Reaper v Baycorp Collections PDL

INTRODUCTION 1 The applicant ("Mr Reaper") has applied to the Court for an extension of time within which to appeal the judgment and orders of Pagone J in Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 13 dismissing Mr Reaper's application for an annulment of his bankruptcy pursuant to s 153B of the Bankruptcy Act 1966 (Cth) ("the annulment application") with costs. The time in which to file an appeal has long since passed as the judgment and orders were pronounced on 28 January 2014. Moreover, Mr Reaper made an application for an extension of time in which to appeal in February 2014 which was refused: see Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 426. Notwithstanding the earlier unsuccessful application to extend the time to appeal, Mr Reaper has contended that he should be given an extension of time to appeal the decision of Pagone J. 2 This matter has had a long and protracted history. On 27 October 2011, the first respondent ("Baycorp Collections") obtained judgment against Mr Reaper in the Melbourne Magistrates' Court for $22,552.40 ("the judgment debt") in respect of an amount due by Mr Reaper to Westpac which Westpac had assigned to Baycorp Collections. On 15 May 2012, the Magistrates' Court dismissed Mr Reaper's application for a re-hearing with costs awarded against Mr Reaper. On 25 July 2012, Baycorp Collections issued a creditor's petition against Mr Reaper and a sequestration order was made against Mr Reaper on 7 March 2013. The second respondent was appointed as trustee of Mr Reaper's estate "the Trustee"). On 16 September 2013, Mr Reaper filed an application for an annulment of the bankruptcy pursuant to s 153B of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") and on 28 January 2014, Pagone J dismissed that application. On 26 February 2014, Mr Reaper filed an application for an extension of time to appeal the decision in the annulment proceeding and on 18 March 2014, Tracey J dismissed that application for want of prosecution. On 8 April 2014, Mr Reaper filed an interlocutory application seeking to set aside the order made on 18 March 2014 dismissing his application for an extension of time to appeal. On 30 April 2014, Tracey J set aside the 18 March 2014 order and refused the application following a contested hearing. On 6 May 2014, Mr Reaper filed an interlocutory application in the annulment proceeding seeking orders for contempt against a Mr Jim Stephenson, a Westpac officer, in relation to an alleged failure to comply with the requirements of a subpoena that Mr Reaper had issued to Westpac in December 2013 for the purposes of the annulment application. The contempt application was dismissed with costs by Pagone J on 3 July 2014: Reaper v Baycorp Collections PDL (Australia) Pty Ltd (No 3) [2014] FCA 729. In December 2014, Mr Reaper sought to file an application which was rejected by the Registrar on the basis that the application constituted an attempt to re-litigate the matters the subject of Pagone J's decision refusing the application for an annulment of Mr Reaper's bankruptcy. Mr Reaper sought judicial review of the Registrar's decision which was dismissed on 11 May 2015: Reaper v Luxton [2015] FCA 430. In Reaper v Luxton, Tracey J stated at [6] that: The Registrar observed that the material lodged for filing focussed on the same matters which had been dealt with in Pagone J's reasons and, "most significantly, the relationship between the credit cards known as 'CC66' and 'CC93', and the question of whether or not [the] bankruptcy should be annulled. His Honour stated at [18] that abuses of process may arise in many ways and that one of them is that a person is seeking "to litigate anew a case which has already been disposed of by earlier proceedings", citing Walton v Gardiner (1993) 177 CLR 378; [1993] HCA 77 at 393 (CLR). At [21] Tracey J stated that the application which Mr Reaper sought to file constituted a fresh application for annulment of his bankruptcy, noting that he sought to challenge some of the evidence which was before Pagone J and on which his Honour relied in determining to reject the annulment application, which included evidence relating to the ownership of credit cards CC66 and CC93 and whether one of them had superseded the other. The decision in Reaper v Luxton [2015] FCA 430 did not deter Mr Reaper from attempting to file further similar applications. 3 In 2015, Mr Reaper made numerous other attempts to file applications to bring prosecutions against Mr Hanford from Westpac and Mr Macey and a Ms Ellis from Baycorp Collections for offences against the Bankruptcy Act and the Criminal Code (Cth) in respect of alleged "false and misleading" evidence given by them in the bankruptcy proceedings against Mr Reaper and the unsuccessful annulment application subsequently brought by him, concerning the existence of the debt on which judgment had been obtained. The Registrar refused to accept each of those applications for filing pursuant to r 2.26 of the Federal Court Rules 2011 (Cth) ("the Rules") on the basis he was satisfied the applications were an abuse of process by reason that Mr Reaper was again seeking to re-litigate the matters the subject of Pagone J's decision refusing the annulment application. Mr Reaper sought judicial review of three decisions of the Registrar and on 20 November 2015, Mortimer J dismissed those applications: Reaper v Luxton [2015] FCA 1296. 4 On 27 January 2016, Mr Reaper filed the second application for an extension of time in which to appeal Pagone J's dismissal of the annulment application. The application annexed a draft notice of appeal which identified three grounds of appeal as follows: 1. The orders appealed from were obtained by fraud. 2. The underlying judgment was tainted with fraud and collusion. 3. Fresh evidence of highly probative value and cogency has been obtained. 5 The latest application is supported by four affidavits affirmed by Mr Reaper. Mr Reaper has asserted that he has relevant fresh evidence that was not available to him at the time of the hearing of his annulment application and has asserted that this evidence is material to showing that he was not personally liable for the debt upon which Baycorp Collections obtained judgment in the Magistrates' Court proceeding. Mr Reaper also asserted that this fresh evidence showed that Mr Hanford and Mr Macey gave false and misleading evidence in the annulment application in relation to the debt in question. Mr Reaper also purported to explain the delay in bringing the application. Part of his explanation for the delay in filing the application for an extension of time in which to appeal Pagone J's dismissal of the annulment application was that he had attempted "to bring the fresh evidence" by the applications which the Registrar had rejected for filing as an abuse of process and the purpose of his application for an extension of time to appeal the orders of Pagone J was "inter alia, so I can bring the fresh evidence by the correct process". 6 The fresh evidence was said to be: (a) exhibit "JRS-1"to an affidavit of Mr Stephenson sworn 26 June 2014; (b) deemed admissions pursuant to notices to admit served by Mr Reaper on the respondents in the annulment application; (c) Westpac Business Cheque Plus account statements numbers 298 and 299 ("Westpac cheque account statements"); and (d) a letter from the Australian Taxation Office ("the ATO") dated 5 June 2014 ("the ATO letter"). 7 For the reasons that follow, this application constitutes yet another attempt to re-litigate the matters the subject of Pagone J's decision refusing the annulment application and so is an abuse of process.

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.

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