FEDERAL COURT OF AUSTRALIA

Phillips v Southage Pty Ltd [2015] FCA 332

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the respondent’s costs of the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

1    The appellant (“Mr Phillips”), who represents himself, has appealed the decision of the Federal Circuit Court (“FCC”) dismissing his application for review of the order of a Registrar of this Court dismissing his application to set aside a bankruptcy notice. The bankruptcy notice was founded on orders for costs made in favour of the respondent against Mr Phillips by the Victorian Court of Appeal, which dismissed Mr Phillip’s application for an extension of time for leave to appeal against orders made by the Supreme Court of Victoria in two separate proceedings. Mr Phillips’ application for special leave to appeal to the High Court from the decision of the Court of Appeal was also dismissed.

2    The grounds upon which Mr Phillips applied to have the bankruptcy notice set aside were that:

(a)    the service of the bankruptcy notice upon him was an abuse of process by reason that it was served on him in the precincts of the Supreme Court; and

(b)    he has a counter-claim, set-off or cross demand within the meaning of s 40(1)(g) of the Bankruptcy Act 1966 (Cth).

3    The FCC held that there was no substance in either ground and dismissed the order for review. On appeal to this Court, Mr Phillips relies on the same grounds. For the reasons that follow, the appeal should also be dismissed.

4    As to Ground 1, no error of law was shown in the reasoning or conclusion of the FCC that service of the bankruptcy notice upon Mr Phillips within the precincts of the Supreme Court was an abuse of process. The evidence about service was contained in two affidavits sworn by Mr Velos, the solicitor for the respondent. Mr Velos in an affidavit sworn on 20 October 2014 deposed as follows:

Steve Phillips having been evicted in November 2012 from 29 Brunswick Street, Fitzroy, moved and commenced residing at 25 Brunswick Street, Fitzroy. However, as a result of the death of his sister in November 2013, who owned 25 Brunswick Street, Fitzroy, the property was sold and Steve Phillips would not provide me with a street address which I could serve documents upon him.

It was not until Friday 19 September 2014, that I received a telephone call from Anthony Purcell, solicitor of Purcell & Purcell in Werribee, who advised me that he acted on behalf of Steve Phillips’ nephew who was involved in Supreme Court of Victoria litigation on behalf of the Estate of his late mother.

Steve Phillips’ nephew is Leon Bagas. Steve Phillips was attempting to make a claim on his sister’s property at 25 Brunswick Street, Fitzroy, claiming that he had a life interest. I was advised by Mr Bagas that that was the claim that Mr Phillips was making against his late sister’s property at 25 Brunswick Street, Fitzroy, and that a hearing was taking place at the Supreme Court of Victoria at Melbourne on 22 September 2014.

I made an application for a Bankruptcy Notice against Steve Phillips.

I then attended at the Supreme Court of Victoria where a hearing had been set down between Steve Phillips and his late sister’s estate. There were several proceedings listed for hearing in Court Room No. 2, Supreme Court at Melbourne on 22 September 2014.

I saw that Mr Steve Phillips was sitting in the Court, however, his proceeding had not been commenced. I left the Court Room and waited outside. I spoke to the solicitor Anthony Purcell acting for Leon Bagas who was sitting outside the court who advised me that the proceeding had not commenced.

Steve Phillips exited Court Room No. 2 and at that point in time, I served the Bankruptcy Notice.

In an earlier affidavit as to service sworn on 24 September 2014, Mr Velos had deposed as follows:

I identified the person I served as the debtor as I have had several court proceedings against him and have known him for a period of two years. When he left the Court he personally came up to me, addressed me and shook my hand. I explained the purpose of my attendance and handed him the documentation. I asked him for an address to send future correspondence to and as he did not reply, I asked if I could send all communication by email. The debtor responded, “I no longer have access to the email address.” I asked him to provide an address that I can send correspondence to and he handwrote his personal address being “PO Box 1040, Collingwood 3066”. I asked for a street address to serve future documents and the Debtor replied, “No way will I give you my address, everything is to be sent to the postal box.”

5    As the FCC correctly stated, there is no general proposition that the service of process in the precincts of the Court will be set aside. It is not the law that service in the precincts of the Court renders the service invalid: Burrell v Connell (1998) 84 FCR 383 at 394-395; Re O’Sullivan; Ex parte O’Sullivan v Commonwealth Bank of Australia (1995) 57 FCR 145; and, as the authorities show, a person may be validly served in the vicinity of the Court or within its precincts: Lawindi; Re Elkateb v Elkateb (2001) 187 ALR 479; [2001] FCA 1527 at [16]-[17]; Hiralal v Hiralal [2013] NSWSC 984 at [72]. In some circumstances, service in the vicinity of the Court or within its precincts may be a contempt of Court if it has “such a deterrent effect as to obstruct the administration of justice” (Baldry v Jackson [1976] NSWLR 19 at 25; Bryant v Commonwealth Bank of Australia [1995] FCA 1687). However, as the FCC stated at [21] in the judgment below:

It is clear that Mr Velos did not seek to interfere with Mr Phillips’ conduct of his case and it seems equally clear from Mr Velos’s affidavit material that [Mr Phillips] was not so far as the materials show in any way inhibited in his conducted of his proceeding by the service of the bankruptcy notice, which was of course wholly unrelated to the proceeding then underway.

The FCC was correct to hold for the reasons given that service of the bankruptcy notice was effective.

6    As to Ground 2, no error of law was shown in the reasoning or conclusion of the FCC that Mr Phillips did not demonstrate that he has a counter-claim, set-off or cross demand within the meaning of s 40(1)(g) of the Bankruptcy Act. Mr Phillips claimed to have a life interest in the property at 29 Brunswick St Fitzroy under his mother’s will and asserted a claim for damages against the respondent for wrongfully taking possession of and selling the property, which secured the repayment of a loan made by the respondent to Beijing Garden Resort Pty Ltd (“Beijing Garden”).

7    Mr Phillips asserted that the respondent did not have the legal entitlement to enforce repayment of the loan because it did not hold a credit licence. At [26] of the judgment below, the FCC stated:

It is readily apparent that Mr Phillips’ assertion that he has a cross-claim within the meaning of s 40(1)(g) of the Bankruptcy Act 1966 (“the Bankruptcy Act”) is misconceived. Any claim that might have been set up was a claim to be made by Beijing Garden and not by him as the monies were not lent to him. Although this puts the matter shortly, I believe it completely disposes of this argument.

There is no error in that reasoning, with which I agree. As the FCC had noted at [25] of the judgment below, orders were made by consent in the Supreme Court of Victoria for Beijing Garden to repay the monies lent by the respondent and it was the failure of Beijing Garden to repay those monies that founded the order for possession and the issue of the warrant for possession. Any claim that the loan was unenforceable was a claim to be made by Beijing Garden which had borrowed the monies from the respondent. It was not a claim that could be made by Mr Phillips.

8    After the respondent obtained the order for possession but before it took possession, Mr Phillips lodged over the property. The respondent applied to the Supreme Court of Victoria for the removal of the caveat. In Southage Pty Ltd v Beijing Garden Resort Pty Ltd & Ors, Vickery J ordered the removal of the caveat. The reasons of Vickery J record at [56] that Mr Phillips had submitted that, on the basis of his mother’s will, he has a present life interest in the property which was sufficient to support his caveat. Vickery J rejected the claim for two reasons. First that “at best” Mr Phillips may once have had a defeasible life interest in the property which was to end upon the grandson of the testatrix attaining 25 years; and secondly, “more significantly” that the property was no longer an asset of the estate created under the will by reason that the executors had sold the property to Beijing Garden. That decision was one of the two decisions in respect of which the Court of Appeal refused to grant Mr Phillips an extension of time in which to appeal.

9    At [30] of the judgment below, the FCC held that Mr Phillips could never have set up a counter-claim, set-off or cross demand because:

The fact is the property was sold to Beijing Garden, albeit in breach of Ms Phillippou’s will, in 2006 and [Mr Phillips] had no legal interest in it thereafter.

On appeal to this Court Mr Phillips contended that the property was not sold to Beijing Garden and that he has a right to damages because, as a tenant for life, he was entitled to possession of the property by virtue of s 12 of the Settled Land Act 1958 (Vic) and, by virtue of s 25 of the Property Law Act 1958 (Vic), his interest in possession could not be prejudicially affected. However the sale of the property to Beijing Garden was the subject of a finding by Vickery J in Southage Pty Ltd v Beijing Garden Resort Pty Ltd & Ors [2013] VSC 272 at [21]-[24], [58] and that finding is binding upon Mr Phillips and is not contestable now. The FCC was correct to hold that Mr Phillips did not have a legal interest in the property to set up a counter-claim, set-off or cross demand against the respondent.

10    On appeal to this Court Mr Phillips also contended that his son has not turned 25 yet so that he still has a present life interest in the property. That contention was another impermissible attempt to go behind the judgment of Vickery J in Southage Pty Ltd v Beijing Garden Resort Pty Ltd & Ors. The FCC correctly dismissed Mr Phillips’ contention that Vickery J was misled in arriving at the conclusion at [57] of his judgment that Mr Phillips might once have had a defeasible life interest in the land which was to end upon his son attaining the age of 25 years. The FCC held that the submission was “wholly erroneous”, and rejected that contention stating that:

The applicant’s mother’s will clearly gave him, on its face, an interest for so much of his life until his son attained the age of 25 years. There is no possible misleading of Vickery J in this regard.

No error of law is shown in the FCC’s reasoning.

11    For the above reasons, the appeal from the decision of the FCC is dismissed.

Associate:

Dated:    7 April 2015