FEDERAL COURT OF AUSTRALIA

Vegas Enterprises Pty Ltd v Rumsley [2017] FCA 35

ORDERS

THE COURT ORDERS THAT:

1.    the application be dismissed;

2.    the time for compliance with the debt appropriation order made by Deputy District Registrar Stanley on 20 May 2015, be extended to 8 February 2017; and

3.    the applicant pay the costs of the first respondent, including any reserved costs, to be taxed if not agreed.

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

REASONS FOR JUDGMENT

BARKER J:

1    The applicant, Vegas Enterprises Pty Ltd, seeks a declaration that what might be called the proceedings’ costs order made in favour of Vegas against Mr Philip George Clifford on 24 August 2010 in WAD 28 of 2009, be set off against what might be called the cross-claim costs order made in favour of Mr Clifford against Vegas on 15 March 2010 in that same proceeding.

2    Vegas also seeks to set aside a debt appropriation order, based on the cross-claim costs order, which was made by a Deputy District Registrar of the Court on 20 May 2015.

3    The key issue is whether a purported assignment of the cross-claim costs order by Mr Clifford to his lawyer at the time, Mr Alan Rumsley, has the effect that the relevant costs orders cannot be set off against each other.

4    In regard to the debt appropriation order, the issue is whether the order ought to be set aside because of Mr Rumsley’s alleged failure to inform the Court that the purported assignment of the cross-claim costs order was the subject of challenge in other related proceedings.

background

5    The background to this proceeding is conveniently summarised by what Gilmour J said in the related proceeding Williamson (Trustee) v Rumsley, in the matter of Clifford (a Bankrupt) (No 2) [2015] FCA 1246, as cited by the Full Court of this Court in Rumsley v Vegas Enterprises Pty Ltd [2016] FCAFC 84 at [3] (North and Reeves JJ):

2     In 2009 Mr Philip George Clifford brought proceedings against … Vegas Enterprises Pty Ltd (Vegas) and its directors in matter WAD 28 of 2009 (the Proceedings). Vegas in turn, brought a cross-claim against Clifford which on 15 March 2010 was dismissed by consent. Vegas was ordered to pay the costs of the cross-claim, to be taxed (the cross-claim costs order).

3     The Proceedings were dismissed on 24 August 2010 and Clifford was ordered to pay Vegas’ costs of the Proceedings (the Proceedings’ costs order).

4     Clifford and … Mr Alan Phillip Rumsley, his solicitor of record, entered into a Deed of Assignment dated 16 March 2012 by which Clifford purported to assign his right, title and interest in relation to the cross-claim costs order to Rumsley (the Assignment). I say ‘purported’ because [Williamson] impugn[s] the validity of the Assignment pursuant to s 120 of the Bankruptcy Act 1996 (Cth) (Bankruptcy Act). That issue is yet to be heard and determined.

5     On 25 May 2012, a certificate of taxation was issued to Vegas with respect to the costs of the Proceedings in the sum of $510,790.

6     Clifford, pursuant to s 20 of the Property Law Act 1969 (WA) (PLA), gave written notice dated 29 May 2012 of the Assignment to Vegas.

7     On 26 February 2013, Clifford became a bankrupt by way of a debtor’s petition.

8     On 22 May 2013, [Williamson was] appointed as trustee… of Clifford’s bankrupt estate under s 157 of the Bankruptcy Act.

…

10     On 9 January 2015, Rumsley was joined as a party to the Proceedings as an assignee of the cross-claim costs order in order to give him an entitlement to be heard on the taxation of the cross-claim costs.

11     On 2 February 2015, a certificate of taxation was issued to Clifford with respect to the cross-claim costs order in the amount of $110,000.

6    On 17 May 2013, Mr Rumsley lodged a proof of debt in Mr Clifford’s bankrupt estate claiming that he was owed $550,000 in legal fees incurred acting for Clifford. On 20 May 2013, Vegas lodged a proof of debt in Mr Clifford’s bankrupt estate claiming that he owed $647,198.11 for costs in a number of proceedings, including WAD 28 of 2009.

7    On 19 September 2014, Mr Clifford wrote to Vegas confirming the notice provided on 29 May 2012 of the purported assignment of the cross-claim costs order. Vegas says that Mr Clifford’s trustees in bankruptcy notified Mr Rumsley, by letter dated 7 January 2015, that they had avoided the purported assignment by stating as follows:

Our client’s position is that the transaction is voidable under sections 120 and 121 of the Bankruptcy Act 1966 (Cth) and our client now so avoids it.

8    On 21 January 2015, the trustees commenced proceedings in this Court in WAD 17 of 2015 challenging the validity of the purported assignment. Those proceedings are ongoing.

9    On 4 February 2015, Mr Rumsley demanded immediate payment of the $110,000 and interest of $32,308.96. Vegas responded to the demand by email dated 6 February 2015, referring to “the set off that applies here”, stating that Vegas did not accept that it owed Mr Rumsley any money.

10    On or about 21 February 2015, Mr Rumsley made an ex parte application for a debt appropriation order directed to Vegas’ bank, Westpac Banking Corporation. Vegas says that, in making that application, Mr Rumsley did not inform the relevant Deputy District Registrar of this Court, who dealt with the application, that the assignment which underpinned his claim to be a judgment debtor as defined in s 3 of the Civil Judgments Enforcement Act 2004 (WA) (CJEA) was the subject of challenge by the trustees in WAD 17 of 2015. It also says that Mr Rumsley did not inform Vegas, the trustees or Gilmour J, the docket judge in WAD 17 of 2015, that he had applied for a debt appropriation order.

11    The Deputy District Registrar made the debt appropriation order sought by Mr Rumsley on 20 May 2015.

12    On 29 May 2015, Gilmour J stayed the debt appropriation order and ordered indemnity costs against Mr Rumsley. See Williamson. These orders were set aside by the Full Court in Rumsley on 13 June 2016.

13    On 26 June 2015, Vegas sent a letter to the trustees, copied to Mr Rumsley, stating that at all times it had asserted a set off of the cross-claim costs order against the proceedings’ costs order. By letter dated 29 June 2015, Vegas invited Mr Rumsley to agree to the set off; an agreement that by letter dated 20 July 2015 Mr Rumsley refused to make.

14    On 3 December 2015, Vegas provided an amended proof of debt to the trustees taking into account the set off of the cross-claim costs order, thereby reducing the amount said to be owing to Vegas by $110,000.

agreed facts

15    In this proceeding, the parties agreed to the following facts:

1.    Vegas Enterprises Pty Ltd (Vegas) was incorporated 21 October 1983.

2.    Alan Rumsley (Mr Rumsley) was admitted to practice 2 October 1998 in the Supreme Court of Western Australia and 30 September 1999 in the Federal Courts and held a practicing certificate under the Legal Profession Act 2008, at all material times.

3.    Philip George Clifford commenced proceedings in Federal Court action WAD 28 of 2009 on 18 February 2009, against Vegas and its two directors, Geoffrey Backshall and Rodney Hart (WAD 28 of 2009).

4.    Mr Rumsley acted for Mr Clifford in WAD 28 of 2009, at all material times from or about 9 January 2009.

5.    Mallesons Stephen Jaques (Mallesons) of which Mr Luscombe was then a partner, acted for Vegas and its two directors in relation WAD 28 of 2009, from or about 3 March 2009 to or about 25 June 2009.

6.    Deputy District Registrar Stanley was the provisional docket Registrar on WAD 28 of 2009.

7.    From or about 26 June 2009, Mr Backshall and Mr Hart were represented by Jackson McDonald in WAD 28 of 2009.

8.    Mallesons (of which Mr Luscombe was then a partner) acted for Vegas in relation to WAD 28 of 2009, at all material times from 26 June 2009 to or about 23 February 2010.

9.    Cochrane Lishman Carson Luscombe (CLCL) (of which Mr Luscombe was then a partner) acted for Vegas in relation to WAD 28 of 2009, at all material times from or about 24 February 2010 to or about 30 April 2011.

10.    Clifford Chance (CC) (of which Mr Luscombe was then a partner) acted for Vegas in relation to WAD 28 of 2009, at all material times from or about 1 May 2011.

11.    Vegas filed a cross-claim against Mr Clifford and Lavan Legal in WAD 28 of 2009, on or about 21 September 2009.

12.    On 15 March 2010, CLCL for Vegas as cross-claimant and Mr Rumsley for Mr Clifford as first cross-respondent, signed and filed a minute of consent orders in terms:

12.1    The cross-claim by Vegas, as cross-claimant, against Mr Clifford, as the first cross-respondent, be and is hereby dismissed; and

12.2    The cross-claimant pay the first cross-respondent’s costs of the cross-claim to be taxed.

13.    On 15 March 2010, Barker J made orders in terms of the minute of consent orders.

14.    The trial in WAD 28 of 2009 was heard by Barker J from 22 to 29 and 31 March 2010 and 1 and 16 April2010.

15.    On 24 August 2010, Barker J delivered judgment in WAD 28 of 2009 and made orders in terms:

15.1    The application be dismissed; and

15.2    The applicant to pay the first respondent’s and the second and third respondents’ costs.

16.    On 24 August 2010, Mr Rumsley appeared for Mr Clifford and Mr Luscombe of Cochrane Lishman Carson Luscombe appeared for Vegas.

17.    Vegas did not apply for an order setting off the costs of the cross-claim.

18.    Mr Clifford commenced proceedings in Federal Court action WAD 231 of 2010, on 2 September 2010, against Vegas and its two directors, Mr Backshall and Mr Hart, appealing the decision of Barker J of 24 August 2010 (WAD 231 of 2010).

19.    Mr Rumsley acted for Mr Clifford in relation to WAD 231 of 2010, at all material times from or about 2 September 2010.

20.    Vegas was represented in WAD 231 of 2010, at all material times from or about 6 September 2010, by CLCL, to or about 30 April 2011 and by CC, from or about 1 May 2011. Mr Luscombe was a partner of both CLCL and CC at the relevant times.

21.    Deputy District Registrar Stanley was the provisional docket Registrar on WAD 231 of 2010.

22.    Vegas filed a notice of contention in WAD 231 of 2010 dated 20 September 2010.

23.    The appeal in WAD 231 of 2010 was heard by North, Besanko and Jessup JJ on 18 and 19 May 2011.

24.    On 3 November 2011, North, Besanko and Jessup JJ delivered judgment in WAD 231 of 2010 and made orders in terms:

24.1    The appeal be dismissed; and

24.2    The appellant to pay the first respondent’s costs of the appeal and the second and third respondents’ costs of the appeal including the costs of the respective notices of contention.

25.    On 3 November 2011, Mr Rumsley appeared, for Mr Clifford and Mr Luscombe of CC appeared, for Vegas.

26.    On 3 November 2011, Vegas did not apply for an order setting off the costs of the cross-claim.

27.    On or about 25 May 2012, a certificate of taxation issued for Vegas’ costs pursuant to the order of Barker J at $510,790.

28.    By letter dated 30 May 2012 from CC to Mr Rumsley, Vegas demanded payment of the amount of $510,790 in the certificate of taxation dated 25 May 2012.

29.    On 26 February 2013, Mr Clifford became bankrupt by a debtor’s petition.

30.    On or about 20 May 2013, Vegas lodged a proof of debt in the estate of Mr Clifford.

31.    On 22 May 2013 Christopher Williamson and David Hurt were appointed trustees of Mr Clifford’s estate under section 157 of the Bankruptcy Act 1966.

32.    On or about 4 February 2014, Mr Rumsley lodged a bill of costs in relation to the cross-claim costs order.

33.    On or about 11 June 2014 an estimate issued in relation to the bill of costs pursuant to rule 40.20(1) of the Federal Court Rules 2011 for $132,082.

34.    On or about 1 July 2014, CC for Vegas filed a notice of objection to the estimate of costs.

35.    On or about 3 October 2014, Mr Rumsley, Mr Backshall, Stewart Forbes and Nathan Landis appeared at a confidential conference before District Registrar Jan, pursuant to rule 40.21(2)(a) of the Federal Court Rules 2011.

36.    On or about 26 November 2014, Mr Rumsley filed an interlocutory application to be joined as a party to the cross-claim, as the assignee of the costs order made by Barker J 15 March 2010.

37.    On 16 December 2014, Mr Rumsley appeared before Barker J on the interlocutory application with Mr Landis for Vegas.

38.    On 9 January 2015, Mr Rumsley appeared before Barker J on the interlocutory application, with Mr Landis for Vegas and Ms Savich for Mr Williamson and Mr Hurt.

39.    On 9 January 2015, Barker J made orders in terms:

39.1    Pursuant to Order 9.09(2) of the Federal Court Rules 2011 (Cth), Mr Rumsley be joined as a party to the cross-claim, as assignee of the costs order made by the Honourable Justice Barker on 15 March 2010; and

39.2    There be no order as to costs on this application or before the taxing officer to this point.

40.    Mr Williamson and Mr Hurt commenced proceedings in Federal Court action WAD 17 of 2015 on 21 January 2015, against Mr Rumsley and Mr Williamson and Mr Hurt (WAD 17 of 2015).

41.    CC acted for Vegas in WAD 17 of 2015, from or about 21 January 2015.

42.    Mr Williamson and Mr Hurt filed the application in WAD 17 of 2015.

43.    With regards to WAD 17 of 2015, Vegas indemnified the trustees for any costs incurred, for any adverse costs orders and agreed to pay remuneration up to $5,000 of which no amount to date has been claimed.

44.    Deputy District Registrar Stanley was the provisional docket Registrar on WAD 17 of 2015.

45.    On or about 2 February 2015 a certificate of taxation issued under Rule 40.22 of Federal Court Rules 2011, in relation to the cross-claim costs order at $110,000.

46.    By letter dated 4 February 2015, Mr Rumsley demanded payment of the cross­ claim costs and interest from Vegas.

47.    On or about 6 February 2015 Mr Luscombe replied by email to the demand for payment.

48.    On or about 6 February 2015, Mr Rumsley replied to the email of Mr Luscombe.

49.    On or about 21 February 2015, Mr Rumsley applied for a debt appropriation order under the Civil Judgments Enforcement Act 2004, with a supporting affidavit of Mr Rumsley sworn 20 February 2015 .

50.    On or about 15 April 2015 Vegas filed a submitting appearance in WAD 17 of 2015.

51.    On or about 15 May 2015, Mr Rumsley filed a second affidavit in support of the application for a debt appropriation order, sworn 15 May 2015.

52.    On or about 20 May 2015, a debt appropriation order was made by Deputy District Registrar Stanley (the DAO).

53.    On 29 May 2015, Gilmour J heard an interlocutory application by Vegas to stay the operation of the DAO and made orders materially in terms:

53.1    The orders of Deputy District Registrar Stanley made on 20 May 2015 be stayed pending determination of this proceeding (WAD 17 of 2015) or further order of the Court; and

53.2    Mr Rumsley pay Vegas’ costs of the interlocutory application on an indemnity basis to be taxed if not agreed, and to be paid forthwith.

54.    The trial of the claim for a declaration in relation to a set off of the cross-claim costs order, in WAD 17 of 2015 was heard by Gilmour on 11 June 2015.

55.    Mr Rumsley commenced proceedings in Federal Court action WAD 300 of 2015, on 17 June 2015, against Vegas, seeking leave to appeal the decision of Gilmour J of 29 May 2015 (WAD 300 of 2015).

56.    CC acted for Vegas in relation to WAD 300 of 2015, at all material times from or about 23 June 2015.

57.    A letter was sent from CC to Mr Rumsley dated 29 June 2015.

58.    Vegas commenced proceedings in Federal Court action WAD 398 of 2015 on 3 August 2015, against Mr Rumsley and Mr Williamson and Mr Hurt 0/VAD 398 of 2015).

59.    CC acted for Vegas in WAD 398 of 2015, from or about 3 August 2015.

60.    On 20 August 2015 Siopis J heard the application for leave to appeal the decision of Gilmour J and granted leave to appeal.

61.    On 17 November 2015, Gilmour J delivered judgment in WAD 17 of 2015 on the claim for a declaration in relation to a set off of the cross-claim costs order and made orders in terms:

61.1    The application for declaration sought in the originating application be refused; and

61.2    The applicants pay the costs of Mr Rumsley of the application.

62.    The appeal in WAD 300 of 2015 was heard by North, Siopis and Reeves JJ on 16 February 2016.

63.    On 27 February 2016, Mr Clifford was discharged from bankruptcy.

64.    On, 13 June 2016, North, Siopis and Reeves JJ delivered judgment in WAD 300 of 2015 and made orders as follows:

64.1    Appeal allowed.

64.2    Orders 2 and 3 of the orders made on 29 May 2015 in WAD 17 of 2015 be set aside.

64.3    The costs of the interlocutory application dated 27 May 2015 be costs in the cause of the matter relating to the debt appropriation order dated 20 May 2015 in proceeding WAD 28 of 2009.

64.4    Vegas pay the costs of this appeal, including the application for leave to appeal.

64.5    The execution of Order 2 above is stayed for seven (7) days.

Issues

16    There are two broad issues falling for determination.

(1)    Whether the two costs orders may be set-off and, if so, whether they should be.

(2)    Whether the debt appropriation order should be set aside.

Is set-off available?

17    Vegas submits that the Court has the power, in relation to matters in which it has jurisdiction, to make such orders as the Court thinks appropriate under s 23 of the Federal Court of Australia Act 1976 (Cth) (FCA). Further, by s 21 of the FCA, the Court is entitled to make binding declarations of right, and can do so in the interests of justice under R 1.32 of the Federal Court Rules 2011 (Cth).

18    Vegas notes that in Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2006) 230 ALR 184 at [68]; [2006] NSWSC 560, White J said that:

set-off of judgments for costs in different actions and in different courts has long been allowed, as has the set-off of judgments for costs against judgments for debt or damages. Such set-offs do not depend upon the statutes of set-off, or the general equitable jurisdiction, but on the control a court exercises over its own proceedings.

19    Vegas also observes that in a recent case, Broadlex Services v RCR Resolve FM (No 3) [2015] NSWSC 1668, McDougall J at [21] said that:

the court must seek to do substantial costs justice, as between the parties, on a more broad-brush and less precise basis. To my mind, the appropriate way to do this is to take a view of the proceedings overall and to make a costs order that reflects both the plaintiff’s success overall and the defendant’s undoubted success in reducing the amount otherwise payable. The costs order should also, in my view, reflect the fact that many of the issues raised by the defendant in its cross-claim failed.

See also Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd (2010) 182 FCR 84 at [17]-[18]; [2010] FCAFC 5.

20    Vegas submits that the right it asserts to set-off one order against the other is not based in equity. Rather, Vegas is seeking to have the Court exercise its inherent jurisdiction to set-off the costs orders relying on the control this Court exercises over its own proceedings. Vegas says it asserted the set-offs in the February 2015 email (immediately after the cross-claim costs order was assessed); in its June 2015 letter; by bringing these proceedings; and (consistent with the assertions of set-off) by not paying the assessed amount of the cross-claim costs order to Mr Rumsley.

21    Vegas submits that the reasons the Court ought to exercise its jurisdiction to order a set-off are that:

(1)    the orders were both made in WAD 28 of 2015 against parties to those proceedings;

(2)    the purported assignment was made in circumstances where Mr Rumsley knew Vegas was seeking costs from Mr Clifford that would exceed any amount assessed in respect of the cross-claim costs order;

(3)    the ‘right, title and interest in the cross-claim costs order that Mr Clifford purported to assign to Mr Rumsley can only be as good as Mr Clifford’s rights to costs. That right was subject to the potential for set-off by the ultimately successful party;

(4)    the purported assignment was avoided by the Trustees in their January 2015 letter – the Trustees declared pursuant to s 120 and s 121 of the Bankruptcy Act 1966 (Cth) that the purported assignment of the cross-claim costs order to him was avoided; and

(5)    on 9 January 2015, before Barker J in WAD 28 of 2009, Vegas reserved its rights with regards to Mr Rumsley’s purported assignment when Mr Rumsley was joined as a party;

(6)    Vegas’ right to assert a set-off had not expired and remained available to Vegas; and

(7)    if no set-off is ordered then Vegas is unlikely to recover any costs from Mr Clifford’s estate.

22    Vegas submits that a set-off that exists at law derives from Statutes of Set-off, Insolvent Debtors Relief 1728 (UK) (2 Geo II c22 s 13), which relevantly provides that where there are mutual debts between a plaintiff and a defendant, one debt may be set-off against the other. See Hazcor Pty Ltd v Kirwanon Pty Ltd (1995) 12 WAR at 62. For set-off at law to exist, it contends, the debts must be: (a) liquidated (see Harbeck & Ors v Vasse Dozer Hire Pty Ltd [2009] WADC 48 at [24]; Blacksheep Productions Pty Ltd v Waks [2008] NSWSC 488 at [19]); (b) mutual (see Hazcor at 67; Harbeck at [34]-[37]); and (c) capable of standing as independent proceedings (see Rawley v Rawley (1876) 1 QBD 460).

23    A debt is ‘mutual’, it contends, if the debts are between the same parties and in the same right. See West Street Properties Pty Ltd v Jamison [1974] 2 NSWLR 435 at 438. Mutuality refers to the identity of the parties. See Harbeck at [34]-[37]. The debts need not have been incurred at the same time. See Day and Dent Constructions Pty Ltd v North Australian Properties Pty Ltd (1982) 150 CLR 85; [1982] HCA 20. In this case, the debts are between the same parties and in the same right.

24    Vegas argues that the liquidated sums of both orders are able to be set-off due to their mutuality, as the orders have both been made in WAD 28 of 2015 against parties to those proceedings. The certificates of taxations comprised assessments of the costs of the parties to the proceedings. Thus, immediately the cross-claim order was quantified, Vegas asserted a set-off.

25    Mr Rumsley submits the claim is unfounded, on the following grounds:

(1)    Mr Rumsley has a judgment debt against Vegas. Mr Rumsley does not owe Vegas anything. He has never owed them anything. There is nothing to “set-off” against his judgment debt.

(2)    There is no basis in fact or law for the assertion by Vegas that before assignment to Mr Rumsley, Mr Clifford’s costs judgment against Vegas was affected by some limitation or defect in title (that is, the countervailing Vegas judgment), so that Mr Clifford could not transfer a “better title” to Mr Rumsley than he had. While Vegas has disavowed reliance on equitable set-off in its submissions and seeks to rely therein only on the Court’s inherent jurisdiction, Gilmour J has already held in the closely analogous situation of equitable set-off, that “There is no equity of set-off that can attach to a costs order” (Williamson at [15]). His Honour added that the only way to claim set-off is to rely on the Court’s inherent jurisdiction. So unless and until the Court has made a set-off order in the exercise of this jurisdiction, Mr Rumsley’s judgment is unaffected.

(3)    Vegas seems to seek to argue that because it could have claimed a set-off of the costs orders in its favour in WAD 28 of 2009 against Mr Clifford, against the cost order in favour of Mr Clifford against it (subsequently assigned to Mr Rumsley), the Court should now somehow, in its inherent jurisdiction, retrospectively order such set-off or declare that it is has happened. Vegas did not seek to invoke any set-off on its part until recently (late June 2015). The assignment had taken place more than 3 years earlier, on 16 March 2012. Mr Clifford went bankrupt on 26 February 2013. The judgment debt owing by Mr Clifford to Vegas then disappeared and transmogrified to a right for Vegas to prove in the bankrupt estate – which Vegas exercised. Since 26 February 2013, there has been no debt owing by Mr Clifford to Vegas against which the judgment debt held by Mr Rumsley against Vegas could be “set-off”. See: Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 at 594-595; McNamara v San & Ors (No 3) (2010) 183 FCR 328 at [66]; [2010] FCA 227).

(4)    Unsurprisingly, there is no case where a Court has ever ordered set-off in its inherent jurisdiction between a judgment debt (in this case held by Mr Rumsley) and a disappeared judgment debt (Vegas’ erstwhile judgment debt against Mr Clifford).

(5)    On 27 February 2016, Mr Clifford was discharged from bankruptcy. In terms of s 153 of the Bankruptcy Act, he was thereby released from all provable debts. The costs orders Vegas had against Mr Clifford no longer exist and Mr Clifford is also no longer subject to the claims in bankruptcy referred to in the previous sub-paragraph. Vegas simply has no claim whatsoever in respect of him or his bankrupt estate. See: Coventry v Charter Pacific Ltd (2005) 227 CLR 234 at [88]; [2005] HCA 67; Robertson v Deputy Commissioner of Taxation (2003) 53 ATR 824 at [23]; [2003] FCA 944; Sampson v McInnis [2007] FMCA 1656 at [36]-[37].

26    Mr Rumsley contends that, even assuming (contrary to the above submissions) that the foundational facts are present so that the Court could exercise its inherent jurisdiction to order a retrospective set-off as sought by Vegas, then the Court should not do so, on the following grounds:

(1)    The very substantial delay on the part of Vegas to rely on or actually set-off.

(2)    The conduct of Vegas in failing to pay a costs judgments held by Mr Rumsley against it – and not moving for any stay of it before Mr Rumsley obtained the debt appropriation order. See further below.

(3)    The circumstances that Mr Rumsley proceeded to act on the judgment assigned to him (in payment for legal services) without any intimation of set-off by Vegas prior to June 2015 – Mr Rumsley had even obtained the debt appropriation order before Vegas purported to assert set-off.

(4)    Even when Vegas then asserted set-off in its letters of 26 June and 29 June 2015 (TB 44 and 45, p 235-238), it did so on spurious grounds apparently not currently pursued in argument – the letters are however still pleaded in the Amended Statement of Claim and the relief is based on the 26 June 2015 letter. These grounds advanced in the 29 June 2015 letter are: equitable set-off, set-off by the Trustees and set-off by its own “assertion”. They were rejected by Gilmour J in Williamson: a finding which binds Vegas who is a party to that case. (This applies even though Vegas had filed a submitting appearance in that matter: see Spautz v Butterworth (1996) 41 NSWLR 1 at 19F to 20D.)

(5)    While the letter of 29 June 2015 states that Vegas will pursue the set-off matter in WAD 17 of 2015 (at TB p 238), it did nothing of the sort. The current matter was then instituted on 4 August 2015.

(6)    Vegas has engaged in manipulative conduct. It put up and funded the Trustees to run their “misconceived” set-off claim while ostensibly just abiding the outcome of WAD 17 of 2015. See TB 50 (p 246); Agreed Facts paragraph 43; T 36 (p 203).

(7)    When it suited Vegas to put forward a larger claim against the Clifford bankrupt estate, it did not invoke any set-off in relation to the judgment debt held by Mr Rumsley. See its first proof at TB 17, p 72; note, by way of contrast, the express set-off claimed at p 75 for Federal Magistrates Court costs. Its later proof asserts set-off against Mr Clifford’s estate. So it is now claiming the same set-off twice, this time against Mr Rumsley.

27    Mr Rumsley further notes that the orders in WAD 29 of 2008 on 15 March 2010 and 9 January 2015, required Vegas to pay the cost of the cross-claim to Mr Rumsley. This was confirmed when Gilmour J found “the cross-claim costs are not owed to the applicants as trustees of Clifford’s bankrupt estate. They are owed to Rumsley”. Mr Rumsley submits that, when the amount, agreed between Vegas and Mr Rumsley, was allowed, in the 2 February 2015 certificate, Vegas was required by orders of the Court to pay Mr Rumsley $110,000, and continues to refuse to do so. Mr Rumsley submits that Vegas does so contrary to “the public interest in the administration of justice [which] requires compliance with all orders” (Witham v Holloway (1995) 183 CLR 525 at [15]; [1995] HCA 3). Mr Rumsley notes that recently, Judge Lucev stated that a failure to pay money the court ordered to be paid is arguably contempt of court (Blackman v Leppard (No 3) [2016] FCCA 272). Mr Rumsley contends this fact weighs very heavily, if not conclusively, against the exercise of any discretion in favour of Vegas.

28    Mr Rumsley further submits that in relation to the discretion on the part of the Court, it should also be noted that:

(1)    the two costs orders in issue deal with very different issues and have no relevant interconnection;

(2)    Vegas had pleaded a cross-claim against Mr Clifford in the proceedings. It did not (and could not have) pleaded any set-off based on the allegations in its cross-claim;

(3)    Vegas then abandoned its cross-claim before trial;

(4)    Mr Clifford obtained an order for his cost of the cross-claim brought by Vegas when Vegas agreed (and entered into a consent order) that the cross-claim against him be dismissed. The nature of the cross-claim was some alleged wrongful conduct on the part of Mr Clifford towards Vegas, including alleged breach of a fiduciary duty;

(5)    Vegas obtained its relevant costs order against Mr Clifford when he failed after trial in his action against Vegas, mainly premised on misleading or deceptive conduct of Vegas and two directors of the company. On the importance of the lack of contemporaneity of competing claims where equitable set-off is considered: see Young v National Australia Bank Ltd (2004) 29 WAR 505 at [34].

29    Mr Rumsley submits the relevant factors listed below in relation to Anshun estoppel should also weigh with the Court, so as not to order set-off.

30    As to the legal set-off contention of Vegas, Mr Rumsley submits this has not been pleaded but the argument is also plainly misconceived. Before the assignment, Vegas had not invoked any set-off and it could not rely on legal set-off, as both bills of costs were unliquidated (untaxed) at the time of the assignment. After the assignment, there was no mutuality between Vegas and Mr Rumsley.

31    Mr Rumsley submits that Anshun estoppel should also prevent Vegas from pursuing the set-off. He submits that Vegas has acted unreasonably in not pursuing set-off earlier in WAD 28 of 2009, the case in which the costs orders in issue were made. That was the case wherein it should have been done. Vegas has had multiple opportunities over many years to do so, but did not do that. The opportunities were there before the assignment and before the bankruptcy of Mr Clifford.

32    Additionally, Mr Rumsley submits Vegas was a party to the proceedings before Gilmour J in WAD 17 of 2015, as a respondent, so is bound by the findings of Gilmour J. The Trustees claimed a set-off in respect of the same costs orders in issue in the present case. Vegas chose to file a submitting notice (TB p 203–204) two weeks after reading the defence pleaded by Mr Rumsley in WAD 17 of 2015 (TB p 192–202), yet brought the stay application in those proceedings when it required relief. After the substantive hearing of the Trustees’ set-off claim by Gilmour J on 11 June 2015 in Williamson, Mr Luscombe for Vegas wrote to Mr Rumsley stating Vegas “has always asserted a set-off” (TB p 237) and if Mr Rumsley did not concede the set-off “Vegas will seek leave to be heard in WAD 17 of 2015 and in that event, we will bring this letter to the attention of the Court” (TB p 238). Mr Luscombe’s letter of 29 June 2015 is an admission that any set-off asserted in that letter was so relevant to the subject matter of the action that it was unreasonable not to pursue it in that action.

33    Mr Rumsley says that although the position of Vegas as a respondent is sufficient to establish the Anshun estoppel, the Trustees confirmed that Vegas was actually the de facto applicant in Williamson. The Trustees wrote that they “provided consent to the Application as a mechanism to assist the creditor, Vegas” (TB p 246). Vegas admits that it “indemnified the Trustees for any costs incurred, for any adverse costs orders and agreed to pay remuneration up to $5,000”, in paragraph 43 of the statement of agreed facts.

34    Mr Rumsley submits that even if an estoppel were not available Vegas would be precluded from maintaining this action where it was an abuse of process. It is well-established by a long line of authority, including Reichel v Magrath (1889) 14 App Cas 665 and Walton v Gardiner (1993) 177 CLR 378; [1993] HCA 77, that the principles of abuse of process are not confined by the doctrines of res judicata, issue estoppel and Anshun estoppel. A court may invoke those principles to prevent attempts to litigate an issue which should have been litigated in earlier proceedings, as well as to prevent attempts to re-litigate an issue which has, in substance, been litigated and determined in earlier proceedings (Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 at [11]).

35    Mr Rumsley submits that the attempt by Vegas to again litigate a set-off in this proceeding is “unfairly burdensome, prejudicial or damaging or productive of serious and unjustified trouble and harassment”, so as to be an abuse of process (Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27 at [14]). To use the words of Heydon J, Vegas is “attempting a second bite at the cherry [which] would be open to dismissal as an abuse of process” (Magill v Magill (2006) 226 CLR 551; [2006] HCA 51).

36    Mr Rumsley contends that Vegas has subjected him to what Allsop J (as he then was) described as the costly and stressful evil of litigation (White v Overland [2001] FCA 1333 at [4]) in WAD 17 of 2015 and now WAD 398 of 2015, both in relation to set-off claims for the same costs orders. In both proceedings it has made allegations “of the most serious and grave character” (Rumsley at [22]). Note the unfounded assertions in paragraphs 50(b) and (c) of the Vegas submissions. Vegas cannot now submit that the claim for set-off in relation to the same costs orders in this proceeding is anything other than “unfairly burdensome, prejudicial or damaging or productive of serious and unjustified trouble and harassment”.

37    The primary submission made by Vegas is that the Court has an inherent jurisdiction to set-off the costs order relying on the control of the Court over its own proceedings.

38    It is usually accepted that this Court does not have an “inherent jurisdiction” in the manner of superior courts exercising a common law jurisdiction, but that it may have implied statutory powers for various purposes, including to protect its own proceedings. See Chen v Monash University (2016) 337 ALR 525; [2016] FCAFC 66.

39    Assuming there is an implied power to make a set-off order in the circumstances of this particular case, I am not satisfied that the Court should exercise the power.

40    The simple fact of the matter is that Mr Clifford assigned the cross-claim costs order in his favour to Mr Rumsley at a time when no set-off had been ordered. Unless that assignment can be impugned it must be accepted as valid and effectual. There has been no order setting aside the assignment.

41    In those circumstances the situation is, as Mr Rumsley has submitted, that the costs order is now held by him and that he is an entirely separate person from Mr Clifford. He is entitled to the benefit of the cross-claim costs order he holds.

42    No application was made to be able to set-off an actual or a prospective proceedings costs order against the cross-claim cross order at the time the cross-claim costs order was made.

43    That consideration however tends to tie into the discretionary considerations which might come into play, should it be considered the Court retains the power, following the assignment of the cross-claims costs order to Mr Rumsley, to set off the cross-claim costs order against the proceedings costs order.

44    While Vegas sought to claim set-off, at a particular point, the assignment had already occurred. Unless there is some other basis for impugning the assignment, Mr Rumsley is entitled to the benefit of the costs order he has obtained by assignment. To order a set-off under any implied statutory power to do so, would in my view, in the particular circumstances of this case, result in a re-ordering, without proper justification, of the legal rights of Mr Rumsley which are, as I have said, independent of those of Vegas.

45    While on one view of the events that have transpired, the assignment made by Mr Clifford to Mr Rumsley was opportunistic, it is also suggested by Mr Rumsley that the assignment was for consideration for legal services provided. In any event, the assignment has not been impugned, whether opportunistic or not.

46    For those reasons I consider that if there is an implied statutory power to set-off, it should not be exercised in this case.

47    In these circumstances, I do not need to deal with other submissions made by Mr Rumsley concerning the conduct of Vegas in relation to supporting the trustees’ claims or the other abuse of process arguments made by him.

48    As to the further argued question of legal set-off put by Vegas, for similar reasons I accept the submission made that, after the assignment, there was no mutuality between Vegas and Mr Rumsley. For that reason alone, no legal set-off is available.

Should the Debt Appropriation order be set aside?

49    Vegas seeks that the debt appropriation order made on 20 May 2015 be set aside as a consequence of set-off orders or because Mr Rumsley did not inform the Registrar dealing with the application for the debt appropriation order that the purported assignment of the cross-claim costs order was the subject of challenge in other proceedings.

50    They further submit that in obtaining the debt appropriation order, Mr Rumsley failed to discharge his obligation both as a party and as a lawyer to disclose the matters that had been raised to the effect that he had no right to claim payment of the costs.

51    Vegas submits that Gilmour J in Williamson (as the trustees in bankruptcy of the bankrupt estate of Clifford) v Rumsley [2015] FCA 639 held that the debt appropriation order should be stayed and said at [8] and [10] that:

Counsel for Mr Rumsley informed the Court that his client did not inform Deputy District Registrar Stanley, who dealt with his application for the debt appropriation orders, that the assignment which underpinned his claim to be a judgment debtor (see section 3 of the Act) was the subject of challenge as I have described. Nor did Mr Rumsley inform Vegas, or the trustees, or myself as the docket judge, that he had applied for debt appropriation orders.

... he was, in my opinion, required, particularly as an officer of the Court, to make disclosure to Deputy District Registrar Stanley that the very basis upon which he was resting his entitlement to the Appropriation Orders, namely, the assignment, was being impugned in the present proceedings.

52    Vegas contends that Gilmour J’s decision was overturned by the Full Court but North and Reeves JJ in Rumsley, agreed at [20] that the “obligation imposed on a person to make full and fair disclosure to a court when seeking to have that court make an order ex parte is well-established”, before relying on Aristocrat Technologies Australia Pty Ltd v Allam & Ors [2016] HCA 3 at [15].

53    Further, the applicant contends the debt appropriation order application brought by Mr Rumsley was brought ex parte. On an ex parte application, it is the obligation of the party, through its representatives to take the place of the absent party and bring forward all material facts which that party would have brought forward in defence of the application. See Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 at 681-2; [1912] HCA 72 and Walter Rau Neusser Del Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 at [38]­ 48]. Though often expressed in the context of applications for injunctive relief, it is a principle that applies to all ex parte applications. See Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 at 677. It applies to a party applying to a Registrar for the exercise of a quasi-judicial power. See Lindholdt v Merritt Madden Printing Pty Ltd [2002] FCA 260 at [45]-[47]; and Nominet UK v National Australia Bank Limited [2006] WADC 83 at [28]-[29].

54    Vegas submits the obligation extends so far because the ex parte procedure is an exception to the rules of natural justice. See Lane v Channel 7 Adelaide Pty Ltd [2004] SASC 47.

55    Vegas say that it is of the utmost importance in the due administration of law that the Courts and the public are able to have confidence that an ex parte order has been made only after the party obtaining it has complied with its duty to disclose all relevant facts. See Town & Country Sports Resorts (Holdings) Pty Ltd and Others v Partnership Pacific Limited (1988) 20 FCR 540 at 543.

56    Vegas contends that some cases state that breach of the duty ‘almost invariably’ or ‘prima facie’ entitles a party to an immediate discharge of the order and restoration of the position which was obtained before it was granted. Others recognise the existence of a discretion as to whether to stay or discharge the order and that relevant to the discretion is whether the non-disclosure was deliberate and otherwise whether the material non-disclosure was serious or the omitted fact was important in the decision making process and whether there would be any hardship if the order was or was not set aside. See Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639 at [28)-[34]; [2005] VSCA 213). However, members of the High Court have since reiterated the position that breach of the duty of disclosure will mean that the ex parte order ‘must almost invariably fail’. See International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at [133]; [2009] HCA 49. See also Aristocrat at [15]).

57    Vegas submits that in addition to the duty of disclosure that falls upon the party bringing the ex parte application, a practitioner appearing on such an application has a separate and personal obligation of the same kind. See Ezystay Systems Pty Ltd v Link 2 Pty Ltd [2014] NSWSC 180. See also rule 34(4) of the Legal Profession Conduct Rules 2010 (WA).

58    Vegas says the fact that the Registrar was the “docket registrar” for the original proceedings and the proceedings in which there was a challenge to the assignment is not a basis upon which Mr Rumsley could discharge his duty of disclosure. It is not for the court to search out, organise and bring together what might be said by the absent party. It falls upon the party (and its lawyers) to bring the matter expressly to the attention of the court. See Walter at [38]; and Lane at [12]).

59    Vegas submits that the judgment of Gageler J in Aristocrat supports the following propositions:

(1)    that it “is an elementary principle of our ordinarily adversarial system of justice that full and fair disclosure must be made by any person who seeks an order from a court ex parte” (at [15]);

(2)    failure to make full and fair disclosure on an ex parte application is ordinarily sufficient to warrant discharge of such an order (at [15]);

(3)    the principle is not confined to particular types of orders (at [15]);

(4)    the principle obliges the party seeking the ex parte order to put forward facts known to the applicant which the absent person could be expected to have sought to place before the court if the application for the order had been contested (at [15]);

(5)    on an application for a stay of an ex parte order, where there is nondisclosure, the court may set aside the order rather than grant the stay (at [14] and [16]);

(6)    even though matters relating to the claim of set-off were for future determination, the failure to disclose that the claim that payment was resisted on the basis that there would be a set-off constituted a failure to make full and fair disclosure (at [5], [13] and [16]); and

(7)    it is open to the Court to set aside an ex parte order even though no steps have been taken by the party liable under the certificate to prevent the enforcement of the costs order and has done no more than raise the set-off point in a single response to the claim for payment of costs in respect of which the certificate of costs had issued (at [5]).

60    Vegas submits the differences between the facts in Aristocrat and the facts in the present appeal are not material to the point of principle. In both cases there was a failure by the party seeking to enforce a costs order by obtaining an order for execution to disclose a known claim that had been made by the party alleged to be liable under the costs order which, if upheld, would mean that there was no entitlement to be paid under the costs order.

61    Vegas submits that Mr Rumsley claims that they are estopped from asserting the set-off by issue and Anshun estoppel either because its claim for set-off has merged in Gilmour J’s judgment in WAD 17 of 2015 or because it should have been dealt with in that action.

62    Vegas further submits that a court will not find Anshun estoppel unless it appears that the matter relied upon in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it (Port of Melbourne Authority v Anshun Pty Ltd (1981) 127 CLR 589 at 602; [1981] HCA 45). The question is not whether the claimant might reasonably have pursued the cause of action in the earlier proceedings, but whether they acted unreasonably in failing to pursue it in the earlier proceedings. See Champerslife v Manojlovski (2010) 75 NSWLR 245 at 246 [3]-[4], 255 [52], 262 [89]; [2010] NSWCA 33; Egglishaw v Australian Crime Commission (2007) 164 FCR 224 at 233-234; [2007] FCAFC 183 at [34].

63    Vegas submits that issue estoppel concerns the matters of fact and law which are legally indispensable to the conclusion. See Blair v Curran (1939) 62 CLR 464 at 531-532; [1939] HCA 23. Further, Vegas submits that in Kuligowski v Metrobus (2004) 220 CLR 363 at 373 [21], the High Court of Australia, applying Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 at 935 indicated that for the doctrine of issue estoppel to apply in a second set of proceedings, the requirements were:

(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

64    Vegas submits that the judgment of Gilmour J was a decision on a preliminary point brought by the Trustees with regard to equitable set-off and the Trustee’s standing to bring an application under the inherent jurisdiction of the Court. Gilmour J found that there was no equitable set-off and that the Trustees lacked standing to bring an application under the Court’s inherent jurisdiction.

65    Vegas submit their claim is different - it is not seeking to establish an equitable set-off and it has standing to bring an application under the Court’s inherent jurisdiction. Regarding the latter, see Williamson at [23] and [29].

66    Vegas say that Mr Rumsley has not clarified the basis for his allegation of abuse of process despite the provision of further and better particulars. It is unclear how the actions of Vegas in bringing this action are unfairly burdensome.

67    Mr Rumsley submits that he need only address the ground that the debt appropriation order should now be set aside because of non-disclosure to Registrar Stanley which had occurred up to May 2015. If Vegas were to otherwise succeed, that is, in relation to set-off, the debt appropriation order would stand to be set aside.

68    Mr Rumsley says there would be no utility in setting aside the debt appropriation on the non-disclosure point. Mr Rumsley submits he could obtain another one if the set-off is not impugned. Of course, any time gap would create an opportunity for Vegas to move funds from Westpac before the new debt appropriation order takes place. Under the current debt appropriation order, Westpac is liable to Mr Rumley if it has paid away the funds held for Vegas at the time of the service of the debt appropriation order, and now does not have sufficient funds in the Vegas account to meet the debt appropriation order.

69    Mr Rumsley submits that under the normal procedures of the CJEA, Vegas could have applied for cancellation of the debt appropriation order and a stay of it: see s 103(1) of the CJEA. This is quite apart from any action Westpac could have taken under s 54. Vegas knew about the debt appropriation order within the seven days after service on Westpac, the time period allowed for payment of the judgment debt (s 51(3) CJEA).

70    Mr Rumsley further says that if Vegas had made such an application under s 103(1), it could not realistically argue that the debt appropriation order should be cancelled “because we only learned of it after the time it was made”. The response would be: “Well, that is exactly what the Act envisages”. If Vegas sought to argue in such a s 103 application that it had a claim to set-off against the judgment debt in the debt appropriation order, the short answer would be that Vegas had not taken the appropriate steps (or any steps) to get a Court order from the Federal Court to set-off the two judgment debts. In Williamson, Gilmour J found that was the only way for it to proceed.

71    Mr Rumsley contends there is moreover currently no ground to set aside the debt appropriation order on the basis of non-disclosure. Further, Vegas’ pleaded case for non-disclosure is that Mr Rumsley, in applying for the debt appropriation order in matter WAD 28 of 2009 did not inform Registrar Stanley “that the purported assignment of the Clifford Costs Order was subject to challenge in another matter”, namely the Trustees’ action in WAD 17 of 2015.

72    Mr Rumsley submits the case of Aristocrat relied upon by Vegas, is distinguishable: it applied in a different legal context, the facts were materially different, and as Siopis J pointed out in Rumsley at [40] and [41], the actual scope or limits of a duty of disclosure when applying for enforcement orders were not argued before Gageler J, who had decided the matter on the papers.

73    Mr Rumsley contends the material non-disclosures of the judgment creditors in Aristocrat went to the very foundation of their costs claim and distinguish that case from the current case.

74    Mr Rumsley submits that in the first place, one of the relevant judgment creditors of the joint special leave costs order in question (the special leave costs order) for some $100,000. Mr Rumsley further submits that while the reasoning of Gageler J is naturally to be accorded high respect, the judgment of a single judge of the High Court is not binding on a single Judge of the Federal Court (Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 at 504). Tonita Enterprise Pty Ltd, was deregistered on 6 December 2015 (Aristocrat at [6]). Thereafter, on 17 December 2015, Mr Allam, Tonita and the other judgment creditors in respect of what must have been a joint costs order, then applied ex parte for a writ for levy of property and a garnishee order in the High Court Registry, relying on the order. They did not disclose that Tonita had ceased to exist.

75    Mr Rumsley submits that further matters were not disclosed to the High Court Registrar in the two ex parte applications. These related to off-setting costs orders, that is, costs orders in favour of Aristocrat in the same case which stood to be set off against the special leave costs order. Aristocrat had specifically communicated to the Allam/Tonita camp that it was invoking set-off in the matter, based on its costs entitlement against Mr Allam, that is, setting off some $900,000 against $100,000. Aristocrat had done this through a solicitor’s letter on 9 December 2015, before the ex parte applications were made. See at [5]. Aristocrat only subsequently learned of the writ of levy of property on 21 January 2016, when its property was seized and it thereafter filed an application in the High Court to set aside or stay the execution of the writ for levy of property and to stay the certificate of taxation, based on the non-disclosures.

76    Mr Rumsley contends the matters referred to above underscore the differences between that case and the present case and highlight what Vegas had, by contrast, not done or had done differently in the present case:

(1)    At the time when Mr Rumsley applied for the debt appropriation order, he held a judgment of $110,000 against Vegas. He did not owe Vegas anything. Unlike the Aristocrat/Allam situation, there were no mutual debts in existence.

(2)    Vegas consented to the initial order to pay costs and also agreed to the amount of $110,000 with Mr Rumsley pursuant to R 40.22 of the Rules (Part A tab 13).

(3)    Prior to the debt appropriation order, Vegas’ only proffered answer to Mr Rumsley’s judgment claim, was a vague reference to “set-off applies” in a short email (TB p 173). Mr Rumsley in response rejected any right to set-off (TB p 173). By way of contrast, Aristocrat had invoked set-off expressly and expeditiously in a situation where there were mutual debts between it and Mr Allam.

(4)    When Mr Rumsley applied for the debt appropriation order, the only relevant proceedings on foot were the Trustees’ “misconceived” application for declaratory relief (Williamson at [21]) regarding set-off, and a claim under s 120 by the Trustees, on which only the Trustees can rely in terms of the express words of the Bankruptcy Act – and which has never been pursued by them, even to this day.

77    Mr Rumsley submits that the proper enquiry about any alleged duty of disclosure on the part of someone like Mr Rumsley in applying for the debt appropriation order, must commence with, and focus upon, the text of the CJEA and regulations made thereunder. See Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 at [47], 46–47; [2009] HCA 41. When that is done, there is nothing to render applicable Vegas’ wide ranging and “one size fits all” assertions about “duties of disclosure” in relation to “ex parte applications”, applying to a debt appropriation order.

78    Mr Rumsley further submits that the proper characterisation of the process for applying for a debt appropriation order is that the judgment creditor (as defined in the CJEA) applies as of right for a statutory remedy in terms of the procedure laid down in that Act and its regulations, the latter amplified by the relevant forms. This process is akin to, for instance, the issue of a warrant of arrest for a ship. Thus:

The power in r 40(1) does not have the character of a judicial or quasi-judicial discretion that extends beyond ensuring that the preconditions for the issue of the warrant have been satisfied and no reason exists under r 40(3) to refuse to do so. (Atlasnavios Navegacao, LDA v The Ship ‘Xin Tai Hai’ (No 2) [2012] FCA 1497; (2012) 215 FCR 265 at [90], 286);

Having regard to the subject matter, scope and purpose of the Act and Rules, it would not be appropriate to impose a duty on a plaintiff seeking the issue of an arrest warrant that comprises of unqualified obligation to make full and frank disclosure of other material facts beyond those specified in the Act and Rules as necessary to be established to invoke the exercise of the power to issue a warrant under r 40(1) (Atlasnavios at [92], 287).

79    Mr Rumsley contends he is not arguing that an applicant for a debt appropriation order can never have any duty of disclosure to the Registrar dealing with that application. If the efficacy of the judgment debt has actually been impaired, that should be disclosed.

80    Mr Rumsley further contends he is arguing that on the facts of this case, he had no duty of disclosure to Registrar Stanley of the trustees’ then pending application for set-off. This is so on at least two bases:

(1)    First, the circumstance and nature of the Trustees’ pending application meant that it did not have to be disclosed.

(2)    Secondly, and importantly, the Appellant has said on oath that he acted in the belief that as docket Registrar for both matters, Registrar Stanley knew of the Trustees’ application. This was a reasonable belief. She took three months to issue the debt appropriation order. It would be remarkable if she did not even know the subject matter of the Trustees’ claims in WAD 17 of 2015.

81    Despite the lengthy submissions that have been made by the parties, in relation to the question whether the debt appropriation order should be set aside, in my view, having formed the conclusion that there should be no set-off on the primary claim, this question becomes somewhat academic.

82    I accept the submission made on behalf of Mr Rumsley that there is no utility in setting aside the debt appropriation order on the non-disclosure point in these circumstances. He could easily proceed to obtain another debt appropriation order even if it were to be set aside.

83    In these circumstances, assuming, but without deciding, that a party in Mr Rumsley’s position may have laboured under some obligation to fully disclose circumstances to the Registrar, in the exercise of discretion, I would not set aside the debt appropriation order in the particular circumstances of this case where I have determined that set-off is not available to Vegas in any event.

CONCLUSION AND ORDER

84    In these circumstances the application for a declaration that the applicant is entitled to set-off the proceedings costs order against the cross-claim costs order is refused, as is the application for an order setting aside the debt appropriation order.

85    The appropriate order in those circumstances would appear to be that:

(1)    the application be dismissed; and

(2)    the applicant pay the costs of the first respondent, to be taxed if not agreed.

Associate:

Dated:    1 February 2017