sought to file in the Victorian Registry by post on 24 November 2004 and to seek relief that he did not seek in the Federal Magistrates Court proceeding and which would not be available to him on any appeal. The applicant in a document entitled 'An Account of How the Case was Conducted by Judge Baumann' which formed part of his affidavit filed 26 March 2004, concluded with the following claim for relief: 'THE APPLICANT IS SEEKING THE FOLLOWING ORDERS: 1. For the decision to be set aside including costs awarded. 2. For a Warrant to be issued for the arrest of the Respondent and for him to be charged with Perjury and Falsification of Records in accordance with Sections 123, 697, 441 of "Criminal Law of Queensland". 3. The Applicant requests that the following amounts be refunded to him plus interest (a) Amount unaccounted for by Respondent $20,646.28 (b) Amount paid to Mr A D Gray $15,000.00 (c) Tax already paid by the Applicant and not by the Respondent (See Exhibits No 21,22) $1,638.00 (d) Legal costs $250.00 (e) Amount paid to ITSA (subject to confirmation) $640.00 (f) Overpayment to the Respondent $53.70 (g) Any other amount of money which in the opinion of the Court should cover for stress, strain and other expenses e.g. postage, stationery, telephone/fax, travel costs' (original emphasis) 24 The applicant's application in the Federal Magistrates Court was made pursuant to s 178 of the Act. That section provides: '178(1) If the bankrupt, a creditor or any other person is affected by any act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable. 178(2) The application must be made not later than 60 days after the day on which the person became aware of the trustee's act, omission or decision.' 25 This section gives the Court a 'general power of review' of a decision of a trustee: McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547 at 552. 26 The applicant stated that the decision in relation to which he sought review was 'the decision of the Trustee who refuses to provide me with bills in taxable form for the $80,000 he received from my estate'. The order he sought on the application was an order that the Trustee 'submit a bill for taxation'. 27 The decision which the applicant sought to review was contained in a letter of the respondent to the Insolvency and Trustee Service Australia ('ITSA') dated 27 July 2001 which was responsive to a letter of 13 July 2001 written by ITSA on behalf of the applicant. 28 The letter of 13 July 2001 said: 'RE: ESTATE OF STEVE KORDATOS NO 2459/96/2 I have received a request from Mr Kordatos for the taxation of your remuneration and costs in relation to his estate pursuant to regulation 8.09. I request that you present a bill in taxable form, in accordance with regulation 8.10, to this office by close of business on Friday 10 August 2001.' 29 The respondent in his reply of 27 July 2001 said in part: 'I refer to your letter dated 13 July 2001 and subsequent telephone discussions with Mr Darryl Hickey of my office on 17 July 2001 regarding Mr Kordatos' request for my remuneration to be taxed in accordance with Regulation 8.09 of the Bankruptcy Regulations. I note that Regulation 8.09(1) provides for a bankrupt (or a creditor) who is dissatisfied with the amount of remuneration claimed, may "by notice in writing lodged within 14 days of being notified in writing or becoming aware of the amount of the claim," request a taxing officer to tax the claim. In my opinion, Mr Kordatos' request for the taxing of my remuneration does not comply with Regulation 8.09(1) in that it has not been made within 14 days of becoming aware of the amount of my claim. In August 1999, during discussion with Mr Kordatos leading up to his proposal under Section 73 of the Bankruptcy Act 1966, the issue of my remuneration was discussed. At that time Mr Kordatos was advised that my remuneration was estimated to be $44,241 at that time, although no remuneration or basis of calculation of remuneration had been approved by creditors at that time. Never the less, in my opinion, the discussion of my remuneration at that time would amount to Mr Kordatos becoming aware of the amount of my claim for remuneration at that time, namely August 1999. My records indicate that Mr Kordatos was provided with a copy of the Formal Receipts and Payments dated 17 December 1999, at the time the dividend was paid to creditors in December 1999. That Form noted the amount of remuneration paid to me as being $38,313.12. This amount was less than the amount previously advised to Mr Kordatos in August 1999 due to creditors not approving my remuneration, calculated with reference to the IPAA Guide to Hourly Rates, in full. Under cover of a letter dated 1 February 2000, addressed to Mr Kordatos, he was again provided with full and complete details of the estate's receipts and payments, which again identified the amount of my remuneration. Given that Mr Kordatos' request has not been made in accordance with Regulation 8.09 of the Bankruptcy Regulations, in that it has not been made within the time period stipulated in that regulation, there is no valid request for the taxing of my remuneration, as approved by the creditors. As such, I do not propose to comply with your request to provide you with a Bill of Costs in taxable form, as required by you under Regulation 8.10, as that regulation has not been validly brought into operation.' (original emphasis) 30 The application which the applicant filed pursuant to s 178 on 4 January 2002 was clearly outside the 60 day time limited provided for in s 178(2) a fact I am satisfied the applicant was aware of when he stated in his orders sought, '… assist me by invoking section 178 of the Bankruptcy Act 1966 (s 33 may also be relevant).' 31 Section 33(1) of the Act provides: '33(1) The Court may: (a) upon such terms as it thinks fit, at any time adjourn any proceeding before it, either to a fixed date or generally; (b) at any time allow the amendment of any written process, proceeding or notice under this Act; or (c) extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with the requirements of a bankruptcy notice), for doing an act or thing or abridge any such time.' 32 The power to extend a relevant time limitation was also relevant to the time limitation of 14 days in Bankruptcy Regulation 8.09 (in the form in which it stood in 2001). 33 No objection appears to have been taken with respect to the time limitation under s 178(2). However the granting of any extension of time to lodge the notice in writing required by reg 8.09(1) was opposed. 34 One of the findings made by the Federal Magistrate with which the applicant takes objection is that contained in par 13 of his reasons where he said: '13 Importantly by letter dated 17 December 1999 the Trustee gave the Applicant an Account of Receipts and Payments. It reveals - Trustees Remuneration of $38,313.12 - Dividend to Creditors $21,040.60 No payment to Gray was made.' 35 The letter of 17 December 1999, which was before the Federal Magistrate, advised the applicant that final dividends had been paid and that his estate had been finalised. The letter included a copy of the Trustees Account of Receipts and Payments.

36 The Account stated: 'Bankruptcy Act 1966 TRUSTEE'S ACCOUNT OF RECEIPTS AND PAYMENTS STEVE KORDATOS (DEBTOR) ESTATE NO. QB 2459 OF 1996 Particulars of the receipts and payments for the period commencing on 15 July 1996 and ending on 16 December 1999, are Receipts Payments Particulars Estimated Value in Bankrupt's Statement of Affairs Total Receipts to Date Particulars Total Payments to Date $ $ $ Receipts in respect of assets shown in the bankrupt's Statement of Affairs: 1,000.00 - Valuation fee 275.00 Cash at Bank 400.00 - Advertising 63.80 Superannuation 5,000.00 - Legal Fees: 11,409.65 Book Debts 1,000.00 - -House/Mortgage 939.00 Motor Vehicles 100.00 - -Caveat/Title Deed 481.36 Household Furniture 300.00 - Insurance Charges 38,313.12 Tools of Trade - 80,000.00 Trustees: 207.77 Other Receipts: -Remuneration 7,216.00 Payment Required by Section 73 -Outlays 21,040.60 Proposal Petitioning Creditors $53.70 Taxed Dividend now Declared of 76 cents in dollars on $27,685 Balance of Account to meet expected future costs Total $7,800.00 $80,000.00 Total $80,000.00

Dated: This 17th day of December 1999 Signed: Paul D Sweeney Trustee' 37 The Federal Magistrate also had before him the itemised bills of costs of Tucker and Associates Solicitors in the sum of $11,409.65 for the provision of legal services to the trustee concerning the house property of the applicant and his wife and the second mortgage over it in favour of Clark. 38 In par 16 of his reasons the Federal Magistrate records that the applicant made the oral submission that he was entitled to know how the $80,000 he gave the respondent was used and continued: 'He specifically complained about the lack of taxation of remuneration and the arrangement reached with the secured creditor Gray.' 39 The Federal Magistrate made the following specific findings: '17 I make the following findings: (a) The request for taxation was first made on 13 July 2001; (b) The Trustees Remuneration was accepted by the creditors at the meeting on 11 October 1999 and: - had been previously estimated to the Applicant; - the Applicant had, perhaps, reluctantly, in light of his desire to secure his home and annul his Bankruptcy, accepted that estimate at the time. (c) The Trustee was not obliged to accept the reduction in remuneration proposed by the creditors from that set out in Regulation 8.08(a). The Trustee has acted commercially (but to his financial detriment) in reducing his fees in order to secure the approval of the s73 composition. This benefited the creditors. (d) The Trustee provided the Applicant with appropriate information as to the disbursement of funds received for the composition. No obligation exists in the Act for the rather simple accounting given in this matter to be audited. 18. The Applicant proposed in paragraph 6.2 of his proposal dated 20 September 1999, that: "The Trustee is entitled to be paid remuneration calculated on an hourly rate, in respect of the time spent by him and his staff in and about the administration of my bankruptcy estate, the implementation of and the administration of the composition at the rate(s) recommended by the Insolvency Practitioners" Association of Australia, from time to time, as a guide to hourly rates and the Trustee shall be entitled to draw such remuneration and expenses at his discretion." In all respects, I am satisfied that at the time the creditors fixed the remuneration, the Applicant did not raise any objection at all.' (Original emphasis) 40 As to the exercise of the discretion the Federal Magistrate said: '20 The granting of an extension of time under s 33 is discretionary and in this case is shaped by: (a) the Applicant knowing all the background facts and eventually formulating the proposal, ultimately accepted by creditors; (b) lack of evidence to suggest excessive remuneration, and in fact, evidence to the contrary which establishes the Trustee agreed to accept less than the Applicant himself originally proposed; (c) the Administration of the composition having been completed nearly years before any request for taxation was made; (d) the delay between July 2001 and the filing by the Applicant of this application in January 2002. (e) No evidence of any concerns by a creditor. 21. There are compelling public policy reasons when a Debtor and his creditors reach an agreement by way of composition, why a Court should not unduly interfere in the administration of the estate (see Re: Tyndall (1997) 30 FLR 6. Time limits in Regulations recognise the need for timely determination (Bellin v. Pattison (1999) FCA 51). 22. In this matter I refuse the application to extend time for the giving of a Notice under Regulation 8.09. 23. The Application will be dismissed. Costs should follow the event. I will give the Respondent and ITSA 14 days in which to make any submission as to the quantum and basis of costs. The Applicant shall have 14 days thereafter to respond. It is my intention, after consideration of those submission, to fix the quantum of costs.' 41 On 10 November 2003 the Federal Magistrate ordered that the applicant pay the respondent's costs fixed by the Court in the sum of $5,788.60. 42 The matters of which the applicant now complains - his inability to subpoena the Commissioner of Taxation, the Queensland Commissioner of Police and Mr Gray because the Federal Magistrate refused to order that subpoenas issue - have caused him no prejudice in the application which he brought under s 178(1) of the Act. None of these persons could have given any relevant evidence in respect of the issues properly raised on the application. 43 The fact that the Federal Magistrate was the president of the Queensland Law Society when the applicant filed a complaint against his former solicitor Mr Gray is not shown to establish any conflict of interest whereby the Federal Magistrate ought to have disqualified himself from hearing the applicant's application. There is no evidence that the applicant raised the matter at the time of the hearing or that he sought that the Federal Magistrate not hear the case. 44 The two points which the applicant pressed on this application as showing he had substantial merits on any appeal were: (a) the alleged wrongful payment of a dividend to the Australian Taxation Office; and (b) the alleged wrongful payment of $15,000 to his former solicitor Mr Gray. 45 The applicant alleges that he has paid to the Australian Taxation Office, and it has retained, payments against his outstanding tax liability. In support of this contention he exhibited to his affidavit notices of income tax assessment for the financial years ended 30 June 1997, 1998, 1999 and 2000. These assessments do not relate to his liability for outstanding assessed tax at the date of his bankruptcy, namely 15 July 1996, which was the debt proved in the composition by the Australian Taxation Office and the subject of a dividend paid to the Australian Taxation Office by the trustee in the administration of the composition. The applicant provided no evidence of payments of his outstanding taxation debt as at 15 July 1996. The material he relies upon relates to different tax liabilities to the Australian Taxation Office. If he has subsequently paid money to the Australian Taxation Office and can satisfy that office of that fact, he will undoubtedly receive a credit against any current tax liability. The question of the entitlement of the Australian Taxation Office to a dividend was, in any event, irrelevant to the issues on the application before the Federal Magistrate which related to a refusal to deliver a bill in taxable form of the trustee's remuneration and costs. 46 The applicant continues to assert that Mr Gray received $15,000 and that the Federal Magistrate erred in finding that no such payment was made. The applicant had the trustee's Account of Receipts and Payment which accompanied the letter of 17 December 1999. The applicant had filed complaints with ITSA regarding the alleged payment to Clark and seeking an accounting for the $80,000. ITSA conducted an investigation into the complaints and received among other documents a cash book print-out detailing the receipts and payments by the trustee in relation to the applicant's affairs for the period 15 July 1996 to 31 October 2001. That document was before the Federal Magistrate. It shows all receipts and payments and fully accounts for the $80,000. None of it is shown as having been paid to Mr Gray. There is simply no basis, on the material available, to show that the Federal Magistrate erred in finding no payment was made to Mr Gray or to hold that the trustee committed perjury in stating in the proceedings that no such payment was made. 47 The statements of accounts do not show that $20,646.28 is unaccounted for. Indeed they amply demonstrate the opposite; everything has been accounted for. There was no evidence of any money being due to the applicant by the trustee at the time of the hearing in the Federal Magistrates Court. The sum of $53.70 held at 16 December 1999 against future trustee's costs had by 31 October 2001 been spent on costs of the trustee. 48 It follows that the Commissioner for Police and Mr Gray could not have given any relevant evidence or produced relevant documents. To the extent that the applicant sought that the records of ITSA be subpoenaed, they were, and those records show that the applicant's complaints have been fully investigated and been found to be groundless. 49 The decision under s 33(1)(c) of the Act to extend time for compliance with any of the provisions of the Act or Bankruptcy Regulations is discretionary. The applicant has not shown that the discretion miscarried in any way. Each of the matters the Federal Magistrate took into consideration in par 20 and par 21 of his reasons were relevant and proper to be taken into account. The decision is not shown to be so far outside the bounds of the relevant discretion that one would infer error in its making. For the reasons set out in House v The King (1936) 55 CLR 499 no appellate court is likely to interfere with the decision of the Federal Magistrate. Accordingly, the applicant has no real prospect of succeeding on the appeal which he wishes to file and serve. 50 For all the above reasons the application to extend the time to file and serve a notice of appeal against the decision of Federal Magistrate Baumann given on 15 October 2003 is dismissed. 51 There is no reason why costs should not follow the event.

I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper.

Counsel for the Applicant: The applicant appeared in person