Reaper v Baycorp Collections PDL

THE ANNULMENT APPLICATION 8 Before Pagone J, Mr Reaper argued that the debt on which the judgment was obtained and his subsequent bankruptcy was founded was not a personal liability. The debt related to amounts owing on a credit card issued by Westpac numbered 4564 7270 0170 3493 ("CC93") which Mr Reaper claimed was not his personal credit card but that of a company of which he was the director. Mr Reaper claimed that CC93 was approved by Westpac as an account for the company in July 2002. The documentary evidence of Westpac, which was exhibited to affidavits of Mr Hanford and Mr Macey, however was that CC93 replaced Mr Reaper's existing credit card numbered 4564 7170 0164 1066 ("CC66") in July 2001. 9 Pagone J dismissed the annulment application, finding that Mr Reaper had not established that the debt and the judgment was not due by him or that the sequestration order ought not to have been made. His Honour reasoned as follows: 3. The debt in question arose from the use of a credit card issued by Westpac numbered 4564 7270 0170 3493 ("CC93") which, Mr Reaper contended was not due on his account but was due by a company. The identity of that company, until the hearing of his application, was said to be Urban Habitat Landscaping and Paving Pty Ltd ("Urban Habitat") of which he had been the director and which had conducted a landscaping business. Urban Habitat went into liquidation and a report as to its affairs was lodged on 31 July 2006 which was signed by Mr Reaper. The report included a list of creditors which did not disclose, contrary to Mr Reaper's contention in these proceedings, any debt due by it on the credit card. Indeed, the credit card continued to be used after the date of liquidation of Urban Habitat, with the last transactions on the card being on 15 November 2007. 4. Mr Reaper's claim about CC93 not being his personal credit card was based upon his evidence that in July 2002 he approached Westpac with the intention of opening a secondary company chequing account for the company. Mr Reaper said that he was advised by a Westpac representative that a corporate credit card account was more appropriate in light of the company's banking history, and Mr Reaper said that he had accepted Westpac's advice and completed an application then and there with the assistance of Westpac's employees. No application was tendered in evidence and none emerged from the issue of subpoenas. 5. The account upon which the debt accrued, and upon which the judgment was subsequently made, was, as I have said, numbered 4564 7270 0170 3493. Critical to Mr Reaper's evidence was that this account, CC93, was approved by Westpac in July 2002 as an account for the company rather than for him. Indeed, his evidence was that at no time during the CC93 application process, or until the company ceased trading, had he been informed by Westpac that he could personally be liable for a default and that had Westpac informed him during the process of the possibility of personal liability by him, that he would have insisted on the secondary company chequing account as initially intended. This evidence was in part supported by his wife, Ms Sharon Fisher, who had been the office manager in the exclusive employ of Urban Habitat during the period in question. Ms Fisher gave evidence, consistent with that of Mr Reaper, of her recollection of events in July 2002 and of her involvement in an application process for accounts to be linked with the company. 6. The evidence of Mr Reaper and Ms Fisher, however, is inconsistent with the documentary evidence of Westpac and, significantly, does not fit within the time frame established by the documentary evidence. That is not to say that there were no discussions with Westpac for accounts on behalf of the company but that the evidence given by Mr Reaper and Ms Fisher of their recollection of events which occurred nearly 12 years before they gave their evidence could not be about the relevant account, namely account CC93, because it had been created before the date (2002) they recalled and in circumstances that reveal that their recollection is mistaken. The fact was that Mr Reaper had a pre-existing credit card numbered 4564 7170 0164 1066 (referred to in the material as account "CC66") which was replaced in 2001, not in 2002, with account CC93. The statements of those credit cards showed that the latter was a continuation of the former. 7. A Mr Luke Hanford, an employee of Westpac, inspected the business records of Westpac and explained that CC66 had been cancelled on or about 1 July 2001 and that CC93 had been issued in replacement. Both credit cards were issued in respect of the one account in Mr Reaper's name. Copies of the statements of account for both credit cards were tendered in evidence showing that CC66, in Mr Reaper's personal name, ended on 5 July 2001 with a debit balance of $2,735.06. The statement of account for CC93 showed that it commenced on 6 July 2001 and that it had an opening debit balance of $2,735.06. That account was also in Mr Reaper's name. It is clear, therefore, that CC93 was a replacement for CC66 as contended by Baycorp. Mr Hanford gave as a reason for the replacement of the credit card that Westpac had changed Mr Reaper's account from a Global Rewards Westpac Visa Gold account to a Westpac Altitude Gold Card account. Mr Reaper contested that and pointed to the fact that CC93 was not described as an "Altitude Gold" account in the statements tendered in evidence. It is true that the statements for CC93 do not use the word "Altitude", but it is clear, and I accept, that CC93 simply replaced CC66 and that the statements of CC93 tendered in evidence were those referred to by Mr Hanford as the replacement "Westpac Altitude Gold Card" account for CC66. I also decline to make the inference Mr Reaper urged upon me, namely, that there must have been a new application for CC93 like the application which had been made when he had applied for CC66. The non-existence of an application for CC93, as distinct from an inability to find one, is the more likely fact if, as I accept, CC93 was issued by Westpac in replacement of an existing account. 8. Mr Reaper has, therefore, not established that the debt in the judgment was not due by him and that the sequestration order ought not to have been made. None of the documents relating to credit card CC93 had any reference to Urban Habitat as claimed by Mr Reaper. The primary documents in relation to the credit cards recorded only Mr Reaper's name. Urban Habitat was incorporated on 21 December 1999 and CC66 (which was substituted by account CC93) was opened in 1998. On 26 July 1998 Mr Reaper completed an application form for the credit card (subsequently issued as CC66) which was approved by Westpac on 5 August 1998 with a limit of $2,500.00. There was no suggestion that account CC66 had previously been other than an account for Mr Reaper personally. The report as to the affairs of Urban Habitat signed by Mr Reaper and lodged in liquidation of the company did not disclose the amounts due on credit card account CC93 as a debt of the company and transactions on credit card CC93 were made after the date of liquidation of Urban Habitat. There was no evidence of any person, other than Mr Reaper, having a liability in respect of credit card CC93. The statements of account for both CC66 and CC93 were sent to Mr Reaper personally at his address. 10 Pagone J also held that Mr Reaper had not substantiated his claim of being solvent.

THE FIRST APPLICATION FOR AN EXTENSION OF TIME 11 As mentioned, this is the second application for an extension of time to appeal the judgment and orders of Pagone J. Mr Reaper's first application was refused substantially on the basis that Mr Reaper had not demonstrated an arguable case on appeal: Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 426, [17]-[18]. The proposed grounds included the allegation that Pagone J had identified the wrong company as being "liable for the debt" and that Mr Reaper had not, at trial, as recorded in the reasons, sought to suggest that a company, other than the one he originally nominated, was responsible for the debt which was attributed to him. Tracey J held that nothing turned on this point as Pagone J found, on the evidence before him, that it was Mr Reaper who, at all times, owed the relevant debt to Westpac.

THE NEW APPLICATION FOR AN EXTENSION OF TIME 12 In his affidavit sworn on 27 January 2016, Mr Reaper has asserted "supported by the new evidence" that the affidavits of Mr Macey, Mr Hanford and the Trustee and a proof of debt lodged in his bankrupt estate by Baycorp Collections were made "to procure the bankruptcy notice, sequestration order and/or orders of Pagone J by fraud". These affidavits are all concerned with the debt claim, which is the subject of the judgment against him and upon which he was bankrupted, which Mr Reaper continues to dispute. Once more, Mr Reaper by this application seeks to challenge the evidence which was before Pagone J to contend that he is not liable for the credit card debt and the "fresh evidence" is called by Mr Reaper in aid of challenging his liability for that debt. He cannot do so for a number of reasons. 13 First and foremost, Mr Reaper is bound by the dismissal of his earlier application for an extension of time which has finally disposed of his appeal rights in relation to the judgment and orders of Pagone J. He cannot agitate the application afresh. 14 Secondly, r 39.05(b) of the Rules upon which Mr Reaper appears to rely to challenge the judgment and orders of Pagone J does not apply. Under r 39.05(b) the Court is empowered to set aside a judgment or order after it has been entered if it was obtained by fraud. However, as the authorities make clear, merely identifying "fresh evidence" that has become available since the entry of orders does not of itself enliven the power under r 39.05(b): Wollongong Corporation v Cowan (1955) 93 CLR 435; [1955] HCA 16, [20]; Commonwealth Bank of Australia v Quade (1991) 178 CLR 134; [1991] HCA 61. As will be made clear, apart from the ATO letter, Mr Reaper's so called "fresh evidence" is not, in any event, fresh material. 15 The first items of "fresh evidence" are the Westpac cheque account statements in the name of Mr Reaper trading as Habitat Exterior Design. Those statements give a customer number "02410432 Reaper, Brett Vincent". The purported significance of those bank statements was said to be that these statements showed that the same customer number was used for personal and business accounts. However, Pagone J did not find that the debt in question was a liability of Mr Reaper on the basis of the customer number but upon the copies of the statements of account for CC93 and CC66, both of which were in Mr Reaper's personal name. Furthermore, given that they are bank statements relating to an account in his name, it is reasonable to infer that this evidence was available to Mr Reaper at the time of the annulment application. 16 The second item of "fresh evidence" is exhibit JRS-1 to an affidavit sworn by Mr Stephenson in response to an interlocutory application filed by Mr Reaper in May 2014 for orders for contempt against Mr Stephenson in relation to the alleged failure to comply with the requirements of a subpoena issued against Westpac. Mr Stephenson at the time was the manager of Westpac's Legal Notices Team, Legal and Secretariat. He deposed that he received an email from Mr Reaper attaching the subpoena which he sent onto the Group Subpoenas Team at Westpac. Exhibit JRS-1 is a file instruction from Mr Stephenson to the Group Subpoenas Team that he included with the email. The file note stated relevantly: I note that credit card ending in 66 was closed in 2003 so documents may not be available. The other card ending in 93 was opened in 2001 so application may no longer be available. 17 Mr Reaper's submission that this file note was evidence that CC66 and CC93 coexisted for around two years and were different credit cards cannot be accepted. The file note was not a source document but a simply a note to the Group Subpoenas Team about the availability of documents. The document is not "fresh evidence" which would have been probative of Mr Reaper's claim had it been available to him at the time of the hearing of the annulment application. 18 The third item of "fresh evidence" relates to notices to admit that Mr Reaper served on both respondents in the annulment application in December 2013. Neither respondent served a notice on Mr Reaper in response disputing the truth of the "facts" or the authenticity of the documents specified in the notices to admit. Mr Reaper asserted that in consequence Baycorp Collections was taken to have admitted the truth that the documents it used to obtain "a judgment in the Magistrates' Court, a bankruptcy notice and a sequestration order" and "to make its Creditors' Petition and its proof of debt" were false or misleading and "in essence Baycorp has been taken to have admitted the truth that it committed a common law fraud and equitable fraud". Mr Reaper similarly submitted that the Trustee had been taken to have admitted the truth that those documents were false and misleading and "despite his admission" the Trustee "sat by and done nothing" and "ignored Mr Reaper's requests to adjudicate, investigate and/or verify Baycorp's proof of debt". Arguably the notices to admit were an abuse of process and furthermore, it is an abuse of process for Mr Reaper now to seek to rely upon any such deemed admissions when the relevant "facts" and submissions about the documents which were the subject of the notice to admit authenticity could, and should, have been brought forward as part of Mr Reaper's case that his bankruptcy should be annulled. In any event the "deemed admissions" asserted by Mr Reaper are predicated on a misconception about the effect of the notices to admit and there are no such deemed admissions, as characterised by Mr Reaper: see r 22.04 of the Rules. Moreover, the "facts" and documents set out in the notices to admit do not provide any foundation for the assertions which Mr Reaper has made, which are baseless and wholly unsupported by the material. 19 The remaining item of "fresh evidence" is the ATO letter. It appears that at the time of the annulment application, only two creditors had filed proofs of debt: namely Baycorp Collections and the ATO. Mr Reaper argued in that application that he was solvent but his assertion of solvency was rejected by Pagone J. His Honour reasoned as follows at [10]-[11]: 10. Mr Reaper has also not substantiated his claim of being solvent. The onus of satisfying the Court of the ability to pay one's debts falls upon the debtor: International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 per Katz J. A statement of affairs was produced by him in the week before the hearing of his application. It revealed an annual income from a disability pension of $16,224.00 in the next 12 months and a tax debt of $14,890.35. Mr Reaper described the tax debt in the statement he prepared as being "under review" but the evidence filed on behalf of the respondents, including correspondence from the Tax Office, indicated that the Tax Office maintains that the amounts are owing, although they might not seek to recover the debt in view of Mr Reaper's bankruptcy. His Trustee in Bankruptcy, Mr Petr Vrsecky, exhibited a proof of debt from the Australian Tax Office for an amount of $34,819.27 rather than the lesser amount Mr Reaper had listed in his statement. The evidence of Mr Vrsecky, in contrast to Mr Reaper's statement of affairs, also identifies debts due to Mr Vrsecky for costs, expenses and legal fees to date in excess of $50,000 and disbursements in excess of $2,000. 11. The statement of affairs prepared by Mr Reaper, and the evidence of his Trustee, reveals the existence of a residential house owned jointly with Ms Fisher on which some $295,000 was owed to Crucis Pty Ltd as mortgagee. Mr Vrsecky has applied for partition of the property but the asset was not otherwise the subject of evidence by Mr Reaper, or Ms Fisher, concerning its sale for the purpose of enabling Mr Reaper to pay his debts as and when they fall due. Even if Mr Reaper had relied upon his equity in the property in establishing solvency, an asset cannot be taken into account in assessing solvency without reference to the time it would take to effect realisation and produce cash: see Sandell v Porter [1966] HCA 28; (1966) 115 CLR 666 at 670; Hall v Poolman [2007] NSWSC 1330; (2007) 65 ACSR 123 at 163 [187]. Realisable property can only be taken into account "if that property is in such a position as to title and otherwise that it could be realised in time to meet the indebtedness as the claims mature": Bank of Australasia v Hall [1907] HCA 78; (1907) 4 CLR 1514 at 1543. There is nothing in the material to suggest that Mr Reaper has taken any steps or made any arrangements for the residential house to be realised to meet his debts. 20 In June 2014, the ATO advised Mr Reaper that it would not be seeking to recover the tax liabilities and Mr Reaper has relied on that letter as "fresh evidence". Pagone J, however, took into consideration that the ATO may not pursue recovery and even disregarding the tax debt, for the reasons given by Pagone J at [10]-[11] Mr Reaper had not otherwise substantiated his claim of being solvent. Accordingly, the fact that the ATO has since advised Mr Reaper that it would not be seeking to recover the tax liabilities does not warrant re-opening the question of solvency.

Other Matters 21 Mr Reaper's written submissions made other serious and wholly unsubstantiated assertions of fraud in relation to the material relied upon by the respondents in the annulment application, all of which was directed at seeking to challenge the debt claim on which he was bankrupted. The assertions lacked any evidential foundation, and were totally unmeritorious. They should not have been made and this judgment is a record of the Court's disapproval of the unjustified attacks on the respondents.

CONCLUSION 22 This application in substance is yet another attempt by Mr Reaper to re-litigate matters which have been finally determined against him, though Mr Reaper continues not to accept this in wilful disregard of the prior decisions of the Court. It should be clear to Mr Reaper by now that he cannot continue to claim that he has no liability to Baycorp Collections. He is bound by the Magistrates' Court order which is a final order and cannot be reopened. This latest application is both completely misconceived and an abuse of process. The application must be dismissed. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.