Kurschinsky v Queensland Law Society [2023] FCA 1682 | Case summary

LOGAN J: 1 This bankruptcy proceeding offers pause for thought about the wisdom of the bifurcation of bankruptcy jurisdiction under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) as between this Court and the Federal Circuit and Family Court of Australia Division 2 (Circuit Court). It also offers pause for thought, and perhaps more, about the quality of administration of the registry both of this Court and also of the Circuit Court. Yet, further, it offers pause for thought, and perhaps more, about the adequacy of present practice, both in this Court as well as in the Circuit Court, with respect to the electronic court files maintained by each of these Courts. 2 The occasion for making these opening statements obviously requires some detailing of the factual background to this proceeding. That background necessarily commences with an order made by a registrar of this Court, exercising delegated authority, on 24 May 2023 to dismiss an application by Mr Alexander Kurschinsky to set aside, under the Bankruptcy Act, a bankruptcy notice, the issue of which had been procured by the Queensland Law Society Incorporated (Law Society). 3 By s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (the Act), a party to proceedings in which a registrar has exercised any of the powers of the Court under s 35A(1) of that Act may, within the time prescribed by this Court's rules, or within such further time as may be allowed under the rules of the Court, apply to the Court to review that exercise of power. No such application for review has ever been filed in this Court by Mr Kurschinsky. 4 A sequel to the dismissal by this Court's registrar of the application to set aside the bankruptcy notice was the filing in the Circuit Court on 17 August 2023 of a creditor's petition and related supporting affidavits. That became proceeding BRG387 of 2023 in the Circuit Court. 5 Certainly in hindsight, but probably also, with respect, in prospect, it was an imprudent act on the part of the Law Society to file in the Circuit Court the creditor's petition in circumstances where there had been an anterior exercise of concurrent bankruptcy jurisdiction by this Court with respect to the bankruptcy notice non compliance with which formed the basis of the act of bankruptcy alleged in the creditor's petition. I have used the description "imprudent" deliberately because it was not unlawful for the Law Society to have instituted the creditor's petition phase in the Circuit Court. As I have mentioned, that court and this Court have concurrent original jurisdiction under the Bankruptcy Act. 6 On 27 October 2023, in proceeding BRG387 of 2023 in the Circuit Court, Mr Kurschinsky filed, without any apparent check whatsoever by the registry of that court, what purported to be an application for the review of the order made on 24 May 2023 by a registrar of this Court. There were and are two patent deficiencies, attention to which by the registry of the Circuit Court should have led to the non-acceptance for filing of that application. In the first instance, and obviously, the order of 24 May 2023, the review of which was sought by the application, was not an order made by the Circuit Court. That Court had no jurisdiction to review an order made by a registrar of this Court. Secondly, and also obviously, the application for review was well out of time. 7 As if to add procedural insult to procedural injury, a series of affidavits relating to the purported application for review were permitted to be filed in the Circuit Court. Thus revealed were procedures which attend electronic filing, or, rather, which do not attend such filing, which are not, in my experience, by any means confined to the present case. Exactly the same lapses attend this Court's present practice and procedure within the registry in relation to electronic filing. There is just no meaningful attention by registrars, as once there was with paper filing, in relation to whether or not documents should be accepted for filing. All too often the first occasion upon which non-compliance with basic requirements of rules of court is exposed is when an attentive associate or judge comes to see the documents concerned shortly before occasion for an exercise of Commonwealth judicial power arises. 8 The core function of a registry is to support that exercise of judicial power by attention to compliance by parties with rules of court. 9 In Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298, at [64], a Full Court, of which, coincidentally, I was a member, observed: Litigation is not a free for all. Those observations were made in the context of the paramount importance, in terms of affording procedural fairness in a civil penalty proceeding, of precision with respect to an alleged contravention. But they have a much wider resonance in terms of adherence to rules of court. There are no different rules of court applicable as between litigants in person and those who have the benefit of legal representation. Of course a degree of understanding must be afforded to litigants in person and, of course, also rules of court must be a servant not a master of justice. For all that, rules of court, be they bankruptcy rules or otherwise, are designed to ensure that parties to litigation receive procedural fairness in an orderly, consistent way. 10 In this instance a combination of bifurcation of bankruptcy jurisdiction, deficient administration of the registries of each court having such jurisdiction, and a party who, whilst legally qualified at one stage, nonetheless acts for himself, have yielded something of a free for all in relation to an endeavour to challenge this Court's registrar's order of 24 May 2023. 11 The position with respect to the review of an exercise of power by a registrar under s 35A(1) of the Act, is that the review is a hearing afresh on the evidence and on the law as at the time of the review hearing: see Bechara v Bates (2021) 286 FCR 166, at [17], and also, notably, the judgment of Emmett J in Totev v Sfar (2008) 167 FCR 193. 12 To his credit, with respect, Mr Kurschinsky understood this position, referring accurately to the nature of the review hearing as a hearing "de novo". The nature of the hearing, I should add, was also well understood by Mr O'Brien of counsel who appeared on behalf of the Law Society. 13 The Law Society, as one might hope given the functions of that body, readily by its counsel recognised the procedural difficulties which I have described, but approached the proceeding in this Court on the basis that it was in the interests of justice to treat the application for review of 27 October 2023, filed in the Circuit Court, as if it had been filed in this Court, with the same applying to the affidavits either of Mr Kurschinsky or of Mr Matthew Benjamin Rodgers (Mr Rodgers) on behalf of the Law Society as if they had been filed in this Court in relation to such a review application in this Court. Mr Kurschinsky frankly acknowledged, on reflection, that procedural deficiency. He joined with the Law Society in promoting the course just described. 14 Bankruptcy proceedings are proceedings in the public interest, not just proceedings as between a petitioning creditor and a respondent debtor. There is also a public interest in such proceedings being dealt with due expedition by courts exercising bankruptcy jurisdiction. In my view, it is overwhelmingly in the interests of justice to deem the application of 27 October 2023 to be an application for review filed in this Court. I direct that a copy thereof be placed on the court file forthwith by the registry. 15 I further direct that copies of affidavits filed in relation to that review application in proceeding BRG387/2023 be placed by the registrar on this Court's file. These are affidavits of Mr Kurschinsky filed in the Circuit Court on 27 October 2023 (two affidavits), an affidavit of Matthew Benjamin Rodgers filed in the Circuit Court on 3 October 2023, an affidavit of Mr Kurschinsky filed in the Circuit Court on 6 November 2023 and an affidavit of Mr Rodgers filed in the Circuit Court on 7 November 2023. 16 Also listed for hearing today but patently mistakenly was the creditor's petition. As I have already mentioned, that petition was filed in the Circuit Court. Unless and until that court transfers the creditor's petition proceeding to it, this Court does not have jurisdiction to hear and determine the creditor's petition. The wisdom or otherwise on such a transfer is in the first instance a matter for the Circuit Court. That it was listed offers further insight into deficiencies in registry administration and also offers yet further pause for thought about bifurcation of federal bankruptcy jurisdiction as between this Court and the Circuit Court. 17 There may also be pause for thought about incongruity as between personal insolvency administration where a jurisdiction is shared as between a superior court, this Court, and an inferior court, the Circuit Court, compared with corporate insolvency administration whereunder jurisdiction is only exercised by superior courts, be they either this Court or the Supreme Court of a state or self-governing territory. There is no substantive difference as between personal and corporate insolvency law in relation to many aspects of recovery of payments or settlements prior to the making of a sequestration order or, as the case may be, a winding up order. That, however, is a side wind in relation to the present proceeding. 18 Mr Kurschinsky's application for review entailed two principal bases of challenge upon which he submitted that the bankruptcy notice should be set aside. Each of these were said to be a basis upon which in terms of s 40(1)(g) of the Bankruptcy Act, the Court would be satisfied that he had a counter-claim set-off or cross-demand equal to or exceeding the amount of the judgment debt upon which the bankruptcy notice was founded. It was also, as I understood it, part of his submission that in any event the judgment concerned had been obtained by fraud. It was thus submitted to be an abuse of process by the Law Society to seek the issue of a bankruptcy notice or, in any event, that the judgment was one given in circumstances where the magistrate concerned had acted in a way which constituted a breach of judicial duty such that it would be an affront to the purposes of the Bankruptcy Act to permit the bankruptcy notice to remain unset aside. 19 Before delving into the merits of whether or not to set aside the bankruptcy notice, it is necessary to make some observations about the review application. 20 As I have indicated already, even had it been filed in this Court or sought to be filed, it is an application well out of time. Mr Kurschinsky acknowledged this. In seeking to meet this deficiency at an evidentiary level so as to enliven a discretion to extend time, he gave evidence by affidavit of dealings with the registry. Those dealings related to the return date of the hearing by the registrar of his application to set aside the bankruptcy notice as well as to some dealings in October of this year. 21 Looking at the email communication from Mr Kurschinsky to the registry with respect to the return date of his application to set aside the bankruptcy notice, it seems to me that Mr Kurschinsky may well have operated under a misunderstanding that it was sufficient for him to have requested a different return date. He did so on the basis that, as he said apparently to a registry officer, he would be away on 24 May 2023. It also appears that, much later, there may have been some internal registry lags in part occasioned by Mr Kurschinsky having filed his review application in the Circuit Court, but also in dealings between the registry at a national and at a district level. 22 I am not altogether satisfied that there is a compelling explanation for the delay, which is of some months, even assuming that what is said in Mr Kurschinsky's affidavit evidence is accurate. However, if there were occasion, truly, on the bases put forward by Mr Kurschinsky to set aside the bankruptcy notice, the thinness of the explanations he has offered would not stand in the way of setting aside the bankruptcy notice. Yet further, because the application for review entails a hearing de novo, it would be nothing to the point, save in terms of offering an explanation for delay, that Mr Kurschinsky may have been denied procedural fairness in the hearing by the registrar of the application to set aside the bankruptcy notice. Mr Kurschinsky did not attend on the day appointed for hearing which was the day on which the order dismissing his application was made by a registrar. 23 I return then to the substantive merits of the application for review. It is for Mr Kurschinsky to provide an evidentiary foundation for the setting aside of the bankruptcy notice. As to the standard of proof, s 34A of the Bankruptcy Act provides: Standard of proof (1) Where, in proceedings in the Court (other than proceedings for an offence), it is necessary, for a purpose relating to a matter arising under this Act, to establish, or for the Court to be satisfied as to, a particular fact (including a contravention of this Act), it is sufficient if that fact is established, or the Court is satisfied as to that fact, as the case may be, on the balance of probabilities. (2) Subsection (1) has effect except to the extent that this Act expressly provides otherwise. 24 Although s 34A requires nothing more and nothing less than proof on the balance probabilities, where allegations entail a party seeking a finding of fact on a grave issue, that finding will not be made on the basis of inexact proofs or indirect references. The observations to this effect made by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 (Briginshaw v Briginshaw), at 362 are applicable. Mr Kurschinsky accepted this. 25 The underlying judgment is that of the Queensland Magistrates Court given on 11 February 2022. On that day, the Magistrates Court ordered that Mr Kurschinsky, as defendant, pay to the Law Society, as plaintiff, the sum of $60,239.05, inclusive of interest. The Magistrates Court also dismissed, that day, a counter-claim of Mr Kurschinsky filed on 30 September 2021 in that court. The Magistrates Court further ordered that Mr Kurschinsky pay the Law Society's costs. Yet, further, the Magistrates Court made orders which provided that all documents on that court's file be placed in a sealed envelope marked "not to be opened without order of the court", with the exception of particularised documents. 26 It is apparent from the proceedings before the Magistrates Court on 11 February 2022 that occasion for the latter order was thought to be found in provisions of the Family Law Act 1975 (Cth) relating to the confidentiality of the names of parties to proceedings in that court. Without embarking upon whether or not there is occasion for like circumspection in law in this proceeding, I propose, if only out of an abundance of caution, to use the same abbreviations, as did the magistrate in her Honour's reasons for judgment, in respect of parties to a proceeding in the Circuit Court. 27 It is apparent from the affidavit evidence taken to be filed in relation to the review application that Mr Kurschinsky failed to appear before the Magistrates Court on 11 February 2022. That absence of appearance provided the occasion for the dismissal of his counter-claim. The magistrate then heard and determined an application by the Law Society for summary judgment. The essence of the Law Society's claim pursuant to r 2.92 of the Uniform Civil Procedure Rules (Qld), was one by subrogation in respect of moneys paid to a Ms W from the Fidelity Fund arising from being the balance of what was said to be a wrongful payment from Mr Kurschinsky's trust account at the time when he was a solicitor in Queensland into a related company trust account and in turn to a Mr H. 28 There had been in the Circuit Court proceedings on the basis of an alleged de facto relationship as between Mr H and Ms W. Ms W had a property the proceeds of sale of which were, in the course of the Circuit Court de facto proceedings ordered to be paid into Mr Kurschinsky's trust account, pending the outcome of those proceedings. It is apparent that the Law Society took the view, upon a claim being made on the Fidelity Fund by Ms W, that Mr Kurschinsky had applied the funds from his trust account without her authority, although he may have had authority from Mr H. 29 On the face of things, having regard to the reasons of the magistrate (Magistrate Merrin) there was a subrogated claim open to the Law Society in respect of the net amount, net of recoveries otherwise made by Ms W, that is, paid to her from the Fidelity Fund. 30 Mr Kurschinsky sought to challenge the Magistrates Court judgment by a notice of appeal filed in the District Court of Queensland on 10 March 2022 (appeal D581 of 2022). The appeal was on the following grounds: 1. The court suppressed the appellant's email application for an adjournment dated 10 February 2022 containing Family Court documents which would enable him to have party and judicial fraud dealt with before the Family Court of Australia arising from earlier proceedings. 2. The Court has failed to give reasons for suppression of Family Court documents alleging fraud and its failure to adjourn the hearing to enable the Appellant to have those Family Court matters determined. 3. The Appellant seeks a hearing de novo of the proceedings the subject of the Appeal. 4. On the hearing of the Appeal the Appellant will seek to adduce fresh evidence to the following effect: a. Court and other documents arising from earlier and other proceedings. 31 It is apparent from subsequent orders in the District Court that Mr Kurschinsky did not prosecute his appeal with due diligence. An order was made on 21 June 2022 by the District Court requiring him to file and serve an outline of argument by a particular time with leave reserved to the Law Society and another named respondent unnecessary to mention to apply to strike out the appeal in the event of default. As it happens, there was a default. That culminated in an order made by the District Court on 16 September 2022 dismissing Mr Kurschinsky's appeal against the Magistrates Court judgment. 32 Initially, Mr Kurschinsky's claimed set-off was grounded in an alleged cause of action in defamation against the Queensland Law Society and others. I am willing to accept that this was not a cause of action which could have been setup in the proceeding before the Queensland Magistrates Court for the recovery by the Law Society of the balance of funds misapplied from Mr Kurschinsky's trust account and met as that net deficiency from the Fidelity Fund. 33 The nature of the defamation proceeding is revealed by a statement of claim in the Queensland Supreme Court in proceeding 5755 of 2023. Mr Kurschinsky is or rather was plaintiff in that proceeding. Two defendants were named, a Mr Moses and the Law Society. The basis for the alleged defamation (and injurious falsehood) was said to be found in a letter authored by Mr Moses that alleged that Mr Kurschinsky had acted unlawfully in paying funds from his solicitor's trust account which ultimately came via the separate trust account of the related company controlled by him to be paid to Mr H. One difficulty apparently highlighted at an interlocutory stage to the Queensland Supreme Court about that proceeding by Mr Kurschinsky was that it was outside the limitation period specified in s 10AA of the Limitation of Actions Act 1974 (Qld). As it happens, it is not necessary further to examine whatever merit there may be in terms of any supporting evidence for that claim. That is because that particular proceeding has been dismissed by the Queensland Supreme Court. 34 There is, as recently as this week, another proceeding instituted by Mr Kurschinsky against the Law Society in the Queensland Supreme Court. On 6 November 2023, he instituted proceeding 14039 of 2023 by which he named the Law Society as third defendant, Mr Rodgers, who is a solicitor for the Law Society, and an entity apparently related to Mr Rodgers' firm as additional defendants. That alleges what is said to be an abuse of process claim in that, so it is alleged, in about February 2021, the defendants "started legal proceedings against the plaintiff seeking recovery of $57,941.55 by which the third defendant (Law Society) had paid an amount to a Ms W from 'her fraudulent time expired claim against the third defendant's' (Law Society's) Fidelity Fund". 35 The particulars to this claim rehearse a grievance of Mr H in respect of Ms W and also the way in which the de facto property proceedings were dealt with both in the Circuit Court and on an appeal to the Full Court of the Family Court. Other particulars so-called allege all sorts of failures on the part of various officers of the Law Society. 36 Included in the affidavit material before me are letters of complaint by Mr Henry to the Law Society as well as related responses by the Law Society. 37 Also included in the affidavit material are the reasons of the Queensland Civil and Administrative Tribunal of 3 June 2020 in respect of proceedings between the Queensland Legal Services Commissioner and Mr Kurschinsky, Legal Services Commissioner v Kurschinsky [2020] QCAT 182. On 3 June 2020, for reasons then published, QCAT made the following orders: 1. It is recommended that the name of the respondent, Alexander Kurschinsky, be removed from the roll of legal practitioners in Queensland. 2. The respondent shall pay the applicant's costs of and incidental to this discipline application, such costs to be assessed on the standard basis in the manner in which costs would be assessed if the matter were in the Supreme Court of Queensland. 3. Cassandra Lee Kimmins shall advise the Tribunal and the respondent as to whether she wishes to pursue her notice of intention to seek compensation order by 4.00pm on 24 June 2020. 4. If Cassandra Lee Kimmins advises that she wishes to pursue a compensation order, then the matter will be listed for directions on a date to be advised by the Tribunal. 38 It is apparent from the accompanying published reasons that part of the occasion for the making of those orders was findings made by QCAT in respect of impropriety on the part of Mr Kurschinsky with respect to the transference of funds from his then solicitor's trust account without Ms Ws authority. 39 There is no affidavit from Mr H in evidence before the court. It appears to me that Mr H may well be operating under a misunderstanding with respect to the funds paid into Mr Kurschinsky's trust account. I say that because, on the face of complaint letters which he has authored, Mr H seems to conflate an amount allegedly owed to him in respect of a loan allegedly made to Ms W by him with the proceeds of the sale of a property of Ms W which were paid into Mr Kurschinsky's trust account. 40 However that may be, while it is not necessary for Mr Kurschinsky to prove as if this were a trial on the merits his alleged abuse of process claim, he must at least provide some evidence so as to satisfy the Court of the existence of a claim, set-off or cross-demand equal to or exceeding the Magistrates Court judgment debt. There is just no such evidence. All that there is are what one might term "conspiracy theories" of improper conduct on the part of various Law Society officers, the Society's solicitors, a Circuit Court judge who entertained the de facto property proceedings, a then judge, if not judges, constituting a Full Court of the Family Court and also, so the submissions went, the magistrate who gave judgment in respect of the Law Society's subrogated claim. 41 As I mentioned to Mr Kurschinsky in the course of submissions, whilst I brought an open mind to bear about the possibility of such conduct, for an application to set aside a bankruptcy notice founded on a judgment as described to succeed, there would have to be some evidence which, taking into account a need to prove a case having regard to what was said in Briginshaw v Briginshaw, provided satisfaction that there was such a case. 42 I am also prepared to accept having regard to the nature of bankruptcy jurisdiction that, even if the Law Society were in no way a party to a judgment of the Magistrates Court which entailed impropriety on the part of the magistrate constituting that court in giving judgment that the court would not require compliance with a bankruptcy notice founded on such a judgment and would set it aside. Of course, an allegation of that kind is amongst the gravest one might make against a judicial officer. There is just no such evidence whatsoever which would offer any prospect of any such claim having any prospect of success. 43 On the face of the evidence of the proceedings before the Magistrates Court last year, nothing more and nothing less occurred than a regular exercise in good faith by the magistrate constituting that court of a jurisdiction consigned to that court. I accept that it is not necessarily conclusive of an absence of merit in Mr Kurschinsky's application to set aside the bankruptcy notice that he failed to prosecute the challenge before the Queensland District Court, but there has to be some occasion evidenced in this Court to go behind the judgment of the Queensland Magistrates Court. And as I have already observed, that is not to be found in "conspiracy theories". 44 The end result is that, however meritorious or otherwise might be the explanation offered by Mr Kurschinsky for his delay in seeking the review of the registrar's decision, he has not shown by evidence that there is occasion to set aside the bankruptcy notice. Instead, there is every reason, in light of what I have stated, to dismiss his application. The appropriate order in the circumstances is to confirm the order of the registrar of 24 May 2023 dismissing the application to set aside the bankruptcy notice and also the orders with respect to costs made that day. 45 For completeness, I should record that an annexure to one of Mr Kurschinsky's affidavits accepted for filing was what purported to be a notice of appeal to this Court in respect of the registrar's decision. When the Court comes to review under s 35A a registrar's decision, the court exercises original, not appellate, jurisdiction. The notice of appeal was not appropriate. It has not, however, been sought separately to be filed. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.

Kurschinsky v Queensland Law Society

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (5)

Cited By (1)