Consideration of whether the Bankruptcy Notices should be set aside
38 I will now consider the applications to set aside the Bankruptcy Notices.
39 The Court may set aside a bankruptcy notice by exercising the general powers conferred under s 30(1) of the Bankruptcy Act. The grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the notice, the existence of the debt upon which it is based, service of the notice, or abuse of process: see Re Briggs; Ex parte Briggs v Deputy Commissioner of Taxation (WA) (1986) 12 FCR 310 at 312; Dunkerley v Comcare [2019] FCA 1002 at [69]; Sayer-Jones v Juju Bean Investments Pty Ltd [2020] FCA 177 at [48].
40 In Re Briggs, Toohey J held at 311-312:
As to the grounds upon which a bankruptcy notice may be set aside, there is at least a starting point in s 40(1)(g) of the [Bankruptcy] Act. That paragraph identifies as an act of bankruptcy failure to comply with a notice or satisfy the Court that the debtor "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 could not have set up in the action or proceeding in which the judgment or order was obtained". Is that the only ground? The cases suggest not though none attempts to define with any precision other relevant circumstances. In Re Sterling [(1980) 44 FLR 125] at 129 Lockhart J mentioned some of the grounds on which notices have been set aside, saying:
Instances of the exercise of this power are where the notice is not in accordance with the terms of the judgment and is calculated to perplex the debtor; the notice is issued for the whole of a judgment debt, yet the judgment debtor has paid into court in part satisfaction of the debt; in truth no debt lies behind the judgment ... and the sum of which payment is required by the terms of a notice has in fact been paid by the debtor.
Counsel for the applicant argued for some general principle of fairness, according to which a bankruptcy notice will be set aside if in some way the notice is unfair to the debtor. I do not accept the existence of such a principle. There is nothing in the Bankruptcy Act 1966 to justify it and no authority to support it. It seems to me that, however formulated, the grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the notice itself, service of the notice or the existence of the debt upon which the judgment and in turn the notice is founded. Having regard to the language of s 40(1)(g), reference to the existence of a debt must include the existence of a counter-claim, set-off or cross demand equal to or exceeding the amount of the debt.
A court hearing an application to set aside a bankruptcy notice is not hearing a petition for sequestration and the provisions of s 52(2), whereby a court may dismiss a petition if satisfied that the debtor is able to pay his debts or that for other sufficient cause a sequestration order ought not be made, cannot be imported into such an application. In my view a court faced with an application to set aside a bankruptcy notice is constrained to look only at the regularity of the notice itself (including service) and otherwise at the circumstances surrounding the existence of the judgment debt and any demand which the debtor may have against the creditor for a comparable amount.
41 In Re Athans; Ex parte Athans (1991) 29 FCR 302, Hill J at 310 confirmed that the Court has no general discretion to set aside a bankruptcy notice.
42 Section 41(1) of the Bankruptcy Act provides that the Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor, "a final judgment or final order". As best as I can interpret the applicants' case, it is that there is no valid final judgment upon which the Bankruptcy Notices are based, because the judgments of the District Court were wrong, as were the subsequent judgments of the Court of Appeal and the High Court. The applicants submit that I am free to simply ignore the other judgments. The applicants seem to be submitting that this Court is required to conduct another trial and decide the issues raised in the District Court for itself, as if the District Court had never heard and determined the matter and as if the Court of Appeal and the High Court had never dealt with the matter.
43 In Clyne v Deputy Commissioner of Taxation (1983) 57 ALJR 673, Gleeson CJ (with whom the other Justices agreed) at 675 held that a final judgment is, "a judgment which finally disposes of the rights of the parties".
44 In Re Athans, Hill J held at 306:
It does not preclude a judgment being a final judgment, or for that matter an order being a final order, that it may be under appeal or be subject to an appeal, or for that matter that it may be set aside. Until set aside, whether on appeal or otherwise, it remains a final judgment.
(Citation omitted.)
45 The judgment of Judge Porter QC of 11 December 2018 was a final judgment, and the applicants have exhausted their rights to appeal from or otherwise challenge that judgment. The Orders made by the Registrar and Deputy Registrar respectively on 17 February 2021 against Chapel of Angels Pty Ltd for costs are also final judgments since they finally dispose of the rights of the parties in relation to costs. The process of review of the costs assessments upon which those Orders were based has been exhausted. I reject the applicants' submission that, because of their assertion that the District Court's judgment involves some misconstruction or misapplication of the QBSA Act and QBSA Regulation, there are no final judgments.
46 In Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132, the High Court considered the principles relevant to the power of the Court to go behind a final judgment or order upon which a bankruptcy notice is based. In Dunkerley v Comcare, Griffiths J at [68] provided a helpful summary of the position since Ramsay:
68 I turn now to summarise the principles relating to the circumstances in which the Court may go behind a judgment debt. It is generally accepted that a Court will accept a judgment as being conclusive of the existence of a debt, however, the Court has a discretion in an appropriate case to go behind a judgment debt to examine whether there is in truth consideration for it. The relevant principles may be summarised as follows:
(a) The Court has the power in an appropriate case to go behind a judgment in an application to set aside a bankruptcy notice, but that power "is not readily exercised if there has been a substantive hearing of the matter on its merits by the court in which the judgment was granted" (see Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461; 315 ALR 523 at [55] (Xu) per Robertson J).
(b) In determining whether to go behind a judgment on which a bankruptcy notice is based, the Court will take into account similar considerations to those which apply when determining whether or not to go behind a judgment on the hearing of a creditor's petition (see Xu at [55], [118]-[120] and [131] per Robertson J).
(c) Although the Court has the power in an appropriate case to go behind a judgment on which a bankruptcy notice is based, the Court does not have the power to set aside the judgment itself and it is also important to bear in mind that the Court is not hearing an appeal from the judgment on which a bankruptcy notice is based (Xu at [57]).
(d) A judgment debt is usually expected to provide the most reliable statement of debt humanly attainable because the ordinary processes of the adversarial system provide a practical guarantee of reliability. That is why there usually is no occasion in a bankruptcy proceeding to investigate whether the judgment debt is a true reflection of the underlying debt (Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132 (Ramsay) at [68] per Kiefel CJ, Keane and Nettle JJ).
(e) Ms Dunkerley must establish special circumstances for the Court to go behind the underlying judgment debt (Petrie v Redmond [1943] St R Qd 71 at 75-76 per Latham CJ, with whom Rich and McTiernan JJ agreed and see also Ramsay at [69] per Kiefel CJ, Keane and Nettle JJ). As a matter of practical experience, special circumstances of this nature are usually only when there has been a consent judgment, default judgment or some other circumstance which means the judgment debtor was unable to present his or her case on its merits in the litigation leading to the judgment debt (Ramsay at [70] per Kiefel CJ, Keane and Nettle JJ).
(f) The Court is reluctant to go behind a judgment once it has been the subject of adjudication by a Court, even if there were problems relating to such matters as the debtor's representation or some other unusual feature. It is accepted, however, that the Court can inquire into the validity of a judgment where there is evidence that it has, for example, been obtained by fraud, collusion or a miscarriage of justice, but the debtor carries the onus of establishing that the fraud was "directly material to the judgment" (see Kirk v Ashdown [1999] FCA 522) and Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 (Emerson) at 588). There may be other substantial reasons for going behind a judgment debt, however, in the absence of some evidence of fraud, collusion or miscarriage of justice, a court sitting in bankruptcy will rarely have substantial reasons to investigate whether the judgment debt was truly owed (Ramsay at [111] per Edelman J).
(g) It is insufficient to set aside a bankruptcy notice merely because the debtor establishes that a judgment is irregular because, for example, the pleadings or proof that were offered were inadequate to support the judgment or the judgment is for the wrong amount (see, for example, Re Skaff; Ex parte Farrow Mortgage Services Pty Ltd (1993) 41 FCR 331 per Drummond J and Re Bedford; Ex parte H E Sleigh (Queensland) Pty Ltd (1967) 9 FLR 497 per Gibbs J).
(h) Absent some good reason for doing so, a Court exercising bankruptcy jurisdiction should avoid embarking on a course which amounts to a re-trial of the issues that have been determined by another Court after a contested hearing. This is, particularly so where that other Court's determination has been the subject of an appeal because the appeal is the appropriate form in which to review the correctness of the judgment (Emerson at 588).
(i) A court exercising jurisdiction in a bankruptcy proceeding should not relitigate on the same evidence, a dispute which has already been fully litigated in adversarial proceedings (Doggett v Commonwealth Bank of Australia [2019] FCAFC 19 (Doggett) at [49] per Kerr, Davies and Thawley).
(See also Sayer-Jones v Juju Bean Investments Pty Ltd [2020] FCA 177 at [10]-[11]; Singh v Fobupu Pty Ltd, in the matter of Singh [2020] FCA 886 at [77].)
47 In the present case, there is no suggestion that the orders of the District Court made on 17 February 2021 that Chapel of Angels Pty Ltd pay costs, or the judgments given by Judge Porter QC on 12 November 2018 and 11 December 2018, were obtained by fraud or collusion, or that there was a miscarriage of justice. The claim is simply that the judgments of Judge Porter QC, and the subsequent decisions of the Court of Appeal and the High Court, are wrong and should be ignored. The applicants have had a full trial on the merits. They simply seek to relitigate, on the same evidence, a dispute which has already been fully litigated in adversarial proceedings in the District Court. They have not established any basis for going behind the judgments.
48 I will say something about the s 78B Notices filed by the applicants in the present proceedings. In Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875, in relation to similar notices filed in those proceedings under s 78B of the Judiciary Act, Derrington J held:
35 Here, Mr Ohlson did not, or was unable to, explain how it was that cl 5 or s 118 of the Constitution impacted upon the matters in issue before the Court, save to assert that they had the effect that the judgment debts were invalid insofar as the decisions of the District Court involved what he asserted to be a misapplication of the QBSA Act…
36 As an aside, it can be observed that Mr Ohlson misunderstood the nature of s 118 and the obligation to give "full faith and credit" to the laws of the States. The Constitutional imperative is the recognition in the State and Federal Courts of the laws of other States and Territories, thereby avoiding the necessity for them to be formally proved. It is not the obligation to apply them correctly. That latter duty arises from the obligations of Courts generally.
37 When the circumstances of this case are considered and the authorities which bind this Court are taken into account, it is clear that no question under the Constitution or its interpretation exists…
49 I respectfully agree with the opinions expressed by Derrington J. His Honour also observed at [34] that the mere fact that a party files a notice purporting to raise a matter under the Constitution does not require the Court to bring a halt to the proceedings in circumstances where the constitutional point is frivolous or vexatious or was raised as an abuse of process. Each of those descriptors is appropriate to the points raised in the s 78B Notices filed in the present proceedings.
50 The applications to set aside the Bankruptcy Notices must be rejected.