Federal Court of Australia

Thompson v Hird [2023] FCA 1530

ORDERS

THE COURT ORDERS THAT:

1.    The originating application be dismissed.

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

REASONS FOR JUDGMENT

DOWNES J:

Introduction

1    On 1 July 2020, the applicant was made bankrupt pursuant to s 55(4A) of the Bankruptcy Act 1966 (Cth), upon the Official Receiver accepting the debtor’s petition presented by her on 26 June 2020.

2    On 14 April 2021, the applicant filed an annulment application, which was dismissed on 18 February 2022: Thompson v Lane (Trustee) (No 3) [2022] FCA 128 (Logan J) (J). An appeal from that decision was dismissed on 10 March 2023: Thompson v Lane (Trustee) (2023) 410 ALR 439; [2023] FCAFC 32 (Charlesworth, Downes and Goodman JJ) (FC J). The following appears at [68]–[70] FC J, which I reiterate by way of relevant background:

In 2014, the appellant acquired a unit in a residential complex called Arila Lodge located in Toowong, Queensland, and has resided in that unit since at least 2016. There is a body corporate for a community titles scheme relating to that complex. The body corporate is the second respondent to this appeal.

Between 2016 and 2020, the appellant and body corporate engaged in litigation which related to various claims concerning damage caused by a water leak from the appellant’s unit, windows in the appellant’s unit, unpaid contributions and a dog in the appellant’s unit. The litigation involved proceedings before an adjudicator appointed under the Body Corporate and Community Management Act 1997 (Qld), the Queensland Civil and Administrative Tribunal, the Magistrates Court of Queensland, the District Court of Queensland, the Supreme Court of Queensland and the (then) Federal Circuit Court. This litigation has resulted in numerous costs orders being made in favour of the body corporate, including in fixed sums, which were not paid by the appellant. As a result, the body corporate filed a creditor’s petition.

Before the creditor’s petition came on for hearing, the appellant became bankrupt. The trustee in bankruptcy, Mr Morgan Lane, is the first respondent. Mr Lane was appointed on 1 July 2020.

3    By an interim application and affidavit lodged for filing on 30 May 2023, the applicant sought to set aside the judgment of Logan J, the “perfected Judgment” of the Full Court and “all Judgments and Orders in legal proceedings to which the Body Corporate for Arila Lodge CTS 14237…is a party for the reasons including that the legal actions made by the body corporate, and the instructions provided by the body corporate chairman, are an abuse of process/ fraud on the Court by [sic] and have tainted the Federal Court judgments”.

4    The interim application contained a list of the legal proceedings to which the Body Corporate is a party on page two, which list included judgments and orders made in various proceedings in the Magistrates Court and the Queensland Civil and Administrative Tribunal, as well as the Federal Court proceedings. The interim application contained 62 paragraphs spanning 14 pages, including various facts relating to proceedings other than in the Federal Court, with additional pages purporting to set out sections of “Relevant Legislation”.

5    The interim application and affidavit were rejected for filing by the Registrar, who wrote to the applicant on 31 May 2023 detailing reasons for that refusal, which relevantly included the following statement:

Rule 39.05 of the Rules sets out the basis on which the Court may vary or set aside a judgment or order after it has been entered.

Whilst the Documents make reference to “s.39.05(b) of the Federal Court Rules 2011”, the Documents do not contain sufficient particulars of the fraud claimed which must be exactly given nor do the Documents disclose evidence discovered since the hearing of the matter, such evidence so material that its production at the trial would probably have affected the outcome. …

(Emphasis original.)

6    On 29 June 2023, the applicant filed an originating application seeking judicial review of the Registrar’s decision on the basis that the Registrar erred at law.

7    The applicant was discharged from bankruptcy on 2 July 2023.

8    In the course of this proceeding, including three case management hearings, the applicant also filed interlocutory applications, but none of these were ultimately pressed, including at the hearing on 15 November 2023.

9    The Registrar has filed a submitting notice and, consequently, there is no contradictor.

10    For the following reasons, the originating application will be dismissed.

Consideration

11    A Registrar’s decision under r 2.26 of the Federal Court Rules 2011 (Cth) is amenable to review pursuant to s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act): Nyoni v Murphy (2018) 261 FCR 164; [2018] FCAFC 75 (Barker, Banks-Smith and Colvin JJ) at [32], [41]. Although the applicant did not identify the basis of my jurisdiction to review the Registrar’s decision, I will proceed on the basis that judicial review was sought under s 5 of the ADJR Act.

12    By her submissions, the applicant contended that there was “fraud upon the Court caused by [Mr] Morgan Lane providing false evidence and same being encapsulated in par [37] of the Decision of Logan J”. That paragraph stated:

Ms Thompson’s trustee, Mr Lane, who is qualified to express an opinion on the subject and whose opinion is relevant, has expressed the opinion that Ms Thompson is not solvent. That is because, in his view, the claims of creditors as reflected in proofs of debt received by him exceed the likely recoveries in the administration of Ms Thompson’s bankrupt estate. He disclosed in detail in his evidence the basis for holding this opinion.

13    Mr Lane is a principal of Worrells, and he was appointed trustee of the applicant’s bankrupt estate on 1 July 2020: [70] FC J. By one of her affidavits in this application (but which was not filed with the interim application), the applicant exhibits and relies upon information extracted from the Worrells file to attempt to demonstrate that Mr Lane’s evidence was false.

14    However, the extract from the Worrells file relied upon by the applicant shows that 18 creditors have been recorded, with 13 proofs of debt received by the trustee valued at a total of $1,356,534.00. None of the proofs of debt have been admitted; however, there is a notation which states that: “Proofs of Debt will generally only be ‘admitted’ in preparation for the payment of a dividend”. A further note states that “[t]here is no pending dividend”. The Worrells file also shows that total receipts are $523,528.37, a figure which falls well short of the total proofs of debt.

15    As best as I can understand her submissions, the applicant appears to interpret the information in the Worrells file as meaning that, because no amount has been paid from the bankrupt estate to the Body Corporate pursuant to its proof of debt, this has the consequence that she was in fact never insolvent, the evidence given by Mr Lane was therefore false evidence and the finding by, and decision of, Logan J was thus obtained by fraud. However, having regard to the notations in the file, such an interpretation of these records is misconceived.

16    That is because the information in the Worrells file is consistent with and supports the evidence given by Mr Lane before Logan J (as referred to at [37] J), and fortifies the conclusion reached by Logan J at [84] J (and upheld on appeal: [52], [135] FC J) that the applicant was insolvent, as the claims of the creditors (as reflected in the proofs of debt received by Mr Lane in his role as trustee) exceed the recoveries in the administration of the bankrupt estate.

17    Importantly, the extract from the Worrells file does not provide any support for the applicant’s contention that Mr Lane gave false evidence before Logan J. Further, it does not support the applicant’s complaint in this application that the Registrar erred in law in refusing to accept the interim application and affidavit for filing.

18    The applicant next contends that there is no valid legal basis for Shand Taylor Lawyers, the Body Corporate or Grace Lawyers to be paid the legal costs identified in the “Costs Order made by Registrar Hird”. However, it is not apparent which costs order is being referred to in these submissions, or its relevance to the proposed application to set aside the various orders and judgments referred to in the interim application. While costs orders have been made in favour of the Body Corporate (and these are listed at [60] J), none are specifically identified as being that of Registrar Hird.

19    The premise of the applicant’s contention that there is no valid legal basis for the payment of these legal costs stems from a complaint concerning a lack of evidence of various costs agreements, and a lack of “exhibited evidence” of payments being made. These complaints largely echo complaints made before Logan J (see [65]–[66], [78]–[79] J) and the Full Court (see [60] and [149]–[150] FC J). They therefore do not appear to be entirely new complaints.

20    The applicant’s submissions culminate in an assertion that the making of the unidentified costs order, and “any payment made in reliance upon the Costs Order” is another fraud upon the Court.

21    However, on the assumption that the applicant intends to refer to the costs orders made in the proceedings listed in the interim application (and not to any particular costs order of Registrar Hird), it is not apparent and nor is it explained how this leads to the result that any of the judgments and orders identified in the interim application were obtained by fraud, or (more importantly) how any of this has the consequence that the decision of the Registrar was an error of law.

22    Rather, this contention appears to be an ill-disguised attempt to reagitate the complaint made to the Full Court that Logan J ought to have gone behind the costs orders at [60] J, which complaint was addressed and rejected: [149]–[150] FC J.

23    By her submissions, the applicant then turns to the basis upon which she says that the Registrar erred in law. Each of her complaints will be addressed seriatim.

24    The applicant complains that the Registrar was wrong to say, as was done in the letter of 31 May 2023, that the documents sought to be filed did not contain sufficient particulars of the fraud claimed because the Registrar did not identify how the 62 paragraphs in the interim application and the 127 pages of exhibits to the affidavit sought to be filed did not contain sufficient particulars. In other words, the applicant appears to complain that the Registrar should have gone further than was done to explain why the material was inadequate. However, it is not the role of a Registrar of this Court to give legal advice, and the extent of the reasons given (when read as a whole) was more than adequate to explain the reasons for the rejection of the documents sought to be filed.

25    In any event, the Registrar was correct in her conclusion. The interim application is replete with assertions that actions were done “fraudulently” and bald assertions about the state of mind of the Body Corporate, but without clearly identifying the specific facts, with particulars, on which the applicant relies to make these serious allegations.

26    The applicant complains that the Registrar erred because there is no “rule” that requires “all information” to be included in the application. However, the Registrar did not reject the documents on this basis. Further, there must be at least some information in any application to enable a respondent to understand the case which it must meet, particularly where allegations of actual fraud are being made (as here).

27    The applicant complains that the Registrar erred in imposing a “requirement” that the documents “disclose evidence discovered since the hearing of the matter, such evidence so material that its production at the trial would probably have affected the outcome”. However, this submission mischaracterises the Registrar’s reasons. The Registrar did not require that the documents disclose fresh evidence sufficiently material to have affected the outcome of the impugned decisions. Rather, it was one factor to which the Registrar had regard in her reasons for rejecting the application for filing.

28    It was not an error of law for the Registrar to have regard to this factor: see, for example, Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (No 2) (1992) 37 FCR 234 (Spender, Gummow and Lee JJ) at page 241; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 (Kirby P, with whom Hope and Samuels JJA agreed) at pages 538–539, which was later approved in Spalla v St George Motor Finance (No 5) [2004] FCA 1262 (French J) at [60]; Storry v Parkyn [2023] FCA 1141 (Rangiah J) at [13]. In Tov-Lev v Lowbeer (No 2) [2014] FCA 379 at [74], Rares J stated:

…A party who seeks to establish that a judgment ought to be set aside due to fraud, ordinarily, must establish that the claim is based on newly discovered facts, that the facts are material and such as to make it reasonably probable that the claim will succeed and go beyond mere allegations of perjury on the part of witnesses at a trial, that the opposing party took advantage of the judgment and that party is shown by admissible evidence to have been responsible for the fraud in such a way as to render it inequitable that such a party should take the benefit of the judgment: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538D–539G per Kirby P, with whom Hope and Samuels JJA agreed.

(Emphasis added.)

29    Further, the Registrar’s consideration of the timing and materiality of any evidence of fraud accords with the law as it relates to setting aside or varying judgments under r 39.05 of the Rules: see, for example, Storry v Weir (No 2) [2022] FCA 1360 (Thomas J) at [14]–[18] citing Spalla at [60]; Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako (No 6) [2018] FCA 577 (Charlesworth J) at [22]–[23].

30    The matters identified above are sufficient to justify the dismissal of the originating application. However, on the assumption that the Registrar did make an error of law, I will proceed to consider whether I would have granted the relief sought in the originating application in any event.

31    In my view, the interim application sought to be filed by the applicant has no reasonable prospect of success for two reasons.

32    First, by the interim application, the applicant seeks orders that this Court set aside judgments and orders of other courts and tribunals which the applicant asserts were obtained by fraud. However, the Federal Court does not have the power to make such orders.

33    Second, even if the applicant could plead and prove that the finding of insolvency by Logan J (which finding was upheld by the Full Court) was obtained by fraud, there is no real possibility that the judgments and orders of Logan J and the Full Court would be set aside: see, generally, Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ) at page 143.

34    That is because it would not overcome the finding by the Full Court that the discretion in s 153B of the Bankruptcy Act had not been enlivened because the preconditions for an annulment order had not been shown to exist: [53]–[54], [96]–[98] and [226] FC J. That conclusion was based upon the findings of Logan J at [33]–[34] J, which the applicant did not challenge on her appeal to the Full Court.

35    Further, it would not overcome the separate finding by Logan J at [86] J (which finding was upheld by the Full Court per Downes and Goodman JJ at [75], [99]–[125] and [229] FC J) that the discretion ought not be exercised because of the applicant’s failure to comply with s 77 of the Bankruptcy Act.

36    A proceeding that has no reasonable prospect of success is an abuse of process: Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 (Mason CJ, Deane and Dawson JJ) at page 393.

37    It follows from this that the interim application and affidavit would be an abuse of the process of the Court if they had been accepted for filing.

38    For that reason, even if I had been satisfied that the Registrar had erred (which I am not), I would have declined to make the order sought by the applicant that the documents be accepted for filing in the exercise of my discretion as to whether to grant relief under the ADJR Act: see Kamha v Australian Prudential Regulation Authority (2005) 147 FCR 516; [2005] FCAFC 248 (Emmett, Allsop and Graham JJ) at [87].

Disposition

39    The originating application should be dismissed.

Associate:

Dated:    6 December 2023