Singh v Owners Strata Plan No. 11723

Application for interlocutory relief 24 Against those background matters, it is now convenient to address and determine Mr Singh's application for interlocutory relief, the essence of which is to seek a stay of the sequestration order made by Smith FM on 5 April 2012 pending various events occurring, including the hearing and determination of Mr Singh's appeal. In accordance with the ordinary practice of this Court, Mr Singh's appeal, which was filed on 24 April 2012, is listed for call-over on 18 July 2012, with the appeal possibly being heard in the November sittings of the Court. 25 Absent Mr Singh having commenced an appeal, there may have been a question whether the Court has a power to stay the operation of a sequestration order, at least for a period exceeding 21 days. It is relevant to note in this regard the terms of both sections 37 and 52 of the Bankruptcy Act. After providing in sub-section 37(1) that, subject to sub-section 37(2), the Court may rescind, vary or discharge an order made by it, or suspend the operation of such an order, sub-section 37(2) of the Bankruptcy Act provides that: (2) The Court does not have power to rescind or discharge, or to suspend the operation of: (a) a sequestration order… 26 It is also to be noted that sub-section 52(3) of the Bankruptcy Act provides: (3) The Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days. 27 But the power of the Court to entertain a stay application and, if appropriate, grant a stay of a sequestration order also needs to take account of Rule 36.08 of the 2011 Federal Court Rules, which deals specifically with the power to grant a stay where appeal proceedings have been initiated. It provides as follows: 36.08 Stay of execution or proceedings under judgment appealed from (1) An appeal does not: (a) operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or (b) invalidate any proceedings already taken. (2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceedings until the appeal is heard and determined. (3) An application may be made under subrule (2) even though the Court from which the appeal is brought has previously refused an application of a similar kind. 28 Rule 36.08 is in substantially similar terms to order 52, rule 17 of the previous Rules. There are numerous decisions of the Court to the effect that it has a power under that rule in an appropriate case to stay the execution of a sequestration order pending the determination of an appeal in this Court (see, for example, Coleman v Lazy Days Investments Pty Ltd (1995) 55 FCR 297 at 301-302 per Carr J; Freeman v National Australia Bank Limited [2002] FCA 427 per Spender J; Menzies v Paccar Financial Pty Limited (ACN 005 592 049) [2002] FCA 692 per Ryan J; Ogle v Tendiris Pty Limited [2007] FCA 1638 per Logan J). 29 It is equally well established that, in determining whether or not to grant a stay of proceedings, it is necessary to consider whether there is an arguable point raised by the proposed appeal and whether the balance of convenience favours the granting of a stay. The weighing of the balance of convenience may require consideration to be given to any claims supported by admissible evidence concerning prejudice on the part of both the applicant and the respondent. 30 I will now deal with each of those two matters.

does mr singh have any arguable points in his appeal? 31 The first task is to consider whether Mr Singh's notice of appeal raises any arguable points or, to express that proposition in slightly different terms, whether any of his grounds of appeal have "some rational prospect of success" (see Burns v AMP Finance Limited (ACN 002 812 704) [2005] FCA 761 at [5] per Emmett J). The first thing to note about the notice of appeal is that most, if not all, of the grounds appear to reflect the grounds of opposition unsuccessfully advanced by Mr Singh before Smith FM concerning whether a sequestration order should be made. As noted above, Smith FM had some difficulty comprehending many of the matters raised by Mr Singh. But, doing the best that his Honour could, Smith FM carefully considered Mr Singh's grounds of opposition and gave reasons for rejecting each of them. 32 Mr Singh's notice of appeal effectively repeats most if not all of those grounds of opposition which he raised unsuccessfully before Smith FM without indicating why he contends that the Federal Magistrate erred in proceeding to make a sequestration order. 33 I have considered each of Mr Singh's proposed grounds of appeal, taking into account the terms in which those grounds are expressed, Mr Singh's affidavit sworn 1 May 2012, his oral submissions and the submissions of the respondent. 34 Mr Singh's first ground of appeal focuses upon his claim that the amount the subject of the Local Court default judgment is incorrect. That allegation was considered by Smith FM but, for reasons given by his Honour, he found that there was no good reason to go behind the amount set out in the default judgment. Mr Singh has failed to persuade me that he has an arguable point in respect to this aspect of Smith FM's analysis or reasons. I find that ground 1 has no rational prospects of success so as to warrant a stay. 35 Ground 2 of the notice of appeal refers to Mr Singh's Supreme Court proceedings and his application to have the District Court's proceedings transferred to the Supreme Court. Again, this ground was carefully considered by Smith FM and was rejected by him on the basis of the detailed reasons given at [25] to [28] of his judgment. Moreover, since Smith FM delivered his judgment, Mr Singh's Supreme Court proceedings have been heard and determined by Justice Adamson (see [14] above). Mr Singh's summons was dismissed and he was ordered to pay the respondent's costs. In these circumstances, ground 2 has been overtaken by events and is doomed to fail. It has no prospects of success. 36 Ground 3 refers to Mr Singh having complained to unspecified "state investigation agencies" about alleged false affidavits. I note that a similar matter was raised by Mr Singh before Smith FM as one of the grounds of opposition to the making of a sequestration order (see item 10 of [9] of Smith FM's reasons). Moreover, in [10] of his reasons, Smith FM adverts to "the many references by Mr Singh in his documents to fabrications, errors and defects". His Honour explained why those matters did not provide any basis for declining to make the sequestration order. For similar reasons, I find that this ground of appeal has no rational prospects of success. Mr Singh has failed to indicate any basis upon which Smith FM's findings or reasons reveal appellable error. 37 Ground 4 seems to suggest that Smith FM erred in not declining to make the sequestration order because of Mr Singh's contention that the proceedings in the Local Court were commenced by the Owners' managing agent without there being an approval as required by s 80D of the Strata Schemes Management Act 1996 (NSW) (the Strata Act). I note that a similar complaint was raised before Smith FM, where Mr Singh sought to oppose the making of a sequestration order on the basis that the strata managing agent of the Owners did not have authority to instruct the Owners' solicitors to issue the bankruptcy notice. Mr Singh also complained that the proceedings in the Federal Magistrates Court were instituted by the agent who did not have authority to act on behalf of the Owners (see items (c) and (d) of [9] of Smith FM's reasons). In [15] of his reasons, Smith FM said that he fully accepted the affidavit and oral evidence given by the two strata title managers and that they "correctly identified the sources of their respective authorities under the management agreements, including authority to instruct a solicitor in relation to recovery of amounts owning to the Owners and to take bankruptcy proceedings". 38 In [11] of his notice of appeal, which contains "observations" on Smith FM's reasons for judgment, Mr Singh submits that the alleged breach of s 80D of the Strata Act "is clearly substantiated by documents on record in light of the Supreme Court of New South Wales Decisions [sic] of Owners SP46528 v Hall [2009] NSWSC 278", and also repeats an allegation of falsification of documents by reason of a discrepancy on the dates of some documents. 39 The Supreme Court decision relied on by Mr Singh in support of this ground contains, among other matters, a discussion of s 80D of the Strata Act. As Kirby J noted, the statutory regime relating to the commencement of a legal action by an Owner's Corporation, was that, under the Strata Act, a rule had to be complied with and, under the Strata Regulations, an exception might apply. The rule established by s 80D was to the effect that a resolution of the Owner's Corporation passed at a general meeting had to be obtained approving the initiation of any legal action for which payment may be required. Sub-section 80D(2) empowered regulations to be made exempting types of legal action from the operation of that rule. Strata Regulation 12C created such an exemption from the operation of s 80D in respect of certain matters, including where the reasonably estimated cost of taking the legal action would not exceed $10,000.00 or, alternatively, where the taking of the legal action has been disclosed by a legal practitioner in accordance with the then Legal Profession Act 1987 (NSW) or was set out in a proposed costs agreement under that Act. Justice Kirby found, on the basis of the evidence before him in those proceedings, that there had been non-compliance with the rule in s 80D and that the exemption in Regulation 12C did not apply. Those findings turned on the particular facts and circumstances of that case. Smith FM found in [15] of his reasons that he was not persuaded that there was any basis to believe that there had been non-compliance with the provisions of s 80D of the Strata Act, as read with Regulation 15 of the Strata Regulations. Mr Singh has failed to identify any basis upon which I could find that this ground of appeal has rational prospects of success, having regard to the particular circumstances here, which are quite different from those the subject of the Supreme Court litigation cited by him. 40 Mr Singh's fifth ground of appeal raises contentions which were also dealt with and rejected by Smith FM for reasons given by his Honour. The contentions relate to the filing of what is described as an "incorrect" statement of claim on 6 August 2010 and allegations of falsification of documents in "violation" of s 329 of the Legal Profession Act 2004 (NSW). These allegations seem to mirror Mr Singh's second ground of opposition to the making of a sequestration order, as recorded by Smith FM in item 2 of [9] of his reasons. I note that these particular allegations do not appear to be reflected in the summary list of the grounds of opposition set out towards the end of [9] of Smith FM's reasons. The learned Federal Magistrate dealt collectively with this particular ground of opposition, together with some other grounds of opposition raised by Mr Singh relating to various internal management matters concerning the body corporate, the retention of strata agents, the conduct of meetings and the instructing of solicitors to act on behalf of the Owners in the debt recovery and bankruptcy proceedings (see [13] of Smith FM's reasons). His Honour explained in [14] of his reasons that he was unable to find in Mr Singh's case any "intelligible isolation of a particular complaint in these respects". In effect, his Honour felt that he had no choice but to deal with those complaints at a high level of generality. His Honour then gave detailed reasons why he rejected those complaints collectively and why he ultimately held in [21] of his reasons that there was no basis in Mr Singh's complaints regarding the authority of the strata agents to instruct solicitors at various stages of the bankruptcy proceedings. In my view, Mr Singh has not been able before me to advance matters any further in respect of this particular ground, nor indicate with any specificity any error of fact or law in Smith FM's consideration and rejection of these matters. I find that ground 5 has no rational prospects of success. 41 Grounds 6 and 9 of the notice of appeal seem to involve further contentions regarding the role and authority of the strata managing agents. As noted above, those matters were agitated before Smith FM and were the subject of detailed findings and reasons by his Honour, particularly in [15] and [21]-[22]. Again, Mr Singh has failed to persuade me that he has any arguable point to raise on his appeal concerning these aspects of Smith FM's findings and supporting reasons. 42 As to ground 7 of the notice of appeal, Mr Singh makes serious allegations against the managing agents concerning the alleged production of fabricated agreements. Smith FM made reference in [10] of his reasons to Mr Singh's many references to "fabrications", and to his difficulty in identifying how those and other matters were relevant to Mr Singh's complaints concerning the correctness of the default judgment. I have discussed above how Smith FM found that he was only able to deal with these sorts of complaints by Mr Singh at a high level of generality. Mr Singh has not persuaded me that he has any arguable appeal point in respect of Smith FM's approach and reasons for rejecting his contentions on those matters. 43 Ground 8 of the notice of appeal challenges the default judgment on two grounds. The first is that the default judgment was obtained in the absence of Mr Singh and Ms Kaur. The second is that the default judgment involves an amount in excess of the $10,000.00 jurisdictional limit in the Small Claims Division of the Local Court. I shall deal with each of those matters in turn. 44 The first matter seems to amount to a complaint of procedural unfairness in the Local Court. In the "Observations" section of his notice of appeal, Mr Singh sets out what he says are passages from the judgment of Delaney DCJ delivered on 18 November 2011, including what is said to be [13] of that judgment in the following terms: The striking of defence in the appellant's absence and without notice, and the failure to order that the defence be reinstated, may be prima facie instances of a denial of procedural fairness. 45 It is also evident that Mr Singh raised similar claims of procedural unfairness in the Local Court processes before the Federal Magistrate. Smith FM found at [16] of his reasons that, in his view, there had been no denial of procedural fairness. Moreover, his Honour proceeded to observe that, even if there had been procedural unfairness at the Local Court level, Mr Singh had ample opportunity to correct any such departures from procedural fairness in his subsequent applications in the Local Court for review of the default judgment, as well as in the District Court proceedings before Delaney DCJ. In particular, he noted that Delaney DCJ gave Mr Singh a further opportunity to formulate intelligible grounds of appeal from the Local Court to the District Court. Ultimately, however, Delaney DCJ concluded that, as at 2 February 2012, there was no basis for entertaining any appeal based on the two appeal summonses filed by Mr Singh. Thus the District Court appeal proceedings were struck out and other consequential orders were made by Delaney DCJ. 46 I agree with the findings and reasons of Smith FM in rejecting Mr Singh's complaints of procedural unfairness. I do not consider that those complaints have rational prospects of success so as to warrant the grant of a stay. 47 As to the second element of ground 8, which relates to the jurisdictional limits in the Small Claims Division of the Local Court, this aspect of the matter does not appear to have been squarely raised by Mr Singh in his grounds of opposition to the making of a sequestration order and that may explain why the issue is not expressly addressed in Smith FM's reasons. I was informed by Mr Radman that this question of jurisdiction was raised by Mr Singh in the Local Court proceedings, including in the hearing of Mr Singh's motion challenging the default judgment, which motion was heard and determined by Magistrate Townsend on 30 June 2011. The transcript containing those reasons was not in evidence before me. 48 It is not entirely clear whether Mr Singh also sought to agitate this jurisdictional issue in his various summonses seeking to initiate appeals in the District Court against the default judgment, although it appears that he may have done so. In any event, it was plainly open for him to do so if he so wished. In either case, it is to be noted that Delaney DCJ struck out Mr Singh's two appeal summonses in February 2012. In these circumstances, it is difficult to see how this element properly arises as part of ground 8, or that it is an arguable point. 49 Ground 10 of the notice of appeal complains that the amount specified in the creditor's petition exceeded the amount of the default judgment. A further complaint is then made under ground 10 that "the amount of $ claimed for hearing on 30 June 2011 is not sanctioned by any Court". No specific amount was specified in this ground of appeal. These matters appear to mirror item (f) of the summary list of grounds set out at the end of [9] of Smith FM's reasons. Smith FM explained in [3] of his reasons how the sum of $21,444.61 specified in the creditor's petition was arrived at. He described how the amount was constituted not only by the default judgment debt, but also included what were described as "subsequently accruing quarterly administration fund and sinking fund levies owed by Mr Singh and Ms Kaur to the Owners, and legal expenses recoverable under s 80 of the Strata Schemes Management Act 1996 (NSW)". His Honour then recorded in [4] of his reasons that he accepted all of the evidence filed by the Owners verifying the amount set out in the petition to the extent that they were not covered by the default judgment. His Honour found that he was unable to detect any substantive challenge to those elements of the total indebtedness among all the evidence, material and submissions put forward by Mr Singh. 50 In the proceedings before me, Mr Singh was unable to identify any particular error or law or fact in Smith FM's reasoning in respect of those matters. Again, I find that this ground has no rational prospects of success. 51 As I observed above, paragraph 11 of Mr Singh's notice of appeal does not appear to state grounds of appeal, but rather is a commentary by Mr Singh on various paragraphs of Smith FM's reasoning. 52 Ground 12 of the notice of appeal is in the following terms: The Honourable Magistrate in Reasons for Judgment has repeatedly in Para 2, 12, 15 and 19 said that the Court discretion to go behind the default judgment even things found incorrect is not exercised in passing this order. For default judgment under appeal in Honourable Supreme Court and also clarification under direction of Honourable District Court to Honourable Local Court on amount of default judgment found incorrect, the bankruptcy proceedings could have been at least put on hold until decision by the Court which are required to go behind the default judgment. 53 I have had some difficulty comprehending this ground. It seems to have two elements. First, it complains that Smith FM should have adjourned the application for a sequestration order pending the outcome of the proceedings in the Supreme Court. In my view there is no substance in that complaint and no arguable point is raised. It was a matter for the Federal Magistrate's discretion whether or not to adjourn the application and no error has been identified by Mr Singh in the exercise of that discretion. In any event, this aspect of ground 12 falls away having regard to Justice Adamson's dismissal of Mr Singh's summons on 18 May 2012. 54 Although it is far from clear, ground 12 also seems to suggest that Smith FM had no discretion whether or not to go behind the Local Court default judgment and was required to do so. In my view, any such argument is also doomed to fail, having regard to the decision of the Full Court of the Federal Court in Evan v Heather Thiedeke Group Pty Ltd, unreported, 14 August 1989. In that matter, the primary judge had declined to go behind a judgment of Justice Connolly in the Supreme Court of Queensland which had provided the basis for a bankruptcy notice. The primary judge recognised that he had the power to go behind the Supreme Court judgment (see Wren v Mohony (1972) 126 CLR 121), but declined to do so. In rejecting an appeal from the primary judge's decision not to go behind the judgment of Justice Connolly, the Full Court made the following observations: In our opinion it is clear that Pincus J well appreciated that he had a discretion (in the sense referred to by Barwick CJ) to go behind the judgment. After a careful consideration of Connolly J's reasons, he came to the conclusion that he could not sensibly disagree with the Full Court's decision. It is impossible to say that he erred in reaching this conclusion. Having reached that conclusion, it was inevitable that he should refuse to exercise the discretion to go behind the Supreme Court's judgment. In my view it is abundantly clear that Smith FM also appreciated that he had a discretion whether or not to go behind the Local Court default judgment. His Honour gave detailed reasons why he was not prepared to exercise that discretion in this case. Mr Singh has not identified any error of a House v The King character in the exercise of that judicial discretion. Accordingly, I conclude that ground 12 does not raise any arguable point. 55 Accordingly, for all these reasons, I find that Mr Singh has been unable to persuade me that any of his grounds of appeal are arguable or have rational prospects of success.

BALANCE OF CONVENIENCE 56 Having regard to my findings above it is strictly unnecessary to consider the second question relevant to whether or not a stay should be granted, namely the balance of convenience. Nevertheless, I consider this is an appropriate case in which to do so, having regard to the fact that Mr Singh is unrepresented and that, as the learned Federal Magistrate repeatedly observed (with which I agree), Mr Singh has difficulty in presenting his arguments in a coherent or comprehensible manner. Accordingly, should I be wrong in concluding that none of his grounds of appeal has any rational prospects of success I will now consider where the balance of convenience lies. For reasons which follow, I find that, even if one or more of Mr Singh's grounds of appeal was arguable, I would decline to grant him a stay because he has been unable to establish that the balance of convenience is in his favour. Indeed, I find that the balance of convenience weighs against granting the interlocutory relief he seeks. 57 As I noted at the outset, Mr Singh's affidavit contains no material seeking to establish that the balance of convenience weighs in his favour. As has been remarked in other similar cases, the Court generally expects that, in an application for interlocutory relief of the type brought by Mr Singh, there should be evidence as to the financial position of the party seeking to stay a sequestration order (see, for example, Burns, supra at [5] per Emmett J and Liprini v Liprini (2010) FCA 1117 at [12] and [22] per Jagot J). Smith FM observed at [23] of his reasons that neither Mr Singh nor Ms Kaur adduced any evidence before him showing that they were able to meet their debts and were not insolvent so as to avoid a sequestration order being made in the Court's discretion. That omission was not rectified by Mr Singh in respect of his financial position in the context of the current proceedings seeking a stay. Mr Singh filed an affidavit in support of his application, yet failed to present any evidence to the Court which would provide a foundation for a finding in his favour on the question of balance of convenience. 58 The failure to provide evidence of solvency as a factor weighing in the balance of convenience was the subject of the following observations by Justice Logan in Ogle v Tendiris Pty Limited, supra at [15], with which I respectfully agree: Obviously enough, bankruptcy proceedings are not proceedings merely between creditor and debtor, but are attended with particular public interest considerations. In that regard, it is of note - as the reasons of the learned Federal Magistrate disclose - for whatever reason, when the offer was extended, Mr Ogle chose not to provide evidence to the Federal Magistrates Court on the hearing of the creditor's petition of his solvency. Of course, the amount involved in this case, the subject of the bankruptcy notice, namely $6300, is in a relative sense, a minor sum. When one takes that factor plus the absence, or at least one might say, the disinclination, to provide evidence of solvency which would have been highly pertinent to the question of whether a sequestration order ought to be made, that is a concern in relation to balance of convenience. 59 Notwithstanding that there was no evidence of solvency in Ogle, Justice Logan found that, having regard to other relevant matters bearing on the balance of convenience, a stay ought to be granted. 60 In my view, Mr Singh has not pointed to any compelling countervailing factors which tilt the balance of convenience in his favour in the circumstances here. In particular, as I have already observed, Mr Singh has not placed any evidence before the Court establishing any material prejudice he says he will suffer between now and the hearing and determination of the appeal if the sequestration order continues to be implemented and his estate administered by the registered trustees in bankruptcy. 61 Although Mr Singh did not provide the Court with any evidence as to his financial position, he said from the bar table that he was willing and able to pay the outstanding levies owed to the Owners Corporation, as long as he was provided with proper particulars of the amount said to be owing. In the absence of any admissible evidence from him on those matters I consider that I cannot take those statements into account. Mr Singh had ample opportunity to adduce relevant financial information regarding his affairs. As can be gathered from the long history of these unfortunate matters, Mr Singh, although self-represented, has extensive experience of court procedures in many different courts. No doubt Mr Singh's statements will be brought to the attention of the Owners and they can take whatever action they consider appropriate in response. 62 There are additional matters relevant to the balance of convenience which do not favour Mr Singh. In particular, it is evident that, despite repeated requests, Mr Singh has still not filed a Statement of Affairs as required by s 54 of the Bankruptcy Act. Ms Quang's affidavit annexed correspondence between her and the trustees in bankruptcy. It appears from that correspondence that Mr Singh was advised by a letter dated 10 April 2012 which was sent by registered post from his trustees in bankruptcy that he was required, pursuant to s 54 of the Bankruptcy Act, to complete and lodge a Statement of Affairs to the Official Receiver within 14 days of receiving notification of his bankruptcy. It also appears that the trustees sent further letters to Mr Singh emphasising the requirement that he complete and lodge a Statement of Affairs. The trustees advised Ms Quang by email dated 23 May 2012 that Mr Singh had not yet provided a statement of affairs and that the trustees would apply to the Insolvency and Trustees Service Australia to issue a notice under s 77CA of the Bankruptcy Act. 63 It is also to be noted that, according to Ms Quang's affidavit, Mr Singh and Ms Kaur have to date accumulated a debt to the respondent in excess of $75,000 in respect of their contributions to the administration and sinking fund, levies and interest. Apparently no payments have been received by the respondent in respect of the debt. As noted above, Mr Singh said that he was willing and able to settle the debt as long as it was properly particularised. That sensible course remains open to be taken irrespective of the outcome of Mr Singh's interlocutory application. 64 In my view, for all these reasons, I consider that the balance of convenience firmly favours a stay not being granted. 65 Accordingly, I make the following orders:

1. The application for interlocutory relief is dismissed.
2. The applicant is to pay the costs of the respondent of and incidental to the application for interlocutory relief. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.