Toogood v Gott, in the matter of Toogood

Federal Court of Australia|2019-10-31|Before: Beaumont J, Greenwood J

The application filed 22 April 2019 be dismissed.
The applicants pay the respondents' costs of and incidental to the application.
Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GREENWOOD J: 1 Mr Steven Paul Toogood and Ms Julianne Toogood (the "applicants") have filed an application for review of orders made by Registrar Buckingham of this Court on 3 April 2019 dismissing an application of the applicants filed on 25 March 2019 (the "principal application") for orders relating to a bankruptcy notice issued on 5 March 2019 by the Official Receiver by which the respondents assert that they are creditors of the applicants in the sum of $74,767.48. 2 By their principal application, the applicants sought the following orders: 1. That the Bankruptcy Notice BN237892 be set aside pursuant to Section 41(5) of the Bankruptcy Act 1966 on the grounds the notice is invalid as it exceeds the amount due and the creditor has been given notice of this by way of email on 25 March 2019. 2. That an extension of time be granted to comply with the Bankruptcy Notice BN237892 pursuant to Section 41(6)(a) of the Bankruptcy Act 1966 and Rule 3.02(4) of the Bankruptcy Rules on the grounds there are proceedings in the Queensland Supreme Court to set aside the underlying judgment. 3. That the Bankruptcy Notice BN237892 be set aside pursuant to Section 41(5) of the Bankruptcy Act 1966 on the grounds the notice is invalid as it was procured by fraud and a miscarriage of justice in the judgment of 26 April 2017. 4. That the court orders an extension of time for compliance pursuant to Section 41(7) of the Bankruptcy Act 1966 and Rule 3.02(3) of the Bankruptcy Rules on the grounds that the applicants have a counter claim, set off or cross demand exceeding the amount of the underlying [judgment]; and 5. The Court look behind the underlying judgment and find that the application to set aside or stay the underlying judgment is competent and has been instituted bona fide and is being prosecuted with due diligence; and 6. Pursuant to Section 51(1) and (2) of the Bankruptcy Act [1966] the Court look behind the underlying judgment and find it was procured by fraud and a miscarriage of justice or find, on the principles in Ramsey Health Care Australia Pty Ltd v Compton [2017] HCA 28 at [72], that there is a substantial question as to whether the debt on is owing and dismiss or stay the petition. 7. That the Bankruptcy Notice BN237892 be set aside pursuant to Section 41(6A)(b) of the Bankruptcy Act on the grounds that there: a) Is a defect or irregularity in the bankruptcy Notice and its issue that is substantial, is not procedural, is objectively capable of misleading the Applicant and has [misled] the Applicant. b) The amount claimed in the Bankruptcy Notice is substantially overstated and proper account should be made and supplied to the creditor prior to issuing any Bankruptcy Notice. c) The Applicant debtor does not owe the debt alleged in the Bankruptcy Notice. [bold emphasis added] 3 The applicant also seek orders staying the orders of Registrar Buckingham pending this Court's decision. 4 As already mentioned, this proceeding is concerned with, at its core, a Bankruptcy Notice BN 237892 (the "BN") issued on 5 March 2019 by the Official Receiver. That BN sought payment, within 21 days, of the sum of $74,767.48 being the amount of a costs order made by a Registrar of the District Court of Queensland on 24 January 2019. 5 On 25 March 2019, the applicants applied to this Court for the orders described at [2] of these reasons. 6 The Federal Court Rules 2011 (Cth) provide that a party may apply to the Court, under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (the "Act"), for review of the exercise of a power by a Registrar of the Court: see Rule 3.11. The review task undertaken by a Judge of the Court in the exercise of the Court's supervisory role concerning orders made by a Registrar in the exercise of the power conferred by s 36A(5) of the Act involves undertaking a review de novo by considering again all the evidence and submissions made to the Registrar (including additional evidence and submissions filed in support of the review application). 7 Accordingly, it is necessary to consider aspects of the procedural background to this matter and any related proceedings relevant to the questions now in issue.

Background 8 Ms Toogood was, at the relevant time, an owner of a property located at Bingil Bay which fell within the local government area of the Cassowary Shire Council (the "Council"). 9 In July 2016, the Council brought proceedings against Ms Toogood seeking recovery of rates said to be unpaid and owing by Ms Toogood to the Council in respect of the Bingil Bay property. It seems that the recovery action was defended. It also seems that, ultimately, the Council succeeded in those proceedings. 10 It was, apparently, this dispute which was the "catalyst" (to use the terminology of Judge Lynham in reasons for judgment delivered on 26 April 2018 in proceeding D169/17 in the District Court of Queensland, at [3] of those reasons), for the applicants making a complaint to the Council concerning the conduct of the Deputy Mayor of the Council (the "complaint"). The background events suggest, clearly enough, that the applicants were not satisfied with the investigation undertaken by the Council concerning their complaint. The applicants proceeded to send a number of emails from 23 March 2017 to 14 July 2017 (eight in all) to various Councillors, Council staff and others such as the Hon Curtis Pitt MP (the Treasurer in the Queensland Government at the time) and Mr John O'Halloran (the Far North Queensland Manager, Department of Infrastructure, Local Government and Planning). Those emails were said to contain defamatory statements or imputations about the Chief Executive Officer of the Council, Mr James Patrick Gott. At [3] of the reasons of Lynham DCJ, eight emails are identified which were said to contain the defamatory statements or imputations. It is not necessary to further identify the details of those emails in these reasons. 11 It should be noted that in the District Court proceedings, the present applicants who were the defendants in those proceedings filed a counterclaim alleging that they had been defamed by Mr Gott. Four additional defendants were added by counterclaim to that proceeding. As to those four defendants, the present applicants asserted that they had been defamed by them. Those four defendants by counterclaim were the Council, Ms Tracey Taylor, Rickey Taylor and John Kremastos. Mr Gott, the Council, Ms Taylor, Mr Taylor and Mr Kremastos are the respondents to the present application. 12 It is relevant to also note that Mr Gott (and the other respondents) also relied upon the contents of a telephone conversation between the applicants and Councillor Kimberley on 29 May 2017 in which the applicants were said to have made comments or remarks defamatory of Mr Gott. The particular matters said to constitute the defamatory imputations about Mr Gott contained in the eight emails and the telephone conversation were pleaded at paras 14 to 43 of the statement of claim filed on behalf of Mr Gott, together with particulars. 13 A question has arisen in these proceedings about whether a recording was made of the conversation between Councillor Kimberley and the applicants on 29 May 2017. This issue of the existence of a recording of the conversation is a matter upon which the applicants place great significance. I will return to that matter later in these reasons. For present purposes, I simply note that the applicants contend that a recording was made of the telephone conversation, in contravention of the Invasion of Privacy Act 1971 (Qld) (the "Privacy Act"). The applicants say that they contended, before Lynham DCJ, that the use of the recording was prohibited by the Privacy Act. 14 On 2 November 2017, Judge Lynham heard three applications. 15 The first was an application by the Mr Gott for an order pursuant to r 171 of the Uniform Civil Procedure Rules 1999 (Qld) (the "UCPR") to strike out various paragraphs of the present applicants' defence and an order pursuant to r 166 of the UCPR that the applicants be taken to have admitted various paragraphs of their defence. 16 The second was an application by the defendants (to the counterclaim), as earlier described, for an order pursuant to r 171 of the UCPR that the entirety of the counterclaim made by the present applicants be struck out. 17 The third was an application by the defendants to the proceeding (the present applicants) pursuant to r 171 of the UCPR to strike out the plaintiff's statement of claim; an application pursuant to r 375 that they be granted leave to amend their defence; an application pursuant to r 358 that they have leave to amend their counterclaim; an application pursuant to r 166 that deemed admissions be withdrawn and other orders. 18 Judge Lynham gave judgment on 26 April 2018 in relation to those applications. 19 As to the first application described at [15] of these reasons, Judge Lynham made the following orders: 1. That pursuant to rule 171 Uniform Civil Procedure Rules the following parts of the defence filed on 7 September 2017 be struck out: (a) Paragraphs 4, 10, 11, 12, 13, 16, 17, 18, 19, 20, 21, 22 and 23 in their entirety. (b) Paragraph 3 - with the exception of the first sentence, the remainder of paragraph 3. (c) Paragraph 14 - subparagraphs (c) and (e) to (n). 2. That pursuant to rule 166 Uniform Civil Procedure Rules the defendants are taken by the following paragraphs of their defence to have admitted the following paragraphs of the statement of claim: (a) Defence paragraph 1 is taken to admit statement of claim paragraph 1. (b) Defence paragraph 5 is taken to admit statement of claim paragraph 12. 3. That the plaintiff's strike out application in respect to paragraphs 8 and 9 be adjourned for further argument. 4. That the plaintiff's application that defence paragraph 6 be taken to have admitted statement of claim paragraphs 13 to 45 be adjourned for further argument. 5. That the defendants pay the plaintiff's costs of and incidental to the application on the standard basis. 6. That the parties have liberty to apply upon giving 7 days clear notice in writing. [emphasis added] 20 As to the application described at [16] of these reasons, Judge Lynham made the following orders: 1. That pursuant to rule 171 Uniform Civil Procedure Rules the entirety of the counterclaim be struck out. 2. That the plaintiffs by counterclaim [the present applicants] pay the defendants by counterclaim costs of and incidental to the application on the standard basis. [emphasis added] 21 As to the application described at [17] of these reasons, Judge Lynham made the following orders: 1. That the application to strike out the statement of claim pursuant to rule 171 Uniform Civil Procedure Rules is dismissed. 2. That the application to withdraw the admissions in paragraphs 1 and 5 of the defence which are taken to admit paragraphs 1 and 12 of the statement of claim is dismissed. 3. That the application to withdraw any deemed admissions in paragraph 6 of the defence be adjourned for further argument. 4. That the application for leave pursuant to rule 375 Uniform Civil Procedure Rules to amend the defence be adjourned for further argument. 5. That the application for leave pursuant to rule 375 Uniform Civil Procedure Rules to amend the counterclaim is dismissed. 6. That the application to add parties to the counterclaim pursuant to rule 62 Uniform Civil Procedure Rules is dismissed. 7. That the application to refer the plaintiff and/or the plaintiff's solicitors to the Crime and Corruption Commission or the Legal Services Commission is dismissed. 8. That the application to transfer the proceedings is dismissed. 9. That the application for disclosure pursuant to rule 222 or rule 229 Uniform Civil Procedure Rules is dismissed. 10. The application to stay enforcement action by the second defendant to the counterclaim in Magistrates Court matter M00519/16 is dismissed. 11. The defendants (plaintiffs by counterclaim) [the present applicants] pay the plaintiff's (and defendants by counterclaim) [the present respondents] costs of and incidental to the applications on the standard basis. [emphasis added] 22 As a result of the various costs orders described above, the respondents (to these proceedings) filed, on 17 August 2018, a Cost Statement in which they claimed $77,220.88 pursuant to the orders and provided a breakdown of those costs. 23 On 7 September 2018, the present applicants filed a notice of objection to the whole of the sum claimed by the respondents. 24 It seems that the existence of the recording of the telephone conversation of 29 May 2017 as earlier described was eventually admitted and was provided to the present applicants on 11 October 2018 (although this date does not appear to be agreed between the parties). 25 Before addressing aspects of matters related to the telephone conversation of 29 May 2017 (as I do later in these reasons), it should be noted that on 26 September 2018, Judge Lynham published a further judgment with respect to various other applications of the applicants which had been filed on 10 July 2018. In that judgment, Judge Lynham addressed an allegation that he had been misled by the present respondents by the non-disclosure of the recording of the conversation between Councillor Kimberley and the applicants. Judge Lynham said this at [4] of the judgment: There is, in my view, no basis whatsoever for making any of the orders sought by the applicants in paragraphs 19, 20 and 21 of the application. In respect to the orders sought in paragraph 19, it is to be borne in mind that the applicants were a party to the phone conversation and can reasonably be expected to have an independent recollection of what they are purported to have said in the phone conversation on 29 May 2017 and, therefore, whether the statement of claim accurately pleads what they are alleged to have said in the conversation relied upon by the plaintiff as containing defamatory imputations. Moreover, the applicants, in pleading in their defence to that aspect of the plaintiff's statement of claim, did not deny the phone conversation or the contents of the conversation as pleaded by the plaintiff. Therefore the involvement of the [sic] either the plaintiff or his solicitor in the recording, publishing, transcribing and using the phone conversation has no obvious relevance to any matter in dispute relating to the phone conversation and therefore I see no proper basis for requiring either the plaintiff or the plaintiff's solicitor to depose an affidavit detailing their respective involvement in that phone conversation. [emphasis added] 26 In other words, based on the pleadings, the pleaded allegations about the telephone conversation and the content of it were not "in controversy" in the proceeding. 27 It seems that prior to the delivery of judgment in the District Court proceedings, the present applicants had applied to the Queensland Civil and Administrative Tribunal ("QCAT") on 3 August 2017 seeking damages of $100,000 for a "breach of privacy as per the letter from the OIC [Office of the Information Commissioner] 21 July 2017 as attached". Effectively, this complaint related to an allegation by Mr Toogood that the Mayor of the Council disclosed to the Deputy Mayor of the Council that Mr Toogood was the source of screenshots taken from an online same-sex "dating site" Grindr that were said to be of the Deputy Mayor. 28 On 29 November 2018, Applegarth J of the Supreme Court of Queensland heard an application by the Council to declare the applicants as vexatious litigants pursuant to ss 5 and 6 of the Vexatious Proceedings Act 2005 (Qld). 29 Justice Applegarth made the following orders: UPON THE Respondents Stephen Paul Toogood and Julianne Toogood undertaking not to file any further proceeding in a Court or Tribunal without the prior leave of a Judge of the Supreme Court or the District Court until the hearing and determination of the Amending Originating Application filed by leave on 29 November 2018: 1. The application is adjourned is adjourned [sic] to a date to be fixed. 2. The Respondents are to file and serve by 9 January 2019: (a) Any further responding affidavit material upon which they intend to rely; and (b) A schedule or similar document which responds to the Applicant's Outline of Submissions and schedules thereto. 3. The hearing of the application under Sections 5 and 6 of the Vexatious Proceedings Act 2005 be set down for a hearing to last less than one day in the Civil List in Brisbane. 4. The matter not be listed until after March 2019 and only after Applegarth J has ascertained from the parties their availability and the availability of their Counsel. 30 Separately, on 17 December 2018, the present applicants filed an application for leave to appeal and for an extension of time within which to do so in the Queensland Court of Appeal from the orders of Judge Lynham without seeking prior leave of the court. 31 On 1 February 2019, Morrison JA published ex tempore reasons (see Gott v Toogood [2019] QCA 8) holding that the applicants had filed their application for leave in breach of the undertaking and order of Applegarth J. 32 Accordingly, Morrison JA made the following orders: 1. Application for leave to appeal, CA No 13879 of 2018, is struck out, without prejudice to the right of Mr and Mrs Toogood, the named appellants, to file an application for leave to appeal should leave be granted within the terms of the order of Applegarth J made on 29 November 2018. 2. The respondents are to pay the applicant's costs on the indemnity basis. 33 On 13 March 2019, Ryan J of the Supreme Court of Queensland dismissed an application by the applicants to vary the undertaking given by them not to file further proceedings without leave: see Toogood & Anor v Cassowary Coast Regional Council [2019] QSC 60. 34 In particular, Ryan J observed at [26] that: The applicants suggest some impropriety on the part of the respondent in relation to the bankruptcy notice, the enforcement warrant and an application to his Honour under rule 667 which would warrant my setting aside or staying my order. I do not accept that the respondent has acted improperly in any respect. 35 Apart from these proceedings, there are, apparently, also criminal proceedings on foot concerning the applicants, the relevance of which will be discussed later in these reasons. For present purposes, it is sufficient to note that the present applicants were charged on 21 June 2017 with stalking offences with respect to the Deputy Mayor of the Council. The applicants contend that the stalking charge arises out of a complaint by the Deputy Mayor concerning emails sent to "Councillors, a Politician and Council related persons", concerning the contended conduct of the Deputy Mayor on Grindr.

The contentions of the applicants 36 At the hearing on 31 July 2019, the central contention of the applicants was and is that the BN ought to be set aside because, in the absence of such an order, the applicants will be prejudiced in their conduct of the criminal proceeding in the sense that a jury, properly instructed, would take a negative view of the applicants due to the circumstance of the bankruptcy. 37 The applicants also, importantly, say that the BN was obtained by "fraud" or otherwise "improperly obtained" as Judge Lynham was misled by the respondent concerning the existence of a recording of the telephone conversation of 29 May 2017. The applicants say that this circumstance raises a question about whether this Court, as a court exercising bankruptcy jurisdiction under the Bankruptcy Act 1966 (Cth) (the "Bankruptcy Act"), ought to "look behind" the costs order the subject of the BN to determine whether the order was obtained by fraud or obtained by other improper conduct such that the BN should be set aside in the exercise of a statutory power under the provisions of the Bankruptcy Act: see also, as to matters of principle, Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 ("Ramsay"). 38 There are, also, a range of other contentions made about vexatious litigant proceedings in the Supreme Court and the substantive defamation proceedings. It is not appropriate to address these matters in the context of an application to review a Registrar's orders. 39 Section 30 of the Bankruptcy Act confers a general power on the Federal Court of Australia to decide all questions of law or fact in any proceeding under or by virtue of the Bankruptcy Act and a power to make such orders as the Court considers necessary for the purpose of giving effect to that Act: s 30(1), s 30(2), s 5(1) as to the definition of "bankruptcy". 40 Section 41(3) provides that a bankruptcy notice shall not be issued in relation to a "debtor" except on the application of a "creditor" who has obtained a final judgment or final order within the meaning of s 40(1)(g), or a person who, by virtue of s 40(3)(d), is deemed to be a creditor. If the final judgment or final order has been obtained by fraudulent conduct or by other improper conduct (such as collusion or a miscarriage of justice), questions of law and fact arise for consideration as to whether the party recited in a bankruptcy notice as a creditor is a "creditor" for the purposes of s 40(1)(g) and/or s 40(3)(d) of the Bankruptcy Act, within the scope of the jurisdiction and power conferred on the Court by s 30 of the Bankruptcy Act.

Ramsay 41 Because the applicants rely upon Ramsay in support of their position, it is necessary to say some things about that authority. 42 In Ramsay, judgment was entered against Mr Compton, a director of company "C" on the footing that Mr Compton had given Ramsay a guarantee of company "C's" debts. The guarantor in the proceedings on the guarantee was represented by solicitors and counsel at the trial. Subsequently, on the hearing of the creditor's petition (being, of course, the proceeding in bankruptcy), Mr Compton sought to adduce evidence to demonstrate that the debt upon which Ramsay relied was no longer "owing" for the purposes of s 52(1)(c) of the Bankruptcy Act due to a sequence of reconciliations of indebtedness which had been carried out. As to the scope of the power to look behind the final judgment or final order, for the purposes of s 52(1)(c) and s 52(2) of the Bankruptcy Act on the hearing of a creditor's petition, so as to determine whether the debt is truly "owing", the scope of the power is not confined to cases where the final judgment or final order was obtained by fraud, collusion or miscarriage of justice. The scope of the power is more broadly conferred than that, although the circumstance that a party has already had a hearing on the merits militates against the exercise of the power to go behind the final judgment or final order: Ramsay at [48]-[52]. So far as s 52 of the Bankruptcy Act is concerned, the question is whether the Court can be satisfied that "there is, in truth and reality, a debt": Ramsay at [49]. 43 In Ramsay Health Care Pty Ltd v Compton [2015] FCA 1207 (Flick J at first instance), declined to investigate whether the debt relied on by Ramsay was truly owing, because his Honour considered that he had no discretionary power to go behind the judgment and, even is such a discretion existed, it ought not be exercised. 44 In Compton v Ramsay Health Care Australia Pty Ltd (2016) 246 FCR 508, the Full Court, Siopis, Katzmann and Moshinsky JJ, allowed Compton's appeal on the basis that substantial reasons were shown for questioning whether Compton was indebted to Ramsay. Accordingly, the Full Court held that grounds were made out for the exercise of the power to go behind the final judgment. 45 In the High Court, the plurality, Kiefel CJ, Keane and Nettle JJ (Gageler J dissenting; Edelman J declining to express a view on the question), held that the Full Court was correct to conclude that a substantial question arose as to whether the judgment debt was truly owing to Ramsay and accordingly, a Court exercising jurisdiction in bankruptcy was required to examine whether the underlying debt, the subject of the creditor's petition and on which Ramsay was relying, was "owing": s 52(1)(c). 46 The point of principle that emerges from the judgment of the plurality in Ramsay, is that described at [42] of these reasons. Thus, when a court exercising bankruptcy jurisdiction is considering whether to make a sequestration order on the hearing of the creditor's petition, the court must be satisfied that the debt on which the order is based is truly a basis for the making of the sequestration order: see also In re Fraser; Ex parte Central Bank of London [1892] 2 QB 633 at 636-637. 47 As Beaumont J explained in Gye v McIntyre (unreported, Beaumont J, 26 May 1992) (relied on in Makhoul v Barnes (1995) 60 FCR 572, 581-582) the rationale for this principle is that when called upon to make a sequestration order, a judge in bankruptcy is not required to determine rights inter partes but instead must satisfy himself or herself that the discretion ought to be exercised to make a sequestration order: see In re Vitoria; Ex parte Vitoria [1894] 2 QB 387; King v Henderson [1898] AC 720; Brookfield v Real Estate Now Pty Ltd [2019] FCA 993. 48 In Ramsay, the plurality were, of course, speaking about the scope of the power to look behind a final judgment or final order on the hearing of a creditor's petition in which a sequestration order was being sought. Here, of course, the circumstances are different as the Court is concerned with an application to set aside a bankruptcy notice which has not yet led to the filing and serving of a creditor's petition. Nevertheless, where a challenge is made to the validity of a bankruptcy notice on the ground that the party who has sought the issue of the bankruptcy notice is not a "creditor" for the purposes of the Bankruptcy Act (ss 41(3), 40(1)(g), 40(3)(d), 30(1) and 30(2)), the same matters of principle arise on an application to set aside the bankruptcy notice as a non-compliant notice under the Bankruptcy Act.

The circumstances of the present case 49 In this case, the BN is based upon an order of a Registrar of the District Court that a certain sum of costs be paid as a result of a costs assessment filed by the present respondents. Pursuant to r 740(2) of the UCPR, an order made by a Registrar of the court pursuant to a certificate of assessment takes effect as a judgment of the court. 50 The existence of a judgment, particularly following a hearing on the merits, may be regarded as satisfactory proof of a debt for the purposes of s 52(1)(c) of the Act: see both Corney v Brien (1951) 84 CLR 343, 355 and Ramsay at [48]. What Ramsay, as discussed supra, reemphasised is that the Court has a discretion whether to accept a judgment as sufficient proof: see also Wren v Mahoney (1972) 126 CLR 212, 224. Crucially, in Ramsay at [68]-[69], Kiefel CJ, Keane and Nettle JJ said: 68. For the purposes of s 52 of the Act, a judgment may usually be taken to be sufficient evidence of a debt in that a judgment against a debtor in favour of a creditor obtained after a trial is, generally speaking, a reliable indication of the true state of indebtedness as between creditor and debtor. Indeed, such a judgment can usually be expected to provide the most reliable statement of the debt humanly attainable because the ordinary processes of the adversarial system provide a practical guarantee of reliability. The testing of the relative merits of a claim and counterclaim under the rigours of adversarial litigation will usually establish the true state of accounts as between the parties to the proceedings. Accordingly, a Bankruptcy Court will usually have no occasion to investigate whether the judgment debt is a true reflection of the real debt. But where the merits of a claim and counterclaim have not been tested in adversarial litigation, a judgment debt will not have this practical guarantee of reliability. 69. In Petrie v Redmond [reported at [1943] St R Qd 71], Latham CJ, with whom Rich and McTiernan JJ agreed, said that the Bankruptcy Court: … is entitled to go behind the judgment and inquire into the validity of the debt where there has been fraud, collusion or miscarriage of justice. ... Also the court looks with suspicion on consent judgments and default judgments. ... The Bankruptcy Court does not examine every judgment debt. Special circumstances must be established before it will do so. It is impossible to lay down any general rule. [bold emphasis added] 51 In Waterton v Lafferty [2019] FCA 1267 (published on 14 August 2019) ("Lafferty"), Banks-Smith J considered an application for a sequestration order which was opposed on the basis that the judgment upon which it is based was said to be tainted by fraud and the creditor's petition was an abuse of process. 52 Her Honour emphasised that the real question for this Court, in the exercise of jurisdiction in bankruptcy, is "whether the judgment was not the outcome of the rigorous processes of adversarial litigation" such that the decision is not, in effect, safe to rely upon: [53]. 53 In Lafferty, there was a history of litigation between the applicant creditor, who was one of the three children of a couple, and the sister of the applicant creditor which culminated in a decision of the Supreme Court of Western Australia. Following that decision, the applicant creditor received the benefit of a costs order against his sister. It was that costs order (which was also made by a Registrar) that the applicant creditor's sister said was infected by fraud concerning the underlying judgment. Effectively, the sister said that her brother swore a false affidavit in the action in the Supreme Court of Western Australia. In substance, the sister's case was a claim for a one-third interest in her mother's estate on the basis of a letter allegedly written by her mother. The sister's claim ultimately failed because she could not make good her allegation as to her mother's representation. 54 Justice Banks-Smith observed that, in her Honour's view, care must be taken not to attribute to a debt which arises as a result of a costs order "special protection": [69]. Her Honour observed that "if an underlying judgment itself is open to question as to whether there has been fraud, collusion or a miscarriage of justice then there may be a sufficient connection between the costs and the judgment to justify going behind the costs judgment and the underlying judgment": [73]. 55 This proceeding involved, as a matter of the underlying controversy, a hearing on a series of extensive interlocutory applications about the pleadings and related matters: see [13] to [21] of these reasons. These interlocutory applications were determined in favour of the respondents (including the Council), which led to the costs orders, which take effect as a judgment. 56 The applicants' essential and central complaint concerns a contention that the individual respondents and the Council misled Judge Lynham concerning the existence of a recording of the telephone conversation of 29 May 2017 between the applicants and Councillor Kimberley said to give rise to the contended defamatory imputations against a member of the Council. For the purposes of these proceedings, I have had the benefit of reading the reasons for judgment of Lynham DCJ in relation to the competing interlocutory applications. The judgment is extensive. It comprises 58 pages and comprehensively examines the various challenges to the defence of the applicants in that proceeding and the efficacy of the cross-claim put on by the present applicants. There is no doubt that the costs order has arisen out of the determination on the merits by Lynham DCJ on the three applications heard and determined by him. 57 Having regards to all of those matters, I am not satisfied that the particular controversy in relation to whether the conversation of 29 May 2017 was recorded or not (recognising that the pleaded content of the conversation was not put in issue by the present applicants) raises a substantial question as to whether the debt upon which the respondents rely to support the BN is, in fact, owing such that this Court should set aside the orders of Registrar Buckingham made on 3 April 2019. 58 The applicants appeared at the hearing before Judge Lynham; provided detailed submissions to his Honour, and provided a detailed notice of objection to the costs assessment provided to the Registrar of the District Court. 59 Further, the paragraph in Judge Lynham's judgment of 26 April 2018 complained of by the applicants as expressing reliance upon the respondents' representation that a recording of the telephone conversation did not exist, is [152]. That paragraph is in these terms: The plaintiff has consistently asserted that the conversation alleged in paragraph 12 of the statement of claim was not recorded electronically or otherwise. As pleaded, paragraph 12 makes no mention of a "recording" or a "document" from which it might be inferred the conversation was recorded in some fashion. Whilst the defendants maintain that there is evidence that the conversation alleged in paragraph 12 of the statement of claim was recorded by Mr Kimberley (I have summarised the evidence relied upon earlier), I am far from convinced as to the veracity of that evidence. In light of the plaintiff's clear and express denials as to the existence of any such a recording, there is no basis upon which the court can make an order for disclosure of the purported recording. This part of the application must be refused. [emphasis added] 60 It is important to note that his Honour made these comments in the judgment under the heading "Disclosure" and the remarks at [152] were directed towards addressing the applicants' application for disclosure of the recording under r 222 of the UCPR. As to that discrete application, Lynham DCJ, for the reasons indicated, determined that that part of the broader application by the applicants had to be refused. However, the costs orders were made in the exercise of the Judge's broad discretion as to costs having regard to the totality of the outcome on the applications overall on the merits. Plainly enough, the respondents were very substantially successful in their applications and accordingly, costs followed that event. The particular issue in relation to a disclosure of the recording of the conversation on 29 May 2017 is not something that calls into question the costs orders on the basis that there has been fraud, collusion or a miscarriage of justice. That follows because the lack of success of the applicants in relation to that discrete disclosure question concerning the recording was not the material matter which brought about the costs orders on which the respondents rely. The respondents obtained costs orders in their favour because they were very substantially successful in relation to the applications decided, on the merits, by Judge Lynham. 61 At [152], Judge Lynham considered the question of whether there was a recording of the telephone conversation on 29 May 2017. He was not satisfied that an order for disclosure of it was to be made having regard to the observations made at [152]. The existence of the recording was later conceded. It is not clear on the current state of the evidence whether the recording reflects the pleading of the content of the conversation which had not been put in issue by the applicants. Whilst it is regrettable that the recording was not disclosed to the applicants, I am not satisfied that this particular matter leads to a substantial question which calls into question the underlying judgment debt arising out of the quantification in accordance with the processes of the District Court of the costs orders made by his Honour.

Prejudice to the criminal proceeding 62 A further complaint made by the applicants is that their bankruptcy would prejudice them in the sense that a properly directed jury would be influenced by the fact of it. 63 The applicants have not further specified the prejudice that they fear would arise out of the making of a sequestration order so far as their conduct of the criminal proceeding is concerned. 64 In Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46 ("Zhao"), the High Court considered the question of the circumstances in which civil proceedings should be stayed pending the finalisation of criminal proceedings. The facts of Zhao are clearly distinguishable from the present case. However, the circumstances of Zhao ought to be mentioned having regard to the contentions of the applicants on this issue. 65 In Zhao, the Commissioner applied for a forfeiture order under the Proceeds of Crime Act 2002 (Cth) at a time when charges were pending against the accused. French CJ, Hayne, Kiefel, Bell and Keane JJ observed that the offence, and the circumstances relating to it which were relevant to the forfeiture proceedings, were substantially identical to the matters in issue in the criminal proceedings: see Zhao, [1]. 66 Ultimately, their Honours made this observation at [47]: The prospect that civil proceedings may prejudice a criminal trial and that such prejudice may require a stay of the civil proceedings is hardly novel. In some jurisdictions, procedures are provided for making an application for a stay in such circumstances. [emphasis added] 67 In Zhao, their Honours also observed that the risk of prejudice in that particular case was properly described as "real". Their Honours also observed that the second respondent in the case could point to a risk of prejudice, and the Commissioner could not. 68 In the present proceeding, there is no "overlap" in the sense described in Lee v New South Wales Crime Commission (2013) 251 CLR 196, between the subject matter of the offence, the subject of the upcoming trial (stalking), and the matters giving rise to the BN. 69 The criminal proceedings are the result of a complaint made by the Deputy Mayor of the Council. It is not apparent why a trial concerning those charges would be prejudiced by a sequestration order having been made as a result of a debt due arising out of a costs order. There is unlikely to be cross-examination of witnesses in the bankruptcy proceedings. The material filed to date has essentially gone to matters of background narrative that have been set out in a range of other public proceedings in the District Court and the Supreme Court of Queensland. 70 As to the applicants' concern that a jury would be influenced (in the relevant sense) by their bankruptcy, I am not satisfied that a jury, properly instructed by a Judge of the District Court, would be influenced by the circumstance of the bankruptcy of the applicants or be unable to put to one side matters relating to the bankruptcy of the applicants (should that occur and should it emerge as a fact in the criminal proceedings) when deliberating upon and deciding the questions a jury would be called upon to decide in the criminal proceedings. 71 The matters addressed in these reasons are the matters relied upon by the applicants in challenging by way of review the decision of Registrar Buckingham in making the order on 3 April 2019 to dismiss the application of the applicants filed on 25 March 2019. The applicants have not been able to make out any proper basis for a challenge to the validity of the Bankruptcy Notice in issue in these proceedings and, accordingly, the application for review is to be dismissed. 72 Accordingly, the application filed 22 April 2019 is dismissed with an order that the applicants pay the respondents' costs of and incidental to the interim application. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

SCHEDULE OF PARTIES QUD 202 of 2019 Respondents Second Respondent: CASSOWARY COAST REGIONAL COUNCIL Third Respondent: TRACEY TAYLOR Fourth Respondent: RICKY KENNETH TAYLOR Fifth Respondent: JOHN KREMASTOS

Federal Court Act 1976(Cth)

Uniform Civil Proceedings Rules 1999(Qld)

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