Liddle, Teresa v The Colonial Mutual Life Assurance Society Ltd [1998] FCA 387

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QG 7327 of 1997

BETWEEN: TERESA LIDDLE

Applicant

AND: The Colonial Mutual Life Assurance Society Limited (ACN 004 021 809)

Respondent

JUDGE(S): SPENDER J

DATE OF ORDER: 7 APRIL 1998

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. The notice of motion filed 17 November 1997 be dismissed; 2. The application filed 3 June 1997 be dismissed; 3. The time for compliance with bankruptcy notice No 2071 of 1996 be extended to 14 days from today's date (23 April 1998); 4. In respect of notice of motion filed 17 November 1997 the applicant to pay the respondent's costs on the motion including reserved costs, to be taxed if not agreed. 5. In respect of the application of 3 June 1997 the applicant to pay the respondent's costs of and incidental to the application including reserved costs but not the costs of 4 February 1998 as to which there is no order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QG 7327 of 1997

BETWEEN: Teresa Liddle

Applicant

AND: The Colonial Mutual Life Assurance Society Limited (ACN 004 021 809)

Respondent

JUDGE(S): SPENDER J

DATE: 7 APRIL 1998

PLACE: BRISBANE

REASONS FOR JUDGMENT There are a number of matters for judgment this morning. I will deal first with the motion of Ms Liddle seeking orders for contempt. On 17 November 1997, Teresa Liddle filed a motion seeking orders that: "(1) the Colonial Mutual Life Assurance Society Limited ACN 004 021 809 and acting solicitors, Mallesons Stephen Jaques, and acting solicitor, John William Peden of Mallesons Stephen Jaques, be determined to be guilty of the charge of Contempt of Court; (2) the Court make such Orders for the punishment of the contempt as are deemed appropriate; (3) the Court makes further or other Orders as are deemed appropriate." In accordance with O 40 of the Federal Court Rules a statement of charge was filed. That statement of charge read as follows: "It is hereby alleged that the abovenamed party The Colonial Mutual Life Assurance Society Limited (ACN 004 021 809) and acting solicitors Mallesons Stephen Jaques and acting solicitor John William Peden, of level 30, Waterfront Place, 1 Eagle Street, Brisbane, are guilty of the charge of Contempt of Court as following:- (a) that the abovenamed party and or persons have wilfully and plainly disregarded the authority of the Federal Court of Australia, and or (b) that the abovenamed party and or persons have wilfully and plainly disregarded and disrespected the orders of His Honour Justice Spender of 30 June 1997, and (c) that the abovenamed party and or persons have wilfully and plainly continued to act in the above contempt notwithstanding that they have been requested not do (sic) do so and or have agreed in principle not to do so." In addition, there was a comprehensive affidavit filed by Ms Liddle. I, of course, consider the allegations of the kind contained in the Notice of Motion filed 17 November 1997 seriously and have looked at all of the material. The affidavit of Ms Liddle in support of the Notice of Motion makes reference to orders that I made on 30 June 1997. The orders of that day were as follows: "1. The time for compliance with Bankruptcy Notice No 2071/96 be extended to 28 days after the determination of the order of the summons filed 29.10.96 in the Supreme Court in No. 1631/92, or earlier order. 2. The application to extend the time of compliance with the bankruptcy notice, based on her claim under the principal proceedings, be adjourned to a date to be fixed. 3. The costs of today be reserved Note: Order 2 is based on the understanding that the application to extend the time for compliance with the bankruptcy notice is to be brought on within the 28 days after the determination of the summons dated 29.10.96. The Court granted liberty to apply to both parties." The nature of the contempt alleged by Ms Liddle are set out in her affidavit. It is helpful if I identify specifically four only of the allegations there referred to, although I have had regard to all of the matters in Ms Liddle's affidavit. Paragraph 7 of her affidavit is in the following form: "I state that I verily believe and allege that the above opposite party did mislead the Court, in that - as to paragraph 2 of the affidavit of John William Peden dated 23 October 1997, which states - 'I make this affidavit in support of the application to set aside the bankruptcy notice dated 3 June 1997 set aside.'" Paragraph 11 alleges a contempt in that there was a failure to include the chronology contained in Ms Liddle's letter of 29 July 1997; paragraph 13 asserts a contempt constituted by an allegation that the solicitors created a time or date for compliance with an order where it is said my orders did not specify a time or date to do the act within a specified time; and paragraph 21 which asserts that there was a relisting of the matter which was contrary, it is said, to the orders which I made on 30 June. It is clear that there are errors of description by Mr Peden in his affidavit of 22 October 1997 and filed on 28 October 1997. Paragraph 2 misdescribes the nature of the application. It was, in fact, Ms Liddle's application to set aside the bankruptcy notice, that application being dated 3 June 1997, and the affidavit of Mr Peden was in resistance to that application. The affidavit also refers to Mallesons Stephen Jaques as solicitors for the petitioning creditor. In fact, I am only concerned at the moment with questions of setting aside a bankruptcy notice and the error of description of the Colonial Mutual Life Assurance Society Limited as the petitioning creditor occurs in quite a number of affidavits. Notwithstanding what are clearly errors in that affidavit, none of the conduct impugned by Ms Liddle in her affidavit amounts to contempt of court. The errors of description by Mr Peden, while unfortunate, do not demonstrate a deliberate attempt to mislead the court nor, of course, was the court in any way led into error by the mistakes that Mr Peden made in his affidavit. In relation to the assertion that the solicitors imposed some sort of limit contrary to my orders of 30 June 1997, it is apparent from the transcript of what occurred on that day that I made the orders that I did on the premise that there would be a diligent and efficient pursuit of the summons in the Supreme Court which had been filed on 29 October 1996, to have the judgment on which the bankruptcy notice was founded set aside. The affidavit of Mr Peden refers to correspondence on 28 August 1997, 3 September 1997, and 10 September 1997, which effectively had the intention of highlighting Colonial Mutual Life Assurance Society Limited's concerns in relation to the speed with which the motion in the Supreme Court proceedings was being pursued. In particular, the letter of 3 September said: "So far as our client is concerned, you are obliged to pursue the Supreme Court action with diligence. You have not done so to date and we have given you a further two weeks to pursue the Supreme Court application. Our client is not prepared to allow you to delay this matter further simply because you make vague allegations of fraud about Court transcripts. Please serve on us by no later than 12 September 1997 the Supreme Court summons together with your affidavit in support." The letter of 10 September also called for the application and supporting affidavits in the Supreme Court to be served no later than Friday, 12 September 1997. Having regard to the grant of liberty to apply in the orders which I made on 30 June 1997, it is clear that the creditor was seeking to have some dispatch in the prosecution of the summons in the Supreme Court, and nothing in those letters, in my opinion, is either wrongful or constitutes a contempt of court. Similarly, causing the matter to be relisted was in conformity with the liberty to apply order that I had made on 30 June 1997, and, as the transcript of the bankruptcy proceedings before me of 11 November show, I was anxious that the Supreme Court summons be prosecuted diligently and that that had in fact not occurred by the time the matter was before me in November 1997, more than four months after the orders that I made on 30 September, and no affidavit material had been filed in support of the motion of 29 October 1996. As I say, none of the conduct impugned by Ms Liddle in her affidavit, in my opinion, constitutes contempt of court, or even arguably constitutes contempt of court. For the reasons that I have indicated, the notice of motion of 17 November 1997 is dismissed. I will hear the parties on costs at the end of these matters. On 3 June 1997 an application was filed in the court on behalf of Teresa Liddle seeking orders that: "1. the bankruptcy notice No.2071 of 1996 or any proceedings thereon be stayed or set aside or adjourned to a date being after the completion of the final Judgement or further or other Order of The Supreme Court of Queensland - in Supreme Court action No.1631 of 1992 between Teresa Liddle (Plaintiff) and The Colonial Mutual Life Assurance Society Limited (ACN 004 021 809) (Defendant), as referred to hereto. 2. the Court make such further or other Orders as are deemed appropriate; and 3. costs be costs in the cause." On 30 June 1997, which was the return date of that application, I made the orders set out above at p 2 of this judgment. On 29 January 1998 a notice of motion was filed on behalf of the Colonial Mutual Life Assurance Society Limited seeking, amongst other things, that the orders made on 30 June 1997 be vacated and that the application to set aside the bankruptcy notice No 2071 of 1996 filed on 3 June 1997 be dismissed. The bankruptcy notice the subject of the application and the notice of motion that I have referred to is a 28 day notice addressed to Teresa Liddle. The bankruptcy notice recites that CML has claimed: "...that the sum of $11,837.17 is due by you to it under a final order obtained by it against you in the Supreme Court of Queensland on 14 March 1996 being an order the execution of which has not been stayed." Accompanying the application for that bankruptcy notice was a photocopy of a duplicate original of a judgment dated 14 March 1996. The judgment indicates that the Registrar concerned with the entry of it was one A. Hams, and the judgment was: "IT IS ADJUDGED THAT: The Defendant (Plaintiff on Counterclaim) do recover against the Plaintiff (Defendant on Counterclaim) the sum of $11,837.17." It is necessary to have regard to the highlights of a very complicated chronology of events dealing with the litigation between Ms Liddle and CML. The chronology that follows is based on the chronology which appears as 'JWP1' to the affidavit of John William Peden of 11 March 1998, although I have had regard to the chronology of Ms Liddle, which is paragraph 4 of her affidavit filed 18 March 1998. Ms Liddle filed a Supreme Court writ on 5 November 1992 against CML, and the writ was served on 4 November 1993. CML entered a Supreme Court entry of appearance which was filed on 10 November 1993. On 31 August 1994 CML by summons sought an order that the plaintiff file and serve a statement of claim by 30 September 1994. On 8 September 1994 Williams J ordered that Ms Liddle serve a statement of claim by 4 November 1994. On 21 December 1994 Derrington J ordered by consent that the plaintiff file and serve her statement of claim by 13 January 1995. That statement of claim was filed on 13 January 1995 and served on that date. There was a request for further and better particulars of the statement of claim served on 26 April 1995. On 26 April the defence and counterclaim were served by CML, as well as a request for further and better particulars of the statement of claim. On 2 May 1995 a notice of motion was filed by CML under O 31 r 11 in respect of default in pleading by Ms Liddle to the counterclaim which had been served on 26 April 1995. On 10 May 1995 there was an order by Derrington J for the plaintiff ordering or reserving leave to amend the notice of motion. On 14 March 1996 judgment was entered, as I have indicated, by Registrar A. Hams. On 15 March 1996 there was a summons by CML requesting further and better particulars of the statement of claim within 14 days in default that the plaintiff's action be dismissed. On 27 March 1996 Dowsett J ordered the plaintiff to deliver an amended statement of claim by 24 April 1996. An amended statement of claim was filed and served on that day. On 25 May there was a summons by Ms Liddle seeking to have the judgment set aside for irregularity or for other cause. On 23 May 1996 Derrington J dismissed the application to set aside the default judgment. However, the Supreme Court file records that his Honour reserved: "The question of an application to set aside the judgment under Order 31 Rule 15 based upon a prayer for the indulgence of the Court based on the circumstances of the entry of judgment." On 13 September 1996, there was an order by Moynihan J against Ms Liddle requiring her to provide further and better particulars or good reason why they should not be provided. On 17 October 1996, Ambrose J ordered Ms Liddle to provide further and better particulars by 15 November 1996. Those particulars were delivered by Ms Liddle to CML on 15 November 1996. In the meantime, on 29 October 1996, a summons was obtained by Ms Liddle which sought the following orders: "(a) The plaintiff be granted appropriate relief under order 45 on the grounds of facts arising or discovered after order or judgment; (b) The court make such further or other orders as are deemed appropriate; and (c) The defendant pay the applicant's costs of and incidental to this summons." The bankruptcy notice was served on Ms Liddle on 7 May 1997. Her application as set out at the commencement of these reasons was filed on 3 June 1997 and was before the Court on 30 June 1997, as I have indicated, and on 19 November 1997 and on 4 February 1998. I should say that the chronology in Ms Liddle's affidavit filed 18 March 1998 contains an assertion that CML entered a "fraudulent order" in respect of the order of Derrington J of 10 May 1995 and further asserts that there was a further fraudulent order entered by CML in respect of the order of 23 May 1996; the fraud that is alleged being the omission of parts of the order. It was plain when the matter was before me that the application to set aside the bankruptcy notice should be postponed until after the determination of Ms Liddle's application to have the judgment set aside. That summons had been filed as long ago as 29 October 1996 but no material had been filed in support of that application when her application to set aside the bankruptcy notice was before the court on 30 June 1997. On that occasion, Ms Liddle indicated to me that there were two things about the judgment which should persuade the court to go behind the bankruptcy notice to see whether, in truth, there was a debt. There was the allegation that, shortly put, the judgment on which the bankruptcy notice was founded had been improperly entered because there was an agreement between the solicitors for CML and the solicitors then acting for Ms Liddle, that she did not have to file a defence at the time when judgment was obtained in default of pleading. The second matter is that there was a reservation of the question of Ms Liddle having other relief in respect of that judgment, and that matter is still outstanding. In the transcript of the proceedings of 30 June, I indicated that both aspects of Ms Liddle's summons of 29 October 1996 should be prosecuted with diligence and efficiency, and I ordered that the time for compliance with the bankruptcy notice be extended until 28 days after that matter had been determined. I said: "But do you understand that the effect of what I have done is to postpone - extend the time for compliance with the bankruptcy notice until 28 days after the determination of your summons of 29 October?" And later: "And granted liberty to apply, that is to both parties. So that if there is delay in that, the other side can come back and I will deal with it, if I have to. The matter was relisted at the instigation of CML before me on 19 November 1997 but, in the meantime, unfortunately, Ms Liddle became preoccupied, perhaps even obsessed, with allegations of fraudulent conduct in relation to the recording of transcripts both in the Federal Court and in the Supreme Court. On 14 August 1997 she, Ms Liddle, made a complaint to Auscript in respect of the transcript of proceedings on 30 June 1997. That letter said in part: "I refer to our recent letters and numerous telephone communications with your office in relation to my complaint and allegation that I believe that the above transcript has been 'edited and deleted' (including further now your re-issued transcript) within your organisation " and later: "In terms of your office' correspondence and communications to me, I am sorry to say, that I further believe that you have subsequently engaged in numerous semantics and ambiguity, and contradictory implied and expressed information and version of event, which I believe has caused further complications and particularly further delay to this matter." On 8 September 1997, Ms Liddle wrote to the principal complaints officer of the Criminal Justice Commission concerning a transcript in the Supreme Court of Queensland on 10 May 1995. The letter commences: "I refer to our recent telephone discussions in relation to my complaint and allegation that I believe that fraud has occurred to the above transcript of proceedings, and further that such fraudulent and criminal conduct and or breach of the law has occurred in specific relation to 'Section 12 of the Recording of Evidence Act 1962'. I therefore further sincerely and truthfully believe that this fraudulent process has been caused to the Supreme Court of Queensland and to me as the Plaintiff in these proceedings, hence my request to you for a criminal investigation." At page 3 of the letter was the further comment: "(I also herewith note, that I further believe that two further transcripts of proceedings - 23 May 1996 and 17 October 1996 - Supreme Court of Queensland - have also been fraudulently edited and deleted)." There had also, on 25 August 1997, been a complaint lodged with the Queensland Law Society Incorporated in respect of a solicitor in the firm of Clayton Utz who had previously been acting for Ms Liddle. That letter says, in part: "I anticipate that I will be in a position to forward a response within the further next 21 days, however, as discussed, as I have further referred related matters to the Criminal Justice Commission and to the Australian Federal Police, I am presently preparing written formal complaint in such respect, and such timing may well be held-up pending their investigation." On 28 August 1997, solicitors for CML wrote to Ms Liddle. That letter said as follows: On 30 June 1997 Justice Spender ordered that you are to pursue the Supreme Court application to set aside the judgment under order 45 of the Supreme Court Rules (Qld) ('application') diligently. By your facsimile dated 25 July 1997 you informed us that you have been advised 6 to 8 weeks would be considered a reasonable period of time. We agree with your assessment in this case and note that 8 weeks has now passed. In the circumstances, we are instructed to provide you with a further 2 weeks to comply with the Judge's order. Accordingly, please serve us with the Supreme Court application and all supporting affidavits by no later than Friday 12 September 1997. If we do not receive your material by then, we will relist the matter before the Federal Court. We note from your letters dated 25 July 1997 and 29 July 1997 and your numerous telephone calls to us over the past few weeks you assert that the transcript of the Federal Court application heard on 30 June 1997 has been fraudulently altered. We further note that you have made a complaint to the Criminal Justice Commission ('CJC') and the Federal Police regarding the alleged alterations to the transcript and that because of these complaints you have informed us that you are not able to serve us with the Supreme Court application and supporting affidavits. The fact that you have made a complaint to the CJC and the Federal Police is not a reason to delay the Supreme Court proceedings. Further, if you believe that the complaints and the alleged fraudulent alterations to the transcript are relevant to the Supreme Court proceedings then you should provide these details in your affidavit material." When the matter was relisted at the instigation of CML, I learned that no affidavit material had been filed in the prosecution of the summons by Ms Liddle of 26 October 1996. Ms Liddle referred to the various matters of complaint and to the circumstance that she had been concerned with those aspects of the matter which had prevented her from devoting sufficient time to the Supreme Court proceedings. I made it plain then that none of the matters that she raised should prevent the timely prosecution of the Supreme Court proceedings, and I permitted the matter to be adjourned notwithstanding that there had been no steps taken by her in respect of her summons of 26 October 1996. The application by Ms Liddle in the Supreme Court to set aside the Supreme Court judgment on the counter-claim was before the court first on 3 March 1998 when Byrne J adjourned the matter with costs to be paid by Ms Liddle until the 10th - with the costs of CML thrown away by the adjournment to be paid by Ms Liddle. The matter was heard by Byrne J on 10 March 1998, and I have to refer to his Honour's reasons for judgment in some detail, since it is important for the resolution of the motion and the bases upon which it is said that the bankruptcy notice should either be set aside or, alternatively, the time to comply with it should be extended until after final judgment in the principal proceedings in the Supreme Court. Byrne J said: On 14 March 1996 judgment was given in default of the applicant's pleading to the respondent's counter-claim which had been delivered in 1995. Thereafter, the applicant applied to Mr Justice Derrington for relief against the judgment. On 23 May 1996 His Honour, it seems, dismissed the application to set aside the default judgment. However, the note on the file records that His Honour reserved: "The question of an application to set aside the judgment under Order 31 Rule 15 based upon a prayer for the indulgence of the Court based on the circumstances of the entry of judgment." In October 1996 the applicant issued a summons challenging the default judgment on the footing that she should be granted: "...appropriate relief under order 45.... The applicant, who has appeared in person, seeks to have the default judgment set aside in reliance on both O 31 r 15 and, alternatively, O 45. No technical objection has been taken to that course. Order 31 r 15 of the Rules of the Supreme Court provides: 'Any judgment by default under this order may be set aside or varied by the Court or a Judge, upon such terms as to costs or otherwise as the Court or Judge may think fit.' " Order 45 r 1 provides: "When facts arise after the giving of a judgment or making of an order which entitle the person against whom the judgment or order is given or made to be relieved from it, or when facts are discovered after the giving of a judgment or making of an order which, if discovered in time, would have entitled the party against whom the judgment or order is given or made to a judgment or decision in the party's favour, or to a different judgment or order, the party may apply to the Court or a Judge for a stay of execution or other appropriate relief; and the Court or a Judge may grant such relief, and for that purpose may direct such proceedings to be taken, and such questions or issue of fact to be tried or determined, and such inquiries to be made, as may be just." Byrne J's judgment continued: "The applicant has not sought to place before me the answer which she might wish to deliver to the counter-claim. More importantly, the material adduced in evidence, though extensive, does not prove facts tending to justify the inference that the applicant has a defence on the merits." His Honour referred to some material in Magistrates Court proceedings, but then having referred to an actuary's report of 7 July 1993, which is in evidence before me, his Honour said of that document: "...this document does not seem to me to contain a basis for supposing that the claim contained in the counter-claim is overstated or subject to some set-off tending to reduce or extinguish it." His Honour continued: "The applicant's submissions have not succeeded in relating contentions in the report and the documents which accompany it to the allegations in the counter-claim or demonstrated that they tend to establish any cross-claim of hers of the kind mentioned in her statement of claim delivered in April 1995 and in particulars of that claim delivered in November 1996; nor does the material otherwise suggest that there is a valuable cross-claim." He later said: "On the material before me, I am not persuaded that there is an arguable case that the $11,837.17 has been inappropriately calculated or that there are reasonable grounds for supposing that, at a trial, the applicant might succeed in demonstrating a set-off or cross‑claim of substantial value. The absence of an arguable defence on the merits is, of course, a material factor in the exercise of the discretion conferred by Order 31 Rule 15, at least if the default judgment was regularly entered." He then dealt with the challenge to the default judgment based on the assertion that the judgment was entered inconsistently with some understanding engendered in the applicant by the respondent or its solicitors to the effect that she was not required to deliver a pleading in response to the counter-claim. His Honour said of this argument: "...there is no evidence to support it. Indeed, the contemporaneous correspondence is clearly opposed to the idea that the applicant had any reason to suspect that the respondent would defer entering judgment." His reasons for judgment concluded: "There is no factual basis for the submission that the applicant entertained some belief that she was not required to deliver her answer to the counter-claim by the time the default judgment was entered. The judgment, therefore, appears to have been regularly entered. No new fact was identified in argument as the basis which might justify an order pursuant to Order 45 of the Rules of Court. In my opinion, the discretion should be exercised against the grant of the relief sought pursuant to Order 31 Rule 15. The application is, therefore, dismissed." His Honour ordered Ms Liddle to pay the costs of her application. The consequence of all this material is that the judgment which underpins the bankruptcy notice has now been sought to be set aside or challenged on at least two occasions in the Supreme Court. The most recent one by Byrne J has resulted in the conclusion, after a contested hearing, that there was no arguable case that the sum of $11,837.17 had been improperly calculated or that there were reasonable grounds for supposing that at the trial the applicant might succeed in demonstrating a set-off or cross-claim of substantial value, and his Honour concluded that the material did not suggest that there was a valuable cross-claim. In the circumstances there is no basis on which the Court, in the exercise of its discretion, ought properly to go behind the judgment which was obtained in default of pleading. Moreover, having regard to the findings of Byrne J, there seems to me to be no basis on which the bankruptcy notice ought to be extended until the determination of the principal proceedings in the Supreme Court, which were commenced by writ as a long ago as 1992. For these reasons the application of Ms Liddle filed 3 June 1997 is dismissed. In relation to the orders that I made on 30 June 1997, they have been overtaken now by the orders that I have made. I ought to permit to Ms Liddle the opportunity of complying with the bankruptcy notice. I have extended the time for compliance with the bankruptcy notice until 4 pm today. I propose to order that the time for compliance with bankruptcy notice 2071 of 1996 be extended so that the time for compliance is 14 days after today; that is to say, I extend the time for compliance with bankruptcy notice 2071 until 23 April 1998. As to costs, first of all in relation to the costs of the application for contempt. The usual rule is that the successful party is entitled to their costs, so that in respect of the motion filed on 17 November 1997, I order that the applicant pay the respondent the costs of and incidental to that motion, including reserve costs, to be taxed if not agreed. In relation to the application filed 3 June 1997 and the respondent's motion filed 29 January 1998. In respect of the application filed 3 June 1997, I order that the applicant pay the respondent's costs of and incidental to that application, including reserved costs, but not including the costs of 4 February 1998. Those costs seem to me to comprehend also the costs of the motion filed by CML on 29 January 1998, so I will not make any separate order in respect of any costs that might be associated with that motion; so that the order that I make as to costs on this application is that the applicant pay the respondent the costs of and incidental to the application filed 3 June 1997, including reserved costs, but excluding the costs of 4 February 1998, as to which I make no order as to costs.