FEDERAL COURT OF AUSTRALIA

Slack v Bottoms English Solicitors, Steindls Solicitors & Miller Harris Lawyers [2003] FCA 1337

PRACTICE AND PROCEDURE – appeal - whether Federal Court should grant leave for bankrupt to be represented by a non-lawyer

APPEALS – Bankruptcy - where appellant sought to recanvass issues determined in other courts – where no basis for impugning the judgments on which bankruptcy notice and petition were based – no legal error in the making of sequestration order

Bankruptcy Act 1966 (Cth) s 308

Federal Magistrates Court Act 1999 (Cth) ss 44(1), 52(1) and (2)

Federal Court Rules, O 4, r 14

International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 cited

Sandell v Porter (1966) 115 CLR 666 followed

RICHARD JOHN SLACK v BOTTOMS ENGLISH SOLICITORS, STEINDLS SOLICITORS and MILLER HARRIS LAWYERS

No Q 128 of 2003

SPENDER J

BRISBANE (heard in Cairns)

20 NOVEMBER 2003

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

THE COURT ORDERS THAT:

The appeal is dismissed with costs.

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

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

REASONS FOR JUDGMENT

1                     This is an appeal from orders made by Federal Magistrate Coker on 12 August 2003, for the sequestration of the estate of Richard John Slack, the appellant.

2                     The making of the sequestration order had been preceded by a long saga of litigation. The merits of that litigation and the facts underlining it have been the focus of the attention of Mr Slack on this appeal, and on other occasions by those who have acted on his behalf, who have conflated their complaints as to the results of litigation in Supreme Court proceedings, with the correctness of the making of the sequestration order against the estate of Mr Slack.

3                     On the hearing of the appeal, one Sohail Laghaifar, a non-lawyer, sought to appear for Mr Slack. Mr Laghaifar had filed submissions on Mr Slack’s behalf. Mr Laghaifar sought to rely on an enduring power of attorney as providing authority for him to act on Mr Slack’s behalf in legal proceedings. Such a power of attorney does not provide a lawful basis for a non-lawyer to act for a party in litigation in a Federal Court.

4                     Section 44 of the Federal Magistrates Act 1999 (Cth) deals with representation, and provides:

‘A party to a proceeding before the Federal Magistrates Court is not entitled to be represented by another person unless:

(a)         Under the Judiciary Act 1903, the other person is entitled to practise as a barrister or solicitor, or both, in a federal court; or

(b)         under the regulations the other person is taken to be an authorised representative; or

(c)          another law of the Commonwealth authorises the other person to represent the party.

5                     Section 308 of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) provides:

‘Subject to this Act, for the purposes of this Act:

(a)         a corporation may act by any person duly authorized in that behalf by the corporation;

(b)         a partnership may act by any of its members or a duly authorized agent;

(c)          a person of unsound mind may act by a person authorized or empowered by law to act for him or her; and

(d)         any person may act by his or her agent duly authorized in that behalf.’

6                     This section does not provide a basis for Mr Laghaifar to act on Mr Slack’s behalf in the Federal Magistrates Court in resisting the making of a sequestration order, nor does it provide a basis for him to act on Mr Slack’s behalf on this appeal. Such acting is not the doing of an act ‘for the purposes of’ the Bankruptcy Act.

7                     Despite this, Mr Laghaifar sought to appear on Mr Slack’s behalf at the hearing of the appeal. Order 4, rule 14 of the Federal Court Rules provides:

‘14(1) Subject to sub-rule (2) and to Order 43 (which relates to disability), any person may proceed in the Court by a solicitor or in person.

14(2) [Proceeding commenced by corporation] Except as provided by or under any Act, a corporation may not, without the leave of the Court, commence or carry on any proceeding otherwise than by a solicitor. …’

Order 4, rule 14(2) provides that a court may give leave for a non-lawyer to act for a corporation. Order 4 is silent on any power of the Federal Court to permit a non-lawyer to act for a party to an appeal from a judgment of the Federal Magistrates Court to the Federal Court.

8                     Even if there were power in the Court to grant such leave, which I doubt, I would not have granted leave for Mr Laghaifar to act on Mr Slack’s behalf on the appeal. In the submissions filed by Mr Laghaifar on Mr Slack’s behalf, there were scandalous allegations made against Justice Jones of the Supreme Court of Queensland, Federal Magistrate Coker and the solicitor who acted for the respondents in the present appeal. Those submissions were replete with serious allegations of criminal conduct, without the slightest evidentiary basis. Further, when the appeal was called on, Mr Laghaifar persisted in wilfully disobeying directions of the Court, interrupting, interjecting and disrupting the hearing of the appeal. I concluded that, even if the Federal Court in the exercise of its appellate jurisdiction had power to grant leave to Mr Laghaifar to act on Mr Slack’s behalf, it would not have been in Mr Slack’s best interests, or in the interests of justice, for Mr Laghaifar to so appear. The same considerations would have been relevant to deny to Mr Slack any opportunity to have Mr Laghaifar assist him as a Mackenzie Friend.

9                     It is important to understand the basis for the making of the sequestration order, if only because it is quite clear that Mr Slack regards the question of the correctness of that order as being dependent on, or involving, the correctness of judgments in the Supreme Court with which Mr Slack has been involved.

10                  The bankruptcy notice which founded the creditors’ petition leading to the making of the sequestration order, the subject of this appeal, was issued by Bottoms English Solicitors (a partnership), Steindls Solicitors (a partnership) and Miller Harris Lawyers (a partnership), the respondents to this appeal. That notice was founded upon an order made by the Supreme Court of Queensland on 5 November 2001 by Justice Jones, that the appellant Mr Slack pay the costs of the proceedings of the second, third and fifth defendants in proceedings 50/2001, to be assessed. Those costs were assessed in the sum of $6,106.95 on 26 February 2002.

11                  That bankruptcy notice, issued by the respondents as joint creditors in respect of a single debt, was served on Mr Slack on 13 May 2002. On 3 June 2002 he applied to the Federal Magistrates Court for an order setting aside the bankruptcy notice, which application was dismissed by Federal Magistrate Coker on 2 August 2002. Mr Slack applied for an extension of time within which to file and serve an appeal against the decision of Federal Magistrate Coker dismissing the application to set aside the bankruptcy notice. On 20 November 2002 I dismissed that application, with costs.

12                  On 15 August 2002 the respondents filed a creditors’ petition. Mr Slack paid the debt claimed in the petition in the amount of $6,106.95 on 28 August 2002. On 3 September 2002 the respondents filed by leave an application to be substituted as creditors in the creditors’ petition in respect of an amount of $6,066.15 and an amount of $2,956.05. The sum of $6,066.15 was in respect of an order for costs which costs were assessed in that sum on 23 January 2002 by the Registrar of the Supreme Court of Queensland in proceedings 50/2001, and the sum of $2,956.05 was pursuant to an order for costs which were assessed by the Registrar of the Supreme Court of Queensland in the same proceedings on 26 February 2002. The assessments for these two amounts, and consequently the two debts owed to the joint creditors by Mr Slack, were in existence at the time of the act of bankruptcy. A creditors’ petition claiming that Mr Slack owed the present respondents the sums of $6,066.15 and $2,956.05 and relying on the act of bankruptcy constituted by non compliance with the requirements of the bankruptcy notice that had been issued on 9 May 2002 and served on 13 May 2002, was served on Mr Slack on 3 September 2002.

13                  On 17 December 2002 Mr Slack tended payment in respect of the amounts of $6,066.15 and $2,956.05, but that tender was declined by the petitioning joint creditors, the respondents to the present appeal. On 17 December 2002 Federal Magistrate Coker adjourned the hearing of the creditors’ petition to 25 February 2003, and ordered the appellant to file any material upon which he intended to rely by 31 January 2003, such material to include a schedule of assets and liabilities. On 1 February 2003 Mr Slack served upon the respondent solicitors a schedule of his assets and liabilities.

14                  On 25 February 2003 Federal Magistrate Coker granted Mr Slack’s application for an adjournment of the hearing of the creditors’ petition. In granting that adjournment to 29 April 2003, Federal Magistrate Coker, referring to further attempts by Mr Slack to bring proceedings in the Supreme Court of Queensland in respect of his claims dating back over many years and which had been the subject of other applications to the Supreme Court, said:

‘The fact is, however, that I am simply not in a position where I can make any determination as to the appropriateness or not, or in fact the likelihood of success of any proceedings that are before the Court. I intend to err on the side of caution in that regard and therefore to grant an adjournment. But I intend to grant the adjournment on a number of bases.

There will be a requirement in relation to these particular aspects of the matter. The first is that the application will be adjourned to 2.15 pm on 29 April 2000. The second, that it needs to be clearly understood that if I am satisfied on the material that is before me on the next occasion that this matter comes before me that I can at law make the sequestration order I will not be satisfied that proceedings continuing in the Sate Courts preclude me from doing so.

In other words, there’s two months to get something sorted out here. The only basis then that the sequestration would not proceed, if I were to find that it was all in order, is if I am satisfied pursuant to the provisions of Section 52(2a) or (b) either that the debtor, Mr Slack, is able to pay his debts, or that there is other sufficient cause.

…

It would seem therefore that the only basis upon which the petition would be dismissed is if I were satisfied that Mr Slack was able to pay all of his debts.’

15                  On 29 April 2003 the hearing was adjourned to 8 July 2003, and then on 8 July was further adjourned to 12 August 2003. Federal Magistrate Coker indicated that the adjournment was subject to a number of conditions, including that Mr Slack provide evidence as to the settlement of Supreme Court Claim 17/1994, and evidence of Mr Slack’s capacity to meet his debts ‘if and when they fall due’.

16                  On 12 August 2003 Federal Magistrate Coker declined Mr Slack’s request for a further adjournment. In his Honour’s reasons for judgment, he concluded that there was no direct legal connection between proceedings 17/1994 which involved Mr Laghaifar, and proceedings 50/2001, which were proceedings initiated by Mr Slack. Federal Magistrate Coker considered a document headed “Assets and Liabilities Statement for Richard John Slack as at 1 August 2003”. His Honour concluded that he was not satisfied that there was an interest in relation to a claimed business of $425,000, ‘particularly in the light of judgments previously made by the Supreme Court’. Federal Magistrate Coker further concluded:

‘… there is no indication whatsoever, that there would be an interest sufficient, within reasonable time, for the debt to be met.’

17                  In respect of an allotment of land on Russell Island, his Honour concluded that the only evidence as to the value of the property was ‘somewhere between $5,000 and $7,000 dollars’, and noted that there is a difficulty that would be experienced in respect of the sale of such a property. His Honour noted that there was no information in relation to two other assets referred to, being a car and firearms, as well as plant and equipment. His Honour said:

‘I am not satisfied that there is information sufficient for me to be satisfied as to an immediate or reasonably opportune capacity for the respondent to pay his debts. In that regard there is also a notation that there are liabilities of approximately $29,000 to credit card facilities, Visa and American Express.’

18                  His Honour noted his satisfaction as to the requirements of the Bankruptcy Act pursuant to s 44(1) and s 52(1). His Honour found:

‘… there is no evidence whatsoever of his capacity to meet the claim within a reasonable time and I am satisfied as I am otherwise required to be, pursuant to the provisions of the Bankruptcy Act, that a notice has been given, there has been non compliance and that it is appropriate, therefore, that an order should be made for the sequestration of the estate of Richard John Slack and I so order.’

19                  The grounds of the appeal which was filed on 1 September 2003 are: [p 600]

‘(a) As an exercise of right to an Appeal by way of a rehearing on the evidence.

(b)         The decision involved an error of law.

(c)          The decision was based on incorrect findings of fact.

(d)         The decision was made in a manner not in keeping with the principles of natural justice.

(e)          The making of the decision involved a denial of procedural fairness.

(f)           The decision was induced or affected by fraud.

(g)         The decision was based on an improper exercise of power.

(h)         The order was incorrectly made because of someone’s deceit.’

20                  On the appeal, no issue was taken concerning the finding of Federal Magistrate Coker that the requirements of ss 44(1) and 52(1) of the Bankruptcy Act had been fulfilled, nor was there any argument directed at the finding of Federal Magistrate that the Court was not satisfied that Mr Slack was able to pay his debts. This test of solvency in s 52(2)(a) of the Bankruptcy Act was explained in International Alpaca Management Pty Ltd v Ensor [1999] FCA 72. This adopted the test set out in Sandell v Porter (1966) 115 CLR 666.

21                  Mr Slack’s primary concern, and most of the material on which he wishes to rely, is directed to events concerning the Gun Deck Shooting Gallery, a business operation which apparently was the subject of a valuation, not in evidence before Federal Magistrate Coker, that if valued as an economically viable business at 24 December 2001 with continuitive access through ground level shopping centre and average weekly takings of $6,500, would be valued at $425,000. Mr Slack at one stage had a twenty-year lease of those premises at Kuranda, and he asserts that he has a claim against the creditors, in a sense, for his lost lease and his lost business income.

22                  However, his claims arising out of those matters were the subject of a claim in proceedings 180/2001 in the Supreme Court of Queensland against Bottoms English Lawyers for damages of $960,275.72, which claim was dismissed by Byrne J on 29 May 2003. The losses were also the subject of Mr Slack’s claim against the respondents to this appeal in the Supreme Court of Queensland claim 50/2001 which was dismissed on 5 November 2001. While the merits of those various claims was the subject of much submissions on Mr Slack’s behalf before Federal Magistrate Coker and in the material on this appeal, there was no material properly before Federal Magistrate Coker on which he should have gone behind the costs orders made by the Supreme Court of Queensland which founded the bankruptcy notice, or the cost orders which were substituted as debts, on which the petition was based.

23                  Turning specifically to the grounds of appeal as contained in the notice of appeal, Mr Slack was asked:

‘What is the error of law you say that was involved in the decision?’

To which Mr Slack said:

‘The error of law is that the opposition have been misleading the judges and misleading the court and misleading everybody here - - -

…

-         - - by not telling the truth and not providing the evidence.’

Mr Slack was asked:

‘What is the incorrect finding of fact that you say Federal Magistrate Coker made?’

And Mr Slack replied:

‘The fact that he put me to sequestration, or the fact that he put me into bankruptcy.’

24                  It was put to Mr Slack:

‘You’ve pursued claims which have been dismissed by the Supreme Court of Queensland, is that not so?

To which Mr Slack replied:

It may be so but it’s certainly not correct, and I object and I don’t consent.’

25                  He was asked:

‘Why do you say the making of a decision involved a denial of procedural fairness?’

To which Mr Slack replied:

‘Your Honour, every time we’ve gone to Court and we’ve tried to show the evidence to try and explain everything that I have in here, no-one is listening. I get the same thing. I get interrupted, sit down, please, don’t talk, wait till you’re spoken to. I have had no natural justice. I have not – nothing is done with procedural fairness and I am here today to try and protect my life, my family, and I am not getting a fair go to do it.’

26                  It was put to Mr Slack:

‘… you seem to fail to appreciate that this is an appeal from the judgment of Federal Magistrate Coker. He found that the requirements of the Bankruptcy Act, in particular Section 44(1) of the Act, were satisfied and that Section 52 did not assist you in that he was not satisfied that you were able to pay your debts as and when they became due, nor was there any other sufficient cause why a sequestration order should not be made.

MR SLACK: I didn’t consent, your Honour, and I believe that he had been misled by certain people that were in the Court those days.

HIS HONOUR: All right.

MR SLACK: And if he didn’t have everything explained to him properly, I didn’t get the chance to do it and I’d like the chance today to do it because his order that he did make was not true, was not fair, and it was not the right decision. …’

27                  There is no basis, in any of the grounds of appeal, for impugning the judgment of Federal Magistrate Coker. I have looked carefully at the whole of the material. While it is clear that Mr Slack’s complaints relate to the outcome of his various claims in the Supreme Court of Queensland, which he strenuously contends have been wrongly decided, the fact of the matter is that none of those complaints provide a basis for holding that Federal Magistrate Coker was wrong in his conclusions concerning the sequestration order that he made on 12 August 2003. No legal error has been demonstrated in Federal Magistrate Coker’s orders or reasons for judgment.

28                  The appeal is dismissed with costs.

Associate:

Dated: 20 November 2003