FEDERAL COURT OF AUSTRALIA

Luck v University of Southern Queensland [2015] FCA 286

THE COURT ORDERS THAT:

1.    The application to set aside the bankruptcy notice be dismissed.

2.    The applicant pay the respondent’s costs of the application to set aside the bankruptcy notice including any reserved costs.

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

REASONS FOR JUDGMENT

1    The applicant (“Ms Luck”) is indebted to the respondent (“USQ”) under a final order for costs made against her in Federal Court proceeding VID 899/2009 (“VID 889/2009”), which have been taxed and quantified in the sum of $29,755.87. USQ served a bankruptcy notice on Ms Luck founded on that costs order and Ms Luck has applied to set aside that bankruptcy notice on the ground that she has a counter-claim, set-off or cross demand within the meaning of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”). In order to understand how Ms Luck has advanced her claim to have a counter-claim, set-off or cross demand within the meaning of s 40(1)(g) of the Bankruptcy Act it is first necessary to set out some background.

Proceeding VID 899/2009

2    Proceeding VID 899/2009 was an appeal by Ms Luck from the judgment in proceeding VID 476/2008. In VID 476/2008, Ms Luck sought leave to appeal from the decision of the Administrative Appeals Tribunal that it did not have jurisdiction to review the deemed decision of USQ to refuse Ms Luck’s request for access to documents. Ms Luck’s application was dismissed and an order for costs was made against her. Ms Luck then appealed against that decision (Luck v University of Southern Queensland [2008] FCA 1582) and also the decision of the primary judge, Tracey J, to refuse to recuse himself from hearing and determining the proceeding on the ground of actual or apprehended bias (Luck v University of Southern Queensland (No 2) [2008] FCA 1594) . The Full Court dismissed the appeal and ordered costs against Ms Luck: Luck v University of Southern Queensland [2009] FCAFC 73.

3    On 4 June 2009, after the hearing of the appeal but before the Full Court delivered judgment, Ms Luck commenced proceeding M51/2009 in the High Court to remove proceeding VID 899/2009 to the High Court (“proceeding M51/2009”). On 26 June 2009, Ms Luck filed a notice of discontinuance of proceeding M51/2009.

4    On 26 June 2009, Ms Luck made application for special leave to appeal the decision of the Full Court in proceeding VID 899/2009. On 28 April 2010, Crennan J ordered that the application be deemed abandoned unless Ms Luck filed and served a draft notice of appeal and summary of argument by 26 May 2010. On 26 May 2010, that application was deemed to have been abandoned. In December 2011, Ms Luck’s application to the High Court for special leave to the appeal from Crennan J’s orders was also deemed abandoned due to inaction.

5    In addition to the above, Ms Luck has also filed two notices of motion relating to the Federal Court and Full Federal Court proceedings. The first notice of motion dated 5 February 2010 challenged, among other things, the decision of the Deputy District Registrar to refuse her an extension of time to file a Notice of Objection to USQ’s Bill of Costs in the Federal Court proceedings. A second notice of motion of the same date made, among other things, a similar challenge in relation to the Full Federal Court proceedings. Both notices of motion were dismissed with costs by Bromberg J on 21 April 2011. Prior to this, Ms Luck also filed two applications for removal to the High Court which were dismissed by Crennan J on 14 September 2011 with no order as to costs.

6    On 1 December 2011, Ms Luck filed applications for extension of time to appeal from the orders of Bromberg J dismissing the two notices of motion. The applications were refused by Kenny J on 23 December 2011. In mid-December 2011 Ms Luck also filed applications in the High Court to remove the applications for extension of time in which to appeal. These applications were discontinued in February 2012.

7    Ms Luck sought to appeal to the High Court from Justice Kenny’s decision but was informed by the High Court that it was unable to accept her application to appeal for filing pursuant to ss 33(4B) and 25(2) of the Federal Court of Australia Act 1976 (Cth). On 3 February 2012, Ms Luck filed an application for an Order to Show Cause in the High Court which she sought, among other things, a writ of mandamus in relation to the refusal of the High Court to accept her application for filing. That application was dismissed by Gageler J on 5 August 2013.

Proceeding VID 1158/2013

8    In proceeding VID 1158/2013, Ms Luck appealed from a decision of Tracey J in proceeding VID 357/2009 (“VID 357/2009”) (Luck v University of Southern Queensland (No 2) [2013] FCA 1141) dismissing four applications for judicial review of decisions made by or on behalf of USQ on the ground that the Federal Court did not have jurisdiction to review USQ’s decisions. The decisions that Ms Luck sought to review are set out in the judgment of the Full Court in VID 1158/2013 (Luck v University of Southern Queensland [2014] FCAFC 135) at [6]-[8] as follows:

Ms Luck was enrolled at the University as an external disabled student undertaking a concessional workload in a Bachelor of General Studies from July 1998. Her enrolment was suspended by notice from the Acting Vice Chancellor, Professor Graham Baker, on 7 February 2006. In broad terms the decisions about which Ms Luck complains all flow out of this suspension.

Each of the parties filed a detailed chronology setting out a range of background and contextual matters surrounding Ms Luck’s suspension. While we have considered the events and details contained in these chronologies the matters they set out are not central to the issues to be decided by the Court and it is unnecessary to canvass them.

The four decisions of the University upon which Ms Luck’s application for judicial review focuses relate to the suspension of her enrolment and refusal to re-enrol her, namely:

(a)    a decision of the Acting Vice Chancellor of the University on 7 February 2006 to suspend Ms Luck’s enrolment for semester 1 of 2006;

(b)    a decision made by the University on 24 April 2006 (communicated by its lawyer) informing Ms Luck that, until the Vice Chancellor was satisfied that Ms Luck had complied with certain requests made by him, her enrolment in semesters 2 and 3 of 2006 would remain suspended;

(c)    a decision made by the University on 13 or 16 February 2009 (communicated by its lawyer) informing Ms Luck that until the Vice Chancellor was satisfied that she had complied with his requests, her enrolment would remain suspended; and

(d)    the decision made by the University on 26 February 2009 (communicated by its lawyer) that the University was not obliged, pursuant to section 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“ADJR Act”), to provide Ms  Luck with a statement of reasons for the decision made on 13 or 16 February 2009;

(collectively “the Decisions”)

9    Ms Luck also appealed an earlier decision of Tracey J refusing an adjournment and dismissing Ms Luck’s application for the primary judge to recuse himself on the ground of apprehended bias (Luck v University of Southern Queensland [2013] FCA 1064).

10    Before the Full Court Ms Luck contended, amongst other things, that:

(a)    Tracey J’s position as Judge Advocate General, as appointed under ss 179 and 180 of the Defence Force Discipline Act 1982 (Cth) (“Defence Force Discipline Act”), was a breach of the separation of powers doctrine;

(b)    Tracey J, in dealing with her application for an adjournment, was performing an executive function in responding (or not responding) to her request for “reasonable adjustments” under the Disability Discrimination Act, and that this gave rise to a breach of the separation of powers;

(c)    the Decisions that she sought to review were made under the Higher Education Funding Act 1988 (Cth) (“HEFA”) or the Higher Education Support Act 2003 (Cth) (“HESA”) and Tracey J wrongly held that the Decisions were made pursuant to the USQ Act;

(d)    the University’s exercise of federal functions under the HEFA and/or the HESA made the University an “officer of the Commonwealth” for the purposes of section 39B(1) of the Judiciary Act 1903 (Cth).

11    The Full Court rejected each of the grounds and ordered Ms Luck to pay USQ’s costs of the appeal. In rejecting Ms Luck’s contention that Tracey J should have recused himself from hearing the matter the Full Court noted that the same contention was dealt with by an earlier Full Court (Luck v Centrelink [2009] FCAFC 54) (“VID 54/2009”) and determined against her.

The special leave application

12    On 12 November 2014, Ms Luck filed an application for special leave to appeal from the whole of the judgment in VID 1158/2013. The application has not yet been determined.

13    On the day of the hearing of the application to set aside the Bankruptcy notice Ms Luck filed a summons in the High Court seeking leave to amend her proposed draft notice of appeal to include orders as follows:

(a)    That the costs of this application, the related appeal, reserved costs and all costs incidental to this HCA matter Gaye Luck v University of Southern Queensland and Anor (ABN 40 234 732 081) M116/2014; and those in respect of the court below, FCA matters VID 376/2009; VID1158/2013 and those incidental and associated HCA and FCA matters relating to matters determined by the primary judge; including Gaye Luck v University of Southern Queensland, VID474/2008; VID899/2008; VID61/2015, be borne and paid by the respondents.

(b)    In accordance with section 32 of the Judiciary Act 1903, give such judgment, or make such order, as, in all the circumstances, the Honourable Court thinks fit to effect all such remedies whatsoever as the Appellant is entitled to in respect of any legal or equitable claim properly brought forward by her respectively in the cause or matters; so that as far as possible all matters in controversy between the parties regarding the causes of action, or arising out of or connected with the causes of action, may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters may be avoided.

the application to set ASIDE the BANKRUPTCY notice

14    Ms Luck filed two affidavits in support of her application. Ms Luck also served a Notice of Constitutional Matter on the Commonwealth Attorney-General and the Attorney-Generals of the States and Territories.

15    In her first affidavit Ms Luck deposed that:

(a)    she has filed an application for special leave to appeal to the High Court from the judgment of the Full Federal Court in Luck v University of Southern Queensland [2014] FCAFC 135 (“VID 1158/2013”);

(b)    she seeks to sets aside the bankruptcy notice on the grounds that the issues raised by her special leave application are “a novel set-off” to the bankruptcy matter and “include strong argument challenging the correctness of” the decisions of the Full Federal Court in VID 1158/2013, VID 54/2009 and VID 899/2008;

(c)    if she succeeded in her appeal “it would constitute authority” to set aside or quash as invalid each of the Full Federal Court decisions and the decisions of Tracey J.

16    In her second affidavit, Ms Luck deposed to constitutional issues raised by her application for special leave which, she asserts, if determined in her favour would result in the quashing or setting aside of the judgments and orders of the Full Court in each of VID 1158/2014, VID 54/2009 and VID 899/2009, including the order for costs against her in VID 899/2009.

17    Ms Luck has also sought interim orders staying or adjourning the hearing of her application to set aside the bankruptcy notice pending the hearing and determination by the High Court of her special leave application and, if special leave is granted, her appeal. Ms Luck argued that it was in the interests of the administration of justice to grant her that interim relief because the merits of her application to set aside the bankruptcy notice are tied up with the merits of her special leave application, and, she argued, the hearing of her application to set aside the bankruptcy notice should accordingly await the outcome of the special leave application.

18    USQ has opposed the application to set aside the bankruptcy notice on the grounds that:

(1)    no recognised “counterclaim, set-off or cross demand” within the meaning of s 40(1)(g) of the Bankruptcy Act is particularised in the application to set aside the bankruptcy notice or Ms Luck’s affidavits in support of her application;

(2)    Ms Luck does not have “counterclaim, set-off or cross demand” within the meaning of s 40(1)(g) of the Bankruptcy Act or r 3.02(2) of the Federal Court (Bankruptcy) Rules 2005 (Cth).

19    USQ has also opposed Ms Luck’s application for interim relief on the ground that, given grounds 1 and 2, it would be futile for the Court to stay or adjourn its consideration of the application or to extend time for Ms Luck to comply with the bankruptcy notice. As the nature of the opposition to Ms Luck’s application for interim relief required full hearing on the merits of Ms Luck’s application to set aside the bankruptcy notice, the matter has proceeded as the hearing of Ms Luck’s application to set aside the bankruptcy notice.

DECISION

20    A debtor commits an act of bankruptcy if he or she does not, within the time specified by the notice, satisfy the Court that he or she has a “counter-claim, set-off or cross demand” within the terms of s 40(1)(g) of the Bankruptcy Act. Section 40(1)(g) provides as follows:

A debtor commits an act of bankruptcy …

...

(g)     if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:

(i)     where the notice was served in Australia – within the time specified in the notice; or

(ii)     where the notice was served elsewhere – within the time fixed for the purpose by the order giving leave to effect the service;

comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.

21    Section 40(1)(g) is to be read with s 41(7) which provides that:

Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied

22    The principles applicable to s 40(1)(g) were not in dispute. In order to come within that section, an applicant must satisfy the Court that he or she has a counter-claim, set-off or demand equal to or exceeding the amount of the judgment debt or sum payable under the final order that could not have been set up in the action or proceeding in which the judgment or order was obtained. Although the applicant does not have to satisfy the Court that he or she will succeed in that claim, the applicant must satisfy the Court that there is sufficient substance to the counter-claim, set-off or cross-demand asserted to make it one which the applicant should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy: Dekkan v Evans [2008] FCA 1004; Glew v Harrowell (2003) 198 ALR 331; [2003] FCA 373 at [12].

23    For the following reasons Ms Luck has not shown that she has a counter-claim, set-off or cross demand within the meaning of s 40(1)(g) of the Bankruptcy Act.

24    First, the counter-claim, set-off or cross demand stipulated in s 40(1)(g) must be something sounding in money: that is, it must be in respect of a money demand, whether liquidated or unliquidated: see Re Jocumsen (1929) 1 ABC 82 at 85 (per Henchman J); Vogwell v Vogwell (1939) 11 ABC 83 at 85 (per Latham CJ); Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433; [1980] FCA 78. The constitutional issues relied on by Ms Luck, even if resolved in her favour, would not sound in a monetary award to Ms Luck. The only claim made by Ms Luck which would sound in a monetary award is her claim for costs, as part of the orders that she seeks in her proposed appeal.

25    Secondly, the counter-claim, set-off or cross demand stipulated by s 40(1)(g) must exist at the time when the application to set aside the bankruptcy notice is heard: Re Ganke; ex parte Ganke v Somerset [1995] FCA 195 at [32]. Ms Luck does not have a presently existing counter-claim, set-off or cross-demand in respect of costs because her claim for costs is contingent upon a successful appeal and an order for costs being made in her favour. A counter-claim, set-off or cross-demand has not been created merely because Ms Luck would seek an order for costs on her appeal if special leave is granted and the appeal successful: Re Thompson; Ex parte Thompson v Grimley Pty Ltd (1995) 61 FCR 544 at 552.

26    Thirdly, it is impossible to quantify the counter-claim set off or cross demand that Ms Luck asserts that she has, and therefore she has not shown that such a claim would equal or exceed the sum of $29,755.87.

27    Fourthly, the only judgment and orders which can be the subject of challenge by Ms Luck by her proposed appeal are the judgment and orders made in VID 1158/2013. A successful appeal against the judgment and orders made in VID 1158/2013 would not entitle Ms Luck to orders setting aside or quashing the orders made in VID 54/2009 or VID 899/2009 or entitle her to costs orders in her favour in substitution for the costs orders that were made in those other proceedings. Ms Luck cannot reopen and relitigate VID 54/2009 or VID 899/2009 which both have been brought to conclusion and the appeal she wishes to bring from the judgment and orders made in VID 1158/2013 would not result in the extinguishment of her liability for the debt on which the bankruptcy notice is founded.

28    Accordingly, as Ms Luck does not have counter-claim, set-off or cross-demand within the meaning of s 40(1)(g) of the Bankruptcy Act, I accept the contention for USQ that there would be no utility in staying or adjourning Ms Luck’s application to set aside the bankruptcy notice pending the determination of her special leave application. Ms Luck’s application to for a stay or adjournment of her application and her application to set aside the bankruptcy notice should both be dismissed.

29    In her application to set aside the bankruptcy notice, Ms Luck also sought an extension of time for compliance with the bankruptcy notice for at least 90 days following the determination of this application. The application for an extension of time should also be refused. The only source of the Court’s power to extend the time for compliance with a bankruptcy notice is s 41(6A) of the Bankruptcy Act which provides as follows:

(6A) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice:

(a)    proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

(b)    an application has been made to the Court to set aside the bankruptcy notice;

the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.

See too s 41(7) which provides that the time for compliance with a bankruptcy notice is extended when an application is made to set aside the notice on the basis of a counter-claim, set-off or cross demand as referred to in s 40(1)(g). Section 41(6A)(a) does not assist Ms Luck. If, and in so far as, Ms Luck seeks to rely on her application for special leave and proposed appeal as constituting an application to set aside the costs order on which the bankruptcy notice is founded, that reliance is misconceived and wrong in law. Section 41(6A)(b) likewise does not assist Ms Luck. Since extensions of time for compliance are in aid of applications to set aside (Re Ganke; Ex parte Ganke and Somerset [1995] FCA 195 at [44]) and since Ms Luck’s application to set aside the bankruptcy notice should be dismissed, there is no basis for any further extension of time for compliance with the bankruptcy notice.

Associate:

Dated:    30 March 2015