May v Vero Insurance Limited

REASONS FOR JUDGMENT 1 On 11 October 2013 the applicant made an application in this Court for an order setting aside Bankruptcy Notice BN163541 issued on 28 August 2013 against him. In addition he sought a stay of his Originating Application in this Court until the determination of certain proceedings in the District Court of New South Wales between the respondent and him (Action No 394410 of 2011) (the District Court proceedings). In the District Court proceedings, the applicant in this Court is the defendant/cross-claimant and the respondent in this Court is the plaintiff/cross-defendant. I think that the applicant probably also wanted to restrain action under the Bankruptcy Notice, although this was not a claim which was clearly articulated in his Originating Application. 2 The judgment debt which is the foundation of the Bankruptcy Notice is for an amount of $78,173. That amount comprises the taxed amount of costs ordered against the applicant on 9 July 2012 by a judge of this Court in proceeding No NSD 360 of 2012 (May v Vero Insurance Limited [2012] FCA 727) (the earlier proceeding) plus interest and other costs. 3 In the earlier proceeding, the applicant sought an order removing the District Court proceedings into this Court and other substantive relief. On 9 July 2012, the judge struck out the whole of the applicant's Originating Application in the earlier proceeding and made an order for costs against the applicant in favour of the respondent. 4 In the District Court proceedings, the applicant in this Court has filed a Cross-Claim which has not yet been determined. That Cross-Claim was not supported in this Court by any evidence. By that Cross-Claim, the applicant claims "$1,000,000 in damages, for Punitive and exemplary damages, as a result of the practices of [the respondent]." The applicant's complaint appears to be that he was forced to provide a guarantee and indemnity for the obligations of a corporation with which he was associated (Belltree Constructions Pty Ltd) (Belltree) to pay premiums to the respondent for Home Warranty Insurance and also to indemnify the respondent against insurance payouts which it might be obliged to make in respect of work done by Belltree. 5 On 30 October 2013 a Registrar of the Court heard the applicant's application to set aside the Bankruptcy Notice and for the stay to which I have referred. 6 On that day the Registrar ordered that: (1) The applicant's application to set aside Bankruptcy Notice BN163541 issued on 28 August 2013 be dismissed. (2) The applicant pay the respondent's costs of that application fixed in the amount of $1,693. 7 By a document filed on 18 November 2013 the applicant indicated both to the Court and to the respondent that he intended to apply for review of the Registrar's decision made on 30 October 2013. In that document he misdescribed what the Registrar had done but that is not of any present significance. 8 On the same day (18 November 2013) the applicant filed an Interim Application in which he sought an "interim" order, namely that Bankruptcy Notice No BN163541 be stayed pending the outcome of this appeal. 9 Although the applicant has not framed his current application in a way which meets the requirements of the Federal Court Rules 2011 and practice of the Court, I take him to be wishing to seek review of the Registrar's decision not to set aside Bankruptcy Notice BN163541 and I intend to deal with the matter which is presently before me on that basis. 10 A review of a Registrar's decision in this Court is a hearing de novo. That means, amongst other things, that the parties are at liberty to tender further evidence in addition to the evidence which was before the Registrar. 11 With the exception of one affidavit, to which I shall refer in a moment, in the present matter, the parties relied upon the same evidence as was before the Registrar. 12 The additional affidavit is an affidavit affirmed by the applicant on 12 November 2013 and filed on 18 November 2013. That affidavit is in the nature of a submission. In that affidavit the applicant said that: (a) He required a review of a decision of the Registrar because no consideration had been given by the Registrar to the Written Submissions made by him to the Registrar or to his Cross-Claim in the District Court or to the affidavit filed by him in support of his application in this Court; and (b) The judge who had dealt with the earlier proceeding had misapprehended the true factual position in relation to District Court proceedings. He blamed the respondent for this. 13 Before me, the applicant relied upon the same Written Submissions upon which he had relied before the Registrar. The essence of those Submissions was: (a) The attempt by the applicant to have the District Court proceedings transferred to this Court was not an abuse of process because the District Court did not have jurisdiction in respect of claims in excess of $1,000,000. The applicant contends that his Cross-Claim in the District Court exceeded the jurisdictional limit of the District Court. (b) The fact to which I have referred in subparagraph (a) above was not revealed to the Court by the respondent who should have disclosed that matter to the Court. 14 The Bankruptcy Notice is based upon a Certificate of Taxation of the costs to which I have referred dated 16 May 2013. That Certificate quantified the costs payable by the applicant to the respondent in the amount of $71,520. Mr May has made available a copy of the relevant certificate and I will mark that Certificate as Exhibit A in the present application. 15 The prima facie position demonstrated by Exhibit A and the Bankruptcy Notice based upon that Certificate is that, as and from 16 May 2013, the applicant became liable to pay to the respondent $71,520. When careful regard is paid to the applicant's Written Submissions and to the oral submissions which he made to me today, it seems that his complaint is that his Cross-Claim in the District Court is for an amount which exceeds the amount certified in the Certificate of Taxation (Exhibit A) by a considerable amount and that it therefore constitutes a Counter-Claim, set-off or Cross Demand upon which he is entitled to rely as the basis for setting the Bankruptcy Notice aside. 16 On the evidence before me, the applicant failed to make good his contentions concerning his Cross Claim in the District Court. He did not establish that that Cross-Claim has sufficient substance to justify an order setting aside the Bankruptcy Notice. The only material before me concerning that Cross-Claim was a description of it and a copy of the pleading. The applicant needed to show much more in order to justify an order setting aside the Bankruptcy Notice. At the very least he needed to adduce sufficient evidence directed to the merits of the Cross-Claim as would have allowed the Court to conclude that the asserted Counter-Claim, set-off or Cross Demand had enough substance to warrant the making of the order which he sought. In addition, there is the difficulty created by fact that the judgment debt relied upon by the respondent in the Bankruptcy Notice (being a costs order which has now been quantified) does not relate directly or at all to the subject matter of the applicant's Cross-Claim in the District Court. 17 In all the circumstances I am not persuaded that I should make the order which the applicant seeks. Accordingly, I will dismiss the application which is currently before the Court with costs. 18 I order that: 1. The Application for Review of the decision of Registrar Hannigan made on 30 October 2013 (including the Interim Application filed by the applicant on 18 November 2013) be dismissed. 2. The applicant pay the respondent's costs of and incidental to that Application. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.