FEDERAL COURT OF AUSTRALIA

Rahman v Dubs (No 2) [2012] FCA 1081

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    The Appellant is to pay the costs of the Respondent, including the costs thrown away by reason of the adjournment of the hearing on 12 September 2012.

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

REASONS FOR JUDGMENT

1    On 28 April 2009 the then Registrar of the University of Technology (Ms Rosalind Dubs) wrote to Mr Mohammad Tabibar Rahman, stating that she was “investigating an allegation of non-academic misconduct”. She then informed Mr Rahman that for a period of seven days he was “excluded from using UTSOnline or any other forms of communication to other students in the Juris Doctor course.”

2    Proceedings ensued between Mr Rahman and Ms Dubs in the Supreme Court of New South Wales. Those proceedings resulted in a number of costs orders being made in favour of Ms Dubs against Mr Rahman. The costs were not paid.

3    A Bankruptcy Notice was served on Mr Rahman on 17 March 2012. Mr Rahman failed to comply with the terms of that Notice. A Creditor’s Petition was then served on Mr Rahman on 5 May 2012. That Petition claimed that Mr Rahman owed Ms Dubs the sum of $56,298.46 being the total of the following judgments:

(a)    judgment in the amount of $27,267.85 obtained in Supreme Court of New South Wales proceedings number 2011/218904 entered on 6 July 2011;

(b)    judgment in the amount of $9,025.86 obtained in Supreme Court of New South Wales proceedings number 2011/130519 entered on 2 August 2011;

(c)    judgment in the amount of $6,954.03 obtained in Supreme Court of New South Wales proceedings number 2011/327868 entered on 14 October 2011; and

(d)    judgment in the amount of $13,050.72 obtained in the Supreme Court of New South Wales proceedings number 2011/58599 entered on 22 February 2012.

A copy of each of those orders was annexed to the Creditor’s Petition.

4    On 19 July 2012 a Federal Magistrate made a sequestration order against Mr Rahman’s estate: Dubs v Rahman [2012] FMCA 664.

5    Mr Rahman now appeals to this Court from that decision. He appeared before this Court on 12 September 2012 unrepresented. He sought an adjournment of the hearing of his appeal on two bases, namely:

    the fact that a challenge to one or more of the judgments of the Supreme Court remained outstanding; and

    his desire to be represented.

On that occasion he assured the Court that Counsel had agreed to represent him – but Mr Rahman was unwilling to name the Counsel. With some considerable hesitation, the hearing was adjourned in order to permit Mr Rahman the opportunity to be legally represented.

6    He again appeared unrepresented on 26 September 2012. Mr Rahman informed the Court that he was ready to proceed without representation. Mr Rahman proceeded to supplement his written submissions which had been filed on 5 September 2012 with further oral submissions. On many occasions during his oral submissions Mr Rahman repeated himself and the content of his written submissions. On a number of occasions he was invited to confine himself to making only new or different submissions. Even though considerable latitude should (perhaps) be extended to an unrepresented party to develop his submissions in the manner that he sees fit, Mr Rahman trespassed well beyond the boundaries of what was appropriate. What matters, however, is that he was given a more than reasonable opportunity to make his submissions.

7    After the hearing was adjourned on 12 September 2012, his Honour Justice Garling delivered his reasons for decision in Rahman v Dubs [2012] NSWSC 1065.

The Notice of Appeal

8    The Notice of Appeal filed in this Court on 2 August 2012 fails to comply with the Federal Court Rules 2011 (Cth). The purported “Grounds of Appeal” are, to say the least, difficult to comprehend. To the extent that meaning can be given to them, it would appear that Mr Rahman seeks to contend (inter alia) that:

    Ms Dubs is “not the official of the UTS” and that there has been some form of “fraud” committed by the solicitors for the Respondent;

    there are outstanding challenges pending in the Supreme Court of New South Wales to the costs orders that resulted in the Bankruptcy Notice;

    there has been non-compliance by the Federal Magistrate with the requirements of s 78B of the Judiciary Act 1903 (Cth);

    there are matters “arising under sovereignty of the Constitutional questions”, including whether the Constitution “give[s] power for the ITSA, Official Receiver and Federal Magistrate Court for such arbitration”; and

    a denial of procedural fairness.

The purported “Grounds of Appeal” extend to some three pages and the above is by no means an exhaustive account of what is there set forth. The “Orders Sought” are also difficult to comprehend. But it is understood that Mr Rahman seeks:

    an order setting aside the judgment of the Federal Magistrate, including the sequestration order;

    an order that he be awarded costs “for fixed amount … ‘as your Honour pleases’ …” under the Uniform Civil Procedure Rules 2005 (NSW); and

    the conviction of the Respondent and her solicitor pursuant to (inter alia) the Crimes Act 1914 (Cth).

It certainly does not advance whatever case Mr Rahman may have to repeat his assertions in the Notice of Appeal that Ms Dubs is a “fugitive party in these proceedings whom made false Affidavit …” or his assertion that there has been “fraud identity and acts of crime”. It should be noted, however, that such assertions find absolutely no support in any of the evidence and are entirely without merit.

9    The confusing manner in which the “Grounds of Appeal” and the “Orders Sought” are expressed is such that the preferable course is to consider the Federal Magistrate’s reasons for decision afresh. If some appellable error is discernible, the fact that an unrepresented party has poorly expressed his arguments – or has failed to identify an available argument – should not stand between him and success. Separate consideration should also be given to those arguments that can be discerned from his Notice of Appeal or the written submissions he has filed.

10    Approached in such a manner, it is considered that the appeal should be dismissed.

The Absence of Any Constitutional Question

11    Given the apparent concern of Mr Rahman with what he describes as “Constitutional questions”, it is prudent to note that the Bankruptcy Act 1966 (Cth) is an exercise of the legislative power conferred upon the Parliament by s 51(xvii) of the Constitution. That is a plenary power: R v Federal Court of Bankruptcy; Ex parte Lowenstein (1938) 59 CLR 556 at 574-575 per Starke J. “No limitation upon the power is found in the Constitution and unless such a limitation can be found there, then it does not exist …”: Stuart-Robertson v Lloyd (1932) 47 CLR 482 at 490 per Starke J. When considering the validity of a provision of the Bankruptcy Act 1924 (Cth) requiring a bankrupt to keep books of account (s 209(g)), Starke J in Ex parte Lowenstein concluded (at 574-575):

The Constitution confers upon the Parliament plenary powers to make laws for the peace, order and good government of the Commonwealth with respect to bankruptcy and insolvency (sec. 51 (xvii.)). The object of sec. 209 (g) is to compel a person who carries on business to keep such books of account as are usual and proper in the business so that the court and his creditors in case of bankruptcy may ascertain what his transactions have been, and what has become of his assets, and to force upon him the contemplation of his position and deprive him of the excuse that he was not aware of it. Such a provision in various forms has long been found in laws relating to bankruptcy and, in my opinion, is clearly a law with respect to bankruptcy. It is for the legislature and not for this court to say what provisions are necessary to achieve the objects sought and for what period of time books of account should be kept.

…     

The power of the Parliament with respect to bankruptcy is, as I have said, plenary. It has power in respect of that subject matter to declare what acts shall constitute acts of bankruptcy, to divest the bankrupt of his assets, to provide for the administration thereof and distribution amongst creditors; it may create offences in relation to the subject matter and attach sanctions to those offences; it may also create courts with jurisdiction in bankruptcy matters and prescribe the procedure and powers of those courts. …

See also: (1938) 59 CLR at 571-572 per Latham CJ.

12    In the present proceeding an Official Receiver has issued a bankruptcy notice pursuant to s 41 of the Bankruptcy Act 1966. And the power of the Federal Magistrate whose decision is now the subject of this appeal was the power conferred by s 52 to make a sequestration order. “Sequestration and distribution” of a bankrupt’s estate have long been regarded as steps in the bankruptcy process: The Queen v Davison (1954) 90 CLR 353 at 375-378 per Fullagar J.

13    Nor should any argument founded upon any perceived inconsistency with a law of a State be accepted given the “supremacy” of the Commonwealth law: In re Richard Foreman & Sons Pty Ltd v Federal Commissioner of Taxation (1947) 74 CLR 508 at 529. Dixon J there observed:

A federal system is necessarily a dual system. In a dual political system you do not expect to find either government legislating for the other. But supremacy, where it exists, belongs to the Commonwealth, not to the States. The affirmative grant of legislative power to the Parliament over the subjects of bankruptcy and insolvency may authorize the enactment of laws excluding or reducing the priority of the Crown in right of the States in bankruptcy …

14    No question arises as to the constitutional competence of the Commonwealth Parliament to enact the Bankruptcy Act or to make provision for the issue of a bankruptcy notice or the making a sequestration order.

The Making of the Sequestration Order

15    Upon proof of the matters set forth in s 52(1) a petitioning creditor has been said to have a “prima facie right” to the making of a sequestration order: Deputy Commissioner of Taxation v Cumins [2008] FCA 353 at [14], 101 ALD 78 at 81 per Gilmour J. See also: Re Dolman; Ex parte Elder Smith Goldsbrough Mort Ltd (1967) 10 FLR 384 at 391 per Gibbs J; Burgess v Permanent Custodians Ltd [2010] FCA 986 at [37]; Russell v Polites Investments Pty Ltd [2012] FCA 11 at [23].

16    Section 52(1) provides as follows:

At the hearing of a creditor's petition, the Court shall require proof of:

(a)    the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)    service of the petition; and

(c)    the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

The orders made by the Supreme Court were in evidence before the Federal Magistrate. One particular matter of which the Appellant complains is the fact that the Federal Magistrate treated an Affidavit sworn by the petitioning creditor, Ms Dubs, on 27 June 2012 as satisfying the requirements of r 4.06 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth). That rule requires an Affidavit be sworn and filed “as soon as practicable before the hearing date for the petition” stating that “each debt on which the applicant creditor relies is still owing”. An Affidavit sworn closer to the date of the hearing some three weeks later was not possible as Ms Dubs was by then in Switzerland “on a family vacation that [had] been planned for some time”. Her Affidavit stated that as at 27 June 2012, the amount of $56,298.46 “is still wholly due and unsatisfied”. In placing reliance upon this Affidavit, the Federal Magistrate committed no appellable error. As stated by the Federal Magistrate, he was “satisfied that Mr Rahman, whilst disputing the existence of the debts, has not made any payment of them”.

17    The Federal Magistrate also considered whether there was “other sufficient cause” for not making a sequestration order, as contemplated by s 52(2)(b). Notwithstanding references to the “prima facie right” to obtain a sequestration order, s 52(2)(b) “confers a discretion on the Court to refuse to make a sequestration order ‘for other sufficient cause’, ie for a cause other than that the debtor is solvent, a circumstance provided for in s 52(2)(a)”: Gould v Day [2000] FCA 1673 at [52] per Heerey, Moore and Goldberg JJ. Where reliance is placed by a debtor upon an outstanding appeal, it has been said to be “… well established that in general a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings provided that the appeal is based on genuine and arguable grounds”: Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 at 148 per Davies, Lockhart and Neaves JJ. See also: Rigg v Baker [2006] FCAFC 179 at [67], 155 FCR 531 at 545 per French J; Deputy Commissioner of Taxation v Caporale Group Pty Ltd [2011] FCA 1189 at [18] per Yates J.

18    The Federal Magistrate considered whether the challenges made by Mr Rahman to the orders for costs which founded the Bankruptcy Notice were based on “genuine and arguable grounds”. This was characterised by the Federal Magistrate as Mr Rahman’s “only reasonable argument”: [2012] FMCA 664 at [12]. He considered the basis of Mr Rahman’s appeal against the costs orders and rejected the argument. The Federal Magistrate was not satisfied that Mr Rahman had an “arguable case”. In so concluding, it is not considered that any appellable error is exposed in the reasoning of the Federal Magistrate.

19    In exercising the discretion conferred by s 52(1) and in making the sequestration order, it is not considered that the Federal Magistrate committed any appellable error. The Magistrate was satisfied that each of the requirements imposed by s 52 had been satisfied. Indeed, after having reviewed the evidence that was before the Federal Magistrate, it is respectfully concluded that the Federal Magistrate was manifestly correct in the order made.

20    The most recent decision of his Honour Justice Garling assumes no relevance to the present proceeding. His Honour dismissed a proceeding pending in the Supreme Court of New South Wales. In doing so, his Honour referred to earlier orders which had been made as to the identity of the defendants, including an order that had been made removing Ms Dubs as a defendant and joining the University of Technology Sydney as a defendant. That decision and those orders, however, have no relevance to the orders as to costs made in favour of Ms Dubs in 2011 and 2012 and which were relied upon by her in the role of a petitioning creditor.

The Section 78B Notice

21    Reliance by Mr Rahman upon s 78B of the Judiciary Act is also without substance. Section 78B(1) provides as follows:

Where a cause pending in a federal court including the High Court or in a court of a State or Territory involves a matter arising under the Constitution or involving its interpretation, it is the duty of the court not to proceed in the cause unless and until the court is satisfied that notice of the cause, specifying the nature of the matter has been given to the Attorneys-General of the Commonwealth and of the States, and a reasonable time has elapsed since the giving of the notice for consideration by the Attorneys-General, of the question of intervention in the proceedings or removal of the cause to the High Court.

In the proceeding before the Federal Magistrate, Mr Rahman on 29 June 2012 filed a document which was titled “Notice of a Constitutional matter under s 78B of the Judiciary Act 1903”. That document stated in part as follows (without alteration):

Nature of constitutional matter

[State briefly but specifically, the nature of the Constitutional matter]

Matter arising under sovereignty of the Constitutional questions and its interpretations of ‘Insolvency And Trustee Service Australia –ITSA an Agency which Acting as Chapter 111-Court and henceforth issues Bankruptcy Notices under Bankruptcy Act 1966 .And such failure by the Australian citizens of compliance gives rights to bring proceedings in the jurisdiction of Federal Magistrate Court from the interlocutory ‘administrative decisions [ not final judgment] from the States Supreme Courts/ District Court. .Does Constitutions, Judiciary Act 1903 gives power for the ITSA and Federal Magistrate Court for such arbitration ? Had not the Rule of law has been violating and infringed for both public and for the Respondent

It is unclear whether or not a copy of that “Notice” was given to each of the Attorneys or whether the contention is that a “Notice” in that form should have been given. Either way, Mr Rahman apparently contended that the Federal Magistrate was thereafter under a duty “not to proceed …”. The Federal Magistrate correctly rejected that contention.

22    The “duty of the court not to proceed” imposed by s 78B is one of “imperfect obligation”: Glennan v Commissioner of Taxation [2003] HCA 31 at [13], 198 ALR 250 at 253 per Gummow, Hayne and Callinan JJ. Section 78B “does not impose a duty on the Court not to proceed pending the issue of notices to the Attorneys-General in every case” in which a constitutional argument is raised and irrespective of “how trivial, unarguable or concluded the constitutional point may be”: cf. Deputy Commissioner of Taxation v Warrick (No 2) [2004] FCA 918 at [103], 56 ATR 371 at 396 per French J (as his Honour then was). “If the asserted constitutional point is frivolous or vexatious or raised as an abuse of process, it will not attach to the matter in which it is raised the character of a matter arising under the Constitution or involving its interpretation”: Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [1999] FCA 1151 at [14], 95 FCR 292 at 297 per French J.

23    The Federal Magistrate did not err in continuing to hear the Creditor’s Petition. He was not under any “duty not to proceed”. The purported s 78B “Notice” relied upon by Mr Rahman failed to identify any “constitutional matter” so as to enliven the “duty” imposed by s 78B(1).

Conclusions

24    The appeal is dismissed. It is without substance.

25    The form in which the Notice of Appeal was filed in this Court only provides a further reason to dismiss the appeal. The “Grounds of Appeal” are embarrassing and fail to identify any appellable error.

26    There is no reason why Mr Rahman should not be ordered to pay the costs of the Respondent, including the costs thrown away by the adjournment of the hearing on 12 September 2012.

The Orders of the Court Are:

1.    The appeal is dismissed.

2.    The Appellant is to pay the costs of the Respondent, including the costs thrown away by reason of the adjournment of the hearing on 12 September 2012.

Associate:

Dated:    5 October 2012