Rumsley v Vegas Enterprises Pty Ltd

NORTH AND REEVES JJ: 1 This appeal seeks to challenge a stay order made by the primary Judge in relation to a debt appropriation order made by a Deputy District Registrar of this Court in related proceedings (WAD 28 of 2009). The debt appropriation order was made under s 53 of the Federal Court of Australia Act 1976 (Cth) in combination with the provisions of the Civil Judgments Enforcement Act 2004 (WA). The availability of such a course was illuminated by McKerracher J in Military Rehabilitation and Compensation Commission v McGuire [2008] FCA 142. 2 Mr Rumsley, the appellant, is a legal practitioner. His complaints in this appeal relate to the manner in which the stay order was obtained from the primary Judge. His central complaint is that he was not given notice of, nor allowed a fair opportunity to respond to, the central allegation upon which the stay order was obtained that, as a legal practitioner and officer of the Court, he had failed to disclose information to the Deputy District Registrar which was material to the grant of the ex parte debt appropriation order he had sought and obtained. 3 Before we address Mr Rumsley's complaints, it is necessary to briefly outline the somewhat complex factual and procedural background to this appeal. This is conveniently summarised in a subsequent, but related, decision of the primary Judge in proceeding WAD 17 of 2015 (Williamson v Rumsley (No 2) [2015] FCA 1246), as follows: 2 In 2009 Mr Philip George Clifford brought proceedings against … Vegas Enterprises Pty Ltd (Vegas) and its directors in matter WAD 28 of 2009 (the Proceedings). Vegas in turn, brought a cross-claim against Clifford which on 15 March 2010 was dismissed by consent. Vegas was ordered to pay the costs of the cross-claim, to be taxed (the cross-claim costs order). 3 The Proceedings were dismissed on 24 August 2010 and Clifford was ordered to pay Vegas' costs of the Proceedings (the Proceedings' costs order). 4 Clifford and … Mr Alan Phillip Rumsley, his solicitor of record, entered into a Deed of Assignment dated 16 March 2012 by which Clifford purported to assign his right, title and interest in relation to the cross-claim costs order to Rumsley (the Assignment). I say "purported" because [Williamson] impugn[s] the validity of the Assignment pursuant to s 120 of the Bankruptcy Act 1996 (Cth) (Bankruptcy Act). That issue is yet to be heard and determined. 5 On 25 May 2012, a certificate of taxation was issued to Vegas with respect to the costs of the Proceedings in the sum of $510,790. 6 Clifford, pursuant to s 20 of the Property Law Act 1969 (WA) (PLA), gave written notice dated 29 May 2012 of the Assignment to Vegas. 7 On 26 February 2013, Clifford became a bankrupt by way of a debtor's petition. 8 On 22 May 2013, [Williamson was] appointed as trustee… of Clifford's bankrupt estate under s 157 of the Bankruptcy Act. 9 Vegas has filed a proof of debt in Clifford's bankruptcy claiming the sum of $543,198.11 comprising the amount of the taxed costs and interest to the date of bankruptcy but less the sum of $2,588 under a separate costs order. 10 On 9 January 2015, Rumsley was joined as a party to the Proceedings as an assignee of the cross-claim costs order in order to give him an entitlement to be heard on the taxation of the cross-claim costs. 11 On 2 February 2015, a certificate of taxation was issued to Clifford with respect to the cross-claim costs order in the amount of $110,000. 4 The events after 2 February 2015 leading up to the primary Judge's stay order on 29 May 2015 also require some elaboration. We do so in the succeeding paragraphs. 5 On 4 February 2015, Mr Rumsley sent a letter to Vegas demanding payment of the sum of $110,000, being the amount certified in the certificate of taxation issued on 2 February 2015. 6 Vegas' lawyers responded by email on 6 February 2015 claiming that a set-off applied to Mr Rumsley's claim and Vegas did not therefore accept it owed him any money. The set-off referred to one of the claims made in proceeding WAD 17 of 2015. It had been commenced about two weeks earlier, on 21 January 2015. In it, Mr Williamson (and his fellow trustee), as trustee of Mr Clifford's estate, challenged the validity of the assignment of the costs order from Mr Clifford to Mr Rumsley and also claimed that debt should be set-off against the debt due under the costs order owed by Mr Clifford to Vegas. This set-off claim was subsequently rejected by the primary Judge in the judgment referred to above: Williamson v Rumsley (No 2) [2015] FCA 1246. However, the first claim, the challenge to the validity of the assignment, remains unresolved. 7 Mr Rumsley's reaction to Vegas' lawyers' email of 6 February 2015 was to apply ex parte on 21 February 2015 (in proceeding WAD 28 of 2009) for the debt appropriation order that is central to this appeal. His ex parte application was directed to certain funds held in an account in Vegas' name at the Westpac Banking Corporation (Westpac). In an affidavit dated 20 February 2015 filed in support of his ex parte application, Mr Rumsley disclosed that he was the assignee of the costs order in question from Mr Clifford. In a supplementary affidavit dated 15 May 2015, Mr Rumsley deposed that, as at the date of that affidavit, he had not been paid any amount of the costs order by Vegas. Nonetheless, Mr Rumsley did not disclose in either affidavit that the assignment of the costs order from Mr Clifford to himself was under challenge by Vegas in proceeding WAD 17 of 2015. 8 On 20 May 2015, Deputy District Registrar Stanley issued the debt appropriation order. As is already mentioned above, it was directed to Westpac. The order was served on Westpac on 22 May 2015. However, Vegas apparently did not become aware of it until about midday on 27 May 2015. Later that afternoon, Vegas filed an urgent interlocutory application in proceeding WAD 17 of 2015 seeking to stay the debt appropriation order. In its application, Vegas sought three orders, as follows: 1. This interlocutory application be dealt with on an expedited basis and the time for serving this application be abridged. 2. The Orders made by Registrar Stanley on 20 May 2015 in WAD 28 of 2009 be stayed pending determination of these proceedings (WAD 17 of 2015) or further order of this Court. 3. The First Respondent pay the Second Respondent's costs of this interlocutory application on an indemnity basis, to be taxed if not agreed. 9 Later still on the afternoon of 27 May 2015, the primary Judge set Vegas' urgent application down for hearing on 29 May 2015 and ordered the parties to file and serve their written outlines of submissions by close of business on 28 May 2015. 10 According to the written outline of submissions filed and served by Vegas late on the afternoon of 28 May 2015, the principal issue in its urgent application was "whether or not the [moneys] the subject of the counter-claim costs order are a debt owed to [Williamson] … or are owed to [Rumsley] …". However, Vegas changed its position soon after the hearing began before the primary Judge on 29 May 2015. At that point, Vegas' counsel claimed, for the first time, that Mr Rumsley had failed to make disclosure of a material fact when he applied to Deputy District Registrar Stanley for the ex parte debt appropriation order. He contended the material fact was the pending challenge to the validity of the assignment of the costs order from Mr Clifford to Mr Rumsley in proceeding WAD 17 of 2015. 11 According to the transcript of the hearing on 29 May 2015, the following exchange occurred between Vegas' counsel and the primary Judge soon after the hearing commenced: MR LUSCOMBE: … Yet he felt he was in a position to use the Civil Judgment Enforcement Act to obtain an appropriation order from this court. Our submission is that in obtaining that appropriation order from Registrar Stanley, Mr Rumsley failed to mention anything about the debt being the subject of a challenge and he failed - - - HIS HONOUR: How do you know that? MR LUSCOMBE: On the papers that are - all of the papers that are presented - and we're relying here on the affidavit evidence from Mr Rumsley - nothing was said about this debt being the subject of a challenge or that the - and that that challenge was pending before this court. HIS HONOUR: Does the Act say anything about that kind of circumstance? But let's assume, for example, that Mr Rumsley had informed Deputy Registrar Stanley of the current application by the trustee. MR LUSCOMBE: We would say - and given what was said to Barker J at the time Mr Rumsley was joined as a party about their - and his knowledge - and I will come to - I will quote from what Mr Rumsley told Barker J about the effect of his joinder not determining final rights, just being a joinder. Mr Rumsley ought to have told Registrar Stanley. As an officer of the court he ought to have and as a party he ought to have told Registrar Stanley that that joinder did not entitle him - had not determined his rights to obtain the money, it had merely joined him as a party. HIS HONOUR: Are you submitting, Mr Luscombe, in effect, that Rumsley misled the deputy registrar? MR LUSCOMBE: I am. I'm submitting that he omitted - the misleading is in the - omitted to tell Registrar Stanley important information. HIS HONOUR: Well, is the - - - MR LUSCOMBE: And I will come to the details of that. HIS HONOUR: Is the effect of your submission that Mr Rumsley misled the deputy registrar into believing that his entitlement to that debt appropriation order was pursuant to an order in his favour as a party, as opposed to what you say and I understand to be the actual position, which is that any entitlement that he has and which is subject to the issue in this substantive proceeding depends entirely upon the efficacy of an assignment in his favour by Mr Clifford? MR LUSCOMBE: Correct. That is our submission. HIS HONOUR: Is everything I've said to you accurate? MR LUSCOMBE: Everything you've said is accurate, sir. HIS HONOUR: All right. (Emphasis added) 12 It is common ground that neither Mr Rumsley nor his counsel was put on notice that Vegas intended to rely upon this alleged material non-disclosure as the primary ground for its urgent stay application. So much is apparent from the following exchange, which occurred at the beginning of Mr Rumsley's counsel's submissions to the primary Judge: DR SCHOOMBEE: Your Honour, we're fighting a, sort of, double whammy, in the sense that the matter has been brought on urgently and the main point, as I perceive, raised by my learned friend was never raised in their submissions or foreshadowed before at any stage. And that is that somehow there was something inappropriate or improper in applying for the debt appropriation order before Registrar Stanley because disclosure was not made. But I would like to deal as best I can with that point, because it's not foreshadowed in their submissions. I've heard it the first time in this court today. I will take your Honour to matters, but there are at least two matters that I'm not able to deal with - and I will come to them - because we haven't been prepared to meet the case. The regulation which we've cited requires the affidavit to specify the grounds under the relevant Act. It's regulation 9 under the Civil Judgments Enforcement Act. The affidavits must actually set out the ground. And the only ground that was set out in the affidavit was - - - HIS HONOUR: Which affidavit are you referring to? DR SCHOOMBEE: I'm referring to Mr Backshall's supporting affidavit. That's the affidavit he filed in support of this interlocutory application. The only reference there was made - they're not sure to whom they should pay the debt and that that would interfere with the provisions that would be ..... so if I can maybe just take your Honour to see what is the foundation of this case, that is, to what has been submitted. Paragraph 7 of his affidavit sworn on 27 May deals with that. That's the only grounds. If there be grounds that were raised, no other grounds were raised at all. (Emphasis added)

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