FEDERAL COURT OF AUSTRALIA

Rana v Chief of Army (No 2) [2008] FCA 1555

RANJIT SHAMSHER JUNG BAHADUR RANA v CHIEF OF ARMY

SAD 124 of 2008

MANSFIELD J

20 OCTOBER 2008

ADELAIDE

THE COURT ORDERS THAT:

1.                  The appeal against the making of a sequestration order over the estate of the appellant on 13 August 2008 is dismissed.

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

REASONS FOR JUDGMENT

INTRODUCTION

1                     The appellant was made bankrupt by order of a Federal Magistrate on 13 August 2008:  see Chief of Army v Rana (No 2) [2008] FMCA 1134.  This is an appeal from that decision. 

2                     The sequestration order was made on the petition of the respondent, and based upon an act of bankruptcy involving a failure to comply with a bankruptcy notice served upon him in respect of a debt of $7,582.86.  That sum represented the costs of the respondent in an earlier action in this Court in which the appellant’s application under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) to review two decisions of the respondent were refused:  see Rana v Chief of Army [2005] FCA 1283 (the 2005 decision).

3                     The first of the two decisions which was sought to be reviewed was a decision that, at the time of the appellant’s discharge from the Australian Army on 13 July 1982, grounds did not exist whereby he could have been discharged because of physical or mental incapacity to perform his duties.  The second of those decisions was again a decision of the respondent by a delegate by letter of 28 April 2002 not to amend the reason for the appellant’s retirement from the Australian Army in the central Army records.  The appellant had asked that his record of discharge be amended pursuant to s 44(2) of the Defence Act 1903 (Cth) (the Defence Act) as then in force, to have those records altered to record that, at the time of his discharge, he was medically unfit for duties.  The appellant was in fact discharged from the Army on the ground of his “retention not being in the interest of Australia or the Army”, pursuant to Australian Military Regulation 176(1)(n).  Underlying those applications under the ADJR Act, was the appellant’s desire to be eligible for benefits under the Defence Force Retirement and Death Benefits Act 1973 (Cth). 

4                     The 2005 decision was affirmed by the Full Court of this Court:  Rana v Chief of Army Staff [2006] FCAFC 63 on 12 May 2006. 

5                     I have referred in a little detail to the 2005 decision for reasons which appear below.  In that decision, costs were awarded against the appellant.  They were subsequently taxed.  They founded the bankruptcy notice, and so the act of bankruptcy.

6                     The appellant unsuccessfully applied to set aside the bankruptcy notice:  see Rana v Chief of Army [2008] FMCA 518.  He appealed from that decision.  Its outcome is discussed in [22] below.

7                     There are 14 grounds of appeal in the amended notice of appeal, which the appellant has variously addressed in four written summaries of argument or outlines of contention, and orally at the hearing of the appeal.  Those grounds to a significant extent overlap, or are repetitive to a degree, and I shall group them when considering them.

FRESH EVIDENCE ON APPEAL

8                     Before doing so, it is necessary to address the appellant’s application to adduce fresh evidence on the appeal.  The fresh evidence was contained as annexures to two affidavits of the appellant of 5 September 2008 and 2 October 2008.  In addition, those affidavits make argumentative assertions as to the basis upon which that material might demonstrate error on the part of the Federal Magistrate in making a sequestration order.

9                     The affidavit of 2 October 2008 principally exhibits a medical report of Dr Jha dated 8 September 2008 addressed to the Administrative Appeals Tribunal (AAT) and a report of Dr Miller of 10 July 2008.  Those reports concern a claim for compensation against the Military Rehabilitation and Compensation Commission (MRCC) under the Safety Rehabilitation and Compensation Act 1988 (Cth) (SRC Act).  The MRCC had refused an application for compensation made by the appellant to it in respect of injuries he alleged to have suffered in the course of his employment with the Australian Army.  The appellant had sought review of its decision by the AAT.  The MRCC had applied to have that application summarily dismissed by the AAT, under s 42B(1) of the Administrative Appeals Tribunal Act 1975 (Cth) because the appellant had unsuccessfully applied for compensation arising out of his Army service under the SRC Act on two earlier occasions, both to the primary decision maker and to the AAT.  That AAT decision given on 1 July 2008 to refuse to summarily dismiss that application provides a basis for one of the grounds of appeal.

10                  I do not propose to receive the affidavit of 2 October 2008 containing Dr Jha’s report or Dr Miller’s report.  That evidence may be relevant to the AAT proceeding.  It may also have been relevant, if available, to the 2005 decision.  I make no comment either way on that point.  Even if it be assumed that the appellant on this appeal could endeavour to demonstrate that the 2005 decision was procured by the respondent by fraud or by misleading the Court, that medical evidence could not go towards establishing such conduct by the respondent.  Its date makes that self-evidently so.  The mere fact of different medical opinion now being available to that which was previously available to the delegate of the respondent (assuming it is different medical opinion in any significant degree) does not tend to show of fraud or deliberately misleading conduct in the decision making process or in the presentation of material to the Court leading to the 2005 decision.

11                  The other affidavit of 5 September 2008 exhibits a report of Professor Goldney, a psychiatrist, of 4 August 2008 and two reports of Dr Miller of 8 and 10 July 2008.  For the same reasons, I do not propose to receive that material on this appeal. 

12                  There were two other exhibits to that affidavit which, ultimately, the appellant sought to rely upon on the appeal.  One is a letter from the trustee of his bankrupt estate informing him of claims made by creditors in his estate, and the other is a photocopy of a statement dated 27 August 2008 addressed to the trustee relating to an alleged assault upon the appellant in the vicinity of the Court building.  It bears a hand printed name, not apparently a signature.

13                  The letter of 27 August 2008 to the appellant does not indicate that particular claims made by creditors will be accepted.  It records amongst the claimant creditors the respondent as having made two claims, one being the costs arising from the 2005 decision of $7,582, and the second also apparently being costs arising from the same matter number of $8,233.  Each amount of costs is said to arise from “judgement no. SAD 222 of 2005”.  In my view, that document cannot enhance or inform the outcome of this appeal.  If it be the case that the respondent has claimed two different amounts for costs to prove in the bankrupt estate of the appellant (assuming he remains bankrupt), the trustee must make a decision whether to accept those claims.  It may be that one of the claims for costs should more accurately be identified to another proceeding.  Counsel for the respondent suggested it may be the costs of the Full Court appeal to which I have referred.  In fact, the Court records show that the matter SAD 220 of 2005 is the Full Court decision referred to at [4] above.

14                  The other document is not in admissible form.  It is an unsigned copy of a letter addressed to the trustee.  If the appellant wished to make something of an assault of the nature he asserts, then it would have been appropriate to have established that material by direct affidavit evidence from a deponent.  I do not propose to accept that material for that reason.  In addition, although the alleged assault is the basis for one of the grounds of appeal, for reasons which I set out below, I do not think that the assault, even if it occurred, was a reason not to have made the sequestration order or demonstrating that the Federal Magistrate fell into error so that the appeal should succeed.

15                  That leaves the balance of the affidavit.  Ultimately, the appellant did not make use of the exhibits of communications between himself and solicitors for the respondent.  I regard the balance of the affidavit itself as being argumentative and capable of being put in oral argument and being considered by the Court.

16                  Accordingly, I reject the appellant’s application to adduce fresh evidence on the appeal.

THE DECISION OF THE FEDERAL MAGISTRATE

17                  As is apparent from the Federal Magistrate’s reasons, his Honour was satisfied that an act of bankruptcy had been committed, and that the proof of the formal matters required by s 52(1) of the Bankruptcy Act 1966 (Cth) (the Act) had been established.

18                  The notice of opposition of the appellant to the bankruptcy and his submissions and supporting material focused upon enlivening the discretion of the Court under s 52(2) of the Act to dismiss the bankruptcy petition.  It relevantly provides that, if the Court is satisfied by the debtor that for other sufficient cause a sequestration order ought not to be made, the Court may dismiss the petition.

19                  The Federal Magistrate identified from all of the appellant’s materials that the “other sufficient cause” arose from four circumstances:

(1)               the existence of other proceedings currently before the Court in actions SAD.111 of 2007 and SAD.12 of 2008 which would justify the Court in not making the sequestration order;

(2)               the appellant had no assets and there was therefore no utility in making a sequestration order;

(3)               the application for a sequestration order was an abuse of process; and

(4)               the application for the sequestration order should be stayed pending resolution of High Court proceedings.

20                  The High Court proceedings to which the appellant referred were, according to the Federal Magistrate, an application for special leave to appeal instituted in respect of the decision of the Full Court of this Court given on 12 May 2006 to set aside that decision, that is the decision referred to in [4] above.  In fact, on 16 July 2008 that application for special leave to appeal was refused.  Consequently, the appellant did not pursue on the appeal the fourth of those matters.

21                  In addition to the three other matters which the appellant identified in his notice of opposition to the bankruptcy petition, and in his submissions and affidavit evidence on the notice of opposition, the Federal Magistrate also identified, apparently from the course of submissions, the claim that the sequestration application should not have been made because, in addition to the costs arising from the 2005 decision, there was a later order for costs made against the appellant in favour of the respondent and that both orders for costs should have been included in the bankruptcy notice.  That is simply erroneous.  A creditor who has obtained a judgment against a debtor, and then a subsequent judgment against a debtor for a different amount, may issue a bankruptcy notice in respect of only one of those judgment liabilities.  I do not need to address that contention further.

22                  The legal action referred to as ADG.123 of 2007 was an application in the Federal Magistrates Court to set aside the bankruptcy notice.  That application had been dismissed by judgment given on 22 April 2008:  Rana v Chief of Army [2008] FMCA 518.  The appellant appealed from that decision.  Following his bankruptcy, the trustee has discontinued that appeal.  I have, on the same date as this judgment, ruled that the discontinuance of that appeal has been effective in bringing it to an end.  I refer to those reasons for doing so.  I also will not repeat the grounds upon which the application to set aside the bankruptcy order was made, and the reasons for the decision of the Federal Magistrate rejecting the claim.  They are set out in the Federal Magistrate’s judgment.  In the sequestration order proceeding, the Federal Magistrate adhered to the views expressed in his earlier reasons for refusing to set aside the application to set aside the bankruptcy notice.

23                  The second proceeding is an action in the Federal Court (SAD.12 of 2008) brought by the appellant against the University of Adelaide and others, including the Chief of Army.  It was summarily dismissed by a judge of this Court on 17 March 2008:  Rana v Commonwealth of Australia [2008] FCA 365.  There is no appeal from that decision.  A similar proceeding was then instituted by the appellant in this Court, with additional respondents.  It was itself dismissed by a judge of this Court on 3 April 2008: Rana v Goldney [2008] FCA 463.  In essence, those actions concerned an examination arranged by the Australian Government Solicitor to be carried out by Professor Goldney (incidentally the examination which led to the report of Professor Goldney of 4 July 2008 which the appellant sought to adduce as fresh evidence on the hearing of this appeal) complaining in part that, by reason of an arrangement he had entered into with the University of Adelaide and others, it was a breach of that arrangement for the Australian Government Solicitor to have arranged for Professor Goldney to have examined him as and when it did, or at all, and secondly apparently by reason of certain information provided to Professor Goldney for the purposes of the proposed examination which (the appellant claimed) was information which should not properly have been available to the Australian Government Solicitor.

24                  The appellant has separately applied for an extension of time within which to appeal from the judgment given on 3 April 2008, as no appeal was instituted within time.  I have separately ruled upon that application on the same day as this judgment is delivered:  see Rana v Goldney (No 2) [2008] FCA 1553.  That judgment contains a more detailed description of the earlier proceeding and I will not repeat the material that is contained within it.

25                  The Federal Magistrate had been told that there was an appeal from the decision of 17 March 2003, and simply concluded that nothing in the materials that led him to conclude that the appeal from the earlier decision summarily dismissing that action was likely to be successful or that, if successful, would indicate that the appellant had a good cause of action against the Chief of Army in respect of the matters to which it refers or relates.  In fact, no appeal from that decision was instituted within time.  An application for an extension of time to appeal from it was refused on 17 June 2008.

26                  As to the asset position of the appellant, apart from noting the reluctance of Courts to decline to make a sequestration order on the ground that the putative bankrupt has no assets:  see Radich v Bank of New Zealand (1993) 45 FCR 101 at 112, the Federal Magistrate concluded on the whole of the evidence that the appellant had not convinced him that he is totally without assets.  He referred to legal proceedings claiming damages, and on a number of occasions that the appellant had managed to resolve proceedings with the payment of money.  He did not therefore accept that the respondent was totally without assets.  His Honour also noted that merely because there are no reasons for suspecting that a debtor has any assets is not of itself a reason for refusing to make a sequestration order:  Bayne v Blake (No 2) (1909) 9 CLR 360 at 364-365.

27                  By the third ground, the abuse of process ground, the appellant asserted that the respondent was seeking to render him bankrupt “contrary to public policy to extract money what the debtor got in the deeds (sic)”.  That is apparently a reference to the agreement between the University of Adelaide and others and the appellant.  Secondly, the appellant alleged that he had been intimidated by process servers and had been assaulted by a process server of the respondent.  Those allegations were denied.  The appellant had also alleged abuse of process on the part of the respondent in the issuing of the bankruptcy notice and the Federal Magistrate had earlier rejected that claim on the basis that there was no evidence that could support the inference that the bankruptcy notice was issued for an improper purpose.  The same material, together with the alleged assault by the process server, was relied upon by the appellant to oppose the sequestration order.  The Federal Magistrate said that there was no basis in the material for declining to make a sequestration order on the ground of abuse of process by the respondent.

THE GROUNDS OF APPEAL

28                  The appellant did not submit either in his written submissions or orally that the Federal Magistrate had misunderstood the grounds of his opposition to the sequestration petition. 

29                  Grounds 7, 10, 11, 12, 13 and 14 of the amended notice of appeal are conveniently dealt with together.  They assert in various ways a wrong conclusion on the part of the Federal Magistrate, without specifically identifying particular wrong conclusions or reasons why the conclusions were wrong; a misdirection or misapplication of the relevant test under s 52(2)(b) of the Act as to what constitutes “other sufficient cause”, together with an assertion that the Federal Magistrate did not in fact consider properly the application of that provision because erroneously his Honour considered the principles applicable under s 40(1)(g) of the Act in relation to his application to set aside the bankruptcy notice; and the conclusion that the sequestration order should fail because the bankruptcy notice was based upon one judgment only when there may have been more than one judgment against the appellant in favour of the respondent.  I have already rejected the last of those asserted errors, but I refer to it also at [32] below.

30                  The suggestion that the Federal Magistrate did not consider s 52(2)(b), but considered in some way the principles applicable under s 40(1)(g) of the Act is simply wrong.  His Honour did not do that.  The appellant did not identify the way in which the Federal Magistrate failed to apprehend the principles to be applied in considering whether there was other sufficient cause not to make the sequestration order, and in my view his Honour’s reasons do not demonstrate any such error.

31                  To the extent to which issue is joined with the conclusions on findings of the Federal Magistrate, general assertions as to error do not advance the notice of appeal or the prospects of success of the appeal.  Where they are separately identified, they are dealt with below.  Subject to separate consideration of particular matters which the appellant has raised in his amended notice of appeal and developed through submissions, in my view no overall error has been identified or has been made out.

32                  In support of the claim that the Federal Magistrate erred by not dismissing the petition because it was based upon a bankruptcy notice founded on one only of the other judgments in favour of the respondent against the appellant, the appellant referred to the decision of ANZ Banking Group Ltd v Menso [2006] FMCA 1522.  That decision does not support the proposition.  It was a decision concerning the validity of a bankruptcy notice, and whether the bankruptcy notice was valid if it was accompanied by either the judgment or the order relied upon.  It has nothing to do with whether a bankruptcy notice founded upon one of several judgments is invalid for that reason alone, or more relevantly whether a petition for a winding up order is invalid  because the bankruptcy notice giving rise to the act of bankruptcy was based upon one of several judgments in favour of the petitioning creditor against the debtor.

33                  One trivial ground of appeal may be dealt with shortly.  The appellant complains in ground nine that the Federal Magistrate in his reasons did not refer to all the legislation discussed in the decision of the Full Court referred to in [4] above.  His Honour referred to the Defence Force Retirement and Death Benefits Act 1973, but did not mention certain of the other legislation referred to in the Full Court decision.  That does not demonstrate error on his Honour’s part.  His Honour was not obliged to recite at length and in detail all of the steps in the reasons for judgment of the Full Court.  The significant feature of his Honour’s consideration was that the Full Court had dismissed the appeal from the 2005 decision. 

34                  Grounds one and four address the weight that the Federal Magistrate gave to the other proceedings to which he referred, and also refers to other proceedings mentioned by the appellant.  There is of course an inherent inconsistency or contradiction in maintaining these grounds, and at the same time maintaining ground five that the petition should have been dismissed because it had been shown that the appellant had no assets and there was therefore no utility in a sequestration order.  That is because these grounds of appeal assert that, by reason of the other proceedings, the appellant had counterclaims set-offs or cross-demands of a significant amount, sufficient to meet the liability in the bankruptcy notice and his liabilities generally.

35                  In the grounds of appeal in the amended notice of appeal, four separate proceedings have been referred to.  The first is matter SAD.111 of 2007, a matter which was dismissed as vexatious by a judge of this Court on 17 June 2008:  Rana v Commonwealth of Australia [2008] FCA 907.  An appeal from that decision is listed to be heard by the Full Court in November.  The second is in matter SAD.47 of 2008:  that is the matter which was summarily dismissed on 17 March 2008, and in which an application for an extension of time to appeal has been refused:  see [25] above.  The third is in matter SAD.48 of 2008 which was dismissed as an abuse of process on 3 April 2008, and in respect of which (by a judgment given today) an application for an extension of time within which to appeal from that judgment has been refused.  The fourth proceeding is the proceeding in which the appellant had appealed from the order refusing to set aside the bankruptcy notice, an appeal which has also been dismissed by reason for judgment given today.

36                  Consequently, nothing has been shown to indicate that the Federal Magistrate erred in assessing the prospects of the appellant recovering substantial funds in those proceedings.  Nor is there any reason to regard those proceedings or any of them as providing sufficient cause not to have made the sequestration order.

37                  Ground two of the grounds of appeal is erroneous.  The Federal Magistrate considered the appellant’s prospects of success in his claim before the AAT.  The decision referred to in the grounds of appeal, discussed above at [9], was not “a landmark case” and did not demonstrate that the appellant had significantly good prospects or success and did not demonstrate one way or the other anything about the appellant’s prospects of success in his claim for compensation, other than to be a ruling that the claim should not have been summarily dismissed notwithstanding earlier decisions of the AAT.

38                  The third ground of appeal, namely that the Federal Magistrate should have disqualified himself because, in another matter, the appellant had asked him to do so is not made out.  To state the proposition put by the appellant is to demonstrate its fallacy.  A judicial officer is not disqualified from determining a proceeding merely by reason of a party having asked that judicial officer to do so.  There is nothing else pointed to by the appellant to indicate that he asked the Federal Magistrate to disqualify himself, or that he presented cogent grounds upon which that disqualification ought to have taken place.

39                  The fifth ground of appeal concerns the asset position of the appellant.  As noted above, it is inconsistent with the appellant’s ground of appeal in which he sought to show that he had significant prospects of substantial inflow of funds from other proceedings.  In any event, in my judgment, the Federal Magistrate did not misdirect himself as to the law, nor make findings which were not reasonably available to him as to the appellant’s financial status.

40                  That ground, together with grounds six and eight also adds the additional contention that the Magistrate should have dismissed the sequestration petition because of an allegation of assault by a process server which the appellant made. It is unclear which proceedings were said to have been served at the time.  It is not shown on the material that the alleged assault, if it occurred, was in relation to the service of the petition for the sequestration order.  Even if such an assault occurred, despite the Federal Magistrate declining to make such a finding on the material before him, that would not of itself demonstrate that the sequestration order ought not to have been made.  The finding of the Federal Magistrate on those issues was reasonably available to him.  The decision of Brunninghausen v Glavanics [1998] FCA 230 referred to by the appellant in this regard is not of direct moment.  In that matter, a bankruptcy notice was set aside because it was issued for an improper motive.  It did not concern the means by which a court proceeding was served, and did not involve any suggestion of assault by the serving officer.  Moreover, nothing was adduced to indicate that the respondent sought to encourage any such conduct.

41                  For those reasons, no ground of appeal has been made out and the appeal must be dismissed. 

Associate:

Dated:         20 October 2008