Smith v Abbott Stillman & Wilson [2007] FCA 1256

FEDERAL COURT OF AUSTRALIA

Smith v Abbott Stillman & Wilson [2007] FCA 1256

TREVOR SMITH v ABBOTT STILLMAN & WILSON vid 1125 OF 2006

RYAN J

17 AUGUST 2007

MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY vid 1125 OF 2006

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN: TREVOR SMITH

Appellant

AND: ABBOTT STILLMAN & WILSON

Respondent

JUDGE: RYAN J DATE OF ORDER: 17 AUGUST 2007

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The appeal be dismissed. 2. The respondent's costs of the appeal form part of the petitioning creditor's costs in the bankruptcy. 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 VID 1125 OF 2006

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN: TREVOR SMITH

Appellant

AND: ABBOTT STILLMAN & WILSON

Respondent

JUDGE: RYAN J

DATE: 17 AUGUST 2007

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 By notice of appeal filed in this Court on 13 October 2006, the appellant has appealed from orders made by Burchardt FM on 25 September 2006, which included a sequestration order against the estate of the appellant; see Abbott Stillman & Wilson v Smith [2006] FMCA 1519.

Background to the appeal 2 On 15 July 2004 the respondent firm filed a complaint against the appellant in the Magistrates Court of Victoria at Melbourne, claiming an amount of $36,763.40. On 7 February 2005 an amended complaint was filed, claiming a reduced amount of $21,687.35. The respondent alleged that the amounts owed by the appellant were evidenced by tax invoices rendered by the respondent for legal services provided to the appellant pursuant to an agreement dated 20 November 2003. 3 On 5 August 2005 terms of settlement were executed between the appellant and respondent in the Magistrates Court proceeding. Those terms provided that the respondent would accept, in full and final settlement of its claim, payments to be made in accordance with a schedule incorporated in the terms. Initially, the appellant made payments as required by the schedule, but, on 10 February 2006, he failed to make a stipulated payment. The terms of settlement provided that, in the event of a default by the appellant in payment of any instalment, the complaint should be reinstated, and the respondent be entitled to enter judgment by consent for the full amount claimed less any part payments made by the appellant. 4 On 28 February 2006, Smith FM ordered that the complaint be reinstated, that the respondent file and serve an application for judgment within 7 days, and that the appellant file and serve any application in response within 7 days of service of the application. In accordance with the terms of settlement, the respondent wrote to the appellant on 28 February 2006 noting that the appellant had defaulted in complying with the schedule of payments, and advising that, if payment were not received by 6 March 2006, an application for judgment would be made to the Magistrates Court. The appellant did not respond to that notification, and, on 6 March 2006, the respondent filed and served an application for judgment in default in accordance with the terms of settlement. On 13 April 2006 Smith FM ordered that the appellant pay to the respondent the sum of $20,157.74. There was no appearance by the appellant before the Magistrates Court on 13 April 2006. 5 On 24 April 2006 the appellant applied to the Magistrates Court to set aside the orders which had been made on 13 April 2006, claiming that he had not been notified of the hearing of the application for judgment, despite having provided his new address to the Court on at least two previous occasions. The appellant's application was heard on 12 May 2006 by Smith FM, when the appellant alleged that the costs agreement with the respondent had been made by a company that of which he was a director and was not binding on him personally. He also alleged that the relevant documents tending to support that contention had not been discovered by the respondent during the proceeding. However, his Honour refused the application holding that the appellant had not demonstrated a valid basis for setting aside the judgment as he had entered voluntarily into the terms of settlement and the judgment had been entered by consent pursuant to the terms of settlement after a default in making a payment required by the terms. 6 On 24 May 2006, the respondent caused a bankruptcy notice to be issued, asserting that the appellant was indebted to it in the amount of $20,376.43 representing the judgment debt arising from the orders made by the Magistrates Court at Melbourne on 13 April 2006, and interest which had accrued since the date of the judgment in the amount of $218.69. A certified extract dated 19 May 2006 of the judgment recited that an order for costs had been made against the appellant in the amount of $20,157.74. The appellant was served with the bankruptcy notice on 3 June 2006. 7 The appellant failed to comply with the bankruptcy notice, and, on 14 July 2006, the respondent procured the issue out of the Federal Magistrates Court of a creditor's petition. That creditor's petition was served on the appellant on 22 July 2006. On 1 September 2006 the appellant filed in the Federal Magistrates Court an appearance and a notice of opposition to the petition. 8 At a hearing of the creditor's petition on 25 September 2006, Burchardt FM made these orders; '1. Leave be granted to amend the date of commission of the act of bankruptcy in paragraph 1 of the petition so that the date reads 26 June 2006. 2. Reverification and reservice be dispensed with. 3. A Sequestration Order be made against the estate of Mr Trevor Smith. 4. The Applicant Creditor's costs, including any reserved costs, be taxed in accordance with the Federal Court Rules and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966. The Court notes that the date of the act of bankruptcy is 26 June 2006.'