Dunn, Stephen v Australian Society of Certified Practising Accountants [1998] FCA 331

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY ng 7134 of 1998

BETWEEN: STEPHEN FRASER DUNN

Applicant

AND: AUSTRALIAN SOCIETY OF CERTIFIED PRACTISING ACCOUNTANTS

Respondent

JUDGES sackville j

DATE: 1 april, 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT This is an application brought by the debtor, Mr Dunn, to set aside a bankruptcy notice which was issued pursuant to an application made by the creditor, the Australian Society of Certified Practising Accountants. The bankruptcy notice was served upon the debtor on 23 January 1998. That notice required payment of the sum of $55,000. That amount represented a costs order that had been made in proceedings between the debtor and the creditor. In those proceedings the debtor sought relief against the creditor. In a judgment delivered on 2 February, 1996 Whitlam J dismissed the application made by the debtor, with costs. I should say that in the proceedings before Whitlam J, the debtor was represented by senior and junior counsel. The debtor appealed from the judgment given by Whitlam J. That appeal was determined on 29 November 1996 by a Full Court comprising Lockhart, Hill and Tamberlin JJ. The debtor represented himself on that appeal. The leading judgment was given by Lockhart J. His Honour proposed that the appeal should be dismissed. His Honour indicated that because questions had been raised that concerned the public he thought that a fair order for costs on the appeal was that the debtor should pay one half of the costs of the creditor in respect of the appeal. The other members of the court agreed with that order. It appears that thereafter a bill of costs was prepared arising out of the order for costs made by Whitlam J. That bill of costs was duly taxed. It is the taxed amount that is the subject of the bankruptcy notice. The debtor has appeared in the proceedings today on his own behalf. He has made it clear that he puts only one ground for his application to set aside the bankruptcy notice. That ground is that the judgment and the costs order upon which it was founded were obtained as the result of what he describes as fraud or improper conduct on the part of the creditor. The conduct upon which the debtor relies is that, as I follow it, a critical document tendered on behalf of the debtor was rejected by Whitlam J on the ground that it had not been served in time. According to the debtor, the true position was that the document had been served in time to be admitted as evidence in the proceedings. The debtor, in support of his application to set aside the bankruptcy notice, read an affidavit and tendered a number of exhibits. One of those exhibits is the transcript of the proceedings before Whitlam J. A reading of that transcript demonstrates the reasons for his Honour's rejection of what the debtor claims was the critical document. That document, which is also in evidence for the purposes of the proceedings today, was a report by the Trade Practices Commission entitled "Study of the Professions" (Final Report, July 1992). Senior Counsel for the debtor in the principal proceedings sought to tender this report. Whitlam J as a reading of the transcript demonstrates, rejected the report, not because of any lateness in its filing or any other form of lateness on the part of the debtor or his legal representatives, but because his Honour took the view that the report could not be evidence of its contents on the issues in dispute in the proceedings his Honour had to determine. It is quite clear from a reading of the transcript that his Honour addressed attention to the admissibility of the document on ordinary principles of Evidence law and applied those principles. In the end, certain portions of the Trade Practices Commission Report were admitted into evidence for the limited purpose of demonstrating material upon which the debtor had relied in writing certain letters. However, the bulk of the report was rejected for the reasons I have explained. Perhaps I might be permitted to add that the reasons expressed by the learned trial Judge seem to me wholly in accordance with principle. It follows that the foundation for the debtor's argument before this Court is lacking. The reason for the rejection of the Trade Practices Commission report was not any lateness in filing the document or, indeed, in taking any other step in the proceedings. The reason for its rejection was an application of the law of Evidence. There is therefore no basis for the contention that any improper conduct on the part of the creditor or its solicitors played any part in the rejection of this document as evidence in the case. I should add that I am not, of course, to be taken as suggesting or endorsing any suggestion that the creditor or its solicitors had engaged in any fraudulent or improper conduct. It follows, then, that there is no basis for the debtor's application to set aside the bankruptcy notice and that the application ought to be dismissed. It is necessary to mention two other matters. The first is that orders had previously been made by another judge of this Court to extend the time for compliance with the bankruptcy notice until 10 March 1998. Mr Rogers, who appears on behalf of the creditor, has very fairly conceded that the absence of an order further extending the time for compliance with the bankruptcy notice until today was the result of what can fairly be described as an oversight. Accordingly, the creditor does not resist an order further extending the time for compliance with a bankruptcy notice until today. The debtor has indicated that he wishes to have that time further extended and I shall give him an opportunity to make that submission shortly. The second matter is that of costs. Ordinarily, costs would follow the event. This would mean that the debtor, having failed in his application to set aside the bankruptcy notice should pay the costs of the creditor. One issue that concerned me was that the debtor's case, in so far as it was founded upon alleged improper conduct, rested upon a misconception. I have explained that misconception already. Had that misconception been pointed out to the debtor at an earlier stage it may have been that the proceedings could have been cut short. Mr Rogers has pointed out that the documents filed by the debtor did not make it entirely clear as to the basis or bases upon which he intended to apply to set aside the bankruptcy notice. Mr Rogers indicated that the documents filed suggested that further grounds might have been relied upon by the debtor. I think there is force in that proposition. However, I think it also emerges clearly enough that one of the grounds, at least, upon which the debtor intended to rely was that there had been improper conduct which had resulted in the rejection of the Trade Practices Commission report in evidence in the proceedings between himself and the creditor. I think it clearly would have been appropriate for the creditor to have pointed out to the debtor the misconception upon which he was proceeding. It is by no means certain that that would necessarily have avoided today's hearing. However, it might have had that result and, in any event, it would have narrowed the issues that required consideration. In the circumstances, I think that the fair course is for the debtor to pay one-half of the creditor's costs of this application. Accordingly, the orders that I propose to make subject to any further submissions in relation to the time for compliance with the bankruptcy notice are these: 1. Extend the time for compliance with the bankruptcy notice until today, 1 April 1998; 2. Dismiss the application to set aside the bankruptcy notice; 3. Order the debtor to pay one-half of the costs of the creditor in respect of the application. I should mention two further matters. First, the debtor, towards the end of oral argument, sought to raise a further issue. That issue was said to involve other kinds of fraudulent or improper conduct on the part of those representing the creditor in the principal proceedings. I declined to grant the debtor leave to amend the grounds upon which he relied to take account of that matter. I did so in part because the fresh grounds were neither in writing nor formulated with any precision. It was difficult to follow how the alleged conduct could have related to the costs order upon which the bankruptcy notice was founded. I also took that course because there was no evidence whatsoever before the court to suggest that any allegation of the kind foreshadowed by the debtor might be well-founded. Accordingly I refuse that application. Secondly, the debtor has now applied for a further extension of the time for compliance with the bankruptcy notice. Although he has adduced no evidence in support of the application, he says that approval has been obtained from a bank for finance. That approval would enable him to pay the amount that is claimed in the bankruptcy notice. Mr Rogers has contested the application for a further extension of time for compliance with the bankruptcy notice. He has drawn my attention to the unreported decision of von Doussa J in Emanuele v Grey, 17 December 1997, unreported. In that decision his Honour said this: "In my opinion the extension deemed to occur by s 41(7) [of the Bankruptcy Act] is intended to cover exhaustively the situation where an application is made to have a bankruptcy notice set aside on the ground that the debtor has a counter claim, set-off or cross demand, and the more general power to extend time to comply with a bankruptcy notice contained in s 41(6A) has no application. But in any event, the power to extend time for compliance in s 41(6A) is a power in aid of setting aside the notice itself .... In this case, once the Court has determined that it is satisfied that the debtor does not have a counter claim, set-off or cross demand, as referred to in s 40(1)(g) there is no occasion to exercise such a power to further extend time for compliance with the notice." I think the observations of his Honour apply to the circumstances of the present case, even though the application has been made on a slightly difference basis pursuant to s.41(7) of the Bankruptcy Act. Accordingly, I do not think there is power for me to extend the bankruptcy notice in the manner requested by the debtor. I therefore reject that application. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville