Sogelease Australia Ltd v Griffin, in the matter of D J Griffin

REASONS FOR JUDGMENT 1 This morning I made a declaration under O 9 r 7 of the Federal Court Rules that the creditor's petition filed in this proceeding has not been duly served upon the respondent debtor ('the Debtor'): see Sogelease Australia Ltd v Griffin, in the matter of D J Griffin [2003] FCA 453. However, in the course of giving my reasons for making that declaration, I indicated that I would be disposed to make an order under O 1 r 8 waiving compliance with the requirement of O 7 r 1 for personal service of the petition on the Debtor or, alternatively, an order under s 309 of the Bankruptcy Act 1966 (Cth) ('the Act') dispensing with personal service. 2 Following the making of a declaration for the reasons then given, an unconditional appearance was filed in court on behalf of the Debtor. An application was then made on behalf of the Debtor to waive non-compliance with O 77 r 11. That rule provides that a person who intends to oppose a petition must, at least three days before the date fixed for the hearing of the petition, or, with the Court's consent, at the hearing, file and serve a notice stating the grounds of opposition to the petition. 3 The application made ore tenus was, in effect, for the Court's consent since the petition was fixed for hearing today following successive adjournments yesterday and the day before. The grounds as set out in the proposed notice of intention to oppose the petition are, in short, that s 52(1)(c) of the Act would not be satisfied because the judgment debt, upon which the bankruptcy notice was founded, is not still owing. 4 The judgment debt arises out of conduct on the part of the Debtor involving alleged misappropriation of funds of the applicant creditors (together 'the Creditors'). Briefly, the allegation is that cheques of the Creditors were falsified by the Debtor and paid into various accounts in the name of the Debtor's wife. The notice of intention to oppose the petition asserts that the acts of the Debtor, in respect of which default judgment was entered, were the subject of operable and continuing duress in the nature of illegitimate pressure and coercion leaving the Debtor with no choice but to act whereby the acts in question were not his in law and by reason of which he accordingly has no liability and no debt is owing. 5 Senior counsel for the Debtor, in oral submissions, indicated that he desired the opportunity to adduce evidence as to the alleged pressure and coercion. The names of the persons alleged to have brought the pressure and coercion to bear were not disclosed. However, senior counsel indicated that they were not the Creditors or persons connected with the Creditors. 6 Senior counsel for the Debtor indicated that, while the judgment debt upon which the bankruptcy notice is based was a default judgment unopposed by the Debtor, the reason for the lack of opposition were constraints imposed by the Legal Profession Act 1987 (NSW). The provisions of the Legal Profession Act are relied upon by way of explanation for the entry of judgment by default without opposition from the Debtor. Section 198J of the Legal Profession Act relevantly provides that a solicitor or barrister must not provide legal services on a defence of a claim for damages unless the solicitor or barrister reasonably believes that the defence has reasonable prospects of success. 7 In support of the application for an adjournment, and for consent to file the notice stating the grounds of opposition, the Debtor relied upon an affidavit sworn today by his solicitor, Mr J F S North. Mr North says that he gave preliminary consideration as to whether there was a reasonable prospect of success in relation to a defence of duress prior to the entry of default judgment. Mr North says that no issue relating to the constitutional validity of the provisions of the Legal Profession Act were contemplated or considered by him prior to 30 April 2003. In essence, Mr North says that a constitutional issue concerning the validity of the Legal Profession Act was raised for the first time on 30 April 2003. Mr North therefore made arrangements to see the Debtor prior to the hearing today and received instructions, after I gave my reasons earlier today, to file the notice of intention to oppose the petition. 8 Mr North says that he wishes to file an affidavit seeking a certificate under s 128 of both the Evidence Act 1995 (Cth) and the Evidence Act 1995 (NSW) in relation to the evidence intended to be relied upon in establishing that there is no debt owing by the Debtor to the Creditors. Mr North says that he wishes to exhibit, as a confidential exhibit, the proposed evidence of the Debtor. He says that because of the number of transactions and entities involved, as identified in the statement of claim filed by the Creditors in the Equity Division proceedings in respect of which judgment was entered, he would not be able to complete that material before 9 May 2003.