Federal Court of Australia

Peek v Hennessy [2021] FCA 1187

ORDERS

THE COURT ORDERS THAT:

1.    In proceeding QUD 202 of 2021:

(a)    the originating application is dismissed;

(b)    the applicants pay the respondent’s costs of the proceeding on an indemnity basis.

2.    In proceeding QUD 203 of 2021:

(a)    the originating application is dismissed;

(b)    the applicants pay the respondent’s costs of the proceeding on an indemnity basis.

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

REASONS FOR JUDGMENT

RANGIAH J:

1    The applicants, Saskia Peek and Peter James McQuitty, have filed separate originating applications in proceeding QUD 202 of 2021 and proceeding QUD 203 of 2021. The originating application in proceeding QUD 202 of 2021 names John Paul Hennessy as the respondent. The originating application in proceeding QUD 203 of 2021 names Hennessy Builders Pty Ltd as the respondent.

2    The originating applications, read together, seek that:

(1)    Bankruptcy Notices BN 251905 (naming Mr Hennessy as the creditor) and BN 251906 (naming Hennessy Builders Pty Ltd as the creditor) (together, the Bankruptcy Notices) be set aside pursuant to s 30(1) of the Bankruptcy Act 1966 (Cth);

(2)    The applicants be granted an extension of time to comply with the Bankruptcy Notices until the High Court of Australia determines the constitutional validity of certain judgments, and until the applications to set aside the Bankruptcy Notices are determined by this Court.

3    The applicants’ originating applications are preceded by a lengthy history of judgments and orders made by the District Court of Queensland, the Queensland Court of Appeal and the High Court. The applicants submit that I should “ignore” those judgments and orders and make the orders now sought by the applicants. The respondents contend, in response, that the applicants’ submissions are “nonsense”.

4    It is necessary to describe the history of the litigation at some length in order to give context to the parties’ submissions.

Background

5    The applicants are directors and shareholders of Chapel of Angels Pty Ltd. On 23 October 2014, Chapel of Angels Pty Ltd commenced proceeding BD 4124 of 2014 against “Hennessy Builder Pty Ltd” in the District Court of Queensland. Later, “John Paul Hennessey” was added as the second defendant.

6    In subsequent proceedings, Hennessy Builder Pty Ltd was referred to by various other names and with various spellings. In Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875, Derrington J at [44]-[48] addressed the discrepancies, noting that:

44     …The company “Hennessy Builders Pty Ltd” apparently does exist, but is unrelated to Hennessy Building and the various proceedings…this error appears to have ultimately originated from the plaintiff’s incorrect description of Hennessy Building in the title of the District Court Proceedings (which it commenced). This lead to Hennessy Building being described in several different ways in the proceedings in the Queensland courts: “Hennessy Building Pty Ltd”, “Hennessy Builder Pty Ltd” and “Hennessy Builders Pty Ltd”, or with “Hennessy” spelt as “Hennessey”.

45     It is apparent on the material before the Court that there has been a misidentification of Hennessy Building in a number of the documents in the proceedings in the Queensland Courts and in documents which are the subject of the present application...

46    …In the course of submissions on behalf of the plaintiff, Mr Ohlson said in relation to the misnaming of Hennessy Building:

Everyone knows that Hennessy Builders – Hennessy Building is the name of the – the proper name of the respondent for everything. Really, you know, the contract is signed in Hennessy Building, and there is different names on all of the court proceedings.

7    The defendants applied for security for costs in the District Court of Queensland, and, on 21 November 2017, Judge Reid determined that security should be provided: Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2017] QDC 280. However, in lieu of ordering the provision of security for costs, his Honour accepted undertakings from the present applicants, Ms Saskia Peek (then known as Saskia Pryce) and Mr McQuitty, that, if any order for costs were made against Chapel of Angels Pty Ltd, they would be jointly and severally responsible for the payment of those costs, as taxed, assessed or agreed between the parties.

8    On 12 November 2018, Judge Porter QC of the District Court delivered reasons for judgment, upholding Chapel of Angels Pty Ltd’s case in part, but finding for the defendants upon their counter-claim, and directing the parties to make submissions as to the appropriate form of orders: Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218.

9    On 11 December 2018, Judge Porter QC ordered that Chapel of Angels Pty Ltd pay Hennessy Builder Pty Ltd the sum of $85,989.86 and pay the defendants’ costs: Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 248.

10    On 3 May 2019, Chapel of Angels Pty Ltd commenced an application in the Queensland Court of Appeal seeking an extension of time to seek leave to appeal against Judge Porter QC’s decisions of 12 November 2018 and 11 December 2018. On 7 October 2020, that application was refused with costs: Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2020] QCA 219.

11    On 30 October 2020, Chapel of Angels Pty Ltd applied to the High Court for special leave to appeal against the judgment of the Court of Appeal. On 4 March 2021, the application for special leave was dismissed by Gordon and Edelman JJ: Chapel of Angels Pty Ltd Trading As Chapel of Angels v Hennessy Building Pty Ltd Trading As Hennessy Building ACN 117 587 998 In Its Own Capacity And As Trustee For The Hennessy Family Trust & Anor [2021] HCASL 40 (4 March 2021).

12    On 17 February 2021, a Registrar of the District Court made an order requiring Chapel of Angels Pty Ltd to pay Hennessy Builders Pty Ltd’s costs assessed in the amount of $216,787.28. Also on 17 February 2021, a Deputy Registrar of the District Court ordered Chapel of Angels Pty Ltd to pay Mr Hennessy’s costs assessed in the amount of $168,960.74.

13    On 18 March 2021, Judge Muir of the District Court dismissed an application by Chapel of Angels Pty Ltd to set aside the costs assessor’s certificates: Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & another [2021] QDC 81.

14    On 17 May 2021, Chapel of Angels Pty Ltd attempted to file an application in the High Court seeking that writs of certiorari issue against all of the judicial officers who had made judgments or orders in the District Court, the Court of Appeal and the High Court. On 26 May 2021, Gageler J directed the Registrar of the High Court to refuse to issue or file Chapel of Angels Pty Ltd’s application without first obtaining the leave of a Justice of the High Court. His Honour apparently formed a view that the application was, on its face, an abuse of process, or frivolous or vexatious, or fell outside the Court’s jurisdiction: see r 6.07 of the High Court Rules 2004 (Cth).

15    On 10 June 2021, Chapel of Angels Pty Ltd applied ex parte for leave to file its application for certiorari. Justice Gleeson dismissed the application for leave on 12 July 2021. Her Honour concluded that the application was an attempt to re-litigate an issue which had been disposed of in earlier proceedings between the parties, and was an abuse of process.

The Bankruptcy Notices

16    Bankruptcy Notice BN 251905 was issued on 20 April 2021. It is addressed to Saskia Pryce (now Saskia Peek) and Peter James McQuitty. The creditor is described as John Paul Hennessy. The Bankruptcy Notice claims that Ms Peek and Mr McQuitty owe Mr Hennessy a total debt of $170,739.69, consisting of a principal amount of $168,960.74 under “Judgment/Order Number: 4124/14”. This appears to be intended to refer to proceeding BD 4124 of 2014 in the District Court, since the Deputy Registrar’s Order of 17 February 2021 in favour of Mr Hennessy bearing that number is attached to the Bankruptcy Notice. Interest of $1,778.95 is claimed. The Bankruptcy Notice states that Ms Pryce and Mr Hennessy are required, within 21 days after service, to either pay the creditor the amount of the debt claimed or make arrangements to the creditor’s satisfaction for settlement of the debt.

17    Bankruptcy Notice BN 251906 was issued on 21 April 2021. It is addressed to the same debtors, but the creditor is described as “Hennessy Builders Pty Ltd in its own capacity and as trustee for the Hennessy Family Trust”. The total amount alleged to be owed is $219,069.78, consisting of $216,787.28 as the principal sum and $2,282.50 for interest. The Registrar’s Order of 17 February 2021 in favour of Hennessy Builders Pty Ltd is attached to the Bankruptcy Notice. The two Bankruptcy Notices are otherwise in very similar terms.

18    On 1 September 2021, I ordered that the applicants’ originating applications filed in this Court in proceeding QUD 202 of 2021 and proceeding QUD 203 of 2021 be taken to have been filed on 24 June 2021. The originating application filed in proceeding QUD 202 of 2021 seeks, relevantly, the following orders:

1.     That the Applicants be granted an extension of time to comply with Bankruptcy Notice BN251905, date of service 3 June 2021, until a determination is made by the High Court of Australia as to the constitutional validity of the decisions of the District Court of Queensland proceedings BD4124/14; the Queensland Court of Appeal proceedings 4767/19 and the High Court of Australia proceedings S199/2020.

2.     That the Applicants be granted an extension of time to comply with Bankruptcy Notice BN251905 until a determination is made by the Federal Court of Australia concerning the Applicants Application to set aside Bankruptcy Notice BN251905.

…

11.     That Bankruptcy Notice BN251905 issued on 20 April 2021 a copy of which is attached to the affidavit of Saskia Peek given in support of this Application (the Bankruptcy Notice) which was served on the Applicants on 2 June 2021, be set aside pursuant to section 30 (1) of the Bankruptcy Act 1966 (Cwlth).

19    The originating application filed in proceeding QUD 203 of 2021 concerns Bankruptcy Notice BN 251906 for which the creditor is Hennessy Builders Pty Ltd. It is in largely similar terms to the originating application filed in proceeding QUD 202 of 2021. However, the application in proceeding QUD 203 of 2021 contains a number of additional numbered grounds, including:

18.     The Bankruptcy Notice BN251906 issued on 21 April 2021 by the Creditor Hennessy Builders Pty Ltd to the Applicants is defective and ultra vires because the Applicants have not by the District Court proceedings undertaking agreed to pay a company named Hennessy Builders Pty Ltd anything.

The applicants ultimately made no submissions concerning the additional grounds.

20    On 30 June 2021, a Judicial Registrar of the Federal Court dismissed the originating applications filed in proceeding QUD 202 of 2021 and proceeding QUD 203 of 2021, on the basis that they were each filed outside the relevant limitation period required under s 41(6A) of the Bankruptcy Act.

21    On 1 September 2021, I made orders setting aside the Orders of 30 June 2021 made by the Judicial Registrar and declaring that the originating applications in proceeding QUD 202 of 2021 and proceeding QUD 203 of 2021 were each made to the Court within the time required under the Bankruptcy Act. I also made procedural orders to allow for the hearing of both originating applications on 14 September 2021.

22    On 12 September 2021, the applicants filed a notice under s 78B of the Judiciary Act 1903 (Cth) (s 78B Notice) in both proceeding QUD 202 of 2021 and proceeding QUD 203 of 2021. The content of the s 78B Notice filed in each proceeding was identical. The applicants’ solicitor indicated in oral submissions that no affidavit of service had been made as at the date of the hearing. No affidavit of service has been filed in either proceeding since the hearing.

23    The s 78B Notice states, relevantly:

…

27.     Notwithstanding the Queensland Court of Appeal in proceedings 4767 of 2019 refused (based on Common Law decisions and UCPR 748 which is not a law or a legislative instrument) to grant the Chapel of Angels an extension of time within which to apply for leave to appeal and where the High Court of Australia in proceedings s.199/2020 refused special leave to appeal the Queensland Court of Appeal decision on the grounds that an appeal to the High Court would not enjoy sufficient prospects of success to warrant the grant of special leave to appeal, the applicants maintain that the Federal Court of Australia in these proceedings is constitutionally bound by and pursuant to Clause 5 and s.118 of the Constitution, s.79 (1) and s.80 of the Judiciary Act, s. 37M (1) (a) (3) and (4) of the Federal Court of Australia Act, s. 7 (2) and (3) of the Queensland Civil Proceedings Act, s.15A,15B and 15AB of the Acts Interpretation Act, 1901 (Cwlth), s. 14A and 14B of the Acts Interpretation Act (Qld) and the QBSA Act and the QBSA Regulations to:

(a)    Ignore the decisions of the Queensland District Court 4124//14; Queensland Court of Appeal 4767/2019 and High Court of Australia s.199/2020.

(b)     Ignore all Common Law decisions which are contrary to Commonwealth and State statutes.

(c)     Ignore the legal principles of res judicata, stare decisis and finality of litigation.

And apply the clear plain English ordinary meaning of the Commonwealth and State statutes in accordance with the requirements of the Constitution and the statute interpretation requirements established by the High Court of Australia since Federation in accordance with the following Queensland judicial hierarchy which has stood (apart from the brief time when appeals to the Queen in Counsel were possible) since time immemorial…

…

The submissions

24    In relation to the hearing of 14 September 2021, the parties filed consolidated submissions in relation to proceeding QUD 202 of 2021 and proceeding QUD 203 of 2021.

25    The applicants’ written submissions commence as follows:

What the applicants are seeking.

1.     The Applicants and I are requesting Your Honour to ignore the Queensland District Court decisions dated 12 November 2018 and 11 December 2018 in proceedings 4124/14 which the respondents rely upon to support the bankruptcy notices claim on the grounds that it is indisputable that the Respondents have no valid claim in law as the Queensland Rule of Law set out in the Queensland Building Services Authority Act, 1991 (the QBSA ACT) and the Queensland Building Services Authority Regulations,1991 (the QBSA Regulations) was not applied.

2.     The Applicants and I are also requesting Your Honour to ignore the Queensland Court of Appeal decisions dated 7 October 2020 in Appeal proceedings 4767 of 2019 and the High Court of Australia decision dated 4 March 2021 in the application for special leave to appeal proceedings S199/2020 on the grounds that the Queensland Court of Appeal refused the applicant Chapel of Angels Pty Ltd (the Chapel of Angels) an extension of time to appeal the Queensland District Court decision and the High Court finding that the grounds of appeal did not identify any reason to doubt the correctness of the Court of Appeal decision, both decisions thereby denying the Chapel of Angels constitutional right to receive the benefit of the Queensland Rule of Law.

3.     The Applicants and I are also requesting Your Honour, in addition to applying the Queensland Rule of Law, to apply equitable principles in this matter and set aside the bankruptcy notices in the interests of justice and fairness to the applicants.

4.     The applicant and I accept that its requests are unusual when being sought in the face of a Queensland District Court judgment debt and when leave to appeal has been refused by the Queensland Court of Appeal and the High Court of Australia.

5.     The Courts are bound by and have a constitutional duty to apply clearly expressed Rules of Law…

…

26    The applicants’ submissions go on to refer to cl 5 and s 118 of the Constitution and to ss 79(1) and 80 of the Judiciary Act. The submissions state that these provisions require that the law expressed in a statute must be applied by all courts and judges, and that a court has no power to make any decision contrary to the ordinary, clear, plain English, meaning of the law expressed by the Queensland Parliament in the Queensland Building Services Authority Act 1991 (Qld) (QBSA Act) and the Queensland Building Services Authority Regulation 2003 (Qld) (QBSA Regulation). The applicants’ submissions assert that this Court is forbidden by cl 5 and s 118 of the Constitution and ss 79(1) and 80 of the Judiciary Act from finding that the applicants have committed an act of bankruptcy, when the amounts claimed in the Bankruptcy Notices are based upon District Court decisions made contrary to the clearly expressed law set out in the QBSA Act, in particular s 42 of that Act, and the QBSA Regulation.

27    The thrust of the respondents’ submissions is that the applicants have not addressed the requirements under ss 41(6A) and 30 of the Bankruptcy Act for an extension of time for compliance with the Bankruptcy Notices and for setting aside the Bankruptcy Notices. The respondents submit that the applicants simply invite the Court to entertain yet another attempt to litigate the proceeding that was dealt with following a contested trial before the District Court. The respondents contend that the applications are an abuse of process, are without merit, and are nonsense.

Consideration of the applications for extension of time

28    The originating applications seek extensions of time for compliance with the Bankruptcy Notices until:

(a)    a determination is made by the High Court as to the constitutional validity of the decisions of the District Court of Queensland, the Queensland Court of Appeal and the High Court itself; and

(b)    a determination is made by this Court as to whether to set aside the Bankruptcy Notices.

29    The relief is presumably sought under s 41(6A) of the Bankruptcy Act, which provides:

(6A)    Where, before the expiration of the time fixed for compliance with 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.

30    It may be noted that s 41(6C) provides:

(6C)    Where:

(a)    a debtor applies to the Court for an extension of the time for complying with a bankruptcy notice on the ground that proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; and

(b)    the Court is of the opinion that the proceedings to set aside the judgment or order:

(i)    have not been instituted bona fide; or

(ii)    are not being prosecuted with due diligence;

the Court shall not extend the time for compliance with the bankruptcy notice.

31    Section 41(6A)(a) of the Bankruptcy Act requires that proceedings to set aside a judgment or order in respect of which a bankruptcy notice was issued must “have been instituted by the debtor”. The “debtor” under s 41 of the Bankruptcy Act is the person against whom the creditor has obtained a final order and to whom the bankruptcy notice is issued (s 41(1)) and who may apply to the Court for an extension of time (s 41(6A)). Accordingly, the applicants are the debtors.

32    However, the originating applications state that Chapel of Angels Pty Ltd has sought to initiate proceedings before the High Court, not the individual applicants. The applicants have not pointed to any proceedings instituted by either of them personally. Accordingly, to the extent that the originating applications rely upon the attempts of Chapel of Angels Pty Ltd to initiate proceedings in the High Court, s 41(6A)(a) is not satisfied.

33    In any event, the attempts of Chapel of Angels Pty Ltd to file an application in the High Court did not initiate “a proceeding”. Under the Order of 26 May 2021 made by Gageler J, Chapel of Angels Pty Ltd cannot file any relevant application in the High Court Registry without leave, and its application for leave was dismissed by Gleeson J on 12 July 2021. Accordingly, no relevant “proceedings” have been instituted by the debtors in the High Court. Further, there is no proceeding seeking to set aside the orders of the District Court made on 11 December 2018 that the applicants pay the amounts of costs assessed.

34    In any event, Gleeson J dismissed Chapel of Angels Pty Ltd’s application seeking leave to file an application in the High Court because, “it is an abuse of process to attempt to relitigate a case which has been disposed of by earlier proceedings”, and “this is precisely what the applicant seeks to do by its proposed application”. Accordingly, the proceeding that Chapel of Angels Pty Ltd sought to initiate in the High Court is an abuse of process, meritless and has not been instituted bona fide. The applicants’ application for an extension time to comply with the Bankruptcy Notices must be refused by reason of s 41(6C)(b)(i) of the Bankruptcy Act.

35    It appears that the applicants also seek to set aside the Bankruptcy Notices under s 41(7) of the Bankruptcy Act, which provides:

Where, before the expiration of the time fixed for compliance with 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.

36    However, the applicants have made no application to the Court for an order setting aside the Bankruptcy Notices on the ground that the debtor has such a counter‑claim, set‑off or cross demand that that they could not have set up in the action or proceedings before the District Court. The basis of the originating applications is simply that no debts are owed because the judgments of the District Court, the Court of Appeal and the High Court are wrong.

37    The applications for extension of time for compliance with the Bankruptcy Notices must be refused.

Consideration of whether the Bankruptcy Notices should be set aside

38    I will now consider the applications to set aside the Bankruptcy Notices.

39    The Court may set aside a bankruptcy notice by exercising the general powers conferred under s 30(1) of the Bankruptcy Act. The grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the notice, the existence of the debt upon which it is based, service of the notice, or abuse of process: see Re Briggs; Ex parte Briggs v Deputy Commissioner of Taxation (WA) (1986) 12 FCR 310 at 312; Dunkerley v Comcare [2019] FCA 1002 at [69]; Sayer-Jones v Juju Bean Investments Pty Ltd [2020] FCA 177 at [48].

40    In Re Briggs, Toohey J held at 311-312:

As to the grounds upon which a bankruptcy notice may be set aside, there is at least a starting point in s 40(1)(g) of the [Bankruptcy] Act. That paragraph identifies as an act of bankruptcy failure to comply with a notice or satisfy the Court that the debtor "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 could not have set up in the action or proceeding in which the judgment or order was obtained". Is that the only ground? The cases suggest not though none attempts to define with any precision other relevant circumstances. In Re Sterling [(1980) 44 FLR 125] at 129 Lockhart J mentioned some of the grounds on which notices have been set aside, saying:

Instances of the exercise of this power are where the notice is not in accordance with the terms of the judgment and is calculated to perplex the debtor; the notice is issued for the whole of a judgment debt, yet the judgment debtor has paid into court in part satisfaction of the debt; in truth no debt lies behind the judgment ... and the sum of which payment is required by the terms of a notice has in fact been paid by the debtor.

Counsel for the applicant argued for some general principle of fairness, according to which a bankruptcy notice will be set aside if in some way the notice is unfair to the debtor. I do not accept the existence of such a principle. There is nothing in the Bankruptcy Act 1966 to justify it and no authority to support it. It seems to me that, however formulated, the grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the notice itself, service of the notice or the existence of the debt upon which the judgment and in turn the notice is founded. Having regard to the language of s 40(1)(g), reference to the existence of a debt must include the existence of a counter-claim, set-off or cross demand equal to or exceeding the amount of the debt.

A court hearing an application to set aside a bankruptcy notice is not hearing a petition for sequestration and the provisions of s 52(2), whereby a court may dismiss a petition if satisfied that the debtor is able to pay his debts or that for other sufficient cause a sequestration order ought not be made, cannot be imported into such an application. In my view a court faced with an application to set aside a bankruptcy notice is constrained to look only at the regularity of the notice itself (including service) and otherwise at the circumstances surrounding the existence of the judgment debt and any demand which the debtor may have against the creditor for a comparable amount.

41    In Re Athans; Ex parte Athans (1991) 29 FCR 302, Hill J at 310 confirmed that the Court has no general discretion to set aside a bankruptcy notice.

42    Section 41(1) of the Bankruptcy Act provides that the Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor, “a final judgment or final order”. As best as I can interpret the applicants’ case, it is that there is no valid final judgment upon which the Bankruptcy Notices are based, because the judgments of the District Court were wrong, as were the subsequent judgments of the Court of Appeal and the High Court. The applicants submit that I am free to simply ignore the other judgments. The applicants seem to be submitting that this Court is required to conduct another trial and decide the issues raised in the District Court for itself, as if the District Court had never heard and determined the matter and as if the Court of Appeal and the High Court had never dealt with the matter.

43    In Clyne v Deputy Commissioner of Taxation (1983) 57 ALJR 673, Gleeson CJ (with whom the other Justices agreed) at 675 held that a final judgment is, “a judgment which finally disposes of the rights of the parties”.

44    In Re Athans, Hill J held at 306:

It does not preclude a judgment being a final judgment, or for that matter an order being a final order, that it may be under appeal or be subject to an appeal, or for that matter that it may be set aside. Until set aside, whether on appeal or otherwise, it remains a final judgment.

(Citation omitted.)

45    The judgment of Judge Porter QC of 11 December 2018 was a final judgment, and the applicants have exhausted their rights to appeal from or otherwise challenge that judgment. The Orders made by the Registrar and Deputy Registrar respectively on 17 February 2021 against Chapel of Angels Pty Ltd for costs are also final judgments since they finally dispose of the rights of the parties in relation to costs. The process of review of the costs assessments upon which those Orders were based has been exhausted. I reject the applicants’ submission that, because of their assertion that the District Court’s judgment involves some misconstruction or misapplication of the QBSA Act and QBSA Regulation, there are no final judgments.

46    In Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132, the High Court considered the principles relevant to the power of the Court to go behind a final judgment or order upon which a bankruptcy notice is based. In Dunkerley v Comcare, Griffiths J at [68] provided a helpful summary of the position since Ramsay:

68     I turn now to summarise the principles relating to the circumstances in which the Court may go behind a judgment debt. It is generally accepted that a Court will accept a judgment as being conclusive of the existence of a debt, however, the Court has a discretion in an appropriate case to go behind a judgment debt to examine whether there is in truth consideration for it. The relevant principles may be summarised as follows:

(a)     The Court has the power in an appropriate case to go behind a judgment in an application to set aside a bankruptcy notice, but that power “is not readily exercised if there has been a substantive hearing of the matter on its merits by the court in which the judgment was granted” (see Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461; 315 ALR 523 at [55] (Xu) per Robertson J).

(b)     In determining whether to go behind a judgment on which a bankruptcy notice is based, the Court will take into account similar considerations to those which apply when determining whether or not to go behind a judgment on the hearing of a creditor’s petition (see Xu at [55], [118]-[120] and [131] per Robertson J).

(c)     Although the Court has the power in an appropriate case to go behind a judgment on which a bankruptcy notice is based, the Court does not have the power to set aside the judgment itself and it is also important to bear in mind that the Court is not hearing an appeal from the judgment on which a bankruptcy notice is based (Xu at [57]).

(d)     A judgment debt is usually expected to provide the most reliable statement of debt humanly attainable because the ordinary processes of the adversarial system provide a practical guarantee of reliability. That is why there usually is no occasion in a bankruptcy proceeding to investigate whether the judgment debt is a true reflection of the underlying debt (Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132 (Ramsay) at [68] per Kiefel CJ, Keane and Nettle JJ).

(e)     Ms Dunkerley must establish special circumstances for the Court to go behind the underlying judgment debt (Petrie v Redmond [1943] St R Qd 71 at 75-76 per Latham CJ, with whom Rich and McTiernan JJ agreed and see also Ramsay at [69] per Kiefel CJ, Keane and Nettle JJ). As a matter of practical experience, special circumstances of this nature are usually only when there has been a consent judgment, default judgment or some other circumstance which means the judgment debtor was unable to present his or her case on its merits in the litigation leading to the judgment debt (Ramsay at [70] per Kiefel CJ, Keane and Nettle JJ).

(f)     The Court is reluctant to go behind a judgment once it has been the subject of adjudication by a Court, even if there were problems relating to such matters as the debtor’s representation or some other unusual feature. It is accepted, however, that the Court can inquire into the validity of a judgment where there is evidence that it has, for example, been obtained by fraud, collusion or a miscarriage of justice, but the debtor carries the onus of establishing that the fraud was “directly material to the judgment” (see Kirk v Ashdown [1999] FCA 522) and Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 (Emerson) at 588). There may be other substantial reasons for going behind a judgment debt, however, in the absence of some evidence of fraud, collusion or miscarriage of justice, a court sitting in bankruptcy will rarely have substantial reasons to investigate whether the judgment debt was truly owed (Ramsay at [111] per Edelman J).

(g)     It is insufficient to set aside a bankruptcy notice merely because the debtor establishes that a judgment is irregular because, for example, the pleadings or proof that were offered were inadequate to support the judgment or the judgment is for the wrong amount (see, for example, Re Skaff; Ex parte Farrow Mortgage Services Pty Ltd (1993) 41 FCR 331 per Drummond J and Re Bedford; Ex parte H E Sleigh (Queensland) Pty Ltd (1967) 9 FLR 497 per Gibbs J).

(h)     Absent some good reason for doing so, a Court exercising bankruptcy jurisdiction should avoid embarking on a course which amounts to a re-trial of the issues that have been determined by another Court after a contested hearing. This is, particularly so where that other Court’s determination has been the subject of an appeal because the appeal is the appropriate form in which to review the correctness of the judgment (Emerson at 588).

(i)     A court exercising jurisdiction in a bankruptcy proceeding should not relitigate on the same evidence, a dispute which has already been fully litigated in adversarial proceedings (Doggett v Commonwealth Bank of Australia [2019] FCAFC 19 (Doggett) at [49] per Kerr, Davies and Thawley).

(See also Sayer-Jones v Juju Bean Investments Pty Ltd [2020] FCA 177 at [10]-[11]; Singh v Fobupu Pty Ltd, in the matter of Singh [2020] FCA 886 at [77].)

47    In the present case, there is no suggestion that the orders of the District Court made on 17 February 2021 that Chapel of Angels Pty Ltd pay costs, or the judgments given by Judge Porter QC on 12 November 2018 and 11 December 2018, were obtained by fraud or collusion, or that there was a miscarriage of justice. The claim is simply that the judgments of Judge Porter QC, and the subsequent decisions of the Court of Appeal and the High Court, are wrong and should be ignored. The applicants have had a full trial on the merits. They simply seek to relitigate, on the same evidence, a dispute which has already been fully litigated in adversarial proceedings in the District Court. They have not established any basis for going behind the judgments.

48    I will say something about the s 78B Notices filed by the applicants in the present proceedings. In Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875, in relation to similar notices filed in those proceedings under s 78B of the Judiciary Act, Derrington J held:

35    Here, Mr Ohlson did not, or was unable to, explain how it was that cl 5 or s 118 of the Constitution impacted upon the matters in issue before the Court, save to assert that they had the effect that the judgment debts were invalid insofar as the decisions of the District Court involved what he asserted to be a misapplication of the QBSA Act…

36    As an aside, it can be observed that Mr Ohlson misunderstood the nature of s 118 and the obligation to give “full faith and credit” to the laws of the States. The Constitutional imperative is the recognition in the State and Federal Courts of the laws of other States and Territories, thereby avoiding the necessity for them to be formally proved. It is not the obligation to apply them correctly. That latter duty arises from the obligations of Courts generally.

37    When the circumstances of this case are considered and the authorities which bind this Court are taken into account, it is clear that no question under the Constitution or its interpretation exists…

49    I respectfully agree with the opinions expressed by Derrington J. His Honour also observed at [34] that the mere fact that a party files a notice purporting to raise a matter under the Constitution does not require the Court to bring a halt to the proceedings in circumstances where the constitutional point is frivolous or vexatious or was raised as an abuse of process. Each of those descriptors is appropriate to the points raised in the s 78B Notices filed in the present proceedings.

50    The applications to set aside the Bankruptcy Notices must be rejected.

Summary

51    The originating applications in proceeding QUD 202 of 2021 and proceeding QUD 203 of 2021 will be dismissed.

52    The respondent in each proceeding seeks payment of their costs on an indemnity basis. A proceeding is an abuse of process if it is foredoomed to fail: Walton v Gardiner (1993) 177 CLR 378 at 393. In my opinion, the applicants’ originating applications had no realistic prospects of success. The abuse of the Court’s process makes it appropriate to order that the applicants pay the respondents’ costs on an indemnity basis.

Associate:    

Dated:    6 October 2021