Consideration
46 The nature of an appeal of this kind was recently described in a fulsome way by Wheelahan J in Whiteman v Deputy Commissioner of Taxation [2022] FCA 975 at [61]-[63] as follows:
61 This appeal comes before me as a single judge exercising appellate jurisdiction pursuant to the Federal Court of Australia Act 1976 (Cth), s 25(1AA)(a). The appeal is by way of re-hearing, in which the primary judge enjoyed no relevant advantage over this court. However, unlike the review that was before the primary judge, the appeal to this court is not a re-hearing de novo. The court's powers on appeal are engaged only if, upon this court considering for itself the evidence and other material that was before the primary judge, some legal, factual, or discretionary error is demonstrated in the orders that were made: Allesch v Maunz [2000] HCA 40; 203 CLR 172 at [23] (Gaudron, McHugh, Gummow and Hayne JJ).
62 For the purposes of the demonstration of error on appeal, the engagement of s 52(2)(b) of the Bankruptcy Act involves two related levels of decision-making. The first is whether the primary judge was satisfied that there was some "other sufficient cause" for which a sequestration order ought not be made. This does not involve the evaluation of facts and circumstances against some legal norm: cf, Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; 234 CLR 124 at [40] (Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ); Templeton v Australian Securities and Investments Commission [2015] FCAFC 137; 108 ACSR 545 at [23] (Besanko, Middleton and Beach JJ). Rather, it is the type of decision to which Mason and Deane JJ referred in Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 518, which calls for value judgments in respect of which there may be room for reasonable differences of opinion, no particular opinion being uniquely correct. See also, Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; 264 CLR 541 at [43]-[49] (Gageler J). Because the powers on appeal are exercisable only upon the demonstration of error, the primary judge's evaluation of whether there was "other sufficient cause" for the purposes of s 52(2)(b) must be shown to have been wrong. Error is not shown merely by persuading an appellate court to make a different evaluation, which may be no better than the first: see, Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 211-212 (Mason CJ, Deane and McHugh JJ), and the approval of the comments of Kirby P in Golosky v Golosky (unreported, NSW Court of Appeal, 5 October 1993). The second and related level of decision-making is whether upon the judge being satisfied of some "other sufficient cause", the court should in the exercise of its discretion dismiss the petition: Endresz v Australian Securities and Investments Commission (No 2) [2015] FCAFC 33; 228 FCR 334 (Endresz) at [34], [37] (Edmonds, Gordon and Beach JJ).
63 Therefore, in relation to this appeal from the decision of the primary judge to the extent that it challenges the judge's rejection of the appellant's claim that the power under s 52(2)(b) should have been exercised to dismiss the petition, the principles essayed in House v The King [1936] HCA 40; 55 CLR 499 at 504-505 apply, such that it must be demonstrated that the decision miscarried. Within those principles, the correctness standard applies to any challenge on appeal to the legal principles that were applied, or to findings of material fact upon which the evaluation took place, but not to the primary judge's evaluation, or to the exercise of the statutory discretion. The principles in House v The King also apply to the appellant's challenge to the primary judge's discretionary decision to fix the review for hearing. If the court is satisfied that error is established, then in a case such as the present where the primary judge enjoyed no relevant advantage over this court, the court may proceed to make its own findings and evaluative conclusions, and formulate its own reasoning: Robinson Helicopter Company Inc v McDermott [2016] HCA 22; 331 ALR 550 at [43] (French CJ, Bell, Keane, Nettle and Gordon JJ).
(Emphasis added.)
47 I respectfully adopt these statements of principle.
48 For the reasons which follow, the primary judge considered and disposed of the arguments made by Mr Renet for why the sequestration order should be set aside. It is appropriate to set out what s 52(1) of the Bankruptcy Act provides:
(1) At the hearing of a creditor's petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
49 As can be seen from the submissions of Mr Renet above, he does not challenge the findings made by the primary judge in relation to whether the requirements of s 52(1) of the Bankruptcy Act were satisfied. However, as his Honour noted, the power under s 52(1) of the Bankruptcy Act to make such an order is subject to subs (2), which provides:
(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
50 Mr Renet made no submission, nor was there any evidence, as to whether he is able to pay his debts, such that this is not a matter where s 52(2)(a) arises. Rather, his submissions were made on the basis, it appears, that the primary judge should have been satisfied of the fact that there was "other sufficient cause" (s 52(2)(b)) as to why it ought not be made.
51 Turning to the first issue, namely, on the basis of Mr Renet's non-attendance at the delivery of judgment, I do not accept, in the circumstances, that this was a basis upon which an appeal could be substantiated. The delivery of a judgment in circumstances where the judgment disposes of all issues, including costs (as is set out in the primary judgment), did not require attendance of the parties and, to the extent that they do not attend, whether for medical reasons or otherwise, could not give rise to a denial of procedural fairness.
52 As to the second issue raised by Mr Renet, namely, what he perceived to be a purported error at [35] of the primary judgment, [35] of the primary judgment sets out a summary of what was understood by the primary judge to be Mr Renet's submission, as follows:
According to his written submissions, Mr Renet then contends that when one takes account of the 2017 settlement, his legal fees, and the outstanding strata fees (apparently without interest), the only amount due and payable by him is $447.10, which seems to cover the period up to 1st November 2022. As an observation only, the figures set out in his written submissions and those set out in his "Invoice" recorded above do not "add up", that is, they are not readily reconcilable.
53 Mr Renet takes issue with what the primary judge understood to be "the only amount due and payable" by Mr Renet, being $447.10. However, it can be seen from the primary judge's reasons at [12] that the basis for this amount arises from the primary judge's understanding of the further written submissions that were provided by Mr Renet to his Honour's chambers on 16 September 2022, as extracted at [12] of the primary judgment, which is as follows:
Pursuant to Orders dated 19th August 2022, the parties were directed to file further written submissions in relation to the 2021 proceedings in the Queanbeyan Local Court and the material produced by the Applicant (Strata Plan) from those proceedings. Mr Renet's very brief closing (or supplementary) written submissions were emailed to Chambers on 16th September 2022. They were as follows:
Further written submissions:
• Lawyer John O'Keefe withdrew after not concluding on settlement
• Magistrate - Identified that while there is money owing the value was unsubstantiated.
• Record goes back to 2014. Breaching settlement.
• An itemized account has been produced to conclude settlement Respondent Affidavit (22/7/2022) see item 8 page 2. An additional instalment for 1/9/2022 - 31/11/2022 Levies 4th Quarter $626.10 being indemnified of all other charges to pay no more than settlement on April 2017 in addition to charging my legal fees of $9000, less $13,774.20. Leaves a balance of $447.10 to be paid up to 31/11/2022
In addition to the applicant having to spend 30 years in prison. Subject to fraud. Under the crimes act of 1990. Section 192E. 1 count - maximum jail sentence of 10 years in prison. Beach of settlement - See Item 1 Respondent Affidavit (Filed 22/7/2022 4:20pm) Committing fraud of opening balance - See Item 5 Respondent Affidavit (22/7/2022) show that account goes back to 2014 in previous submissions by Applicant. 3. Violating section 85(5) of strata scheme management act of 2015 - See Item 8 page 3 Respondent Affidavit (22/7/2022)
(Emphasis added.)
54 I can discern no error in the primary judge's reasons.
55 Mr Renet variously described that the basis upon which the sequestration order could be set aside was because there was a continuing dispute as between the parties and, in circumstances where, by virtue of that dispute, he was in fact owed large sums of money himself.
56 The primary judge had set out in some detail the allegations made by Mr Renet. In particular, as set out at [29] of his decision, he described the "regular complaint" of Mr Renet as being with respect to the judgment debt in the Local Court, which ultimately led to the bankruptcy proceedings and sequestration order. His Honour noted the following at [29] of the primary judgment:
In relation to the judgment debt, I note that:
(a) The judgment was never appealed or Application made to set it aside;
(b) In his own submissions, Mr Renet confirmed that he was legally represented, at least for part of the litigation that resulted in the judgment debt (as noted below, he claims a significant sum, apparently by some sort of "cross-claim" arising from these legal fees); and
(c) Mr Renet regularly contended that a "settlement" between the parties regarding strata fees precluded the judgment debt standing.
57 Mr Renet on appeal takes no issue with paragraphs (a) and (b) of his Honour's judgment. The fact that the judgment was never appealed, nor was an application made to set it aside, and that Mr Renet was in fact legally represented, at least in part of the litigation that resulted in the judgment debt being made on 8 June 2021, is of some significance.
58 There are limited circumstances where, when a judge is exercising appellate jurisdiction in relation to a bankruptcy, he or she has the capacity to go behind a judgment. As stated by the plurality in Ramsay, Kiefel CJ, Keane and Nettle JJ held that (at [68]), for the purposes of s 52 of the Bankruptcy Act, a judgment may usually be taken to be sufficient evidence of a debt in that judgment against a debtor in favour of a creditor obtained after a trial. This is because a trial is generally a reliable indication of the true state of indebtedness as between a creditor and debtor given its ordinary processes, as part of the adversarial system, involve a testing of the relative merits of a claim and counterclaim. However, a bankruptcy court is able to go behind a judgment and inquire into the validity of the debt where there has been fraud, collusion or miscarriage of justice and looks with suspicion on consent judgments and default judgments: Petrie v Redmond [1943] St R Qd 71 at 75-76; Ramsay at [67], [69]]). This reflects a logic propounded in Ex parte Kibble; In re Onslow (1875) LR 10 Ch App 373, 376-377 (quoted in Wren v Mahony (1972) 126 CLR 212, 232-233 (Menzies J, dissenting)):
It is the settled rule of the Court of Bankruptcy, on which we have always acted, that the Court of Bankruptcy can inquire into the consideration for a judgment debt. There are obviously strong reasons for this, because the object of bankruptcy laws is to procure the distribution of a debtor's goods among his just creditors. If a judgment were conclusive, a man might allow any number of judgments to be obtained by default against him by his friends or relations without any debt being due on them at all; it is therefore necessary that the consideration of the judgment should be liable to investigation.
59 Accordingly, a court exercising bankruptcy jurisdiction has a discretion to accept or not accept a judgment as satisfactory proof of a debt. This discretion is possible because, while the prior existing debt will have merged with the judgment debt at general law when the judgment was handed down, it remains unmerged in bankruptcy law: Wren at 224 (Barwick CJ). The existence of this discretion reflects bankruptcy courts' concern to protect the interests of third parties that did not participate in the litigation that led to the judgment debt: Ramsay at [67] (Kiefel CJ, Keane and Nettle JJ). The discretion to accept a judgment as proof of a debt "is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner": Wren at 224-225 (Barwick CJ). Substantial reasons will not usually exist where a judgment debt has been obtained after the merits have been tested in adversarial litigation, and where there is no evidence of fraud, collusion or miscarriage of justice: Ramsay at [111] (Edelman J).
60 This means that, while there is no general rule governing when a court may exercise its discretion to go behind a judgment, it will do so more readily where certain factors are present, including where:
(a) there is evidence of fraud, collusion or miscarriage of justice: Petrie at 75-76 (Latham CJ), citing Re Flateau; Ex parte Scotch Whisky Distillers Ltd (1888) 22 QBD 83, 85-86;
(b) the debt arises out of a consent judgment or default judgment: Petrie at 76; and/or
(c) there are circumstances which suggest a failure on the part of the judgment debtor to present his or her case on its merits in the litigation that led to the judgment: Ramsay at [70].
61 In addition, the Full Court has held that the discretion to go behind a judgment should not be exercised where 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 be reduced and would not support a finding that there was in truth no debt at all: Emerson v Wreckair Pty Limited (1992) 33 FCR 581 at 589 (Morling, Neaves and Spender JJ), cited in Katter v Melhem (No 2) [2014] FCA 1176; 319 ALR 646 at [77] (Wigney J). See also Olivieri v Stafford (1989) 24 FCR 413, 431-432 (Gummow J), quoting Re Riviere; Ex parte Original Mont de Piete Ltd (1919) 20 SR (NSW) 77, 84 (Owen AJ).
62 I am not satisfied by any of the submissions or additional evidence filed by Mr Renet that this is an occasion where the Court can exercise its discretion to not accept a judgment as satisfactory proof of a debt. Mr Renet made various assertions to the effect that there was fraud and that there had been an agreement in 2017 which was a responsive claim.
63 However, there is nothing on the evidence before me upon which I could be satisfied that such a case could be made out.
64 At the end of the hearing Mr Renet sought leave to rely on a snapshot of an email Mr Renet to Ms Mitchell, from Civium Strata People, dated 18 June 2019 and to 10 documents, which Mr Renet asserted (without evidence) were attached to this email. It appears that the email (but not the attachments) was contained in Mr Renet's affidavit, affirmed on 22 July 2022, which was before the primary judge. The documents included Trust Account Receipts from Ray White Queanbeyan for monies received from Mr Renet in 2015, email communications from Mr Renet to Ms Guiren in 2016, appearing to attach receipts for payments he had made and in 2017 an email to a "Steven" at "office@ccaust.com.au" where Mr Renet where he asked that an adjustment be made regarding his levies given the fact of the 2017 settlement.
65 It is clear that, to the extent that there was a settlement in 2017, it related to unpaid levies for a period between 27 August 2014 and 1 September 2016. Further, the terms of settlement refer to Local Court proceedings No. 2016/00240542. The judgment debt arose in relation to proceedings with a different case number, No. 2020/00252979, some four years later, in circumstances where Mr Renet was represented (at least partially). Further, there is no evidence that Mr Renet appealed that decision or sought to have it set aside.
66 There was nothing in the additional documents referred to at [64] above would prove otherwise. Accordingly, I reject Mr Renet's ability to rely on this new evidence on appeal.
67 To the extent that Mr Renet propounded that, by virtue of what he perceives is his own claim for legal costs (including for his own labour) to be set off against the judgment debt and, in essence, he has a claim of equal value against them, none of the material satisfied me that this was the case.
68 Further, to the extent that there is a claim made with respect to a purported breach by the Stata Plan of s 85(5) of the Strata Schemes Management Act, s 85(5) provides as follows:
An owners corporation may, by resolution at a general meeting, agree to enter into payment plans, either generally or in particular cases, for the payment of overdue contributions. A payment plan is to be limited to a period of 12 months but a further plan may be agreed to by the owners corporation by resolution.
(Emphasis added.)
69 Accordingly, as submitted by the Strata Plan, all that s 85(5) provides is a discretion to enter into a payment plan.
70 Mr Renet, at various points, made allegations of criminality as against the legal representatives of the Strata Plan, the Strata Plan itself, and the primary judge, in circumstances where it appears that he misapprehends how the law operates and where this Court has no jurisdiction to deal with such claims. I found the submissions he made in these respects irrelevant to my determination of the matters at hand.
71 To the extent that Mr Renet claims that the basis for the two costs orders were "unsubstantiated" or based on "fraud", he made no comprehensible submission nor pointed to any evidence to substantiate the claims.
72 Accordingly, I am not satisfied that Mr Renet has put anything before me which could constitute some legal, factual or other discretionary error demonstrated in the orders made.