FEDERAL COURT OF AUSTRALIA
WENDY GAI COOMBER
DATE OF ORDER:
THE COURT ORDERS THAT:
2. The applicants pay the respondent’s costs, as agreed or taxed.
3. Order 6 of the orders made on 9 July 2019 is set aside.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
1 By an application dated 21 May 2019, the applicants (Mr and Mrs Coomber) seek a review of the Registrar’s decision dated 1 May 2019 in which he dismissed the Coombers’ application to set aside a bankruptcy notice issued on 25 February 2019 and which had been served on them on 5 March 2019 (BN 235326). The applicants contend that they have a counter-claim equal to, or higher than, the sum claimed under the bankruptcy notice (which is in the amount of $24,426.43, being a judgment debt based on a costs order made against the Coombers in proceedings in the Supreme Court of New South Wales).
2 The respondent has filed a creditor’s petition seeking an order for sequestration against the Coombers (NSD804/2019). Those proceedings are currently stayed pending this proceeding.
3 The proceeding has a long and somewhat complex procedural history which is not confined to the proceeding in this Court.
The Registrar’s decision
4 As noted above, the Coombers’ application to set aside the bankruptcy notice was based on a claim that they had a counter-claim under s 40(1)(g) of the Bankruptcy Act 1966 (Cth) equal to, or exceeding, the amount claimed in the bankruptcy notice and that they could not have set up that counter-claim in the action or proceeding in which the judgment or order in respect of which the bankruptcy notice has been issued was obtained.
5 The Registrar’s reasons are recorded in a transcript of the hearing before him on 1 May 2019. The Registrar made reference to certain proceedings in the NSW Civil and Administrative Tribunal (NCAT) which the applicants said supported their counter-claim. The Registrar held that he was not satisfied that it was appropriate to allow the NCAT matter to be resolved before the bankruptcy progressed. Having regard to the material placed before him, the Registrar said that it was insufficient to enable him to be satisfied as to the merits of the Coombers’ claims in the NCAT, including the absence of valuation evidence. It was also evident that the Registrar was given little information about the likely timeline for the NCAT proceeding. The Registrar also noted that the bankruptcy notice was only the first stage in the bankruptcy process, and the Coombers would be able to raise the progress of the NCAT claims in response to any creditor’s petition that may be filed subsequently.
Case management of the review
6 The review first came before me on 9 July 2019. On that day, orders were made with a view to the matter being ready for a final hearing on 9 October 2019. The orders included direction that the applicants file and serve any evidence on which they intended to rely, as well as a written outline of submissions, by the close of business on 13 August 2019. A deadline was also set for the respondent to file and serve affidavits and an outline of submissions. The Court also ordered that the sequestration proceeding (NSD804/2019) be stayed until further order.
7 As will shortly emerge, the applicants continued to provide material in support of their application up until the day before the hearing. The respondent also sought to rely upon a second affidavit dated 4 October 2019 sworn by her instructing solicitor, which had been served on the applicants on that day but which was not filed until 9 October 2019, i.e. the date of the hearing after the Court granted leave.
The applicants’ evidence
8 The applicants filed several affidavits but, in the event, did not read any of them. Instead, they relied upon two bundles of documents which were tendered at the hearing. The first bundle was described as a response to the respondent’s second affidavit. It contained several NCAT documents, a copy of the Working Farm Lease Agreement dated 11 September 2015, extracts from the Agricultural Tenancies Act 1990 (NSW) and an extract from NCAT’s website. This became Exhibit 1 in the proceeding.
9 The applicants also relied upon a separate bundle of documents, which was described as the material which the Coombers had sought to file in NCAT on 4 October 2019. This constitutes the “fresh proceeding” which the Coombers say they have commenced in NCAT and which they rely upon in support of their counter-claim. Something more will be said about this matter below. It is sufficient to note at this point that the material included not only a copy of a “Declaration of Valuer” dated 9 August 2019 by Mr John Lewis, but a more recent document dated 2 October 2019 by Mr Lewis, which is headed “Addendum for Declaration of Valuer”. The respondent objected to this bundle of material on various grounds, including relevance, the fact that the fresh proceeding in NCAT had not been accepted for filing and was, in any event, an abuse of process, the late receipt of Mr Lewis’ “Addendum for Declaration of Valuer”, his lack of expertise and the absence of any sufficient and detailed explanation by him of how he arrived at the different values for cattle, including the 19 cattle which are the subject of the fresh proceeding in NCAT. The respondent also objected to this material on the basis that it did not conform with the Court’s Expert Evidence Practice Note and that it was evident that the Coombers had sought to influence Mr Lewis by providing him with a statement which recorded their own personal valuation of the cattle. I admitted the material which became Exhibit 2, while noting the respondent’s objection and indicated that I would give my reasons on admissibility in my final reasons for judgment.
10 The respondent relied upon two affidavits sworn by her instructing solicitor, dated 8 July 2019 and 4 October 2019 respectively. The respondent also handed up a helpful “aide-memoire” which summarised the NCAT proceedings commenced by the Coombers from 8 March 2019.
The various NCAT proceedings
11 The Coombers have initiated numerous proceedings in NCAT. The following summary draws primarily upon the respondent’s outline of written submissions dated 23 August 2019, together with the “aide-memoire”. As will become apparent, it appears that there are, or were, other proceedings in NCAT involving the Coombers and Ms Butler, the details of which remain unclear. Further information concerning the current status of NCAT proceedings is set out in my summary below of the Coombers’ evidence.
12 Although the Coombers stated in oral address that the only NCAT proceeding they relied upon for the purposes of the present proceeding is the fresh application which was lodged on 4 October 2019, it is desirable to provide some broader context and background to that matter because it could affect the weight and significance which the Court gives to the fresh proceeding.
(i) NCAT proceeding COM 19/13488
13 The Coombers commenced these proceedings in the NCAT against Ms Butler by an application dated 15 March 2019. They sought to re-agitate matters under the Agricultural Tenancies Act which had previously been finalised in other NCAT proceedings, namely COM 17/03827, COM 17/06919, AP 18/09144 and COM 18/33555. The Coombers sought damages in the amount of $31,000 for the impounding and slaughter of 19 cattle on 24 September 2018. They described the matter as an agricultural tenancy dispute. The Coombers claimed that 19 of their cattle had been illegally removed from their leased land by Ms Butler and that the cattle were subsequently sold for “fat” (slaughter) value. The Coombers allege that the real value of the cattle sold was not reflected in the sale price because they were sold for slaughter and not for breeding.
14 On 1 August 2019, these proceedings were dismissed by an NCAT Senior Member (S Thode), who published detailed reasons on 2 August 2019. In brief, the proceedings were dismissed because NCAT found that the applicants had refused to file points of claim which disclosed any arguable causes of action and that this caused prejudice in the form of delay and costs to the respondent. It was also found that there had been a want of prosecution of the proceedings, a failure to disclose a cause of action and that the proceedings were frivolous and lacking in substance.
(ii) NCAT proceeding COM 19/13482
15 These proceedings were commenced in the NCAT by the Coombers on 15 March 2019. They sought “renewal” of the proceedings in COM 17/03827, COM 17/06919 (which related to a cattle crush). They sought an order for payment of $10,000 as compensation. The proceedings were dismissed on 1 August 2019. The Senior Member’s reasons dated 2 August 2019 referred to immediately above also applied to this proceeding.
(iii) NCAT proceeding COM 19/74146
16 The Coombers commenced this proceeding in NCAT on 8 March 2019 against Moree Plains Shire Council and Ms Butler. The proceeding related to an administrative review of the alleged unlawful impounding of 9 of the Coombers’ cattle on 25 January 2019. No compensation was sought. On 14 August 2019, the proceedings were dismissed by a Senior Member of NCAT.
(iv) NCAT proceeding AP 19/13485
17 These proceedings were commenced by the Coombers on 19 March 2019 in NCAT against Ms Butler. They sought to reopen proceeding AP/00165 and to set aside an order of Principal Member Rosser made on 31 January 2019 dismissing the proceeding after the Coombers had indicated that they wished to withdraw the proceeding. AP 19/00165 was an appeal from COM 18/40564 and COM 18/47802 which concerned a dispute between the parties over possession of the farm. They then sought to reopen the matter in NCAT AP 19/13485. No compensation was sought. On 31 July 2019, the appeal proceedings were dismissed by the NCAT Registrar.
(v) Appeal in NCAT COM 19/35907
18 On 7 August 2019, the Coombers sought to stay or have set aside the decisions in COM 19/13482 and COM 19/13488. The application was dismissed on 14 August 2019. It may be noted that this was the second unsuccessful attempt by the Coombers to litigate the matters in those proceedings which had been dismissed on 1 August 2019.
(vi) Appeal in NCAT AP 19/36427
19 On 12 August 2019, the Coombers sought to appeal the decisions in COM 18/47802 (formerly COM 18/33555) and COM 18/40564. The respondent contends that the application was more than ten months out of time and also sought to appeal impermissibly from earlier orders of the Appeal Panel in AP 19/13485.
20 The proceedings were withdrawn on 1 October 2019 and then formally dismissed on 8 October 2019. The proceedings involved an attempt to resume the appeal in AP 19/13485.
(vii) Further application to set aside in NCAT COM 19/74146
21 On 23 August 2019, the Coombers filed an application seeking to have set aside the original decision with the same proceeding number (see above at ). The matter will be determined on the papers after 1 October 2019.
(viii) Proposed proceeding in NCAT lodged on 4 October 2019
22 As noted above, Exhibit 2 was said to reflect the documents which the Coombers had lodged with NCAT on Friday, 4 October 2019. These are the only proceedings now relied upon by them in support of their review application. As the respondent pointed out, these fresh proceedings do not yet have an NCAT file number and it is unclear whether the documents have been accepted for filing. The application relates to the same subject matter as NCAT 19/13488, namely the claim for compensation in respect of the impounding and slaughter of 19 cattle on 24 September 2018. The Coombers seek compensation amounting to $34,734.39 (plus GST) on the basis that the cattle were sold contrary to order 10 made by NCAT on 20 August 2018. The application, which is dated 3 October 2019, sets out background matters and points of claim. The order dated 20 August 2018, which was made by Tribunal Member J Ringrose, was made in the context of proceedings with the case number COM 18/33555. The order was to the effect that Ms Butler be “restrained from interfering or causing or permitting interference with the operations of the applicants on the property comprised in the Working Farm Lease Agreement dated 11 September 2015 until further order of Tribunal”. The material lodged with NCAT included the two reports by Mr Lewis regarding the valuation of the cattle, including the 19 cattle which were sold on 24 September 2018.
The parties’ submissions summarised
23 The Coombers represented themselves. As noted above, the only proceeding now relied upon by the Coombers is the proceeding which they say they commenced on 4 October 2019, but which apparently has not yet been accepted for filing. The fresh application seeks compensation in the amount of $34,734.39 plus GST for the sale of the 19 cattle which the Coombers claim was contrary to order 10 of the orders made by NCAT on 20 August 2018. In an addendum, the Coombers claim that the new application “is in respect of new and additional matters which were not able to be previously fully presented to the Tribunal”. Those matters were described as the failure of Ms Butler to give reasonable notice before entering the leased farm, contrary to s 11 of the Agricultural Tenancies Act; that NCAT’s orders dated 20 August 2018 restrained Ms Butler “from interfering or causing or permitting interference with the operations of the applicants on the property comprised in the Working Farm Lease Agreement dated 11 September 2015 until further order of the Tribunal”; and the “correctly certified Cattle Valuation which was not previously available”. A copy of NCAT’s orders dated 20 August 2018 is attached to the application.
24 The Coombers also relied on Exhibit 1, which comprised the following documents:
(a) A letter dated 14 August 2019 from a Senior Member of NCAT who acknowledged receipt of an application from the Coombers to set aside the decisions made on 1 August 2019 in both COM 19/13482 and COM 19/13488. The letter notes that those applications were dismissed on the basis that Mrs Coomber indicated by telephone that she did not want to participate any further in the hearing and no adjournment was sought. The letter also noted that the Coombers would take advice on whether they wished to pursue an appeal (as opposed to having the decisions made on 1 August 2019 set aside).
(b) Directions made by the NCAT Registrar on 30 August 2019 in case number COM 74146 which relates to an application by the Coombers to set aside the decision dated 14 August 2019 and their request for a stay (see above at  and ). The Registrar noted that the matter would be determined on the papers after 1 October 2019.
(c) A letter dated 8 October 2019 from the NCAT Registrar, which advised that the Appeal Panel had made orders in chambers on that day dismissing the proceeding in AP 19/36427 because it had been withdrawn and that the hearing scheduled for 28 October 2018 was vacated.
(d) A copy of the Working Farm Lease Agreement dated 11 September 2015.
(e) Extracts from the Agricultural Tenancies Act.
25 The Coombers also relied upon Mr Lewis’ two valuation reports.
26 Ms Butler’s submissions may be summarised as follows:
(a) the valuation evidence is irrelevant in circumstances where the material NCAT claims have all been dismissed and two so-called appeals have been filed but are baseless;
(b) the valuation evidence is not relevant to any present claim made by the Coombers and is, in any event, inadmissible;
(c) the bankruptcy notice is a valid instrument and was validly served on the Coombers, it being based on the non-payment of legal fees by the Coombers to Ms Butler following Darke J’s dismissal of the Coombers’ proceedings against her in NSWSC 2017/80154;
(d) the Coombers did not have a valid off-set or counter-claim either on 1 May 2019 or at present;
(e) the Coombers attempts to bring further litigation against Ms Butler cannot provide a basis for setting aside the bankruptcy notice and, in any event, those proceedings are baseless;
(f) the Coombers have not demonstrated a valid off-set or counter-claim as required by Croker v Commonwealth  FCAFC 25; 9 ABC(NS) 44 at -;
(g) the Court cannot be satisfied that the Coombers have a prima facie case or genuine or bona fide claim and the Coombers have failed to demonstrate that their claims have any substance;
(h) the volume of litigation brought by the Coombers against Ms Butler is a relevant consideration in the exercise of the Court’s discretion.
Consideration and determination
27 There is a helpful summary of the relevant principles guiding the Court’s jurisdiction by Colvin J in CFB18 v Reader Lawyers & Mediators  FCA 611; 16 ABC(NS) 26 at  to :
32. A debtor served with a bankruptcy notice who brings a set aside application within time will not commit an act of bankruptcy in failing to comply with the notice if the debtor satisfies the Court that he or she has a counter-claim, set‑off or cross‑demand equal to or exceeding the amount claimed that he or she could not have set up in the action or proceeding in which the judgment or order for the amount claimed was obtained: s 40(1)(g) of the Bankruptcy Act.
33. Where an application is made to set aside a bankruptcy notice on the basis of such an offsetting claim, the Court must weigh up considerations as to the legal and factual merit of the claim relied upon by the debtor and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim: Guss v Johnstone  HCA 26 at . The offsetting claim must sound in money and it must be a claim that it is proper and reasonable for the debtor to litigate: Vogwell v Vogwell (1939) 11 ABC 83, 85. It must be raised in the same right as the claim the subject of the bankruptcy notice: Ebert v Union Trustee Company of Australia Ltd (1960) 104 CLR 346, 351‑352. So, for example, a claim made in a trustee capacity can only be met by an offsetting claim against the debtor in the same trustee capacity.
34. The various formulations in the cases as to what must be established by the party seeking to set aside the notice were summarised by Lindgren J in Re Glew; Glew v Harrowell  FCA 373 at . They include, the existence of a “prima facie case”, “a fair chance of success” or the party is “fairly entitled to litigate” the claim and that the party is advancing a “genuine” or “bona fide” claim. However, it is not simply a matter of evaluating whether there is a claim with the requisite strength. Rather, the question is whether the claim is of a kind that, in all the circumstances (including the Court's view of the strength of the offsetting claim), it is just to allow the party to pursue rather than face bankruptcy. One aspect of the claim to consider is its strength. A weak claim will not suffice. Otherwise, an assessment of strength is to be considered in the context of other considerations that bear upon the justice of allowing the bankruptcy proceedings to continue without the claim first being determined.
35. The claim must be articulated in the supporting affidavit filed with the application to set aside. After reviewing the relevant cases, Bromwich J concluded in Coshott v Prentice (No 2)  FCA 1531 at  that:
for an application to set aside a bankruptcy notice to be competent and trigger the automatic statutory extension of time for compliance in s 41(7), the offsetting claim must be “effective” or “real” at the time the application is made; it must be bona fide; it must on its face show a relevant offsetting claim. Such a jurisdictional requirement for a competent application cannot be supplemented after the time for compliance has expired because that is too late to engage jurisdiction and trigger an extension of time.
36. The claim may then be supplemented by further affidavits relied upon at the hearing of the application to set aside the bankruptcy notice, but new claims cannot be introduced.
28 It is also well settled that in conducting a review of the Registrar’s decision, the review is conducted as a hearing de novo (see Jageev Pty Ltd v Deane (1997) 72 FCR 398 at 399 and Deputy Commissioner of Taxation v Vasiliades  FCA 1190 at ).
29 Applying those principles to the circumstances here, I am not satisfied that the Coombers have established that they have a prima facie case in NCAT which is of sufficient strength to warrant the setting aside of the bankruptcy notice. My reasons are as follows.
30 First, as noted above, as matters stand at present, it is not even clear that NCAT will accept for filing the fresh application lodged on 4 October 2019. That, of course, is entirely a matter for NCAT but, as set out above, there is a long history to the Coombers’ claim for compensation in respect of the impounding and sale of the 19 cattle, which is the sole subject matter of the proposed proceeding.
31 Secondly, assuming that the proceeding is accepted for filing, I am required under the relevant principles to assess its strength or weakness. The background to the proceeding would indicate that its prospects are quite weak, having regard to the decision and detailed reasons of NCAT provided on 31 July 2019 and 2 August 2019 respectively. Furthermore, as noted above, the Coombers’ application to set aside that decision in COM 19/35907 was also dismissed on 14 August 2019. Although NCAT’s letter dated 14 August 2019 records that the applicants would take advice on whether they wished to pursue an appeal, they have delayed doing so for almost ten weeks and will, presumably, require time to be extended to prosecute the appeal. Obtaining such leave may well be difficult against the background of the dismissal and/or withdrawal of the previous claim.
32 Thirdly, the Coombers attempt to revive the claim is said to rely upon previously unavailable material, including the orders of NCAT dated 20 August 2018, including order 10. The Coombers have failed to identify any tenable basis upon which they would be entitled to compensation for breach of an NCAT order, assuming (without deciding) that there has been such a breach.
33 Fourthly, there would appear to be formidable hurdles to that part of the fresh application which relates to an alleged cause of action under the Agricultural Tenancies Act. As Ms Fishburn, who appeared for the respondent, pointed out, any claim for compensation relating to a dispute under that legislation could only be made by an owner or a tenant and had to be made in NCAT no later than three months after the relevant dispute or at the end of tenancy, whichever is the later (see ss 20(1) and (2)). The respondent no longer owns the relevant property and NCAT has determined that the lease ended in late 2018. These matters weigh heavily against the prospects of the Coombers being able to make good the case which is outlined at  above.
34 Fifthly, although it is strictly unnecessary to decide the admissibility of Mr Lewis’ two reports because the proceeding will be dismissed on other grounds, for completeness I will explain why I consider the two reports to be inadmissible. The first report dated 9 August 2019 does not comply with the Court’s Expert Evidence Practice Note. There is no indication that Mr Lewis was even aware of that practice note when he completed his initial two page evaluation. Mr Lewis’ qualifications as an expert are also unclear. He describes himself as a retired Chartered Architect (sic?) and former breeder of Salers and Rangemaster cattle, and that he owned and operated a Salers Cattle Stud in Millthorpe. He does not provide any evidence of how long he bred such cattle or the extent of his personal involvement in the cattle stud. Mr Lewis said that he had shown cattle in competition with Cairo Salers at various shows, but he provided no details of when that occurred and whether or not his familiarity with the Salers breed remains current.
35 I also consider that Mr Lewis does not provide sufficient information as to how he carried out the valuation of the 19 cattle. It is evident that he relied upon photographs of the cattle provided to him by the Coombers, but there is no indication that he knew how old the cattle were or their estimated weight, which would generally be relevant to their value. Mr Lewis states that his valuations were based upon “reasonable and fair prices for stud cattle, not trade cattle and research on pricing” from various stated sources, including newspapers and his previous experience, but again particulars of these matters are scant.
36 It was only after the Court pointed out on 14 August 2019 of the need to comply with the Expert Evidence Practice Note that Mr Lewis then provided an Addendum to his valuation dated 2 October 2019. This Addendum contained a statement that Mr Lewis had read and complied with the Expert Evidence Practice Note and Harmonised Expert Witness Code of Conduct and agreed to be bound by them. It also said that his opinions were based “substantially on specialised knowledge arising from my training, study and experience”. Again, no sufficient particulars were provided of those matters. Mr Lewis also frankly and correctly drew attention to the fact that the Coombers had provided him with material “for guidance as to the manner in which to set out my independent Valuation (sic)”, together with photographs of the cattle. As Ms Fishburn pointed out, one of the documents provided to Mr Lewis provided the Coombers’ own personal valuation of the 19 cattle, which totalled $35,500. Mr Lewis’ valuation was slightly higher at $38,800, but the Court cannot be confident that this valuation was arrived at independently and without regard to the Coombers’ own valuation. Providing that particular information to Mr Lewis goes well beyond giving Mr Lewis “guidance as to the manner in which to set out [his] independent Valuation (sic)”.
37 Although Mr Lewis’ first report was made available to the respondent in August 2019, a copy of his second report was only served late on Friday, 4 October 2019 (i.e. immediately before the long weekend in New South Wales). I accept that Ms Fishburn did not sight the second report until after it was referred to during the course of the hearing. She indicated that if she had had earlier access to it, she would have required Mr Lewis to be available for cross-examination.
38 For all these reasons, I would if necessary have ruled the two expert reports to be inadmissible. If that would have been in error, I would have given Mr Lewis’ evidence little if any weight for similar reasons to those set out above.
39 Finally, and independently of the other matters raised above, there is a very live issue as to whether the Coombers are entitled to rely upon a counter-claim, in the form of the recently lodged application in NCAT relating to the 19 cattle, in circumstances where, although a related claim was on foot when the originating application to set aside the bankruptcy notice was filed, that earlier claim has been either dismissed or withdrawn. Mr Coomber explained that the only NCAT proceeding now relied upon is the fresh application, which relies in part on an alleged breach of Order 10 of orders made by NCAT on 20 August 2018, together with matters arising under the Agricultural Tenancies Act. In Mr Coomber’s own words, as recorded in Addendum A to the NCAT application, this “new Commercial List Application is in respect of new and additional matters which were not able to be previously fully presented to the Tribunal and as such, it is now presented to the Tribunal as a fresh application”.
40 As Bromwich J stated in Coshott v Prentice (No 2)  FCA 1531 at , an offsetting claim must be effective or real at the time the application is made and this jurisdictional requirement cannot be supplemented after the time for compliance has expired. Even accepting that in a hearing de novo there is a complete rehearing of the facts and law as they exist at the time of review (Zdrilic v Hickie  FCAFC 101; 246 FCR 532 at -), that aspect of the proceeding cannot overcome the incompetency of the application to set aside the bankruptcy notice. A claim may be supplemented by subsequent affidavits, but new claims cannot be introduced. This is directly inconsistent with the explicit terms of the “Background Data” which is Addendum A to the fresh application dated 3 October 2019.
41 For these reasons, the application for review will be dismissed, with costs. The order made on 9 July 2019 which stayed the proceeding concerning the creditor’s petition and application for sequestration will be lifted.