Pan v Macarthur Central Shopping Centre Pty Ltd

Whether legal error by the primary judge (ground 1) 17 This ground relates to [8] J at which the primary judge stated: …At the time of the hearing before the Court, the respondent relied upon a number of affidavits, none of which disclosed any good basis for the Court going behind the judgment of the District Court of Queensland. There was no evidence of fraud, improper collusion or any other miscarriage of justice which had been made out in the respondent's material. There was otherwise no special circumstance justifying this Court going behind the judgment of the District Court. The submissions made by the applicant were to the effect that the District Court judgment was wrong. (citations omitted.) 18 The footnote to the proposition that "[t]here was no evidence of fraud, improper collusion or any other miscarriage of justice" cited Corney v Brien (1951) 84 CLR 343 at [356]-[357] (which I construe as a reference to Fullagar J's reasons at pages 356 to 357) and Ramsay Health Care Australia v Compton (2017) 261 CLR 132 at [91]. 19 In relation to this ground, the submissions of the appellant will be addressed seriatim. 20 The appellant submitted in writing that the reasons in [8] J indicate that the test that the primary judge applied for going behind the judgment debt was whether there was any "evidence of fraud, improper collusion or any other miscarriage of justice". However, that submission cannot be accepted, as the primary judge went on to state that "[t]here was otherwise no special circumstance justifying this Court going behind the judgment of the District Court" (emphasis added). 21 The appellant submitted that the citations referred to in the footnote "demonstrate an error of law in taking too narrow a view of the Court's discretion in this regard". That was said to be because the citation to Ramsay at [91] is to the minority decision of Gageler J whereas a complete (and accurate) statement of the legal test which should have been articulated by the primary judge should have included a reference to the final sentence of Ramsay at [70] in which the majority (comprised of Kiefel CJ, Keane and Nettle JJ) stated that: The same concern [that is, that a sequestration order has been made which was based on a judgment that was not the outcome of rigorous processes of adversarial litigation] may also arise in a case where the judgment was obtained in circumstances which suggest a failure on the part of the judgment debtor to present his or her case on its merits in the litigation which led to the judgment. 22 However, the final sentence in [70] of Ramsay does not form part of the legal test to be applied for the purposes of deciding whether to go behind a judgment debt such that the primary judge erred in law in not reciting it. It is an articulation of an example of a situation where a court might consider going behind a judgment debt, and needs to be read in the context of the discussion at [68]-[70] of Ramsay. 23 Finally, this ground of appeal was advanced on the premise that, because the appellant is "a self represented litigant for whom English is not her first language, and who struggles to follow the complexities of court procedure and litigation", the appellant was unable to present her case on its merits in the District Court (ergo the statement in the final sentence of [70] of Ramsay was apposite). 24 However, there was no cogent evidence before the primary judge to support a finding that the appellant was unable to (or did not) present her case on its merits in the District Court proceeding, and nor was any such submission made. In those circumstances, it is not surprising that the primary judge did not address the issue of whether the appellant was able to present her case on its merits in the District Court. To the contrary, the appellant's case before the primary judge was to the effect that the DCJ was wrong (as noted in [8] J and about which statement no complaint is made). I am therefore unable to discern error because the primary judge did not appreciate that, in addition to the arguments which the appellant did advance, there was a further one which was not advanced which had the consequence that the propositions in Ramsay at [70] should have received particular focus. 25 Further, the appellant has not adduced satisfactory evidence on this appeal to demonstrate the facts relied upon to claim that she was unable to present her case on its merits in the District Court. Instead, I have been asked to draw an inference from transcripts as to her ability to speak English and to understand legal concepts, effectively based on her own statements made in other courts. I am not prepared to draw such an inference in circumstances where these matters could have been, but were not, the subject of direct evidence by the appellant in this appeal (subject to leave being granted), and where other evidence which was adduced contradicted such an inference. 26 Notably, the evidence shows that the appellant was the author of documents written in the English language (such as emails); the District Court judge was satisfied that the appellant did not require an interpreter at the hearing of the summary judgment application; and the appellant's counsel accepted that all of the relevant evidence relied upon by her to support her defence of the claim (which was documentary) was before the District Court judge who decided the summary judgment application. 27 It follows that no error of law has been demonstrated and ground 1 fails.

Whether grounds exist to go behind judgment debt (proposed ground 2) 28 It was submitted by counsel for the appellant that: The motivating reason why we say that the judgment should be gone behind is because Ms Pan was a self-represented litigant with English as a second language who was simply not [equipped] to deal with the summary judgment procedure, let alone the nuances of questions such as… which category of Masters v Cameron this was, how principles of contractual interpretation should be applied to this scenario to ultimately come to an outcome… 29 While it was accepted by the appellant that all relevant evidence was before the District Court judge, it was submitted that there were legal submissions that were not made that could have been made had the appellant been legally represented. 30 However, leave will not be granted to include ground 2 in the Notice of Appeal in circumstances where: (1) The factual premise relied upon to go behind the judgment was not established by the evidence, for the reasons already explained. (2) To the extent that it might be inferred that the appellant did not know or appreciate the legal arguments that could have been, but were not, presented by her in the District Court, there was no evidence that the appellant did not understand that she could have had legal representation at the hearing in the District Court, or to explain why she did not have legal representation. (3) There was no explanation in the evidence as to why the appellant did not have legal representation before the primary judge to justify why she should now be permitted to advance the proposed ground 2 on this appeal (being an argument not advanced before the primary judge). (4) There is a public interest in the finality of litigation. 31 A further reason for refusing leave to amend is that the proposed ground 2 lacks merit such that, were it permitted to be advanced, it would fail in any event. (1) The appellant accepts that the same case that she advances before this Court - that a binding agreement was reached with the respondent for her to pay a lesser sum - was advanced by her in the District Court. (2) As already observed, there is no satisfactory evidence which demonstrated that the appellant was unable to, or did not, present her case on its merits in the District Court proceeding. (3) This is not a case involving a consent judgment or a default judgment. On the contrary, the merits of the appellant's case were tested in a contested hearing at which both parties appeared. All of the relevant evidence was before the District Court. The reasons of the District Court contain an analysis of the merits of the contention by the appellant that an agreement to pay a lesser sum was reached by reference to that evidence: see [17]-[20] DCJ. (4) That the appellant elected not to be legally represented in the District Court (unlike on this appeal) does not have the consequence that she has been deprived of presenting her case on the merits so as to justify going behind the judgment. A suspicion of inadequate representation is not of itself sufficient to give rise to a question worthy of investigation by a bankruptcy court: Ramsay at [71]. (5) That there were additional arguments which could have been advanced by the appellant in the District Court, but were not, will not suffice to put in issue whether there "is in truth or reality" a debt upon which a person's sequestration has been sought: see, generally, Doggett v Commonwealth Bank of Australia [2019] FCAFC 19 (Kerr, Davies and Thawley JJ) at [34]. 32 Even if the appellant's contentions about the agreement which she says she reached with the respondent are correct, the position remains that the appellant does not dispute that she continues to owe a debt to the respondent of $26,804.72. The appellant therefore does not contend that there is, in reality, no debt due, or that her debt is below the statutory minimum required to sustain a sequestration order. Although this is not decisive, this would provide an additional and powerful reason not to go behind the judgment debt, even if leave to advance ground 2 had been given. 33 As observed by the Full Court in Cumins v Deputy Commissioner of Taxation (2008) 172 FCR 425; [2008] FCAFC 185 (North, Emmett and Rares JJ) at [8]-[10]: … [W]here the Court, at hearing of the petition, is satisfied that there was a real debt on which the judgment was founded, although judgment was entered for an amount greater than the sum truly owing to the judgment creditor, the Court is entitled to proceed to make the debtor bankrupt. There is no principle that if a judgment is irregular, because it was entered for an excessive amount, the irregularity should necessarily invalidate subsequent bankruptcy proceedings: Re Bedford; Ex parte HC Sleigh (Qld) Pty Ltd (1967) 9 FLR 497 at 499. The judgment created a new debt which bound the appellant. Until that judgment was set aside it remained the measure of the debt payable by the appellant. The bankruptcy notice speaks at the date of its issue: Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337 at 339; Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 at 587 (Emerson). At that date, the judgment debt was $38,084,522.24 as recorded in item 1 in the Schedule to the bankruptcy notice. The fact that the judgment sum might be or is reduced in the future does not invalidate the bankruptcy notice: Emerson 33 FCR at 587. A court exercising bankruptcy jurisdiction may go behind a judgment, but would not do so if the grounds upon which the judgment is challenged are such that, if accepted, they would only support a finding that the amount of the debt would be reduced and would not support a finding that there was no debt at all: Emerson 33 FCR at 589. It may also be relevant if the amount of the judgment would be reduced below the statutory minimum that supports a petition: Wilson v Official Trustee in Bankruptcy [1999] FCA 1760 at [40]. (emphasis added.)

Insolvency of appellant 34 Even had both proposed grounds of appeal been permitted to be advanced, and both had succeeded, I would have declined to make the orders sought by the appellant. 35 The primary judge made an unchallenged finding at [10] J that the appellant is unable to pay her debts as and when they fall due. 36 There is no evidence before me by which I can be satisfied that, if the sequestration order is set aside and the creditor's petition is dismissed (as is sought by the appellant): (1) the costs of the trustee in bankruptcy will be paid and how that will occur. As the sequestration order was made in March 2022, it cannot be assumed that these costs would be insignificant; (2) the interests of other creditors of the appellant's estate would not be affected adversely by the proposed orders; and (3) the appellant would be able to pay her debts as and when they fall due, and why that is the case, considering the statements in her previous emails about her financial position and the unchallenged finding by the primary judge to the effect that she is insolvent. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes.