FEDERAL COURT OF AUSTRALIA Goldberg v Morrow [2004] FCA 1490 BANKRUPTCY – appeal from sequestration order made by Federal Magistrate – sequestration order based on judgment debt – allegation that original order giving rise to judgment debt obtained by fraud and collusion – allegation that appellant denied natural justice by not being afforded opportunity to object to affidavits of debt and search – allegation that Federal Magistrate wrongly refused adjournment of proceeding Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1, referred to House v The King (1936) 55 CLR 499, referred to DAVID GOLDBERG v DAVID MORROW V1118 of 2004 WEINBERG J 19 NOVEMBER 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V1118 OF 2004 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: DAVID GOLDBERG APPELLANT AND: DAVID MORROW RESPONDENT JUDGE: WEINBERG J DATE OF ORDER: 19 NOVEMBER 2004 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V1118 OF 2004 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: DAVID GOLDBERG APPELLANT AND: DAVID MORROW RESPONDENT JUDGE: WEINBERG J DATE: 19 NOVEMBER 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 This is an appeal by David Goldberg against a sequestration order made on 6 September 2004 by McInnis FM. The Chief Justice has determined, pursuant to s 25(1A) of the Federal Court of Australia Act 1976 (Cth), that the appeal should be heard by a single judge. background facts 2 The dispute between the parties has a long and tortuous history. It is sufficient, for present purposes, to summarise a number of its salient features. 3 The respondent creditor David Morrow is a Victorian police officer. His creditor's petition arose from a costs order made by the Supreme Court of Victoria in a proceeding that was brought against him by Mr Goldberg in April 2003. Mr Goldberg claimed damages for, among other things, false arrest and false imprisonment. 4 On 23 May 2003, Mr Goldberg applied for judgment in default of defence. That application was referred to Master Wheeler. On 26 May 2003, the matter was adjourned to 23 June 2003. In the meantime a defence was filed on behalf of Mr Morrow on 29 May 2003. 5 On 2 June 2003, Mr Morrow filed a summons seeking to have the statement of claim brought against him struck out as disclosing no cause of action. On 23 June 2003, Master Wheeler made an order in those terms, but gave leave to file and serve an amended statement of claim. On 14 July 2003, Mr Goldberg filed an amended statement of claim. 6 On 25 June 2003, Mr Goldberg filed a notice of appeal against Master Wheeler's decision of 23 June 2003 ordering that his statement of claim be struck out. On 24 July 2003, Gillard J heard the appeal in the Practice Court. His Honour ordered that both the statement of claim, and the amended statement of claim filed on 14 July 2003, be struck out. However, he gave Mr Goldberg leave to file a further amended statement of claim by 7 August 2003. He also ordered Mr Goldberg to pay Mr Morrow's costs of the appeal. 7 On 4 August 2003, Mr Goldberg filed a summons in the Court of Appeal seeking leave to appeal against the decision of Gillard J. On 22 August 2003, that application was refused. The Court of Appeal made no order as to costs. 8 On 23 September 2003, Mr Morrow filed a summons seeking summary dismissal of the proceeding for want of prosecution and failure to serve a further amended statement of claim. He also contended that Mr Goldberg's claim disclosed no cause of action. On 3 October 2003, Mr Goldberg filed a further amended statement of claim. On 9 October 2003, Master Wheeler ordered that the further amended statement of claim be struck out. The Master also ordered that the proceeding be dismissed for want of prosecution, and that Mr Goldberg pay Mr Morrow's costs. 9 On 14 October 2003, Mr Goldberg filed a notice of appeal against Master Wheeler's decision of 9 October 2003. On 6 November 2003, Nettle J ordered that the appeal be dismissed. His Honour also ordered that the further amended statement of claim be struck out, and that the entire proceeding be dismissed for want of prosecution. He awarded Mr Morrow costs. 10 On 13 November 2003, Mr Goldberg filed a notice of appeal against the orders made by Nettle J on 6 November 2003. On 19 February 2004, Master Dowling settled the index to the appeal book. On 11 March 2004, Mr Goldberg filed a summons in the Court of Appeal seeking to challenge the orders of Master Dowling in settling the contents of the appeal book. On 16 April 2004, that application was dismissed. 11 On 29 April 2004, Mr Goldberg brought fresh proceedings in the Supreme Court against Mr Morrow seeking an injunction to restrain him from threatening or intimidating Mr Goldberg. On 5 May 2004, Warren CJ dismissed that application. Mr Goldberg was ordered to pay Mr Morrow's costs. 12 On 2 July 2004, Mr Goldberg filed a complaint and summons in the Melbourne Magistrates' Court seeking an intervention order against Mr Morrow. On 8 July 2004, that application was dismissed. 13 In the interim, on 9 September 2003, Mr Morrow filed a summons for taxation in the Supreme Court in relation to the order for costs made by Gillard J on 24 July 2003. On 9 October 2003, Master Bruce taxed the costs in the sum of $3,822.02. On 16 October 2003, Mr Goldberg filed an application to review Master Bruce's taxation. Master Bruce treated that application as an application for a rehearing de novo. On 14 November 2003, he reheard the matter and taxed the costs in the sum of $3,468.85. 14 On 27 November 2003, Mr Goldberg applied for a review of Master Bruce's orders of 14 November 2003. On 26 February 2004, Master Bruce dismissed that application. On 1 March 2004, Mr Goldberg filed a notice to review in relation to the orders made by Master Bruce on 26 February 2004. On 23 March 2004, Dodds-Streeton J dismissed that application for review, with costs. 15 On 29 March 2004, Mr Goldberg sought leave to appeal against the orders made by Dodds-Streeton J on 23 March 2004. On 30 April 2004, the Court of Appeal dismissed the application for leave to appeal, with costs. On 17 May 2004, Mr Goldberg filed an application for special leave to appeal against that decision in the High Court. On 3 June 2004, Mr Goldberg filed a summons in the Court of Appeal seeking an extension of time within which to seek leave to appeal against the decision of Dodds-Streeton J made on 23 March 2004. On 1 July 2004, the Court of Appeal dismissed that application, with costs. On 26 July 2004, Mr Goldberg filed an application for special leave to appeal against the decision of the Court of Appeal of 1 July 2004. THE BANKRUPTCY PROCEEDINGS 16 On 21 November 2003, Mr Morrow caused a bankruptcy notice to issue out of the Insolvency Trustee Service Australia against Mr Goldberg in relation to the costs order made by Gillard J on 24 July 2003, as ultimately taxed by Master Bruce in the sum of $3,468.85. On 30 December 2003, Mr Goldberg filed an application in the Federal Magistrates Court seeking to have the bankruptcy notice set aside. On 2 March 2004, Deputy Registrar Connard granted Mr Goldberg's application on the ground that the order for costs made by Gillard J had not been annexed to the bankruptcy notice as it ought to have been. On 5 March 2004, Mr Morrow issued a second bankruptcy notice. On 31 March 2004, Mr Goldberg filed an application to have that bankruptcy notice set aside. On 17 June 2004, Phipps FM dismissed that application, with costs. 17 On 5 July 2004, Mr Goldberg filed a notice of appeal in this Court against the decision of Phipps FM. It appears that that appeal has not yet been heard. 18 On 30 June 2004, Mr Morrow commenced the present proceeding by filing a creditor's petition in the Federal Magistrates Court relying for the act of bankruptcy upon Mr Goldberg's failure to comply with the second bankruptcy notice. 19 In an affidavit affirmed by David Ryan, Mr Morrow's solicitor, it is asserted that there is no appeal extant against the costs order made by Gillard J on 24 July 2003. It is also asserted that there is no stay on foot in relation to that order. 20 Mr Goldberg disputes that contention. He claims that his appeal against the costs order made by Gillard J is still on foot. He produced an undated letter from a Supreme Court officer that purported to establish that fact. For reasons that will soon become apparent, it is unnecessary to resolve this factual dispute. THE PROCEEDING BEFORE FEDERAL MAGISTRATE MCINNIS 21 As previously indicated, on 30 June 2004, Mr Morrow filed a creditor's petition against Mr Goldberg. The act of bankruptcy specified in the petition was Mr Goldberg's failure to comply with the requirements of the bankruptcy notice that had been served upon him on 11 March 2004. That bankruptcy notice was based upon the order for costs made by Gillard J on 24 July 2003, as assessed in the sum of $3,468.85 by Master Bruce on 14 November 2003. 22 In an ex tempore judgment delivered on 6 September 2004, McInnis FM made a sequestration order against Mr Goldberg's estate. His Honour noted that in support of the creditor's petition, Mr Morrow had relied upon "the usual affidavits". He granted leave to Mr Morrow to rely upon an affidavit of debt and an affidavit of search, each sworn on 6 September 2004. He said that when taken together with the other affidavits on the file, the requirements of the Bankruptcy Act 1966 (Cth) had been met. There were no "technical deficiencies" in the material, and Mr Morrow was entitled to rely upon the judgment annexed to the bankruptcy notice in the way that he claimed. 23 His Honour observed that in a notice of intention to oppose the application or petition, filed on 29 July 2004, Mr Goldberg claimed that the order for costs made by Gillard J on 23 July 2003 had been procured by fraud. Indeed, Mr Goldberg claimed that the order had been obtained by collusion, involving "secret police known as ASIO according to the rules of ASIO, not according to the rule of law". Mr Goldberg had also described the order as "not the final order", and therefore as incapable of forming the basis of a bankruptcy notice. 24 McInnis FM rejected each of these contentions. He held that it was clearly established that an order for costs could form the basis for a bankruptcy notice, and hence, ultimately, a creditor's petition. When Mr Goldberg was asked to highlight any parts of his affidavits that might provide evidence of the alleged fraud or collusion, he referred to two affidavits, the first sworn on 29 July 2004, and the second on 24 August 2004. 25 His Honour then referred in detail to the various paragraphs in those affidavits to which he had been taken. He said that he had carefully read each affidavit, but was satisfied that there was "no evidentiary basis upon which the allegations of fraud have been made". He concluded that there was no suggestion of any miscarriage of justice, as claimed by Mr Goldberg. 26 McInnis FM noted that there had been one matter that had initially caused him some concern. That arose from the fact that there was an appeal on foot from the decision of Phipps FM dismissing Mr Goldberg's challenge to the validity of the bankruptcy notice. However, his Honour said that any concern that this might have occasioned had been allayed by the fact that there had been no stay of the decision by Phipps FM sought, or granted. His Honour also considered that it was significant that Mr Goldberg had not filed his appeal against the decision of Phipps FM until 5 July 2004, several days after Mr Morrow had filed the creditor's petition on 30 June 2004. For these reasons, his Honour considered it appropriate to proceed with Mr Morrow's application for a sequestration order. THE APPEAL TO THIS COURT 27 On 10 September 2004, Mr Goldberg filed a notice of appeal against the sequestration order made by McInnis FM some four days earlier. The grounds contained in that notice of appeal are as follows: "(A) The Appellant was denied Natural Justice by the order made where there was no evidence before the Court which could lead to such findings against the Appellant under the Rule of Law. (B) His Honour Magistrate McInnis has failed in his duty to act fairly and in the second of according procedural fairness by allowing a MOCK hearing to take place which was conducted by ASIO lawyers according to the rules of Secret Police known as ASIO. The Appellant rights to Natural Justice were destroyed, defeated and prejudiced by his Honour [sic] order and overall conduct of the case. (C) How any reasonable Magistrate can impose impermissible disability and discrimination by exercise of the Judicial Act on the Appellant by allowing a mock hearing to take place. No sworn evidence had been presented by the Respondent before the Court. His Honour accepted an unsworn statement and documents, made by the ASIO's lawyers, from the behind the bar table without at least showing the documents to the Appellant." 28 By notice of motion filed on 24 September 2004, Mr Morrow sought an order, under O 52 r 18(1) of the Federal Court Rules, that the appeal be dismissed as incompetent. On 25 October 2004, I heard that motion. I dismissed Mr Morrow's application and ordered that he pay Mr Goldberg's costs. However, I also ordered that the appeal be given an expedited hearing, so that the question whether a sequestration order should have been made could be determined as quickly as possible. I arranged for a transcript of the proceeding before McInnis FM to be obtained, and a copy to be provided to Mr Goldberg. 29 Mr Goldberg was not legally represented before McInnis FM. He was also unrepresented before me. He did not file any affidavit material in support of his grounds of appeal, although I made provision for him to do so if he considered that course to be appropriate. He indicated that he was content to proceed upon the basis that the transcript accurately recorded what had transpired on 6 September 2004 with only some minor and inconsequential omissions. 30 In substance, Mr Goldberg's first point, as embodied in ground A, was that he had been denied natural justice. This was because, during the course of the hearing, McInnis FM had permitted Mr Morrow to file additional affidavits that Mr Goldberg had not previously seen, without affording Mr Goldberg the opportunity to object to those affidavits. Indeed, Mr Goldberg claimed that he did not have the opportunity to see the affidavits until after the sequestration order had been made. 31 The transcript reveals that what occurred was as follows. When the application was called on for hearing, at 2.57pm, counsel for Mr Morrow sought leave to file an updated affidavit of search, and also a further affidavit of debt, both sworn on 6 September 2004. His Honour granted leave to file those affidavits, noting that they verified paragraphs 1, 2 and 4 of the creditor's petition. The affidavits in question were each affirmed by Mr Ryan, Mr Morrow's solicitor. 32 The affidavit of debt simply attested to the fact that the amount of $3,468.85 owed by Mr Goldberg had not been paid. The affidavit of search attested to the fact that the National Personal Insolvency Index maintained by the Official Receiver, did not contain any reference to Mr Goldberg apart from the creditor's petition filed in this proceeding. Moreover, there were no details of a debt agreement, in relation to the debt upon which Mr Morrow relied, in the Index, on the day that the creditor's petition was presented. 33 Affidavits of this nature, though essential, are routine. I invited Mr Goldberg to tell me how, if at all, he had been prejudiced by their tender, or what, if anything, he would have said in reply had he been specifically invited to comment upon them. He was unable to point to any objection that he might have taken to their admissibility, or to anything that he might have said to controvert the facts alleged in them. In truth, it was perfectly clear that these affidavits were completely uncontentious. All that Mr Goldberg could proffer was the suggestion, unsupported in any way, that the affidavits on the Court file may not have been the affidavits that were actually tendered during the course of the proceeding. There is no substance in that submission. The documents are on the Federal Magistrates Court's file, and there is no basis for any suggestion that they have been tampered with. 34 In any event, there is no substance in ground A. There was nothing to prevent Mr Goldberg from asking to see these affidavits before they were received, had he wished to do so. There was also nothing to prevent him from objecting to their being received, if he had any basis for doing so. The fact is that his challenge to the making of a sequestration order was not based upon anything other than his claim that the original costs order made by Gillard J (and the consequential taxation order made by Master Bruce) had been procured by fraud and collusion. Even if, as a matter of correct form, he ought to have been asked whether he objected to the affidavits being filed, he was in no way denied procedural fairness by what occurred. He suffered no conceivable prejudice of any kind: see generally Re Minister for Immigration and Multiculturaland Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1. 35 Mr Goldberg's second ground was that McInnis FM had so misconducted himself during the hearing, that his decision ought to be set aside. There were essentially three limbs to that submission. The first was that his Honour ought to have adjourned the hearing because there was still an appeal on foot against Phipps FM's decision to uphold the validity of the bankruptcy notice. The second was that his Honour gave Mr Goldberg's case short shrift, and did not consider, in sufficient detail, whether there was merit in his claim that Gillard J had acted upon the instructions of ASIO when he found against Mr Goldberg on 26 July 2003. The third was that McInnis FM was himself acting in some way under the influence of ASIO. 36 There is no substance in any of these contentions. Whether or not to grant an adjournment is a discretionary matter. It was open to his Honour to proceed with Mr Morrow's application notwithstanding the fact that there was, on foot, an appeal against Phipps' FM's decision. An attack upon the exercise of a discretion of this kind must establish error of the type identified in House v The King (1936) 55 CLR 499. Mr Goldberg could point to no error of that type. 37 So far as I can see from the transcript, McInnis FM conducted himself in an impeccable manner. He gave Mr Goldberg free rein to say whatever he wished in opposition to the making of a sequestration order. He did not prevent him from speaking, as he might have done, when he strayed into irrelevancies as he frequently did. There was no denial of natural justice whatever. 38 There is no basis for the suggestion that his Honour acted under the influence of ASIO. I reject that contention. 39 That leaves ground C. The ground is largely a repeat of ground A. It is equally devoid of merit. 40 It follows that the appeal should be dismissed. The appellant will pay the respondent's costs. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. Associate: Dated: 19 November 2004 The appellant appeared in person Counsel for the Respondent: Mr K. Baker Solicitor for the Respondent: Victorian Government Solicitor Date of Hearing: 9 November 2004 Date of Judgment: 19 November 2004