Case: Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240
Outcome: cited
matter is complicated by the number of related claims and appeals. In summary: 1. The genesis of this matter was proceedings commenced by the appellant against the respondents in the Federal Court of Australia in November 2003. The appellant claimed contraventions of the Trade Practices Act 1975 (Cth) in respect of the respondents' alleged refusal to honour a promotional card sold to the appellant by the Queensland University of Technology Association of Law Students. Those proceedings were heard and summarily dismissed by Cooper J on 24 May 2004 ( Worchild v The Drink Nightclub (Qld) Pty Ltd [2004] FCA 642). His Honour ordered that the appellant pay the respondents' costs of and incidental to the proceedings. 2. On 20 September 2004, an estimate of the respondents' bill of costs arising out of the decision of Cooper J was made pursuant to the provisions of O 62 r 46 Federal Court Rules and allowed in the sum of $24 000.00, for which sum a Certificate of Taxation was issued on 12 October 2004. 3. On 26 November 2004 Deputy District Registrar Baldwin in the Federal Court made an order that the appellant pay the sum of $24 000.00 to the respondents. 4. Bankruptcy Notice Q/N1238/2004 ('the bankruptcy notice') identifying the appellant as the debtor was issued by the Official Receiver on 15 December 2004. The bankruptcy notice was issued in relation to the appellant's failure to pay the respondents in accordance with the costs order of Deputy District Registrar Baldwin of 26 November 2004. 5. On 21 January 2005 the respondents served the bankruptcy notice on the appellant. 6. On 13 May 2005 before Deputy District Registrar Baldwin in the Federal Court the appellant sought to have the bankruptcy notice set aside. The appellant was unsuccessful and he was ordered to pay costs in the amount of $2500. The appellant unsuccessfully appealed this decision of the Deputy District Registrar ( Worchild v The Drink Nightclub (Qld) Pty Ltd ACN 090 830 854, in the matter of Worchild [2005] FCA 863 per Dowsett J), and then again unsuccessfully to the Full Court of the Federal Court ( Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240). As at the date of the hearing the appellant had sought special leave to appeal to the High Court from the decision of the Full Court. (I understand that special leave to appeal was refused: Worchild v The Drink Nightclub (Qld) Pty Ltd [2006] HCA Trans 223.) 7. On 3 June 2005, the respondents filed a creditor's petition in the Federal Magistrates Court applying for a sequestration order under s 43 Bankruptcy Act 1966 (Cth) (' Bankruptcy Act ') against the estate of the appellant in respect of the debt of $24 000.00 owing to them under the order of Deputy District Registrar Baldwin in the Federal Court of 26 November 2004. The document was accompanied by an affidavit of the second respondent sworn 31 May 2005, deposing that he had access to the books and records of the first respondent, and that the appellant had not paid, nor made arrangements to the satisfaction of the respondents for the settlement of the debt claimed in the bankruptcy notice. 8. On 20 June 2005 the appellant filed and served a Notice of Intention to Oppose the Petition in the Federal Magistrates Court. 9. The petition came before District Registrar Ramsey in the Federal Magistrates Court on 24 June 2005, however the Registrar directed that the matter be adjourned for hearing before a Federal Magistrate at 10.15 am on 26 August 2005. The matter then came before Rimmer FM. In the original notice of appeal, the appellant claimed as his third ground of appeal that there had yet to be a final determination of the application to set aside the bankruptcy notice as required under s 43 of the Bankruptcy Act . Specifically, the appellant submits that in an affidavit of 3 June 2005 filed by Mr Bisson, a solicitor acting for the respondents, in accordance with r 31.04 of the Federal Magistrates Rules, Mr Bisson deposed that an application was made for an order setting aside the bankruptcy notice and that the application had been finally decided by Deputy District Registrar Baldwin on 13 May 2005. However, the appellant submitted that no affidavit was filed before the creditor's petition was heard by Rimmer FM to the effect that the decision of Deputy District Registrar Baldwin had been appealed to Dowsett J, and an appeal from the decision of Dowsett J was pending before the Full Court. (The decision of Dowsett J was subsequently upheld: Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240.) The appellant submits further that as at the date of the hearing before me there was an application for special leave to appeal the decision of the Full Court to the High Court of Australia. Principally, it appears that the issue of whether the order of the Deputy District Registrar was in the nature of a final order has already been raised by the appellant in other litigation, and dealt with by the Full Court in that context: Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240. In particular I note par 10 of the joint judgment of Kiefel, Jacobson and Greenwood JJ where their Honours said: '10 In our view the order of 26 November 2004 is a final order within the meaning of the Bankruptcy Act , one in which the respondents' rights were ascertained and given effect to. Unlike a mere Certificate of Taxation, an order made under O 62 r 45(3) of the Federal Court Rules directs the payment of money. This was a feature absent in Re Walker; Ex parte Noble Einsiedel Pty Ltd [1992] FCA 327 , a decision of Northrop J of 16 April 1992 at p 4. A purpose of the rule is to permit enforcement and execution under the order. The latter is an important element in determining whether an order is final or not: Pepper v McNiece [1941] HCA 27 ; (1941) 64 CLR 642 at 657. In Re Draper; Ex parte Australian Society of Accountants, an unreported decision of 3 February 1989, von Doussa J held that an order made under the rule was final, within the meaning of s 40(1)(g) of the Bankruptcy Act . In his Honour's view, if there be any doubt about that, it is removed by the provisions of s 40(3)(b) of the Bankruptcy Act , as the orders are ones which can be enforced as final judgments. See also Re Luckins; Ex parte Columbia Pictures Industries &amp; Anor (1996) 67 FCR 549, a decision of Beaumont J at p 559.' The nature of the 'weight of evidence' against her Honour's finding in relation to par 1 of the petition is unclear. As I have already noted, none of the facts to which par 1 refers appeared to be in dispute before her Honour. Indeed, I note this same issue has been raised by the appellant before the Full Court in other proceedings, and the Full Court found that it was not necessary that a certificate of taxation be attached to the bankruptcy notice, and that the relevant order of Deputy District Registrar Baldwin was as required by the Bankruptcy Act attached to the bankruptcy notice ( Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240 at 8, 9). The appellant has sought to rely on the decision of the Full Court (see TS ll 38-42) however he appears to have misread the judgment of their Honours. No error in the reasoning of Rimmer FM is demonstrated by this submission. I note that the Full Court in Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240 at par 5 explained to the appellant that there was no uncertainty as to the amount he should pay to satisfy the relevant debt, nor to whom he should make payment. It is concerning that the appellant continues to raise this putative 'doubt' as to the identity of the petitioners as an issue. There is no 'weight of evidence' against her Honour's finding. In my view, no error in her Honour's judgment is demonstrated by this submission of the appellant. 4. The appellant submits that 'paragraph 4 of the Petition fails to state the date of act of bankruptcy'. In respect of this point, her Honour at par 74 of her judgment held that she was satisfied that the petition was compliant with the formal requirements of the prescribed Form. I find no error in the finding of her Honour in relation to this issue. The fifth ground of appeal in the appellant's original notice of appeal fails. Rimmer FM in her judgment considered in some detail the application of s 52(2)(b) Bankruptcy Act to this case. Section 52(2) provides: 'If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made: it may dismiss the petition.' This ground of appeal fails for the following reasons: 1. This issue was raised by the appellant in related litigation before the Full Court, and dismissed by the Full Court ( Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCAFC 240 at [19] ). 2. It is incorrect to claim that the learned Federal Magistrate 'failed to appreciate' that security for costs was required to contest a bill of costs in the Federal Court: it does not appear that the issue was actually raised before her Honour. 3. On the basis of the principles I explained earlier, I do not consider there are exceptional circumstances which entitle the appellant to raise this new issue on appeal. This ground of appeal is founded in a claim that Rimmer FM failed to investigate the appellant's allegations in circumstances where there was sufficient cause to doubt the judgment debt. In my view this ground of appeal, and the appellant's submissions in support, are misconceived. At the hearing, the appellant submitted that there was a 'real and relevant issue of fact', namely that there were grounds for the learned Federal Magistrate to 'go behind the judgment in circumstances where there was no other material before the court' (TS p 10 ll 1-2).