FEDERAL COURT OF AUSTRALIA

Jones v Purnell Motors Pty Ltd [2019] FCA 55

ORDERS

THE COURT ORDERS THAT:

1.    The amended application for an extension of time and leave to appeal filed on 16 March 2018 be dismissed.

2.    The applicant pay the respondent’s costs.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    This is an application made by Richard Jones for an extension of time and leave to appeal from orders made in the Federal Circuit Court of Australia (Federal Circuit Court) on 24 July 2014: see Purnell Motors Pty Ltd v Jones (No.2) [2014] FCCA 1617 (Purnell v Jones). In Purnell v Jones Judge Lloyd-Jones dismissed Mr Jones’ application for review filed on 18 June 2013 (Application for Review) and his application in a case filed on 4 July 2013 (Application in a Case) on the basis that Mr Jones had no reasonable prospect of success pursuant to r 13.10(a) of the Federal Circuit Court Rules 2001 (Cth) and ordered that the costs of Purnell Motors Pty Ltd (Purnell) from 18 June 2013 up to the date of the orders be paid from the bankrupt estate of Mr Jones on an indemnity basis.

2    The orders made by the Federal Circuit Court in Jones v Purnell are interlocutory. Accordingly, Mr Jones had until 7 August 2014 to file an application for leave to appeal from them: see Federal Court Rules 2011 (Cth) (Federal Court Rules) r 35.13(a). He did not do so but filed an application for an extension of time and leave to appeal on 18 October 2017, three years, two months and 11 days after that date.

3    Mr Jones has now filed an amended application for an extension of time and leave to appeal (Amended Application) in which he raises the following two grounds:

1.    The Bankruptcy Notice (BM1900) relies on a District Court Judgment (2011/00302105), given on 20th September, 2011, which is irregular and fraudulently obtained. (Legal Profession Act 2004, S368 and 369) RJF-04, 06)

2.    The Bankruptcy Notice fails because a fact essential to its validity, which it alleges to have existed, did not in fact exist. (Bankruptcy Act 2006, S40(1)(g),40(3)(d), and S41(1),41(3)(a), RJF 01-05)

4    While a draft notice of appeal was not annexed to the Amended Application, an amended draft notice of appeal was prepared by Mr Jones and sent to the Court’s registry. It included as proposed grounds of appeal the same grounds as those included in the Amended Application.

5    For the reasons that follow, the Amended Application should be dismissed.

background

6    There was a substantial amount of evidence relied on by the parties but, given the nature of the application made by Mr Jones, only a limited amount of it was relevant. The background facts insofar as they concern the application before me are set out below.

7    On a date prior to 16 September 2010 Purnell served a bill of costs (Bill of Costs) on Mr Jones who at that time was represented by Curlington Legal & Consulting (Curlington). It seems that the Bill of Costs was for Purnell’s costs in proceeding no 4712/2007 in the District Court of New South Wales (District Court) between Mr Jones as plaintiff and Purnell as first defendant.

8    On or about 29 September 2010 Purnell filed its costs assessment application (Costs Assessment Application) between it as costs applicant and Mr Jones as costs respondent in the Supreme Court of New South Wales (Supreme Court) in relation to the Bill of Costs.

9    Robbert Fox of Fox O’Brien Solicitors & Conveyancers was appointed as the costs assessor for the purposes of the Costs Assessment Application. By letter dated 2 September 2011 from Mr Fox addressed to Bamford Lawyers (Bamford), the solicitors for Purnell, and copied to Curlington, Mr Fox indicated that: he had completed the costs assessment the subject of the Costs Assessment Application; the certificate of determination of costs (Costs Certificate) together with his statement of reasons (Reasons) and certificate of determination of costs of the costs assessment (Costs Assessor Costs Certificate) had been forwarded to the Supreme Court; and those documents would be released on payment of his fees.

10    The Costs Assessor Costs Certificate, which is central to Mr Jones’ proposed grounds of appeal relevantly provides:

11    On or about 6 September 2011 Christopher Garry Bryett, who at the time was the solicitor in the employ of Bamford who had carriage of the matter on behalf of Purnell, arranged payment of Mr Fox’s fees in the sum of $4,170.83. The effect of this was that Purnell paid the entire amount claimed in the Costs Assessor Costs Certificate including Mr Jones’ share. Thereafter Mr Bryett received the following documents from the Supreme Court:

    the Costs Certificate issued on 2 September 2011 which assessed the amount of costs to be paid by Mr Jones to Purnell as $277,582.02;

    the Reasons; and

    the Costs Assessor Costs Certificate issued on 2 September 2011 which assessed the cost of the costs assessment at $9,275.74 and noted that each party was to pay half of those costs.

12    The Costs Certificate, Reasons and Costs Assessor Costs Certificate were dispatched by the Supreme Court to Bamford and Curlington on the same date, 8 September 2011.

13    On 20 September 2011 Purnell filed a form to register the certificates of Robert Fox issued on 2 September 2011 (Registration of Certificates) in the District Court together with the Costs Certificate and the Costs Assessor Costs Certificate and sought a total amount to be enforced at the date of registration of $282,686.93.

14    On 26 September 2011 the Costs Certificate, Reasons and Costs Assessor Costs Certificate sent to Mr Jones (care of Curlington) were returned to the Supreme Court marked “return to sender”.

15    On 7 February 2012 Purnell filed a “Form 43 Judgment” in the District Court for the amount claimed in the Registration of Certificates. On 20 September 2011 judgment was entered by the District Court in proceeding no 2011/00302105 between Purnell as plaintiff and Mr Jones as defendant (Costs Judgment). The terms of the judgment provide:

Pursuant to sections 368 and 369 of the Legal Profession Act 2004 judgment for the Plaintiff against the Defendant in the sum of $282,686.93.

16    On 30 March 2012 bankruptcy notice BN1900 for $296,720.91, being the amount of the Costs Judgment plus interest, was issued to Mr Jones (Bankruptcy Notice).

17    On 17 April 2012 Mr Jones wrote to Bamford referring to the Bankruptcy Notice which he acknowledged in that letter was “served on Sunday last”. Mr Jones sought a number of documents and other information from Bamford and concluded his letter with the following:

Denying me knowledge of the Costs Assessment and the Judgement (sic) and filing for Bankruptcy Notice without advising me of the debt for over 6 months is a gross abuse of process which has been referred to the Legal Services Commission and the Chief Justice.

18    On 9 May 2012 a creditor’s petition was filed in the Federal Magistrates Court of Australia (now the Federal Circuit Court) by Purnell naming Mr Jones as respondent and relying on Mr Jones’ failure to comply with the requirements of the Bankruptcy Notice (Creditor’s Petition).

19    By letter dated 30 August 2012 the Manager, Costs Assessment at the Supreme Court, in response to a letter from Mr Jones dated 23 August 2012, informed him, among other things, that:

1.    When Mr Fox completed the assessment on 2 September 2011, as far as I am aware he wrote to the parties to advise them of the completion of the assessment and the amount to be paid to release the certificates and reasons.

2.    Mr Fox also returned the certificates with his determination to me on that date.

3.    On 8 September 2011, Bamford Lawyers paid the amount of $4,170.87 to release the certificates and reasons and I sent the certificates and reasons to the parties.

4.    I sent the certificates and reasons to you at the address provided on the application, being the address for Curlington Legal, Level 6, 280 George Street, SYDNEY NSW 2000.

5.    On 26 September 2011 Australia Post returned the certificates and reasons I sent to you and they were marked "Return to Sender". Prior to 26 September 2011, none or (sic) our mail sent to the address provided for you was returned. Nor prior to that date did we receive any notification of any change of your address for sending notices. Without any further address to send the certificates and reasons, they remained on file until further notice.

6.    It is our practice that if any party subsequently contacts us to advise they have not received the certificates or reasons, indicating they did not receive them as a result of there being an incorrect address provided or they were not received for any reason, we provide those certificates and reasons without any further charge. A copy of them is attached for you.

(emphasis added)

20    On 5 October 2012 a sequestration order was made against the estate of Mr Jones (Sequestration Order).

21    On 18 June 2013 Mr Jones filed the Application for Review of the Sequestration Order. In the Application for Review Mr Jones relevantly sought orders for an extension of time for the filing of that application and an order that the Sequestration Order be annulled.

22    On 4 July 2013 Mr Jones filed the Application in a Case in the Federal Circuit Court which sought an order staying the Sequestration Order; an order that the proceeding be transferred to Armidale, Coffs Harbour, Grafton or alternatively Tamworth; orders for production of documents in relation to orders made to freeze his assets on the application of his trustee in bankruptcy, Paul Gerard Weston (Trustee); and an order for compensation and damages. On 1 April 2014 the Federal Circuit Court ordered, among other things, that Mr Jones’ application for a stay of the Sequestration Order be dismissed.

23    On 22 April 2014 Purnell filed an application in a case (Purnell Application). The Purnell Application is lengthy and refers extensively to documents filed by Mr Jones but relevantly seeks an order in the following terms, which is set out in Purnell v Jones at [7]:

On the basis that the Applicant has no reasonable prospect of successfully prosecuting them, that the Application for Review filed 18 June 2013 and Application in a Case filed 4 July 2013 be dismissed.

24    On 2 May 2014 Mr Jones’ Application for Review, Application in a Case and the Purnell Application were listed for hearing in the Federal Circuit Court.

purnell v jones

25    The primary judge delivered a lengthy judgment in which he summarised what was clearly a significant amount of material relied on by the parties before him and made findings on the numerous issues raised for his determination in the context of the applications before him.

26    Ultimately, the primary judge made an order summarily dismissing the Application for Review and the Application in a Case. That is, Purnell was successful in obtaining the relief it sought in the Purnell Application. What follows is a summary only of the primary judge’s extensive reasons.

27    After referring to the various applications that had been filed, the primary judge set out the history leading to their filing. Relevantly, his Honour noted at [21]-[23] that:

(1)    the matter had originated in early 2004 when Mr Jones purchased a car from Purnell. Approximately six months after its purchase, Mr Jones arranged for Purnell to fit additional lights to the vehicle. Ultimately, the vehicle’s electrical system failed, the engine stopped and all external lights extinguished, requiring it to be returned to Purnell for repair. From that point Mr Jones was dissatisfied with the vehicle’s safety and performance and ultimately brought proceedings in the District Court against Purnell;

(2)    on 10 February 2010 judgment was given by the District Court in favour of Purnell and Mr Jones was ordered to pay Purnell’s costs;

(3)    Purnell’s costs were assessed and the Costs Judgment was ultimately issued which formed the basis of the Bankruptcy Notice; and

(4)    a Creditor’s Petition was issued on the basis of Mr Jones’ failure to comply with the Bankruptcy Notice.

28    The primary judge noted that Mr Jones left the country in August or September 2012 during which time he suffered a number of health issues which inhibited his ability to pursue issues regarding his insolvency. However, at the time of his departure, Mr Jones was aware of the existence of the Bankruptcy Notice which he had failed to satisfy and did not provide the creditor’s lawyers with any contact details during his absence: Purnell v Jones at [24].

29    At [25] the primary judge recorded that he had expressed his concern to the parties about the scope of the proceeding which his Honour described as “far ranging” based on the grounds pleaded in the Application for Review and the Application in a Case. The primary judge noted that Mr Jones had indicated that he had no intention of going back beyond 2009/2010 and that essentially it was “a matter of the Costs Assessment, rather than the decision of the District Court” which Mr Jones acknowledged should have been appealed but was not.

30    The primary judge accepted that the court has the power to go behind a judgment relied on by a petitioning creditor but noted that the authorities indicated that the court is reluctant to do so and exercise a discretion to embark on a fresh trial of underlying issues in the absence of good reason: Purnell v Jones at [27]. At [30] his Honour said:

Throughout Jones’ written submissions he focuses on the issue of going behind the judgment in relation to the costs orders, however, Jones has had ample time to pursue any challenge to the cost determination and this could have been pursued at a time well before Jones claims that he was suffering from ill health. The judgment was founded on a real debt, in the sense considered in Wren v Mahony (1972) 126 CLR 212. The suggestion of fraud in respect to the preparation of the costs application was addressed by the Costs Assessor and was rejected. I am not satisfied that the discretion to go behind the costs judgment ought to be exercised. Consequently, the various claims raised by Jones in respect of the Court exploring issues that have been established by the Costs Assessment are not within the scope of the Review requested.

31    Commencing at [68] the primary judge addressed the Purnell Application insofar as it sought summary dismissal of Mr Jones’ extant applications. His Honour referred to the court’s power to summarily dismiss an application in s 17A of the Federal Circuit Court of Australia Act 1999 (Cth) noting that, pursuant to s 17A(2), the court could give judgment for one party against another where it was satisfied that the other party had no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

32    Ultimately, the primary judge agreed with the submissions made by Purnell in support of its application for summary judgment and preferred them to Mr Jones’ submissions to the extent they dealt with issues relevant to the applications before the court. In summary, Purnell submitted that:

(1)    the first step in the Application for Review (which sought to have the Sequestration Order annulled) was to obtain an extension of time in order to file that application. In considering that issue, it is relevant, in the context of a sequestration order, to have regard to the work undertaken by the trustee and the interests of creditors and the public in the prompt administration of a bankrupt’s estate. Further, before an application for an extension of time will be granted, an applicant must show that he or she has an arguable basis for the court not to affirm the sequestration order: at [81]-[86];

(2)    s 52(2)(b) of the Bankruptcy Act 1996 (Cth) (Act) gives the court a discretion to dismiss a creditor’s petition but it is for the debtor who commits an act of bankruptcy to persuade the court of something which overrides the public interest in “stopping … unremunerated trading, and the rights of the individual creditor who are unable to get their debts paid to them as then become due”: at [87]-[88];

(3)    in determining the appropriate order, including whether to decline to set aside a sequestration order that should not have been made, the court may take into account considerations relevant to the making of an annulment order pursuant to s 153B of the Act, including whether the bankrupt is able to pay his debts, the interests of creditors, public policy considerations arising from the Act and whether the applicant has made any proposal for payments of fees and charges incurred by the trustee in the course of the administration: at [93];

(4)    the power to make an order setting aside a sequestration order would normally be exercised in circumstances where the matter came before the court very soon after a sequestration order had been made and before there had been any administration of the estate: at [98];

(5)    the court should not grant an extension of time to Mr Jones to file the Application for Review because the court should not be positively satisfied that: it is fair and equitable in the circumstances to exercise its discretion to extend the time for making the application; Mr Jones has provided an acceptable explanation for the delay; and, in any event, the extension of time would be futile or at least so weak as not to outweigh the matters otherwise weighing against the grant of an extension or, were the court to grant an extension, weighing against the court, in the exercise of its discretion, in respect of the setting aside the Sequestration Order: at [99]-[100];

(6)    if the Sequestration Order was set aside or, in the alternative, the bankruptcy annulled, the delay would have occasioned significant prejudice to creditors and the Trustee because Mr Jones had not paid his debts and had not established that he would be able to pay his debts nor made full disclosure of his financial situation. Further, were the Sequestration Order set aside, the question of who would own the property which the Trustee had recovered is not without difficulty: at [105]-[111];

(7)    the prospective prejudice to creditors must be given generous weight where there is no evidence that the bankrupt complied with the requirements of r 7.06 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) and served the applications on all creditors: at [113];

(8)    Mr Jones does not offer to pay the Trustee his remuneration or costs and expenses of the administration of his estate and the court could have no confidence that he would be able to pay them, particularly as it is unclear whether a property transferred to the Trustee would revert to Mr Jones. Setting aside the Sequestration Order would not serve the public policy considerations underlying the Act having regard to the lack of commercial morality Mr Jones displayed prior to the Sequestration Order being made and his conduct during the course of the bankruptcy: at [114]-[115]; and

(9)    Mr Jones has not advanced any arguable basis on which the court ought to be satisfied that the Sequestration Order should be set aside or, in the alternative, the bases advanced are so weak as not to outweigh those matters which otherwise weigh against the grant of an extension. Mr Jones has not shown an acceptable explanation for his delay, supported by admissible evidence, in applying to review the Sequestration Order. His first application for review of that order was made eight and a half months after the order was made. Even if the delay is satisfactorily explained, that of itself is not sufficient for the court to be satisfied that it is proper to extend the time for the filing of an application for review: at [116]-[119].

33    In coming to his view, the primary judge also addressed each of the contentions made by Mr Jones in support of the Application for Review, which his Honour noted were based on the premise that the court can and should go behind the underlying judgment of the District Court on which the Bankruptcy Notice and Creditor’s Petition were based: see [164] of Purnell v Jones. However, the primary judge was not satisfied that any of the issues raised by Mr Jones established a basis upon which the court could go behind that judgment. At [205] the primary judge concluded:

On the material before the Court I am not satisfied that an application to set aside or annul the sequestration order would succeed and, consequently, the Application for Review and Jones’ Application in a Case should be dismissed pursuant to Rule 13.10(a) of the FCC Rules on the basis that these applications by Jones have no reasonable prospects of success.

principles

34    As noted at [2] above, the orders made in Purnell v Jones are interlocutory. Accordingly, Mr Jones requires leave to bring his appeal: s 24(1A) of the Federal Court of Australia Act 1976 (Cth). An application for leave to appeal must be filed 14 days after the date on which the judgment was pronounced or the orders were made: r 35.13(a) of the Federal Court Rules. As Mr Jones did not file his application for leave to appeal within 14 days of the orders being made he requires an extension of time to seek leave to appeal.

35    The following considerations guide the exercise of the Court’s discretion to extend time for the filing of an application for leave to appeal:

(1)    the length of the delay and the applicant’s explanation for the delay;

(2)    any prejudice to the respondent occasioned by the delay, noting that the mere absence of prejudice is not sufficient to justify the grant of an extension of time; and

(3)    the merits of the substantive application,

Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-349.

36    The considerations relevant to determining whether leave to appeal should be granted are whether, in all the circumstances, the primary judge’s decision is attended with sufficient doubt to warrant its reconsideration; and, presuming the decision is wrong, whether substantial injustice would be suffered by the applicant if leave to appeal were refused: see Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 (Decor). These considerations are cumulative and thus are not satisfied unless each limb is made out: Rawson Finances Pty Ltd v Deputy Commissioner of Taxation (2010) 81 ATR 36; [2010] FCAFC 139 at [5].

mr Jones’ evidence

37    Mr Jones relied on three affidavits affirmed by him on 21 June 2017, 15 September 2017 and 3 April 2018 respectively.

38    Mr Jones provides the following explanation for the delay in making his application for leave to appeal:

(1)    first, he says that in March 2017 when reviewing the affidavit of the Trustee, Mr Weston, sworn on 5 September 2016 (Weston Affidavit) in preparation for his cross-examination of the Trustee in proceeding SYG2492/2014 he “discovered anomalies in the amounts claimed as due to Purnell Motors” and that “one document was omitted from the affidavit which had been included in the affidavits previously filed”. Mr Jones said that his “examination of the documents led to the discovery that the [Costs Judgment] relied upon in the Bankruptcy Notice was irregular and, fraudulent”;

(2)    he has suffered significant dislocation as a result of orders made in the Federal Circuit Court on 16 June 2017 which required vacant possession of his residence within 14 days. He has been evicted from the property in which his files were stored and in which he prepared court documents. He has also suffered from an undisclosed significant medical condition. The medical certificates provided by Mr Jones state that he was unfit for work or to attend court from April to May 2017. A letter dated 3 July 2017 from Dr Russell King addresses the order made for possession of Mr Jones’ properties and addresses a concern about the impact of that order on Mr Jones’ physical and psychological wellbeing;

(3)    Mr Jones had to prepare an appeal from orders made by the Federal Circuit Court on 12 April 2017 and 9 May 2017. In addition, his application for annulment of the bankruptcy was returned by the registry of this Court on about 30 June 2017 after which he attempted to file a further application for annulment on about 4 August 2017. That latter application was rejected by a Registrar of this Court who, by letter dated 9 August 2017, informed Mr Jones that “[a]s Judge Lloyd-Jones has already considered and refused to annul your bankruptcy in Purnell Motors Pty Ltd v Jones (No.2) [2014] FCCA 1617, procedurally your only option is to seek leave to appeal against that decision in the Federal Court of Australia”;

(4)    Mr Jones was distressed to have the documents returned again with a different reason given by the registry which refused to file his application. He received those documents at a time when he had to provide vacant possession of the property where he lived and where he stored his files. The documents to which he required access had been “unlawfully impounded by the Trustee and [he] was unlawfully locked out of [his] place of residence”; and

(5)    on 14 August 2017 his appeal in NSD949/2017 and NSD1036/2017 was set down for hearing on 28 August 2017. Preparation for and attendance at that hearing and the preparation of submissions subsequent to the hearing delayed his ability to prosecute this proceeding in the form required by the Registrar.

39    The Weston Affidavit is annexed to Mr Jones’ affidavit affirmed on 3 April 2018. According to Mr Jones, the Weston Affidavit drew his attention to a discrepancy in the alleged debt and gave rise to the issue he now raises before me. In the Weston Affidavit, Mr Weston relevantly deposes that:

18.    On 29 September 2010 Purnell Motors filed an Application for Assessment of its Costs in the Registry of the Supreme Court (see page 138) and by 21 October 2010, that Application was assigned to a Costs Assessor (see PWG-2 at page 8).

19.    On 8 September 2011 Purnell Motors obtained a Certificate of Determination of those costs in which the costs of Purnell Motors costs were assessed at $277,582.02 (see page 137). That Certificate was the basis for a judgment in the New South Wales District Court on 20 September 2011 (see pages 139 and 140).

…

40    The irregularity which Mr Jones said is apparent in the Costs Judgment (referred to at [38(1)] above) is further explained by Mr Jones. He said that the Costs Judgment which was relied on to found the Bankruptcy Notice included an amount owing to the Manager, Costs Assessment and not to Purnell. Mr Jones said that those two amounts had been combined into one judgment as a debt allegedly owing to Purnell. Mr Jones submitted that the Bankruptcy Notice relies on the Costs Judgment to which interest has been added on the combined amounts of the debts owing to Purnell and to the Manager, Costs Assessment “which have been merged” in the Costs Judgment.

consideration

Delay

41    The first issue to consider in connection with Mr Jones’ application for an extension of time is that of delay in making the application. There has been considerable delay on Mr Jones’ part. Mr Jones’ evidence about his medical conditions, eviction from his place of residence, difficulties with accessing his files and the need to prosecute other proceedings only provides an explanation for the delay of approximately six months from April 2017 to the time of filing of the application for an extension of time and leave to appeal in October 2017.

42    The period prior to that, spanning approximately two years and eight months, is explained only by Mr Jones’ late identification of an alleged discrepancy in the Costs Judgment upon which the Bankruptcy Notice is founded when he was reviewing the Weston Affidavit in March 2017. While I note that Mr Jones is self-represented and was dealing with this matter and other litigation on his own, in my opinion, the explanation he provides is not sufficient to explain or justify a delay of such magnitude.

43    Mr Jones has had ample opportunity to raise issues about the Costs Judgment and the Bankruptcy Notice. This was not a case where a new piece of evidence came to light which had not been available to Mr Jones. To the contrary, Mr Jones has been aware of the matters upon which he relies to frame his proposed grounds of appeal for some time. Mr Jones said he was served a copy of the Bankruptcy Notice and the Costs Judgment on 15 April 2012 and from at least late August or early September 2012, prior to the making of the Sequestration Order, Mr Jones had received copies of the Costs Certificate and the Costs Assessor Costs Certificate. They are the documents on which he relies to frame his proposed grounds of appeal. That the argument now raised did not occur to him until he reviewed Mr Weston’s affidavit in March 2017 does not assist him. A significant delay in bringing an application for leave to appeal cannot, in my opinion, be justified nor adequately explained because a party has had a new idea about the proceeding where the evidence and/or basis for this “new idea” existed long prior to its formation. There must be some finality to litigation. To find that circumstances, such as those in the present application, provide an acceptable explanation for a delay, particularly a lengthy delay, would undermine the need for finality.

Prejudice

44    The second issue that arises in connection with the application for an extension of time is whether Purnell or other parties will or have been prejudiced by Mr Jones’ delay in bringing his application.

45    Purnell did not file any evidence which addressed this issue but in the course of its oral submissions informed the Court that the administration of Mr Jones’ estate was effectively complete and that Mr Jones had been discharged from bankruptcy approximately two years prior to the date of the hearing of his application before me in June 2018.

46    Given the considerable period that has passed since the making of the Sequestration Order, I would infer that making an order to extend time could cause prejudice, if not to Purnell directly, to the administration of Mr Jones’ estate and to creditors more generally. But even if that were not so, the mere absence of prejudice is not sufficient to justify the grant of an extension of time.

Merits of the proposed appeal

47    The third issue, which is common to the application for an extension of time and to the application for leave to appeal, is whether the proposed appeal has any merit or, put another way, whether the primary judge’s decision is attended with sufficient doubt to warrant its reconsideration on appeal.

48    Mr Jones raises two grounds of appeal in his draft amended notice of appeal set out at [3] above both of which concern the Costs Judgment which Mr Jones alleges is irregular, was fraudulently obtained and does not satisfy s 40(1)(g) of the Act.

49    The proposed grounds of appeal are new and were not raised before the primary judge, adding another dimension to Mr Jones’ application. That is, Mr Jones would need leave to raise those grounds on appeal. Leave to raise a ground of appeal not argued below, where a party had the opportunity to do so, as is the case here, is only permitted where it is expedient in the interests of justice to grant leave. The considerations relevant to the question of whether leave should be granted to raise a new ground on appeal have a degree of commonality with those that arise on an application for an extension of time and leave to appeal including, as they do, the merits of the proposed appeal and any prejudice to the respondent: BOZ16 v Minister for Immigration and Border Protection [2018] FCA 418 at [66].

Mr Jones’ submissions

50    Mr Jones submitted that the Costs Judgment was not a final judgment as required by the Act as it represented, in addition to the alleged debt to Purnell, an amount which was not ordered by the court and not permitted by the Legal Profession Act 2004 (NSW) (now repealed) (LP Act). He accepted that his appeal was not concerned with error in the primary judge’s judgment but with the evidence which has come to light since that time. He said that initially, the Registrar and, on review, the primary judge accepted the Costs Judgment as the “‘true’ debt owing” but that judgment was obtained by fraud.

51    Mr Jones submitted that when the Costs Judgment was issued in September 2011 it was accepted by the courts as binding authority for a debt due and became the “linchpin” around which all proceedings were decided, rightly or wrongly. He contended that Purnell made no attempt to enforce the Costs Judgment but issued the Bankruptcy Notice and that judges of the Federal Circuit Court and the District Court along with himself were misled by the Bankruptcy Notice.

52    Mr Jones submitted that it was reasonable to infer now that the significant effort invested by Purnell in the proceedings before the primary judge was to preserve the “fraudulently obtained” Costs Judgment. He said that in 2016, when he recognised the irregularity with the Costs Judgment, he attempted to have the irregularity addressed in proceedings in the Federal Circuit Court and made several attempts to file a separate application but was delayed because of his medical condition.

53    Mr Jones submitted that at the time when the Bankruptcy Notice was served he was inexperienced in the ways of the courts and tactics of lawyers. He said that when the Weston Affidavit was filed in proceeding SYG2492/2014 he noticed discrepancies in the Costs Judgment and the alleged debt due to Purnell. He said he also noticed that the Costs Assessor Costs Certificate was not referred to in the Weston Affidavit which led him to undertake further investigations.

54    Mr Jones said that his appeal is confined to “the fraud upon the court leading to the issue of the irregular [Costs Judgment]” and does not seek to set aside that judgment. He also does not seek to rely only on the fact that the amount in the Bankruptcy Notice exceeds the debt due. He said that the issue he raises concerns the validity of the Bankruptcy Notice.

55    Mr Jones submitted that the Costs Judgment, whether merely irregular or founded on a fraud upon the court or circumstances analogous to fraud, is not a final judgment in terms of the Act. Thus Mr Jones said that the Bankruptcy Notice is therefore a nullity because a requirement made essential by the Act has not been satisfied.

56    Mr Jones acknowledged that he would have been liable for 80% of costs properly assessed and that he had set aside sufficient assets to meet a legitimate claim. He said that there were substantial errors in the Reasons but by the time he became aware of them it was too late to appeal, although he attempted to do so. Mr Jones contended that Purnell took control of his assets, even before the Costs Judgment, and refused to vary them to allow satisfaction of the debt. He further contended that Purnell acted to ensure his bankruptcy and did so by fraudulent means such that it should not benefit from the fruits of its deceit.

57    Mr Jones submitted that the power of the court to award costs is governed by s 98 of the Civil Procedure Act 2005 (NSW) and that, once a costs order has been made, the procedure for assessment of those costs is governed by the LP Act. He noted that, once a costs assessor has determined costs, he can issue a certificate pursuant to s 368(5) of the LP Act. Mr Jones said that while Purnell alleged that it paid the costs assessor to obtain the relevant certificates (which Mr Jones described as a widely used practice to prevent the other party from having access to the certificates), that nevertheless gave no statutory or legal right for the amount so paid to be added to a judgment without a court order.

58    Mr Jones submitted that the Costs Judgment was in a form which was not authorised by the LP Act and that it merged the debt due to Purnell by order of the District Court with an amount which was recoverable only in a judgment entered in the name of the “Manager, Costs Assessment”. Mr Jones contended that the Costs Judgment was irregular and a fraud upon the court for two reasons: first, because it was founded on the fraudulent claim for an amount due and enforceable only by the Manager, Costs Assessment and not Purnell; and secondly, a judgment for costs of costs assessment was not supported by the orders made by the District Court on 24 February 2010 or any other orders.

59    Although seemingly not the main focus of Mr Jones’ submissions, in the alternative, he contended that the claim for the costs of the costs assessment included in the Costs Judgment was a further attempt by Purnell to unjustly enrich itself and, further in the alternative, that it could be inferred that Purnell, by its conduct, intended to deceive and that the Costs Judgment entered as a result of its conduct was not one which could lawfully found the Bankruptcy Notice.

Consideration

60    As set out at [15] above, the Costs Judgment is for the sum of $282,686.93, which is the combined amount of the Costs Certificate (being $277,582.02) and Mr Jones’ portion of the amount specified in the Costs Assessor Costs Certificate which was paid by Purnell (being $5,104.91). In the judgment’s terms, it refers to s 368 and s 369 of the LP Act. The gravamen of the issue raised by the proposed grounds of appeal is that it was incorrect to include in the Costs Judgment the amount included in the Costs Assessor Costs Certificate which was to be paid by Mr Jones because that was not an amount due to Purnell. It is said that its inclusion makes the Costs Judgment irregular or fraudulently obtained or renders the Bankruptcy Notice a nullity because a fact essential to its validity did not in fact exist.

61    Sections 368 and 369 of the LP Act, as it was at the date of the issue of the Costs Certificate and the Costs Assessment Costs Certificate (ie 2 September 2011), relevantly provided:

368     Certificate as to determination

(1)    On making a determination of costs referred to in Subdivision 2 or 3 of this Division, a costs assessor is to issue a certificate that sets out the determination.

(2)    A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process.

(3)    However, any such certificate may not set out the costs of the costs assessment within the meaning of section 369.

Note. Section 369 makes provision for the recovery of the costs of costs assessments relating to costs to which either section 317 (Effect of failure to disclose) or 364 (Assessment of costs—costs ordered by court or tribunal) applies. The section requires a costs assessor to issue a separate certificate setting out the costs of such costs assessments. That section also makes provision for the effect of such a certificate.

(4)    In the case of an amount of costs that has not been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction.

(5)    In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed.

(5A)    The costs assessor must forward the certificate or a copy of the certificate to:

(a)    the Manager, Costs Assessment, and

(b)    each party to the assessment, unless subsection (6) applies.

(6)    If the costs of the costs assessor are payable by a party to the assessment as referred to in section 369, the costs assessor must:

(a)    forward a copy of the certificate to the Manager, Costs Assessment only, and

(b)    advise the parties that the certificate has been so forwarded and will be available to the parties on payment of the costs of the costs assessor.

…

369    Costs of costs assessment

(1)    This section applies to the costs of a costs assessment in relation to:

  (a)    costs to which section 317 (Effect of failure to disclose) applies, and

(b)    costs to which section 364 (Assessment of costs—costs ordered by court or tribunal) applies, and

  (c)    costs that on assessment are reduced by 15% or more.

(2)    A costs assessor is, subject to this section, to determine the costs of a costs assessment to which this section applies.

(2A)    Subject to any order of or the rules of the relevant court or tribunal, the costs assessor may determine by whom and to what extent the costs of an assessment referred to in section 364 (Assessment of costs—costs ordered by court or tribunal) are payable and include the determination in the certificate issued under this section in relation to the assessment.

(3)    The costs of a costs assessment to which this section applies are payable:

(a)    for a costs assessment in relation to costs to which section 317 (Effect of failure to disclose) applies—by the law practice that provided the legal services concerned, or

(b)    for a costs assessment in relation to costs to which section 364 (Assessment of costs—costs ordered by court or tribunal) applies—by such persons, and to such extent, as may be determined by the costs assessor, or

(c)    for a costs assessment in relation to costs that on assessment are reduced by 15% or more—by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons, and to such extent, as may be determined by the costs assessor.

…

(5)    On making a determination, a costs assessor may issue and forward to each party and the Manager, Costs Assessment a certificate that sets out the costs of the costs assessment.

…

(7)    The certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs.

(8)    The costs of the costs assessor are to be paid to the Manager, Costs Assessment.

(9)    The Manager, Costs Assessment may take action to recover the costs of a costs assessor or Manager, Costs Assessment.

(10)    In this section:

costs of the costs assessment includes the costs incurred by the costs assessor or the Manager, Costs Assessment in the course of a costs assessment under this Division, and also includes the costs related to the remuneration of the costs assessor.

62    Part 36, r 36.10 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides that:

(1)    A cost assessor’s certificate:

(a)    may be filed in the proceedings to which it relates, or

(b)    may be filed in fresh proceedings, whether in the same court or another court.

(2)    A number of certificates may be filed together under subrule (1) if each of the certificates:

(a)    relates to the same costs assessment, and

(b)    requires the same person or persons to pay costs.

(3)    The certificate or certificates must be accompanied by an affidavit, sworn not more than 14 days before the certificate or certificates are filed, stating:

(a)    if some of the costs specified in the certificate or certificates have been paid—the amount of the costs that have been paid, or

(b)    that none of the costs specified in the certificate or certificates have been paid.

…

63    Mr Jones relies on the decision in Kassem & Seccatore as joint liquidators of Pan Pacific Age Care Services Pty Ltd (in liq) & Anor v Koutavas [2012] NSWSC 236 (Kassem). In that case Ward J (as her Honour then was) considered whether she should exercise her discretion to set aside a judgment entered in respect of costs (as assessed under the applicable costs assessment procedures) of both a costs order made in other proceedings in favour of the plaintiffs and the costs of the assessment of those costs. The applicant on the application submitted that it was not possible for a party, other than the Manager, Costs Assessment, to have the benefit of a certificate of judgment arising from the filing of a s 369 certificate such that it is not possible for costs certificates under s 368 and s 369 to be filed together and become one judgment: Kassem at [26].

64    Ward J referred to the decision in Dennis v Miller (2012) 257 FLR 64; [2012] FMCA 25, in which Smith FM considered the same issue as was before her Honour. At [40] of Kassem Ward J accepted the observation by Smith FM therein that s 369(9) did not preclude the party identified in the costs certificate as entitled to the certified costs of the assessment from filing a certificate under s 369(7) of the LP Act. However, Ward J’s concern was with the proposition that the costs judgment which would automatically arise from the filing of a s 369 costs of costs assessment certificate could of itself impose an obligation on the party against whom the assessment was made to pay those costs to the party in whose favour the assessment was made (as opposed to being liable to pay the Manager, Costs Assessment): see Kassem at [41].

65    While her Honour accepted that there was nothing in s 369(9) of the LP Act to prevent the filing by the party certified as entitled to the costs of a s 369 certificate, she considered that the real issue was the manner in which a judgment that arose as a result of the filing of such a certificate was to be enforced. Ward J concluded that the effect of s 369(8) was that any such judgment requires the costs to be paid to the Manager, Costs Assessment because if that were not so, there could be conflicting claims for costs by both the recipient of the costs certificate and the Manager, Costs Assessment: Kassem at [42]-[43].

66    After considering the operation of her construction of s 369 of the LP Act on the facts of the case before her, Ward J said that, while she accepted that the judgment arising on the filing of the s 369 certificate was not of itself a judgment for the payment of the costs of the costs assessment to the plaintiffs, she did not accept that that necessarily meant that the judgment that had been entered in favour of the plaintiffs should be set aside as an irregularity. Her Honour noted that “[t]he purpose of the entry of the judgment in the Court’s records as a judgment of the court … is to give effect to and record the judgment arising by operation of the statute (and to permit its enforcement)”: Kassem at [45].

67    Justice Ward saw the solution to the problem that arose was to have the terms of any judgment entered record that the primary obligation on the party liable under the s 369 certificate was to the Manager, Costs Assessment: Kassem at [46].

68    Justice Ward accepted that practical difficulties flowed from her construction of s 369 of the LP Act but said that those difficulties could be met by the application of the principles of restitution and consequently made orders that reflected the use of those principles and did justice between the parties. Her Honour made an order that required the defendant (the applicant on the application) to pay the plaintiffs by way of reimbursement the amount they had paid to the Manager, Costs Assessment to obtain release of the relevant costs certificates.

69    In Weber v Aquaqueen International Pty Ltd; Aquaqueen International Pty Ltd v Weber [2013] NSWSC 1181 (Aquaqueen) Mr Weber registered four costs certificates in the Supreme Court and obtained a single judgment against Aquaqueen International Pty Ltd (Aquaqueen). Among other things, Aquaqueen subsequently sought to dismiss or set aside the judgment entered against it on three bases, including because the total sum for which the judgment was registered included components which represented the costs of the costs assessment process which could only be recovered by the Manager, Costs Assessment: Aquaqueen at [51]. Accordingly, Aquaqueen contended that the judgment was irregularly entered in accordance with the principles enunciated in Kassem.

70    In addressing that argument Garling J considered the decision in Kassem. At [94] his Honour observed that Ward J must have accepted the submission made that the effect of s 369(8) of the LP Act was a substantive one which had the consequence of overriding the provisions of s 369(2A) of the LP Act, at least to the extent that the costs which were being determined included costs which were payable for the costs assessment. His Honour then noted that no submission had seemingly been made in Kassem that there was an alternative construction of s 369(8) available, namely that the subsection was susceptible to a facilitatory, rather than substantive, construction which, if adopted, would not override s 369(2A) but would have a coherent effect. At [96] Garling J continued:

In other words, the Costs Assessor acting in accordance with s 369(2A) of the LP Act determines what sum is to be paid which include both the costs assessor’s fees, and the application fees which are payable to the Court. The provisions of s 369(8) of the LP Act are facilitatory in the sense that there is no room for the payment of the costs assessor’s costs by a party directly to the costs assessor himself or herself. It is to be remembered that the costs assessor is an independent officer undertaking a specified task under the legislation. Although the costs assessor renders a tax invoice to the Manager, Costs Assessment for their own fees, the costs assessor is not an employee of the Manager, Costs Assessment. The Manager, Costs Assessment, whose role is to administer the Costs Assessment Scheme, would not, but for the provisions of s 369(8) of the LP Act, otherwise have any right to collect the fees of the various costs assessors which are ordered to be paid by one party or another. It seems, to me, that the preferable interpretation of this subsection is that it merely facilitates the operation of the scheme by making the costs of costs assessors payable by one or other party to the Manager, Costs Assessment, rather than directly to individual costs assessors.

71    His Honour was of the opinion that s 369(9) gives the Manager, Costs Assessment the right to take action to recover costs, a right which is co-relative to the facilitatory obligation in s 369(8) of the LP Act. His Honour said that without that provision, the Manager, Costs Assessment would have no legal right to claim the costs assessor’s costs. His Honour observed that that right of action only existed where the costs remained unpaid but that the subsection does not dictate from which party the costs assessor’s costs are to be recovered. Garling J found that there was no reason why an action for recovery could not be taken against either the costs applicant or the costs respondent, at the election of the Manager, Costs Assessment. However, his Honour noted that as a practical matter, such an action would not ordinarily need to be taken because costs certificates are not released until the costs are paid: Aquaqueen at [97]-[98].

72    Contrary to the conclusion reached in Kassem, Garling J did not accept that the judgment entered in the case before him was irregular because of the inclusion in it of a sum payable for the costs of the costs assessor and, in particular, the cost assessor’s costs: Aquaqueen at [104]. His Honour set out his reasons for reaching that conclusion at [106]-[114] as follows:

106    First, the fees (or costs) charged by a Costs Assessor are included within the definition of the term “costs” of the costs assessment in s 369(10) of the LP Act. Accordingly, it is expected that they will form a part of the assessment process which is initiated by one party or another, in order to obtain a determination of the fair and reasonable amount of costs as between the parties.

107    Secondly, at the conclusion of the costs assessment process, the LP Act gives to the Costs Assessor the obligation to determine in what sum, and by whom, the costs of the costs assessment ought be paid: s 369(2), and s 369(2A) of the LP Act;

108    Thirdly, that determination is to be recorded in a Certificate: s 369(2A) of the LP Act.

109    Fourthly, that Certificate, consequent upon being filed in a court of competent jurisdiction, becomes a judgment which determines that one of the parties to the costs assessment process is obliged to pay to the other party, the sum which the costs assessor has determined. The party determined by the Certificate to be liable, and obliged by the judgment, to pay the sum so determined, is the party who has had a right under the LP Act to participate in the costs assessment process, to put arguments and objections to the costs assessor, and who has the right under the LP Act to challenge in the ways there permitted, the contents of the Certificate.

110    Fifthly, the Manager, Costs Assessment does not have any right to participate in the costs assessment process, nor to make any submissions as to the outcome of that process. The Manager is not named as, nor is he or she in fact, a party to the matter. No obligation is created in favour of, or against, the Manager, by the issue of a determination, and then a Certificate under the LP Act. In fact, rather than being a party, the Manager, Costs Assessment is the person given the responsibility for the effective operation of the costs assessment scheme: see LP Act, Pt II Subdivisions 1, 2, 4 and 5.

111    Sixthly, it is clear that the judgment once entered, is then enforceable as a judgment of the Court in the terms which it is entered. That is a judgment by one party against the other party named in the Certificate as liable for a fixed and identified sum. Again, the Manager is not a party to the judgment. The judgment is not expressed to be in favour of (or against) the Manager. There is no requirement under the UCPR, for the Manager to be joined as a party when the Certificates are registered. Nor would the Manager be a necessary party to those proceedings.

112    Seventhly, the fact that the legislation provides a mechanism by which the Manager, Costs Assessment is entitled to be paid the costs of the costs assessor, and that the Manager may be entitled to exercise a right to collect those costs, does not seem to me to make a judgment in the sum determined in accordance with the legislation between the parties to the costs assessment matter to be irregular. On the contrary, the judgment so entered is a regular one, entered just as the UCPR permits.

113    Lastly, this construction means that it remains open, at all times, where the costs of the costs assessment have not been paid, for the Manager, Costs Assessment to take action to recover those costs. In those circumstances, the Manager would be party to the recovery action, as the plaintiff, and if successful, would obtain a judgment in his or her favour, upon which enforcement action could then be taken in the same way as for any other debt.

114    I appreciate that this conclusion differs from that reached by Ward J in Kassem. However, to the extent that it is necessary for me to disagree with her Honour’s central finding, which I have described above, I do so with the utmost respect. However, I do so because it seems that her Honour’s view, that a judgment entered against a party to the proceedings, in consequence of the filing and registration of a s 369 Certificate, is one which takes effect in favour of a person who is not a party to the proceedings (the Manager, Costs Assessment), and not in favour of the party filing the judgment, in whose favour it is expressed to be, is in the absence of any specific provision in the LP Act which enables this to occur, erroneous.

73    The decision in Aquaqueen was the subject of an application for leave to appeal which was dismissed without consideration of Garling J’s construction of s 369 of the LP Act: see Aquaqueen International Pty Ltd v Weber [2014] NSWCA 101.

74    In Ritson v Commissioner of Police, New South Wales Police Force (2018) 332 FLR 182; [2018] FCCA 916 Judge Smith considered the same issue raised by Mr Jones in his proposed grounds of appeal, namely whether a bankruptcy notice was liable to be set aside because it was based on an irregular judgment. The irregularity was said to be, as is the case here, the inclusion in the judgment of the costs of the costs assessment and issuing the repayment of those costs to someone other than the Manager, Costs Assessment.

75    After referring to the decisions in Kassem and Aquaqueen, Judge Smith concluded at [60] as follows:

With great respect to Ward J, I disagree with her Honour’s reasoning except to the extent that she agreed with Smith FM and I agree with, and adopt the reasoning of Garling J. I would only add that I would give no weight to one of the central concerns that led Ward J to her conclusion, that is that there would be conflicting claims for the costs of an assessment. I consider that that possibility is remote given that, by operation of ss 368(5) and (6), the certificate of the assessed costs need only be given to a party if the Manager, Costs Assessment has been sent the certificate and the parties notified that it will not be given to them unless the costs of the costs assessor have been paid. The practical operation of those provisions, in the context, was that the party in whose favour a costs assessment was made would pay the costs of the assessment, obtain certificates for that assessment and for the costs of the assessment and proceed to judgment against the costs respondent in respect of both. Where the costs applicant did not pay, however, the Manager, Costs Assessment could take steps to recover the amount of the costs under s 369(9) of the LPA.

76    I too, with respect, consider that the better view of the operation of s 369 of the Act to be that which is set out in Aquaqueen and I adopt Garling J’s reasoning in that regard. Applied to the facts of this case that means that:

(1)    the costs assessor’s costs were “costs” of the cost assessment as defined in s 369(10) of the LP Act;

(2)    the costs assessor was obliged pursuant to s 369(2) and s 369(2A) of the LP Act to determine the amount and by whom the costs of the costs assessment were to be paid. He did so by determining first, a total amount of $9,275.74 payable as costs of the costs assessment which included $5,104.91 for the application fee; and secondly, that one half of that amount was to be paid by Purnell, the costs applicant, and the other half, by Mr Jones, the costs respondent. That determination was included in the Costs Assessor Costs Certificate; and

(3)    the Costs Assessor Costs Certificate was filed and became a judgment which once entered was enforceable as a judgment of the District Court on the terms on which it was entered, namely for Mr Jones to pay Purnell the amount identified therein. As Garling J said in Aquaqueen at [111] the Manager, Costs Assessment is not a party to the judgment; the judgment is not expressed to be in favour of that Manager; there was no requirement under the UCPR for the Manager, Costs Assessment to be joined as a party when the certificates were registered; nor would the Manager, Costs Assessment be a necessary party to those proceedings.

77    As Garling J noted at [112] of Aquaqueen that the Manager, Costs Assessment is entitled by reason of the operation of s 369(8) and (9) of the LP Act to be paid the costs of the costs assessor and to take steps to recover those costs does not make the Costs Judgment, which is for a sum determined in accordance with the LP Act, irregular. The Costs Judgment is regular having been entered in accordance with the requirements of the UCPR.

78    For those reasons there is no merit in Mr Jones’ proposed grounds of appeal.

conclusion

79    Having regard to the unacceptable delay which was, in my opinion, not adequately explained and the lack of merit in the proposed grounds of appeal, the Amended Application should be dismissed. As Mr Jones has been unsuccessful, he should pay Purnell’s costs. I will make orders accordingly.

Associate:

Dated:    31 January 2019