Rafidi v Commonwealth Bank of Australia

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judge: BURLEY J
• Judgment Date: 03 May 2019
• Neutral Citation: [2019] FCA 620
• Date: 03 May 2019

FEDERAL COURT OF AUSTRALIA

Rafidi v Commonwealth Bank of Australia [2019] FCA 620

File number:	NSD 374 of 2017
Judge:	BURLEY J
Date of judgment:	3 May 2019
Catchwords:	BANKRUPTCY – application to set aside bankruptcy notice – general powers of Court pursuant to s 30(1) of the Bankruptcy Act 1966 (Cth) – where final judgment entered into by consent – where consent said to be vitiated due to the final judgment being improperly obtained – where duress/undue influence/unconscionable conduct alleged – where final judgment alleged to not be “attached” to bankruptcy notice – application dismissed
Legislation:	Australian Securities and Investments Commission Act 2001 (Cth) s 12DA Bankruptcy Act 1966 (Cth) s 30, 41, 52 Bankruptcy Regulations 1996 (Cth) reg 4.02
Cases cited:	Ahern v Deputy Commissioner of Taxation (Qld) [1987] FCA 504; 76 ALR 137 Chancliff Holdings Pty Ltd v Bell [1999] FCA 1708 Commonwealth Bank of Australia v Rafidi [2016] NSWSC 1931 Commonwealth Bank of Australia v Rafidi [2016] NSWSC 381 Corney v Brien [1951] HCA 31; 84 CLR 343 Curtis v Singtel Optus Pty Ltd [2014] FCAFC 144; 225 FCR 458 Harrison v Charalambous [1999] FCA 902 Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; 204 ALR 327 Katter v Melhem (No 2) [2014] FCA 1176; 319 ALR 646 Olivieri v Stafford [1989] FCA 731; 24 FCR 413 Rafidi v Commonwealth Bank of Australia [2017] NSWCA 96 Rafidi v Commonwealth Bank of Australia [2018] FCA 1005 Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 345 ALR 534 Re Briggs; Ex Parte Briggs v Deputy Commission of Taxation (WA) [1986] FCA 512; 12 FCR 310 Re Halstead; Ex parte Westpac Banking Corporation [1991] FCA 788; 31 FCR 337 Smith v Abbott, Stillman & Wilson [2007] FCA 1256 Wren v Mahoney [1972] HCA 5; 126 CLR 212 Xu v Wan Ze Property Development (Aust) Pty Ltd (in liquidation) [2014] FCA 461
Date of hearing:	28 September 2018
Date of last submissions:	5 October 2018
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Category:	Catchwords
Number of paragraphs:	62
Solicitor for the Applicant:	Mr T. Hall of Hall Partners
Counsel for the Respondent:	Ms E. Holmes with Mr J. Foley
Solicitor for the Respondent:	Dentons Australia

ORDERS

		NSD 374 of 2017
BETWEEN:	IYAD RAFIDI Applicant
AND:	COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 Respondent

JUDGE:	BURLEY J
DATE OF ORDER:	3 May 2019

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The Respondent to file and serve any application for a special costs order, accompanied by any affidavit evidence and written submissions of no more than 5 pages in length, by 17 May 2019.

3. The Applicant to file and serve any affidavit evidence in response, and written submissions of no more than 5 pages in length, by 31 May 2019.

4. The Respondent to file and serve any affidavit evidence in reply, and written submissions of no more than 3 pages in length, by 7 June 2019.

5. The parties are to indicate in their written submissions whether or not they desire to attend a hearing, failing which the application will be determined on the papers.

6. If no application for a special costs order is made by 17 May 2019, the Applicant is to pay the Respondent’s costs.

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

REASONS FOR JUDGMENT

BURLEY J:

1. INTRODUCTION

1. By originating application filed on 16 March 2017, the Applicant Iyad Rafidi seeks declarations and orders setting aside Bankruptcy Notice 212149, issued to him pursuant to s 41 of the Bankruptcy Act 1966 (Cth) by the Respondent, Commonwealth Bank of Australia (CBA). The Bankruptcy Notice identified a total debt of $9,331,605.09. This arises from a judgment order entered by the consent of the parties on 4 November 2016, in proceedings conducted in the Supreme Court of New South Wales involving Mr Rafidi, Brick and Block Company Pty Ltd (BBC), and the CBA (Supreme Court Proceedings). Mr Rafidi was a director and shareholder of BBC.

2. The application, when understood in the context of the affidavit evidence filed accompanying it, raises two grounds upon which it is said that the Bankruptcy Notice should be set aside. I reviewed each in the course of giving judgment in relation to several interlocutory applications filed by the parties in Rafidi v Commonwealth Bank of Australia [2018] FCA 1005 (interlocutory judgment). These reasons should be read in conjunction with the interlocutory judgment, and adopt the definitions used in it. The first ground was defined in the interlocutory judgment at [50] as the “vitiated consent allegations”. The second is a technical argument going to the validity of the Bankruptcy Notice, as set out in paragraph 1 of the application. The ultimate order sought is that the Bankruptcy Notice be set aside pursuant to s 30 of the Act.

3. In the interlocutory judgment, I said at [103] that Mr Rafidi may rely on the parts of the affidavits sworn by him on 16 March 2017, and 17 July 2017, that address the vitiated consent allegations, and that he may also rely on the technical argument. There is no dispute between the parties as to the identity of the particular paragraphs now relied upon by Mr Rafidi, and it is not necessary to identify them here. In answer, the CBA relies on the whole of each of the affidavits sworn by Mr Bates, a solicitor acting for the CBA, on 7 April 2017 and 11 July 2017. There was no cross-examination of either witness and the parties filed written submissions. The parties agreed that the application would be determined on the papers.

4. In his final submissions, Mr Rafidi seeks leave to rely on an additional affidavit, sworn by Mr Norrie, a solicitor employed by the firm acting for Mr Rafidi, on 27 September 2018. The affidavit attaches 4 documents, which are identified at [54] to [55] below. The CBA opposes the grant of leave, arguing that on a number of occasions prior to the filing of Mr Norrie’s affidavit, Mr Rafidi has made clear that he had filed the totality of his evidence. It also submits that Mr Norrie’s affidavit and accompanying annexures are irrelevant.

5. For the reasons set out below, I have concluded that the application must be dismissed and Mr Rafidi must pay the costs of the proceedings. The CBA contends that it is entitled to a special costs orders, so I have made directions for the service of evidence and submissions relevant to any such application the CBA seeks to make in that regard.

2. THE RELEVANT LAW

6. Section 30(1) of the Act provides:

30 General powers of Courts in bankruptcy

(1) The Court:

(a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and

(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or...