Moore v Wilson

Federal Court of Australia|2006-02-10|Before: Mansfield J

introduction 1 On 21 January 2005 a sequestration order under s 43 of the Bankruptcy Act 1966 (Cth) (the Act) was made by Registrar Christie in the Federal Magistrates Court over the estate of the appellant. The order was made on the petition of the respondents of 7 October 2004 in respect of a debt of $4,600, for which they had obtained a judgment by default in the Magistrates Court of South Australia on 11 June 2004 (the costs judgment). The petition was based upon an act of bankruptcy committed on 16 September 2004, namely the failure to comply with a bankruptcy notice served on the appellant on 26 August 2004 itself based upon the costs judgment. 2 The appellant did not attend the hearing on 21 January 2005. It is not important to inquire into why he did not do so. That is simply because he had, and exercised, the right to a full rehearing of the petition of the respondents: s 104 of the Federal Magistrates Act 1999 (Cth) (the FM Act).

3 On 11 February 2005, the appellant applied for a review of the sequestration order (the review application). He sought an order that the petition be dismissed. The consequence would be that the sequestration order would have, and would have had, no effect. There was some debate at the hearing before the learned Magistrate as to whether the order should have been for dismissal of the petition, or for annulment of his bankruptcy, but in the event the Magistrate did not have to decide that. 4 The review application was heard before Federal Magistrate Lindsay on 8 and 22 April and 13 May 2005. Judgment was delivered at 9:00 am on 1 July 2005. The application for review was dismissed, with the result that the sequestration order made on 21 January 2005 stands. On 8 July 2005, the learned Magistrate ordered that the appellant pay to the respondents their taxed costs of the review application, excluding the costs associated with two directions hearings. For present purposes the exclusions from the costs order are immaterial. 5 After judgment was reserved on 13 May 2005, the appellant applied by two notices of motion for further orders from the learned Magistrate. 6 By motion of 14 June 2005, the appellant sought an order in substance for leave to adduce further evidence (namely the evidence contained in his affidavit of 14 June 2005) on the hearing of the review application (the further evidence motion). He also sought certain other orders to which it is not necessary to refer. The further evidence motion was heard on 17 June 2005. It was refused. The appellant was ordered to pay the respondent's costs of the motion which he fixed at $500. 7 By motion of 21 June 2005, he sought an order that the learned Magistrate disqualify himself from further hearing of the review application on the ground of ostensible or actual bias (the disqualification motion). The disqualification motion was returnable at 9:00 am 1 July 2005. It was not called on for hearing until after judgment had been delivered on the review application. The disqualification motion was also dismissed. 8 There is before the Court by the appellant - (1) an appeal from the dismissal of the review application, duly instituted; (2) a motion for leave to appeal from the dismissal of the further evidence motion, issued only on 21 October 2005 and for an extension of time to do so; and (3) a motion for leave to appeal from the dismissal of the disqualification motion, issued only on 21 October 2005 and for an extension of time to do so. The two motions were foreshadowed at a directions hearing on the appeal on 4 October 2005. On that date, the appellant was directed to file and serve by 21 October 2005 such evidence as he considered appropriate in support of the applications for leave to appeal and if leave was given in support of the proposed appeal. 9 The appellant filed no such evidence. Instead, on 5 December 2005, he filed a document entitled 'Draft Index to Appeal Documents' which identified a number of documents including, in effect, all the evidentiary material before the learned Magistrate (and other materials on this Court file) as the material he proposed to rely upon. With the sensible acquiescence of the respondents, he was permitted to refer generally to the material before the learned Magistrate on the review application and on the further evidence motion and the disqualification motion, as well as what had transpired at the hearing of those applications. To determine the appeal, the transcript of each of the hearings at first instance has been procured. 10 Before addressing the grounds of the three matters now before the Court, it is appropriate to refer to the learned Magistrate's reasons for decision on the three applications before him, and (because it was referred to by the appellant) the foundation of the costs liability upon which the costs judgment was obtained.

the proceedings at first instance 11 In proceedings in this Court numbered S 3004 of 2003 between the respondents as applicants and the appellant and others including Manna Hill Mining Company Pty Ltd (Manna Hill) as respondents (the earlier proceedings), Lander J gave judgment generally in favour of the respondents on 14 July 2004 and made substantive orders on 16 July 2004, and costs orders on 30 July 2004. The appellant appealed from the substantive orders on 6 August 2004 and sought leave to appeal from the costs orders also on 6 August 2004. That appeal, and that application for leave to appeal, have not yet been heard as the appellant was precluded from himself maintaining those proceedings following the sequestration order on 21 January 2005. His trustee has not to date been required to determine whether or not to prosecute them, because his status as trustee has been subject to the outcome of the review proceedings. 12 In the course of the earlier proceedings, on 24 March 2004 and on 6 April 2004 Lander J on separate interlocutory applications made orders that the appellant pay to the respondents costs of $600 and $4000 respectively. Under O 62 r 3(2) of the Federal Court Rules, Lander J also ordered that those costs be recoverable forthwith rather than only upon completion of the principal proceedings. Those costs orders underpinned the costs judgment. 13 The learned Magistrate identified the appellant's principal contention on the review application as being that he was able to pay his debts as and when they became due, although his Honour recognised that solvency did not of itself entitle the appellant to have the petition dismissed: see St George Bank Ltd v Helfenbaum [1999] FCA 1337. On the issue of solvency, the evidence was then discussed in detail. His Honour was, ultimately, not satisfied that the appellant was able to pay his debts as and when they fell due. Included in the appellant's assets were 212 shares held in Manna Hill, which were found to be held on trust for the Moore Family Trust. It was accepted that the appellant was the trustee of the Moore Family Trust and a beneficiary, so that the shares in Manna Hill were treated as an asset of the appellant. However, his Honour was unable, on the evidence, to assign any value to that shareholding. 14 Nor was his Honour satisfied that other sufficient cause had been shown as to why the sequestration order should not be made. The two principal matters raised by the appellant as showing other sufficient cause for the petition being dismissed were his shareholding in Manna Hill, and the fact that the appellant (by his trustee) might not prosecute the appeal from the decision in the earlier proceedings. As to the latter point, his Honour proceeded on 'the basis that the appeal will ultimately be determined on its merits'. 15 Consequently, the review application was dismissed on 1 July 2005.

16 Those reasons for judgment also addressed the further evidence motion, dismissed on 17 June 2005. The learned Magistrate said that the appellant had been unable to identify any circumstances which had arisen since he reserved judgment on 13 May 2005 which warranted him being given leave to make further submissions (his Honour categorised the further evidence motion as one seeking to make further submissions rather than to adduce further evidence), and in particular submissions criticising the way the hearing of the review application had been conducted. Such criticisms, his Honour said, could be pursued upon any appeal. In reasons for decision given on 17 June 2005, the affidavit of the appellant in support of the further evidence motion was described as 'a reagitation of submissions' and suggestions of 'inadequacies relating to the conduct of the review application'. His Honour said then: '… there are no matters … that relate to events that occurred since the reservation of my judgment which the justice of the case might require me to hear submissions about.' 17 On 1 July 2004, reasons were given for refusing the disqualification motion. The learned Magistrate pointed out that it was filed without a supporting affidavit. It was given a return date as the same date as the judgment on the review application, but called on only after that judgment. Hence, his Honour observed 'there would not appear to be any utility' in further hearing of that motion, and that any appeal from the decision on the review application would be the appropriate forum for agitating the appellant's concerns.

the grounds of appeal 18 The appellant has been unrepresented at all times. His written documentation, whether in affidavit form or as submissions, and his oral submissions are argumentative, assertive, and often apparently repetitive. They are often extravagantly expressed, and he makes apparently unfounded but serious allegations. 19 The notice of appeal from the review application decision contains 29 grounds, but they are not clearly expressed and are repetitive. So far as I can determine, and omitting merely assertive claims (those where there is no particularity of the claim or of the error alleged such as unsupported claims of fraud or perversion of the course of justice), the notice of appeal claims that the learned Magistrate erred because: (1) there was no act of bankruptcy because the appellant was not served with the bankruptcy notice, because the bankruptcy notice was in a 'closed envelope'; (2) there was no service of the petition itself upon him, because the petition was also in a sealed envelope; (3) he found the appellant was not solvent (elsewhere in the notice of appeal the appellant refers to disputing his indebtedness to the second respondent and refers to the first respondent owing him $3106, the second respondent owing him $14,350 and $6333, and Manna Hill owing him $68,4000, and also claims that his shareholding in Manna Hill is worth $600,000; he apparently thereby identifies particular factual errors asserted, and complains that the learned Magistrate did not accept his evidence about why his statement of affairs was not accurate); (4) there were other sufficient causes for the petition to be dismissed, including - (i) that he offered to repay the debt of $4600 but was not permitted by the respondents to do so; (ii) that the appellant had 'set-offs' against the respondents (referred to in (3) above); (iii) that he had an illness; and (iv) that the appeal against the earlier decision had not been resolved; (5) the appellant was not accorded procedural fairness because - (i) he was not given sufficient time to present evidence and submissions, including by reason of the dismissal of the further evidence motion to adduce submissions and 'new' evidence regarding his 'real' statement of affairs, and because he received a very lengthy affidavit of the respondents on the afternoon of 5 April 2005 for the hearing on 8 April 2005; (ii) no weight was given to his state of health, namely his mental condition and its effect upon his capacity to conduct the hearing of the review application in a timely manner (the appellant did not claim that he was incompetent to conduct the hearing but that he should have been given more time to adduce evidence and to make submissions); (iii) he was not permitted to cross-examine the respondents' witnesses (whose evidence-in-chief was given by affidavit); (iv) he was not given an adjournment of the hearing of the review application to obtain legal representation (which he claims was available to him); (v) the hearing on 13 May 2005 was 'completed' whilst he was still in the course of making submissions; (vi) the learned Magistrate was ostensibly biased against him as indicated by - (a) the general hostility he experienced during the hearing; (b) failing or declining to hear and determine the disqualification motion before delivering judgment; (c) commencing the hearing on 13 May 2005 before the listed commencement time in the presence of counsel for the respondents but in the absence of the appellant; (d) dismissing the further evidence affidavit (which the appellant claims, contrary to the assessment of the learned Magistrate, included evidence he wished to adduce and not simply submissions he wished to make); (e) selective use of evidence and failure to have regard to evidence favourable to the appellant in making the findings of fact. 20 The grounds of appeal in the draft notices of appeal attached to the two motions seeking leave to appeal from the dismissal of the further evidence motion and of the disqualification motion broadly speaking are included in the grounds of appeal from the dismissal of the review application. The only additional matter raised (which is itself comprehensible) is that the learned Magistrate should have treated the affidavit of the appellant of 14 June 2005 (filed in support of the further evidence motion) as also in support of the disqualification motion, so that his Honour erred in treating the disqualification motion as not complying with the Federal Magistrates Court Rules. 21 I have incorporated into the description of the grounds of appeal certain particularity which emerged from questioning the appellant during the course of the hearing of this appeal. I have not included certain matters which he raised in argument but which could not have led to the appeal (or other application) being successful (for example that certain evidence was apparently misplaced but then located in the course of the hearing at first instance, or that the result of the proceedings simply reflected the decision of 21 January 2005 under review without independent consideration, or that for a period during the hearing at first instance there was some misunderstanding about the foundation of the debt giving rise to the costs judgment).

Service 22 In my view, the appellant was served with the bankruptcy notice and the petition by being given each of those documents. There was clear evidence to that effect. The appellant acknowledged that. There is no requirement that such documents at the time of service not be in a 'closed' or sealed envelope. The appellant pointed to no provision of the Act or of the Bankruptcy Regulations 1996 to support his contention, nor to any authority which does so. The service provisions under the Act are generally construed strictly: see, e.g. Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988)19 FCR 347. That reflects the need for certainty about if and when an act of bankruptcy has been committed, and the significance of a sequestration order. 23 There is no specific provision as to how service of a bankruptcy notice must be effected. Bankruptcy Regulation 16.01(1) provides a range of service options including personal service, and reg 16.01(b) then provides that personal service is effected when the document is delivered. There is no doubt the bankruptcy notice was delivered to the appellant. 24 As a Court process, service of the petition is governed by the relevant Court Rules. Rule 31.05 of the Federal Magistrates Court Rules required the petition to be served personally by giving a copy to the appellant: Rules 6.06(1) and 6.07(1) of the Federal Magistrates Court Rules. That was complied with. 25 There is no merit in these grounds of appeal.

Solvency 26 The following consideration is only upon the basis of the affidavit evidence before the learned Magistrate. 27 The appellant did not file any appearance or defence to the proceedings in the Adelaide Magistrates Court, leading to the costs judgment on 11 June 2004. Nor did he at any time apply to set it aside. Nor did he apply to set aside the bankruptcy notice under s 41(7) of the Act by reason of any counterclaim, set-off or cross demand against the respondents. 28 The appellant did not contend that the learned Magistrate had misapplied or misunderstood the law. On appeal, his focus was simply on whether, upon the evidence, the Magistrate erred in not being satisfied that he was able to pay his debts: s 52(2)(a). The learned Magistrate found that, apart from the amount of the costs judgment, the appellant had significant liabilities of between $75,000 and $100,000 and little in the way of assets. There were four particular assets which were discussed in the judgment. From my perusal of the material before the Magistrate, including the transcript, they are four matters of major debate. 29 The principal claimed asset was the shareholding of the appellant as trustee of the Moore Family Trust in 212 shares in Manna Hill. The appellant claimed in his Statement of Affairs filed on 11 February 2005, and in his material, that those shares were worth some $600,000. Contrary to the contentions of the respondent, the learned Magistrate assumed in the appellant's favour that the appellant is the sole beneficiary of the Moore Family Trust, so he treated those assets held on trust as the appellant's shares. The learned Magistrate did not, however, ascribe any value to them. In my judgment that conclusion did not involve error on the part of the Magistrate. There was no evidence at all as to the balance sheet or recent trading performance of Manna Hill, so simply on that basis the finding of the learned Magistrate was open to him. The appellant gave some evidence of an asset of Manna Hill having a significant value, but the fact that it may have an asset of significant value does not mean that it has a surplus of assets over liabilities, or that the asset is unsecured, or that it is readily realisable so that the appellant can obtain any particular price for the sale of the shares. The effect of discussions from time to time between him and the respondents (and at least one other person) for the sale of their respective shares to others at nominated prices does not tend to prove the worth of those shares. Moreover, the appellant in his Statement of Affairs said that he did not know the value of those shares. There was no evidence that, in recent times, he had attempted to sell them, or to raise funds with them as collateral, to meet his liabilities or for any other purpose. There was evidence that in the earlier proceedings in July 2004 he had contended that Manna Hill was insolvent. In the face of such evidence, the Magistrate was entitled to, as he did, discount the appellant's assertions as to the value of those shares and to reach the view that he could not assign any value to them. 30 The Magistrate also rejected the appellant's claim to have significant amounts owed to him by Manna Hill, and Manna Hill Resources, for consulting fees. The appellant gave evidence of an entitlement to those amounts, but it was not accepted. It was not accepted because the appellant had nominated in his Statement of Affairs different amounts claimed for consulting fees, because the invoices for them had been rendered only in late 2003 or early 2004 although the work claimed to have been done related to a period of time back to 2001, and because there had been no attempt to recover any of those amounts. In addition, there was no evidence that either of those companies was in a position to make any payment in respect of the claimed amounts. I see no error in the learned Magistrate's approach to that aspect of the claim. The appellant said in his submissions that he did give a detailed explanation of the foundation for the consulting fees claim, but there is no explanation in either of his two affidavits before the learned Magistrate of 11 and 30 March 2005 addressing those matters. I have also considered his affidavit of 14 June 2005. It does not adduce any further information on that claim that previously was not before the learned Magistrate. 31 The appellant also claimed to be entitled to $20,683 from the second respondent as moneys advanced to her or for her benefit in relation to living expenses and loans over a period of time. That claimed indebtedness was not accepted by the learned Magistrate. His Honour had regard to the absence of that claimed asset in the Statement of Affairs, the absence of any attempts to recover those amounts, and the circumstances in which the indebtedness allegedly arose: that is, whilst the appellant and the second respondent were sharing the same house and had 'reasonably complicated financial relations between them'. Part of that reasoning was derived from information in the second respondent's affidavit of 6 April 2005 disputing any indebtedness to the appellant, asserting that any payments made by him were made as a means of sharing accommodation expenses, and that in addition the payments were made from Manna Hill and not from the appellant's own resources, as well as being a form of payment of rent. A debt of $3,106 allegedly owed by the first respondent was also discussed. There was no contradictory evidence of the first respondent. In my view, the Magistrate correctly observed that the assertions of the appellant in his affidavit having regard to the documents produced, indicated more probably that the indebtedness (if there was any) arose from moneys paid by the appellant to Manna Hill in circumstances where the appellant considered that the second respondent should have made larger payments to Manna Hill so that the appellant would not have been called upon to do so. It was open to conclude on the appellant's own assertions that any such indebtedness was that of Manna Hill to him. As noted above, there was no evidence upon which the realisable value of any such indebtedness could be assessed. 32 The assessment of the appellant's liabilities was made on a more general basis. The learned Magistrate put aside any indebtedness for costs in respect of the earlier proceedings estimated at $400,000. He did not take it into account. He noted the appellant's Statement of Affairs disclosed liabilities of about $119,000. In his submissions on the appeal, the appellant suggested that he had provided a revised statement of affairs but it was not in evidence before the Magistrate, nor was it included in his affidavit of 14 June 2005. That affidavit relevantly simply denies the indebtedness of the appellant in respect of almost all the liabilities which he acknowledged in his Statement of Affairs. That affidavit does not explain the basis of that denial, except in some instances in the most laconic terms such as the debt being 'not personal' or being a commercial debt, or not being enforced. No documentation of any cogency in support of any of those assertions is provided. 33 As to the debts listed in the Statement of Affairs, the learned Magistrate appears to have discounted the liability of $11,494 to one O'Riley. The appellant gave evidence by his affidavits about the nature of this dispute, about that debt and the steps he had taken by proceedings to relieve himself of the asserted liability. The Magistrate appears also to have approached the liability of the appellant to one Denise Langford, in a broad brush way. He found the indebtedness is 'somewhere between $15,000 and $67,000'. In reaching that figure, the Magistrate did not prefer the affidavit of Ms Langford as to the amount of his indebtedness to her (claimed to be $67,000) to the appellant's acknowledged indebtedness (in his list of unsecured creditors) of $15,000. It may be that his Honour took that approach because he did not permit cross-examination of Ms Langford. In his oral submissions the appellant asserted that his indebtedness to Ms Langford was only of the order of $10,000, and in his affidavit of 14 June 2005 he disputed liability to her at all. On the basis of the evidence, in my view the finding of the Magistrate did not involve error on his part. 34 Overall, in my judgment (and subject to considering the procedural fairness complaints) the learned Magistrate was entitled to reach the view that the appellant was unable to pay his debts at the time of the hearing before him, or more accurately that the appellant did not prove to the Magistrate's satisfaction that he was able to pay his debts at that time. The reasons for the Magistrate reaching that view are rational and there was evidence upon which he could reasonably have reached that view. The shortcomings in the evidence of the appellant were obvious. Evidence of the sort which one would ordinarily expect to be adduced to support such a claim of solvency when the value of individual assets or the amount of individual liabilities was in issue was not adduced. There is nothing in the evidentiary material which persuades me that the conclusion of the learned Magistrate was in error.

Other Sufficient Causes 35 The learned Magistrate identified the matters put forward by the appellant under s 52(2)(b) of the Act variously in the course of the reasons for judgment. That is because the 'other sufficient causes' involved in large measure the claims he made about the value of certain assets. As the Magistrate was not satisfied that the assets had the value claimed, it followed that he was not satisfied that those assets provided other sufficient cause for not making the sequestration order. Those assets were the value of consulting fees allegedly owed to him by Manna Hill, and the value of 'his' shares in Manna Hill through the Moore Family Trust. The appellant did not identify any evidence indicating, as he claimed in submissions, that he had offered to repay the costs judgment in clear terms. 36 The appellant also raised his medical condition as providing another sufficient cause for not making the sequestration order. In my view, the learned Magistrate recognised and accurately understood the evidence as to the appellant's medical condition. It was open to him to conclude not simply that the medical condition did not provide a satisfactory explanation for the inconsistencies in the material the appellant adduced to the Court as to the value of his assets and liabilities, but independently was not a reason to decline to make the sequestration order. That medical evidence is summarised in the reasons for judgment. I shall not repeat it. Neither before the learned Magistrate nor on the hearing of this appeal did the appellant assert that he was not capable of managing his own affairs. The Magistrate observed the capacity of the appellant to conduct the proceedings before him, and was obviously alert to ensure that the appellant did understand the proceedings. 37 The fact that the appellant has been unfit for work for various periods of time, based upon medical certificates, and that in 2004 he had a 'nervous breakdown' and has been under psychiatric supervision since, might explain why (for example) the costs judgment was secured by default. It does not itself provide a sufficient cause not to make a sequestration order, when other conditions for the making of that order existed. The medical evidence did not go to the real issue as to the extent of the assets and liabilities of the appellant, upon which he was basing his invocation of both arms of s 52(2).

procedural fairness 38 It is necessary to refer to the course of the hearing. 39 At a directions hearing, the learned Magistrate gave directions for the filing of the affidavit evidence of the appellant and of the respondents. The hearing was to commence on 8 April 2005. 40 The review application required a rehearing de novo of the petition: see s 104 of the FM Act. Under s 35A of the Federal Court of Australia Act 1976 (Cth), the review hearing therefore required the respondents to prove the various matters which they were also required to prove before the Registrar, including those specified in s 52(1) of the Act: see e.g. Martin v Commonwealth Bank of Australia (2001) 217 ALR 634; Meehan v Alfaro (1999) 93 FCR 201. The same approach applies under s 104 of the FM Act. There is no material difference in the two provisions. That approach has been adopted in the Federal Magistrates Court: see Adelaide Bank Ltd v Badcock [2002] FMCA 10; Clancy v Robinson [2002] FMCA 47. 41 Subject to the issue as to service of the bankruptcy notice and of the petition referred to above, there was no issue on this appeal that the 'formal' matters referred to in s 52(1) and elsewhere had been proved. The appellant's real contention at the review hearing before the learned Magistrate was that the petition should be dismissed under s 52(2) of the Act, because he was able to pay his debts, and because there were other good reasons for the petition being dismissed. The onus of proof of those matters was upon the appellant. 42 In apparent compliance with the directions of 16 March 2005, the appellant had filed and served two lengthy handwritten affidavits of 11 and 30 March 2005. The respondents had filed and served affidavits of Megan Prideaux of 3 March 2005, 15 March 2005 and 4 April 2005, of Nicholas Iles of 5 April 2005 and of the second respondent of 6 April 2005. The Magistrate also had regard to an affidavit of Denise Langford, a creditor supporting the petition, sworn on 17 January 2005. 43 The hearing commenced on 8 April 2005. No affidavits were formally read on that occasion, although the transcript indicates that the parties understood that those affidavits would be considered as the evidence (or part of it). 44 Ideally, the respondents (as the petitioning creditors) would have proceeded to prove the 'formal' matters required by s 52 and related provisions. If the issue of service was genuinely in dispute, the appellant would have been entitled to cross-examine those deponents. There was no dispute about the other 'formal' matters to be proved. 45 The appellant told the learned Magistrate (and explained in his affidavits) that his complaint about service was that he had received the bankruptcy notice and later the petition each in a sealed envelope, so that he argued there was no service in accordance with the Bankruptcy Regulations 1996 or the Federal Magistrates Court Rules respectively. There would have been no need for cross-examination unless the respondents disputed that fact. They did not do so. I have found that there was no error in finding service of the bankruptcy notice and of the petition, notwithstanding that fact. Indeed, contrary to the appellant's assertion that he was entitled to cross-examine the serving officers on their affidavits, there would have been no purpose in him doing so. It would have been a waste of time. No other legitimate reason to cross-examine them was suggested, even though the appellant disputes the precise conversations which took place at the time of service. His credit was not impinged or sought to be impinged by that dispute, and a finding as to what was said at the time of service was unnecessary. 46 A Court is entitled to control the course of proceedings, provided impartiality and the appearance of impartiality is maintained. A litigant, whether represented or not, is not entitled to unlimited time to present submissions; a judge or magistrate may limit the time for submissions, and curtail clearly unmeritorious submissions. A litigant is not entitled to adduce irrelevant evidence, or evidence in an inadmissible form. Nor is a litigant entitled to cross-examine a witness where the cross-examination is itself irrelevant to the proceedings. Judges or magistrates may curb such cross-examination. 47 Depending upon the particular circumstances, the appellant would then have adduced his evidence on the matters he relied upon under s 52(2), namely his affidavits of 11 and 30 March 2005, subject to it being relevant and in admissible form. If the respondents wished to cross-examine him, they could then have done so. They, in turn, would have adduced such evidence on those issues as they considered appropriate, again subject to it being relevant and in admissible form. The appellant could have cross-examined those deponents. Re-examination would follow in each instance. That sequence of evidence is provided for by s 28 of the Evidence Act 1995 (Cth) (the Evidence Act). I have qualified that course of events by reference to the particular circumstances, as there might be in some cases such an overlap between the 'formal' matters to be proved by the respondents as petitioning creditors and the issues raised under s 52 as to require all the respondents' evidence to be adduced initially. 48 That course of events was not followed. 49 The hearing commenced on 8 April 2005. 50 No doubt prompted by the form and content of the appellant's affidavits, the learned Magistrate at an early point in the hearing said he would: '… hear Mr Moore on the grounds of his application for review [including] the issue of the cross-claims [against the respondents] and any other sufficient cause argument [sic] he wants to raise.' The Magistrate identified the three general issues as being: (1) the moneys owed to the appellant by the respondents; (2) the solvency of the appellant; and (3) the 'other grounds' why aside the sequestration order should be 'set aside' (strictly speaking, why the sequestration order should not be made).

He proposed that the appellant should 'be heard' on those issues. In response to the appellant's request to cross-examine the respondents' witnesses, he was told that the Magistrate would determine whether to permit cross-examination in the light of the appellant's submissions (which were to include who he wished to cross-examine and why he wished to cross-examine them). The Magistrate later told the appellant that the appellant was giving a summary of his case and, after hearing from counsel for the respondents, he would determine whether he could or would deal with the review application without taking oral evidence. 51 The appellant's submissions then were not solely directed to or based on the affidavit evidence relevant to the issues under s 52(2) of the Act. He spoke of the misunderstanding about the foundation for the costs judgment, namely the two costs orders on interlocutory applications during the earlier proceedings. He spoke about whether he had appealed from those costs orders (he had not done so). He then turned to his claims against the respondents, including by reference to his affidavit of 11 March 2005 and the second respondent's affidavit of 6 April 2005; certain of the assertions by the second respondent he expressly denied. In the course of that exchange the Magistrate said that he would 'determine who, as between you and Ms Lawton, is telling the truth about that', although his Honour almost immediately added: '… it's enough at this stage that I note you dispute what Ms Lawton is saying, isn't it?' The Magistrate asked the appellant why he had not earlier pursued his claim against the second respondent. He was also asked why he had not defended the summons leading to the costs judgment and had not applied to set aside the bankruptcy notice, or why he had not filed material prior to the Registrar making the sequestration order to endeavour to avoid it under s 52(2) of the Act. The appellant referred to his medical condition; that prompted lengthy reference to the available medical certificates of unfitness for work and the like. The appellant did speak at some length about the way in which the 212 shares in Manna Hill were held, ultimately claiming they were held by him as trustee for the Moore Family Trust and that he was the principal beneficiary, and about the value of those shares, including his preparedness to sell them and the time needed to do so and the means by which he might do so. The documents then in affidavits did not clearly show that shareholding structure. 52 The appellant also disputed that he owed an estimated $400,000 for legal costs awarded in the earlier proceedings (declared in his Statement of Affairs) or a significant number of the other debts he had listed in his statement of affairs. 53 He disputed his indebtedness to Ms Langford, who deposed to a debt owed to her by the appellant of not less than $67,000. 54 At one point the appellant, in an exchange with the learned Magistrate, accepted he estimated his debts at about $43,000, or (later) $30,000-35,000. He claimed he had assets exceeding that indebtedness including consulting fees owed to him by Manna Hill of about $50,000, plus advances he had made to Manna Hill of about $30,000 (he shortly afterwards said Manna Hill owed him about $40,000 in all), as well as the shares in Manna Hill (which he elsewhere valued at about $600,000) and monies he claimed were owing to him by the first respondent of about $2,500 and by the second respondent of about $14,000. In the course of the appellant's submissions, two medical certificates were received as exhibits certifying incapacity for work for certain periods. 55 Counsel for the respondents then contended that, on the basis of the appellant's submissions:

there was no basis to dispute the liability underlying the costs payment, and no action had been taken at any time to do so either by defending the action, by seeking to set aside the bankruptcy notice, by putting material before the Registrar under s 52(2) before the sequestration order was made, or by seeking leave to appeal from the orders made in the earlier proceedings on which the costs judgment was based;
there is no other sufficient cause to decline to affirm the sequestration order where the costs liability estimated at $400,000 arising from the costs order in the earlier proceedings stood, and as that costs order was in favour of the respondents any claim against them was of no moment;
the appellant was clearly insolvent based upon his Statement of Affairs, (in which he said he did not know the value of the 212 shares in Manna Hill, and because those shares were not shown to be controlled by the appellant so that he could dispose of them for his own benefit, and because in any event they were not shown to have any value). It was also put that the claims against the respondents were contrived, because they had not earlier been mentioned including in the Statement of Affairs, and that the claim for counselling fees owed by Manna Hill was also contrived as the amount of the claim had varied so greatly and because the invoices in support of the claim had only been belatedly raised. 56 The submissions of counsel for the respondents were not completed on 8 April 2005. The hearing was adjourned to 22 April 2005. The appellant was given the opportunity to provide in a timely manner further documents relating to the Moore Family Trust. At the conclusion of the hearing, the Magistrate in response to the appellant asking about witnesses, said that after completion of submissions including the appellant's reply, he would either deliver his judgment or reserve his judgment, and whether he would 'need to hear the evidence before I make my determination … will be part and parcel of my ruling'. 57 The hearing of submissions resumed on 22 April 2005. The question of whether the appellant was entitled to cross-examine any witnesses of the respondent did not arise. 58 Documents produced by the appellant relating to the Moore Family Trust were received as exhibits. 59 Senior counsel for the respondents completed his oral submissions and handed up written submissions. 60 The appellant was given the right to make responsive submissions. He explained why the information he gave in his Statement of Affairs was unreliable, and why he should be treated as the beneficiary of the Moore Family Trust. 61 At a certain point the nature of the earlier hearing arose. The Magistrate indicated the appellant had then been given the opportunity to complete his submissions. The appellant said all he had done was to point out matters which were raised by his appeal, and had not completed his submissions. He then diverted into reasons why he did not resist the sequestration order until after it had been made, or the making of the costs judgment because of his medical condition. He re-asserted his claims against the respondents, and for consultancy fees against Manna Hill (which at this point he quantified at $68,400). He asserted, contrary to his earlier acknowledgment, that his debts were less than $1000. He responded to the Magistrate's question about how he would sell the 212 shares in Manna Hill. He complained of not being allowed to cross-examine the deponents who gave evidence for the respondents, or 'to present my facts'. He was given until 26 April 2005 to produce further documents relating to the Moore Family Trust. Judgment was reserved. 62 The matter was relisted on 13 May 2005 because there was disagreement about the receipt into evidence of further documents produced by the appellant relating to the Moore Family Trust. 63 The hearing was listed to commence at 10 am. The transcript records the hearing having commenced at 9.59 am. The appellant attended only a very short time after the hearing commencement. The transcript records: 'MR ABBOTT:If your Honour pleases, I appear for Mr Wilson. HIS HONOUR: It was listed for 10 o'clock, Mr Abbott, so I suppose I should give Mr Moore a bit more time to arrive. It was just listed because pursuant to that arrangement, at the last hearing Mr Moore provided a stack - I think that's the appropriate noun - of documents. I first of all wanted to make sure that I really needed to receive all of those from him. Come forward, Mr Moore. MR MOORE: I was just trying to find it.' After a brief unrelated discussion, the following exchange took place: 'MR MOORE: I find this very unusual, your Honour, because it's three minutes to 10. The hearing is at 10 o'clock. I wasn't here or called and I went up to the registry office and this hearing has already started. And it's now two minutes to 10 and I'm just sitting down here. … MR ABBOTT: I'd like to assure Mr Moore that your Honour called it on and informed me that you would be waiting until 10 o'clock or until Mr Moore arrived. Your Honour then only commenced after Mr Moore walked in the courtroom. MR MOORE No, Mr Abbott. It's not 10 o'clock yet. It's one minute before. It's just turned 10 o'clock, Mr Abbott. You see, you're being smart again. HIS HONOUR: Mr Moore, all Mr Abbott is trying to indicate to you is that I didn't deal with anything before your arrival. The matter had just been called on. The only matter I raised with Mr Abbott is that I would be waiting until 10 o'clock before I dealt with the matter. That's all Mr Abbott is saying.' The appellant then was invited to explain the further documents he had produced. He did so. The bundle of documents he had produced (excluding certain correspondence) was received as part of the evidence. The hearing was then adjourned. 64 As noted above, the further evidence motion was discussed on 17 June 2005, and reasons for that ruling were given. Judgment on the review hearing was given on 1 July 2005, before the disqualification motion was dealt with and discussed. 65 In my view, most of the complaints of a lack of procedural fairness are without merit. It is possible to deal with them briefly. 66 The appellant had ample time to present his submissions. They occupied the bulk of the hearing times on 8 and 22 April 2005. That time was to a significant extent taken up with the appellant addressing unmeritorious or irrelevant issues, such as his criticism of the Registrar for making the sequestration order, and because the appellant did not focus on the real issues. But that was a matter for him. He did not seek any adjournment of the review application, and in particular did not do so to obtain legal advice available to him. Nor, with one exception, did he seek any further time to make submissions by reason of his medical condition; the one exception was an expressed desire to leave the courtroom during the submissions of senior counsel for the respondents on 22 April 2005, but he did not develop his request in any detail and then replied to those submissions. He was not deprived of the opportunity to make submissions on 13 May 2005. That hearing was not for submissions; they had been completed. It occurred because of a dispute about the extent to which the material lodged by the appellant on 26 April 2005 was admissible. The learned Magistrate ruled on that issue. 67 The claim of ostensible bias is also not made out. The transcript reveals that the learned Magistrate asked the appellant many questions during his submissions, but they were designed to better understand the appellant's submissions and to raise with him concerns as to the relevance of some of them or to raise with him matters of concern. They were appropriate matters to raise. They do not reveal hostility to his claims, but an attempt to understand them. The appellant's style of argument, assertive and unsourced to evidence in many instances, and often difficult to relate to relevant claims, invited such questioning. 68 The claim of selective use of evidence, or of failing to have regard to all the evidence, is clearly erroneous. The reasons for judgment refer to the issues raised by the appellant, and to the evidence (it is clear his affidavits of 11 and 30 March 2005 had been carefully considered). The conclusions reached do not of themselves support any suggestion of a closed mind on the part of the Magistrate, but to the contrary indicate a careful consideration of all of the relevant evidence. 69 The appellant's affidavit of 14 June 2005 in support of the further evidence motion comprises 91 handwritten pages. It includes a description of the course of the hearing, complaints about the manner of the conduct of the earlier proceedings, offensive personal attacks on certain people, and repeats some matters in his earlier affidavits. It also assertively, that is without proper detail, disputes the debts which he disclosed in his Statement of Affairs and re-asserts the value of the assets which he claimed to have. In that form, it repeats much of what the appellant put by way of submissions to the learned Magistrate during the hearing about those matters so it has that evidentiary quality previously only founded in his submissions. The conclusion is that the appellant's liabilities are about $2000-3000 only and his assets (apart from the shares in Manna Hill) about $132,000.

70 The hearing by then had been completed. The affidavit of 14 June 2005 did not explain why that 'evidence' (to the extent to which it contained assertions of facts) had not been adduced during the hearing. Nor did it claim that any of its contents had only newly been discovered, or could not have been discovered by proper investigation earlier. Nevertheless, the learned Magistrate had a discretion to allow the appellant to in effect re-open his case by adducing further evidence. He did not do so. There is no reason to conclude the exercise of that discretion miscarried in the present circumstances. The appellant had been given an opportunity to present his evidence in the face of the evidence relied on by the respondents (essentially identified in the affidavit of Ms Prideaux of 3 March 2005); it includes the Statement of Affairs and the affidavit of Ms Langford. The affidavits of Mr Iles and of the second respondent had been received in early April 2005. The further affidavit of the appellant, where it contained factual material and not argument, was inconsistent in significant respects with what the appellant had put in his submissions; proper reasons for the change of view were not proffered. Its form was unsatisfactory. The evidence about the appellant's medical condition did not provide that explanation. 71 It is unclear whether the disqualification motion came to the attention of the learned Magistrate before he delivered judgment on the review application. As his Honour said, if grounds existed for him to disqualify himself, those grounds would equally have been available on appeal. The appellant has not in the circumstances shown that the sequence in which judgment was given, and then the disqualification motion addressed, indicate ostensible bias on the part of the learned Magistrate. 72 The right to be heard is an important element of our system of justice. So too is the need for justice to be administered openly in the presence of the parties. The 'commencement' of the Court on 13 May 2005 was a little early and the appellant's arrival shortly afterwards understandably gave him cause for concern. However, as the material referred to above shows, the hearing of the review application had not commenced precisely because the appellant was not present and the time for its commencement had not been reached. The transcript reveals that. The appellant attended very shortly afterwards. I do not consider, in the circumstances, those events might reasonably cause a fair-minded lay observer to apprehend that the Magistrate might not bring an impartial and unprejudiced mind to the resolution of the review application: see Johnson v Johnson (2000) 201 CLR 488 at 492; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344. 73 I have considered collectively the several matters upon which the appellant contends ostensible bias is shown on the part of the learned Magistrate. I do not consider that, taken collectively, they support such a conclusion. 74 There remains the issue of the appellant not being permitted to cross-examine any of the respondent's witnesses. 75 The recital of the course of the hearing indicates that, initially, the learned Magistrate sought to understand from the appellant the real matters in dispute to determine whether to permit him to cross-examine. That objective seems to have been lost sight of by 22 April 2005. It was not then raised. No ruling was made on the topic. The appellant's request to cross-examine all the respondents' witnesses was left in abeyance to judgment. 76 Section 27 of the Evidence Act provides that a party may question any witness, except as provided by the Evidence Act. It is unclear that the common law position that there is no right of cross-examination (see e.g. per Young J in Eq in GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No.3) (1990) 20 NSWLR 15 at 22) survives that provision. The practical outcome may be the same. Improper questioning may be disallowed: s 41. More importantly, s 11 of the Evidence Act preserves the power of a court to control the conduct of a proceeding, including with respect to abuse of its process. It is by the exercise of such a power that, in this instance, cross-examination of the process servers could have been precluded. It could have served no useful purpose, and would have added to the expense and length of the hearing for no valid reason. Similarly, the foundation for the costs judgment was a matter of record. There was clearly an act of bankruptcy committed by the appellant when he failed to comply with the bankruptcy notice based on the costs judgment. Cross-examination on the review application to endeavour to show that Lander J ought not to have made the orders in the earlier proceedings upon which the costs judgment was based would also have been pointless, and a waste of time and expense. See also Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 293. 77 On the substantive issues raised in the review application under s 52(2) of the Act, it was a matter for the respondents as to whether they sought to cross-examine the appellant on his affidavits. They did not do so. The respondent's affidavits which preceded 30 March 2005 put the appellant on notice as to their case, and gave him the opportunity to respond. The judgment was made that the rule in Browne v Dunn (1893) 6 R 67 had been satisfied. The appellant has made no submission of unfairness in that regard. 78 The appellant's wish to cross-examine, in particular Ms Langford and the second respondent, related directly to the issue of solvency. To a significant degree, the learned Magistrate in fact avoided addressing contentious factual issues: he expressly assumed in favour of the appellant that the 212 shares in Manna Hill were the appellant's shares; he also disregarded the costs liability arising from the costs order following the outcome of the earlier proceedings. 79 The assessment of the appellant's debts as being between $75,000 and $100,000 was made, as the reasons for judgment show, upon the basis of the Statement of Affairs and the appellant's evidence (as distinct from his submissions) about that. The O'Riley 'debt' was about $12,000, so the reduction from the debts listed in the Statement of Affairs having regard to the appellant's evidence was of the order of $32,000-7000. That did not involve any assessment of the respective claims of the appellant and Ms Langford as to the amount of his debt to her; the disputed evidence was referred to and the Magistrate simply observed that the indebtedness is somewhere between $15,000 (the appellant's figure) and $67,000 (Ms Langford's figure). The reasons do not suggest an amount greater than $15,000 was taken into account. The learned Magistrate has therefore, on that contested evidence, taken the view based upon the appellant's own material. In that circumstance, he did not deprive the appellant of a fair trial by not permitting the appellant to cross-examine Ms Langford. There was no benefit to the appellant in him doing so, as the cross-examination would have legitimately sought to have the Magistrate accept the fact as to the amount of the indebtedness which the Magistrate assumed in any event. 80 The reasons for judgment indicate that, with one qualification, the assessment of the value of the appellant's assets was also reached upon the assessment of the appellant's own evidence and the material he had provided, rather than by resolving any conflicting evidence from other persons.

81 However, the position is more complex in respect of the claimed liability of the second respondent to the appellant. There was a conflict between the evidence of the appellant and that of the second respondent, to which the Magistrate referred. His Honour referred to that evidence, and concluded: 'I have formed the view on the material available to me that the alleged claim against Ms Lawton is speculative at best. It does not assist me in finding that Mr Moore is solvent. It does not constitute a "sufficient cause". There was absent any explanation from Mr Moore as to why the claim had not been pursued previously either in terms of legal proceedings or even a demand for payment. Unexplained also was the absence of any reference to it in his Statement of Affairs as monies owing to him. The claim relates to a period of time when Mr Moore and Ms Lawton were sharing the same house and arises out of what appear to be reasonably complicated financial relations between them. Mr Moore has the burden of persuading me that a real claim exists against Ms Lawton for these monies. I am very far from being persuaded that such is the case.' Each of those observations is based upon the appellant's own evidence, and its shortcomings as discussed in the course of submissions. It is not derived from any evidence of the second respondent which is inconsistent with any of the appellant's evidence on which those observations are made. It is consistent with the approach that I understand the Magistrate to have taken, that is to form his judgment on his assessment of the appellant's evidence and that evidence of the respondents which was based upon matters of record (the costs orders in the earlier proceedings and the costs judgment) and material provided by the appellant in his Statement of Affairs, that the Magistrate concluded: 'Having considered all of the affidavit material filed by Mr Moore and listened attentively to the submissions he made on each of the three occasions referred to above, I am not satisfied that any grounds for not making the sequestration order have been established.' 82 In those circumstances, in my view the learned Magistrate did not deprive the appellant of a fair trial by not permitting him to cross-examine all the respondents' witnesses or those witnesses whose evidence contradicted the appellant's evidence. It is unfortunate that the Magistrate did not expressly explain why he did not permit cross-examination of some of those witnesses. But the course of the hearing indicates his Honour was endeavouring to ascertain the extent to which there was uncontested evidence and to understand by questioning the appellant the full nature and extent of his evidence and where it had possible shortcomings. His reasons then indicate, in my judgment, that the decision was taken upon that material so that any evidence of witnesses directly contradictory of the appellant's evidence was not relied upon to reach the conclusions reached. The concluding passage of the reasons quoted above indicates his Honour limited his consideration in that way.

conclusion 83 For those reasons the review application should be dismissed.

I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Counsel for the Appellant: The appellant appeared in person

Counsel for the Respondents: ML Abbott QC with NJ Iles

Solicitor for the Respondents: Iles Selley Lawyers

Date of Hearing: 6 December 2005

Date of Judgment: 10 February 2006

Federal Magistrates Act 1999(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (19 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (9)