McDougall v Workcover Corporation of South Australia

PROPOSED GROUNDS OF APPEAL 9 The power of the learned primary judge to extend the time in which to make an application under s 104 of the FCCA Act involved the exercise of discretion. To succeed on any appeal to this Court, Mr McDougall must show that the judgment is affected by an error of the kind discussed by the High Court in House v The King (1936) 55 CLR 499 at 504 - 505 (Dixon, Evatt and McTiernan JJ): The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. 10 The proposed grounds of appeal are to the effect that the learned primary judge: (1) erred by failing to find that the application for review was subject to a seven year time limit and that, accordingly, an extension of time was not required (ground 1); (2) failed to apply High Court authorities concerning the powers of a Registrar to exercise the power under s 52 of the Bankruptcy Act (ground 2); (3) wrongly refused to receive and read an unsworn affidavit asserting a discrepancy in the bankruptcy notice upon which the creditor's petition was founded (ground 3); and (4) "showed total bias to me to appease a Government Department" (ground 4). 11 In support of the first proposed ground of appeal, Mr McDougall submitted that certain persons had committed criminal offences against the Crimes Act 1914 (Cth) and that the time prescribed for the commencement of proceedings for the prosecution of the alleged offences had not expired at the time that he commenced his proceedings in the FCCA. Accordingly, he submitted, the primary judge erred in determining that an extension of time pursuant to r 2.03 of the Bankruptcy Rules was required. 12 These are not proceedings for the prosecution of an offence, nor were the proceedings before the primary judge, nor were the proceedings before the Registrar. There is no reasonable basis for Mr McDougall to argue that the time limit prescribed in r 2.03 of the Bankruptcy Rules did not apply. The first proposed ground of appeal enjoys no reasonable prospects of success. 13 In support of the second proposed ground of appeal, Mr McDougall submitted that the judicial power of the Commonwealth, particularly the power to make a sequestration order pursuant to s 52 of the Bankruptcy Act, could not validly be delegated to, or exercised by, a non-judicial Registrar. The primary judge rejected the same contention. His Honour refused an application by Mr McDougall for an adjournment of the proceedings pending the service of notices pursuant to s 78B of the Judiciary Act 1903 (Cth). 14 In Harris v Caladine (1991) 172 CLR 84, the High Court upheld the validity of a provision of the Family Law Act 1975 (Cth) which provided that the Family Court of Australia may make rules delegating to Registrars certain powers of that Court. Such a provision did not transgress the limits imposed by Chapter III of the Constitution, provided that the exercise of powers by a non-judicial officer is subject to review de novo by a judge or judges of the Court on questions of both fact and law: see at 95 - 96 (Mason CJ and Deane J); 122 - 127 (Dawson J); 150 - 152 (Gaudron J) and 164 - 165 (McHugh J). 15 Having cited Caladine, the primary judge said (at [18] - [20]): 18 The topic was recently dealt with by McKerracher J in Conlan v Pratt (No.2) and it is appropriate to quote the following relevant passage: 'This point of law has been re-visited on a number of occasions in a series of cases dealing with the question of delegation of judicial power: The High Court has repeatedly held under Ch III of the Constitution judicial power may be delegated providing that the delegation is subject to the supervision and control by Ch III judges: see Harris v Caladine (1991) 172 CLR 84 and Commonwealth of Australia v Hospital Contribution Fund of Australia (1982) 150 CLR 49. In addition in other courts, mainly this Court, see also Amos v Monsour Pty Ltd (formerly Monsour Legal Costs Pty Ltd) [2010] FCA 741; Totev v Sfar (2008) 167 FCR 193; Re Socket Screw & Fastener Distributors (NSW) Pty Ltd (in prov liq) (1994) 51 FCR 599; Taylor v DCT (Cth) (1999) 42 ATR 220; Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq) (2000) 99 FCR 554 and on appeal in Chisholm v Official Trustee in Bankruptcy [2000] FCA 1234.' 19 Given the ample authority on the point, in particular the decision of the High Court in Harris v Caladine, the above passage was understandably referred to with approval by the Full Court of the Federal Court when it recently considered the question in Cristovao v Registrar Scott. 20 With respect to the orders made by Registrar Bochner in 2014, Constitutional protection existed at the relevant time by virtue of the judicial power to conduct a review of a sequestration order pursuant to r.2.03 of the Bankruptcy Rules. Such a review is a hearing de novo. It is exactly such a review that the applicant asks the Court to conduct in this matter. (Footnotes omitted) 16 Before the primary judge, and on this application, Mr McDougall placed reliance upon R v Davison (1954) 90 CLR 353. Nothing in Davison precludes the making of a law providing for the delegation of powers under the bankruptcy regime to a Registrar. Subsequent authorities, particularly the decision in Caladine, have established that laws delegating powers to a Registrar do not offend Ch III of the Constitution subject, as I have said, to the availability of a de novo review by a judge of the exercise of the Registrar's powers. 17 There is no arguable appealable error affecting the approach of the primary judge. His Honour did not err in considering the law to be settled and in determining there to be no issue arising under the Constitution so as to require the proceeding before him to be adjourned pending the issue of s 78B notices. As the primary judge correctly observed, s 78B of the Judiciary Act does not impose a duty on the Court not to proceed in the face of a Constitutional point that is unarguable: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 95 FCR 292 at [14] (French J). 18 Accordingly, the second proposed ground of appeal has no reasonable prospects of success. 19 The third proposed ground of appeal asserts that the primary judge fell into error by not receiving in evidence an unsworn and unsigned affidavit tendered by Mr McDougall on the day of the hearing of his application. By that material, Mr McDougall sought to demonstrate that the judgment debt entered against him was overstated because it did not account for an instalment he had paid to the respondent in the amount of $2,191.90. 20 The primary judge observed, correctly, that the material tendered by Mr McDougall concerned events that had occurred prior to the default judgment having been entered in the Magistrates Court. His Honour refused to admit the material in evidence both because it was unsworn and because it was irrelevant. 21 It is to be recalled that Mr McDougall was made bankrupt on a creditor's petition founded upon his failure to comply with a bankruptcy notice seeking payment of a judgment debt. The particular act of bankruptcy relied upon by the respondent was that specified in s 40(1)(g) of the Bankruptcy Act. Such an act of bankruptcy occurs where: (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia - within the time specified in the notice; or (ii) where the notice was served elsewhere - within the time fixed for the purpose by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained; 22 The respondent denies that the amount of the judgment debt exceeded the amount in fact owing by Mr McDougall and, in particular, denies that the instalment was not taken into account in calculating Mr McDougall's indebtedness. For the reasons that follow, it is not necessary for this Court, nor was it necessary for the primary judge, to resolve that dispute. 23 Section 41(5) of the Bankruptcy Act provides that a bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement: s 41(5) of the Bankruptcy Act. 24 There was no evidence before the primary judge capable of supporting a finding that Mr McDougall had notified the respondent within 21 days of being served with the bankruptcy notice that he disputed the amount in fact due. More fundamentally, however, at the time that the bankruptcy notice was served upon Mr McDougall, judgment in the higher amount had been entered against him and the bankruptcy notice did not misstate the amount then due and payable pursuant to the judgment. Any dispute between Mr McDougall and the respondent concerning the amount of any underlying debt had merged in the default judgment and Mr McDougall was liable to pay the amount specified in it. The bankruptcy notice did not misstate the amount then owing. Mr McDougall otherwise made no application to set the bankruptcy notice aside. 25 Moreover, Mr McDougall's evidence (even if admitted and accepted) could not on any view demonstrate that he had a counter-claim, set-off or cross demand "equal to or exceeding the amount of the judgment debt" for the purposes of s 40(1)(g) of the Bankruptcy Act. Any discrepancy relied upon by Mr McDougall is insufficient to eliminate his indebtedness to the respondent and there was no evidence before the primary judge to the effect that the discrepancy affected the question of whether Mr McDougall was solvent. 26 Furthermore, even if it could be demonstrated that the instalment upon which Mr McDougall relied was equal to or exceeded the amount of the judgment debt, the evidence upon which he sought to rely did not demonstrate that a cross-claim or set-off for the credit could not have been set up in the same action or proceeding in which the default judgment was obtained. As the Full Court explained in Palaniappan v Westpac Banking Corporation [2017] FCAFC 121 at [32] - [33] (Gilmour J, McKerracher J agreeing): (1) the question of whether or not a person could have "set up" a counter-claim, set-off or cross demand in the particular case in which judgment was obtained is to be determined by reference to legal capacity, not practical ability; (2) the debtor bears the onus of establishing that he or she was legally unable to set up their counter-claim, set-off or cross demand in the proceedings; and (3) the mere failure to take advantage of an opportunity does not equate to a legal inability. 27 Mr McDougall did not defend the proceedings in the Adelaide Magistrates Court. On the present application, he has not demonstrated how it is that he was legally incapacitated from participating in the proceedings in the usual way, including by obtaining discovery, disputing the amount of the claimed debt or raising a set-off or counterclaim by reference to the instalment. The material tendered before the primary judge did not address that question. Although Mr McDougall has filed a significant amount of evidentiary material in support of the present application, I do not consider him to have reasonable prospects in succeeding on any application to adduce that evidence on any appeal. The evidence does not assist Mr McDougall to surmount the legal obstacles to which I have referred. In particular, Mr McDougall cannot succeed on an appeal merely be showing that he did not owe the respondent the amount specified in the judgment debt. 28 The third proposed ground of appeal cannot succeed. 29 The final proposed ground of appeal alleges actual bias on the part of the primary judge. 30 To succeed on that ground Mr McDougall must show that the primary judge, in refusing to grant an extension of time, approached his task with a mind that was not open to persuasion. An allegation of actual bias is a serious allegation, requiring distinct proof: SBBA v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 90 at [15] (Weinberg, Stone and Jacobsen JJ). 31 As Gleeson CJ and Gummow J said in Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 (at [72]): … The state of mind described as bias in the form of prejudgment is one so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or arguments may be presented. Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion. … See also Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 90 - 92 (Deane J). 32 The ground of appeal alleging actual bias has no reasonable prospects of success. Whilst Mr McDougall may vehemently disagree with the outcome of his application before the primary judge, he has adduced no material on the present application capable of supporting an arguable case that the primary judge approached the issues before him with a mind that was not open to persuasion. His submissions amount to a bare assertion that the primary judge dismissed his arguments concerning the Registrar's powers in order to "appease" the respondent. To the extent that Mr McDougall alleges that the primary judge made facial expressions, it has not been shown that the expressions (if made) were demonstrative of actual bias. Mr McDougall's arguments concerning the Registrar's powers were properly rejected by the primary judge because they were fundamentally lacking in legal merit. They were deserving of short shrift. 33 Even if it could be shown that the judgment of the primary judge was affected by actual or apprehended bias, the remaining arguments sought to be raised on the appeal are so lacking in merit that it there is no reasonable prospect that the Court, in the exercise of its appellate jurisdiction, would grant the relief sought. 34 Accordingly, neither the application for an extension of time to appeal, nor the application for leave to appeal, should be granted. 35 The application should be dismissed. I will hear the parties as to costs. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.