Singh v Owners Strata Plan No. 11723

REASONS FOR JUDGMENT 1 By interlocutory application filed on 2 May 2012 the applicant seeks an order staying a sequestration order made on 5 April 2012 by Federal Magistrate Smith. The sequestration order was made on the creditor's petition of the respondent (the Owners) and was made against the estates of both the applicant, Mr Jagjit Singh, and his wife, Ms Sarbjit Kaur. The creditor's petition was based in part on a default judgment given by the Local Court in respect of unpaid levies, interest and costs said to be owed by Mr Singh and Ms Kaur to the Owners in relation to a unit in Harris Park. 2 Although the sequestration order was made against the estates of both Mr Singh and Ms Kaur, it appears that only Mr Singh seeks interlocutory relief. Mr Singh's interlocutory application came before me as Duty Judge. Mr Singh represented himself and the respondent was represented by Mr Radman, the respondent's solicitor. 3 A notice of appeal from Smith FM's judgment and orders was filed on 24 April 2012. The notice of appeal also seems to suggest that Mr Singh is the only appellant. Although Ms Kaur's name is typed on the Form 121, it has been ruled out in handwriting. Mr Singh confirmed at the hearing that he was the sole applicant and appellant and that his wife is not a party to these proceedings. 4 Mr Singh has sworn an affidavit dated 1 May 2012 in support of his application to this Court for a stay pending inter alia the hearing and determination of his appeal. As will be seen further below, that affidavit addresses at some length the various grounds of appeal set out in the notice of appeal. It should also be noted at the outset, however, that the affidavit contains no material addressing the issue of balance of convenience. 5 The application for a stay was opposed by the respondent. It relied on an affidavit sworn 23 May 2012 by Sylvia Quang, a solicitor acting for the respondent. Mr Singh said that he had not been served with a copy of the affidavit, so I adjourned the hearing for 30 minutes to enable him to read it. The respondent has also filed a notice of objection to competency in relation to Mr Singh's appeal. That notice was filed on 22 May 2012. The respondent seeks to have its objection to competency heard and determined before the hearing of the appeal. It is to be noted that the respondent does not in its notice of objection to competency raise any argument that Mr Singh's proceedings are incompetent because apparently his initiation of the proceedings was not approved by his trustees in bankruptcy. There is no need to deal with these matters now. They are better dealt with as part of the process leading up to the appeal. 6 Following Smith FM's orders made on 5 April 2012, Mr Paul Desmond Sweeney and Mr Terry Grant van der Velde were appointed as joint and several trustees for the estates of Mr Singh and Ms Kaur. There is no direct evidence before the Court as to their attitude to Mr Singh's application. It is evident from Ms Quang's affidavit that the trustees were notified of Mr Singh's proceedings in the Supreme Court. Ms Quang informed them of those matters under cover of a letter dated 11 April 2012. By letter dated 3 May 2012, the trustees responded to Ms Quang advising that, based on their experience with similar matters, they proposed to adopt an impartial position in relation to the Supreme Court proceedings. Accordingly, they neither consented nor objected to Mr Singh's claims in those proceedings. The respondent asked me to infer that the trustees had the same attitude to these proceedings before me. Ideally the matter should have been the subject of direct evidence. 7 It appears that Mr Singh never served a copy of his notice of appeal on the respondent. Ms Quang has given evidence to the effect that it was not until 8 May 2012, when she received an email from the Federal Court Registry, that she first became aware of Mr Singh's notice of appeal, interlocutory application and affidavit in support. 8 Mr Singh's notice of appeal sets out what are said to be twelve grounds of appeal, although I note that ground 11 does not appear to state grounds of appeal, but rather involves a somewhat disjointed commentary by Mr Singh on the reasons given by Federal Magistrate Smith. That commentary appears under a heading in the notice of appeal "Observations on Reasons for Judgment". 9 The application for interlocutory relief sets out eight separate interlocutory orders sought by Mr Singh. Orders 1 to 7 all seek a stay in the sequestration order made by Smith FM. But the grounds for, and timing of, the stays sought by Mr Singh vary in many of those paragraphs. Mr Singh also seeks an order that costs be costs in the cause. 10 It is convenient to defer consideration of Mr Singh's application for a stay until after the reasons of Smith FM are briefly described. Those reasons may be summarised as follows (noting that Smith FM emphasised several times the difficulties presented by Mr Singh's evident inability to simplify his thoughts and present them in an intelligible fashion to other people): (a) the creditor's petition relied on a total indebtedness by Mr Singh and Ms Kaur in the amount of $21,444.61. That amount was constituted by the amount of a judgment debt obtained in the Local Court of New South Wales on 6 May 2011, together with subsequently accruing quarterly administration fund and sinking fund levies owed by Mr Singh and Ms Kaur to the Owners; (b) his Honour accepted the Owners' evidence verifying the amounts set out in the petition and he was unable to detect in Mr Singh's evidence or submissions any substantive challenge to the amount of that indebtedness; (c) nor did his Honour see any good reason to go behind the judgment debt entered as a default judgment on 6 May 2011 in the Local Court, even though that was the focus of Mr Singh's challenge to the petition; (d) his Honour was satisfied that Mr Singh and Ms Kaur had committed an act of bankruptcy on 24 August 2011, when each of them failed to comply with the bankruptcy notice duly served upon them; and (e) his Honour was also satisfied for reasons that he gave that the other requirements of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) and Rules concerning the exercise of power under s 52 of the Act to make a sequestration order were satisfied in relation to both estates. 11 His Honour went to some length in his reasons to describe multiple proceedings involving Mr Singh and Ms Kaur, as well as the respondent, in the Local Court, District Court and Supreme Court. The various proceedings in the Local Court and the District Court have a long history which is set out in [7] of the learned Federal Magistrate's reasons and need not be repeated here. 12 Of particular relevance to Mr Singh's interlocutory application is the fact that the Owners obtained default judgment on 6 May 2011 in the Local Court in the amount of $14,251.68. In various proceedings in the Local Court Mr Singh and Ms Kaur unsuccessfully sought to have the default judgment set aside. Mr Singh and Ms Kaur then brought various proceedings in the District Court appealing that default judgment. They were initially successful in obtaining from Delaney DCJ a stay of the execution of that default judgment. That stay lapsed on 28 October 2011. Subsequently, on 2 February 2012, Delaney DCJ struck out both an Amended Summons and a Further Amended Summons filed by Mr Singh and Ms Kaur in attempting to commence an appeal in the District Court against the default judgment. Also on 2 February 2012, Delaney DCJ ordered that any stay of execution of the Local Court default judgment be lifted and that no further action be taken in the District Court proceedings by Mr Singh or Ms Kaur until all costs orders were paid. 13 At the hearing before me, Mr Singh tended copies of a notice of motion and supporting affidavit which he had filed in the District Court recently. The motion sought various relief which appears to be aimed at facilitating Mr Singh being able to appeal the Local Court default judgment to the District Court. The motion is returnable in the District Court on 8 June 2012. It remains to be seen how it will be dealt with having regard to the orders made by Delaney DCJ on 2 February 2012 and the fact that the respondent's costs of the earlier District Court proceedings have not been paid. 14 On 23 March 2012, Mr Singh filed a summons in the Supreme Court of New South Wales in which he sought to have the proceedings in the District Court transferred to the Supreme Court under s 140 of the Civil Procedure Act 2005 (NSW). According to Mr Singh's application for interlocutory relief, those proceedings were fixed for hearing on 2 May 2012. In fact, as is evident from Ms Quang's affidavit, the matter was listed for directions in the Supreme Court on that day and was then adjourned until 16 May 2012. Mr Singh's summons was heard on that day by her Honour Justice Adamson. Her Honour also heard the respondent's application to have the summons dismissed. On 18 May, her Honour gave judgment and ordered that Mr Singh's summons be dismissed and that he pay the respondent's costs of those proceedings. Her Honour held that the Supreme Court had no power to transfer Mr Singh's appeal in the District Court to the Supreme Court. These matters are relevant to ground 2 of Mr Singh's application for interlocutory relief (see further below). 15 The history of the proceedings in the Federal Magistrates Court is also helpfully set out in [7] of Smith FM's decision and need not be repeated here. 16 The Federal Magistrate set out in [9] of his reasons his understanding of Mr Singh's formulation of his grounds for opposing the making of a sequestration order. After noting that he had difficulty reducing Mr Singh's case to a precise or intelligible form, his Honour adopted the following summary by the Owners' solicitor of his understanding of Mr Singh's grounds of opposition: (a) That the default judgment was incorrect; (b) That Bankruptcy Notice NN3395 of 2011 did not state the correct address and was void; (c) That Bright and Duggan Pty Ltd as the strata managing agent of the Owners did not have authority to instruct the Owners' solicitors to issue the Bankruptcy Notice; (d) That these proceedings were instituted by Bright and Duggan Pty Ltd who did not have authority to act on behalf of the Owners; (e) That the Owners' solicitor have maintained these proceedings without the authority of the Owners; (f) That the amounts claimed in the creditor's petition are different from the amounts stated in the Bankruptcy Notice and have no justification in law; and (g) That the Court should exercise its discretion to dismiss the Creditor's Petition to avoid denying Mr Singh and Ms Kaur an opportunity to appeal the default judgment of the Local Court proceedings 2010/00283693. 17 It is evident that a central focus of Mr Singh's case before the Federal Magistrate was that his Honour should go behind the Local Court default judgment for various reasons. 18 His Honour found no substance in any of the arguments advanced by Mr Singh opposing the making of a sequestration order. In particular, his Honour could find no good reason for the Court to go behind the Local Court default judgment upon which the bankruptcy notice was based and upon which the creditor's petition was partly based. His Honour appeared to accept that there was a "minor discrepancy" in the amount of the default judgment but his Honour held that, in his discretion, he would not go behind the judgment to investigate its calculation in circumstances where "it appears that undoubtedly there is a real debt owing in an amount upon which the bankruptcy proceedings could properly be based". His Honour also gave reasons for rejecting the other grounds upon which Mr Singh invited the court to go behind the Local Court default judgment (while noting again that Smith FM repeatedly referred to the difficulties he experienced in seeking intelligibly to isolate Mr Singh's complaints on those additional matters and, indeed, his case generally). 19 His Honour also gave detailed reasons explaining why he rejected the other grounds of opposition advanced by Mr Singh, as best he could understand them. 20 His Honour ultimately concluded that he was satisfied that a sequestration order should be made. In particular, he found that he was not satisfied that any of the circumstances under which the default judgment had been obtained in the Local Court, and which was not set aside on appeal to the District Court, constituted any "other sufficient cause" under s 52 of the Bankruptcy Act for declining to make a sequestration order. 21 His Honour also rejected Mr Singh's argument that he should adjourn the creditor's petition in light of Mr Singh having commenced proceedings in the Supreme Court of New South Wales seeking to have the District Court proceedings transferred. Having regard to Justice Brereton's decision in Rinbac v Owners Strata Plan No 64972 [2010] NSWSC 656 at [11], the learned Federal Magistrate doubted whether the Supreme Court would accept jurisdiction to entertain the summons and added that, in any event, he was firmly of the opinion that there was no reasonable prospect that the Supreme Court would be satisfied that there was a "sufficient reason" within the meaning of sub-section 140(4) of the Civil Procedure Act 2005 to exercise that jurisdiction, even if it had it. 22 Federal Magistrate Smith expressed the following findings in [29] of his reasons: In my opinion, Mr Singh has been afforded more than enough time to challenge the Local Court judgment in the District Court during dependency of the bankruptcy proceedings, and was afforded more than reasonable opportunities to formulate his arguments before Delaney DCJ. As I have explained, he has been unable to show either the District Court or this Court that there are good grounds for going behind the judgment. 23 Accordingly, his Honour declined to further adjourn the petition and proceeded to make a sequestration order in the form described above.