Karlsson v Griffith University, in the matter of Karlsson [2024] FCA 205

Federal Court of Australia

Karlsson v Griffith University, in the matter of Karlsson [2024] FCA 205 File number: NSD 1079 of 2023

Judgment of: YATES J

Date of judgment: 8 March 2024

Catchwords: BANKRUPTCY AND INSOLVENCY – application for review of a decision of a Registrar – application to set aside a bankruptcy notice

Legislation: Bankruptcy Act 1966 (Cth) ss 40(1)(g), 41(7) Federal Court of Australia Act 1976 (Cth) s 35A(5) Trade Marks Act 1995 (Cth) s 44(3)(b Federal Court (Bankruptcy) Rules 2016 (Cth) rr 2.02(3), 7.05(1) Federal Court Rules 2011 (Cth) r 16.32

Cases cited: Callegher v Australian Securities and Investments Commission [2007] FCA 482; 239 ALR 749 Karlsson v Griffith University [2019] NSWSC 1335 Karlsson v Griffith University [2020] NSWSC 365 Karlsson v Griffith University [2020] NSWCA 176; 103 NSWLR 131 Karlsson v Griffith University [2022] FCA 591 Karlsson v Griffith University [2022] FCA 997 Karlsson v Griffith University [2021] HCASL 1 Zakrzewski, in the matter of Zakrzewski v Rodgers [2000] FCA 1187; 178 ALR 694

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: General and Personal Insolvency

Number of paragraphs: 53

Date of hearing: 1 March 2024

Counsel for the Applicant: Applicant was self-represented

Counsel for the Respondent: Ms E Hall

Solicitor for the Respondent: Bartley Cohen

ORDERS NSD 1079 of 2023 IN THE MATTER OF ANNIKA KARLSSON BETWEEN: ANNIKA KARLSSON Applicant

AND: GRIFFITH UNIVERSITY Respondent

order made by: YATES J DATE OF ORDER: 8 MARCH 2024

THE COURT ORDERS THAT:

1. The orders made on 7 November 2023 and 29 November 2023 be confirmed. 2. The applicant's application dated 27 November 2023 be dismissed. 3. The applicant pay the respondent's costs of the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

Introduction 1 On 7 November 2023, a Registrar of the Court dismissed the applicant's application to set aside a bankruptcy notice that has been issued on the application of the respondent. The debt claimed in the bankruptcy notice is based on costs orders that the respondent has obtained in various proceedings to which I will refer. The amount of the debt (which includes interest) is $122,910.04. 2 The Registrar also awarded costs against the applicant, assessed in the amount of $8,004.25: Order 1 made on 29 November 2023. 3 The applicant seeks a review of the Registrar's exercise of power. In the present case, such a review is properly brought under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) based on r 2.02(3) of the Federal Court (Bankruptcy) Rules 2016 (Cth) (the Bankruptcy Rules). Erroneously, the applicant has relied on r 7.05(1) of the Bankruptcy Rules pertaining to the review of a decision by a Registrar to make a sequestration order. No point has been taken by the respondent about this, and I will treat the applicant's application as proceeding under r 2.02(3). 4 The applicant seeks to set aside the bankruptcy notice because she claims to have a "counter-claim, set-off or cross demand" of the kind referred to in s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), which provides that a debtor commits an act of bankruptcy: (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia--within the time fixed for compliance with the notice; or (ii) where the notice was served elsewhere--within the time specified by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she 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 or she could not have set up in the action or proceeding in which the judgment or order was obtained; 5 It is established that the Court has power to set aside a bankruptcy notice if it is satisfied that the debtor has such a counter-claim, set-off or cross demand: Zakrzewski, in the matter of Zakrzewski v Rodgers [2000] FCA 1187; 178 ALR 694. The power is implied from s 41(7) and other provisions of the Bankruptcy Act. 6 As best as I can understand her application, the applicant also seeks to: (a) obtain judgment against the respondent for the sum of $4,515,160.46; (b) set aside various costs orders made against her (on which the bankruptcy notice is based); (c) challenge the Registrar's assessment of costs in the sum of $8,004.25; and (d) obtain other, ancillary relief. 7 The principles on which the Court proceeds in a review under s 35A(5) were summarised by Lander J in Callegher v Australian Securities and Investments Commission [2007] FCA 482; 239 ALR 749 at [46]: 46 The hearing before me is a hearing de novo: Mazukov v University of Tasmania [2004] FCAFC 159; Pattison v Hadjimouratis (2006) 155 FCR 226. The right to review arises because the Registrar has exercised the judicial power of the Commonwealth and, as such, is subject to the supervision of the Court. The Registrar's orders are reviewable by hearing de novo: Harris v Caladine (1991) 172 CLR 84 per Dawson J at 124. A hearing de novo contemplates a complete rehearing. The moving party before the Registrar has the responsibility of satisfying the Court that the orders should have been made. The parties may adduce further evidence before the Court and the rehearing is determined on the evidence put before the Court which may include the evidence put before the Registrar. The judge determines the rehearing without being fettered by the decision of the Registrar: Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187. ... 8 The applicant is not legally represented. Her command of English is poor. She appeared at the hearing with the assistance of an English/Thai interpreter.

Background 9 The counter-claim, set-off or cross-demand on which the applicant relies is, in fact, a claim she unsuccessfully brought against the respondent in the Supreme Court of New South Wales, and then in this Court, which led to the costs orders being made against her. 10 To explain, the applicant owns a registered trade mark (Trade Mark No. 1638546) comprising the words "Know More. Do More." in respect of certain services in class 41. The applicant obtained her registration on the basis of s 44(3)(b) of the Trade Marks Act 1995 (Cth). The respondent had its own prior registration of that mark for certain services in class 41. It consented to the applicant obtaining her own registration. The respondent subsequently applied for the cancellation of its own registration. The respondent's registration was cancelled with effect on 20 August 2018. 11 The applicant commenced a proceeding in the Supreme Court of New South Wales seeking damages from the respondent for, amongst other causes of action, infringement of her registered mark. However, on 1 October 2019 the applicant's statement of claim was struck out on the application of the respondent, and the applicant was ordered to pay the respondent's costs of the strike-out application: Karlsson v Griffith University [2019] NSWSC 1335. 12 The applicant was given the opportunity to propose an amended statement of claim but, when she did so, the respondent objected to it. The applicant then filed a notice of motion seeking various forms of final relief against the respondent. The respondent filed a notice of motion seeking, amongst other relief, an order that the proceeding be dismissed. Leave was subsequently granted to the applicant to amend her notice of motion to seek an order that she be granted leave to file her proposed amended statement of claim. 13 On 14 February 2020, the Supreme Court heard the two notices of motion. On 7 April 2020, the Supreme Court refused leave to file the proposed amended statement of claim, summarily dismissed the proceeding the applicant had brought, and ordered that the applicant pay the respondent's costs of and incidental to the proceeding as a whole, in addition to the costs she had already been ordered to pay: Karlsson v Griffith University [2020] NSWSC 365. The Supreme Court found that the applicant had no reasonable prospects of successfully prosecuting the causes of action on which she relied, that the proceeding was therefore frivolous, and that, in the particular circumstances of the case, the proceeding was also vexatious. 14 The applicant applied to the Court of Appeal for leave to appeal from the two decisions. The applicant's application was dismissed by the Court of Appeal for want of jurisdiction: Karlsson v Griffith University [2020] NSWCA 176; 103 NSWLR 131. The applicant later applied to the High Court for special leave to appeal. Her application was refused: Karlsson v Griffith University [2021] HCASL 12. 15 On 28 March 2021, the costs orders made in the Supreme Court on 1 October 2019 and 7 April 2020 were assessed in the amount of $60,323.75 (Assessment No. 2021/16743) and a costs certificate was issued. Costs in relation to the remuneration of the costs assessor were assessed in the amount of $3,229.05 and a certificate for this amount was also issued. On 16 April 2021, the Local Court of New South Wales issued a judgment for $63,552.80 based on the assessed costs. These costs have not been paid. 16 Subsequently, the applicant commenced a proceeding in this Court seeking damages against the respondent for $5,341,737.50 for the same alleged wrongs that were the subject of the Supreme Court action. The respondent, through its solicitors, wrote to the applicant inviting her to discontinue the proceeding or, if not, to file and serve an amended statement of claim to remedy the apparent defects in her pleading. The respondent informed the applicant that if she did not discontinue her proceeding or did not amend her statement of claim to remedy its defects, it would file an application for summary dismissal or strike out. 17 In response, the applicant filed an interlocutory application seeking judgment for the entire amount of her claim. The respondent then filed an interlocutory application for summary dismissal or, in the alternative, an order that the applicant's originating application and statement of claim be struck out. The respondent also sought an order that it be excused from filing a defence until further order of the Court. 18 The applicant filed a second interlocutory application seeking default judgment against the respondent because it had not filed a defence in accordance with the time limit imposed by r 16.32 of the Federal Court Rules 2011 (Cth). The second interlocutory application also sought orders in respect of the costs incurred in the Supreme Court. The parties treated the applicant's second interlocutory application as superseding her first interlocutory application. 19 When the interlocutory applications were heard, the Court accepted the respondent's principal argument that the proceeding should be dismissed as an abuse of process because it was no more than an attempt to re-litigate the Supreme Court action. The Court also expressed its satisfaction that each of the causes of action on which the applicant relied had no reasonable prospects of success. 20 Further, the Court found that the applicant's second interlocutory application for default judgment was misconceived; the Court had made an order that the respondent be excused from filing a defence until further order, and the Court did not have jurisdiction to interfere with the costs orders that had been made in the Supreme Court proceeding. 21 On 24 May 2022, the Court dismissed the applicant's second interlocutory application, gave judgment in favour of the respondent by dismissing the proceeding, and ordered that the applicant pay the respondent's costs: Karlsson v Griffith University [2022] FCA 591. 22 The applicant sought leave to appeal from this judgment. On that application, the Court found that the applicant was unable to articulate any arguable or coherent allegation of error in the primary judge's reasons. The Court also found that the application for leave to appeal, like the principal proceeding, was an abuse of the Court's process. On 15 August 2022, the applicant's application for leave to appeal was dismissed, with costs: Karlsson v Griffith University [2022] FCA 997. 23 On 2 May 2023, a certificate of taxation, for costs in the sum of $31,207.00, was issued with respect to the costs order made on 24 May 2022. On the same day, a certificate of taxation, for costs in the sum of $16,101.00, was issued with respect to the costs order made on 15 August 2022.

The evidence 24 The applicant relies on five affidavits she has made. Generally speaking, the affidavits are difficult to comprehend because of their poor form and poor expression. Parts of them are, in fact, incomprehensible. 25 The applicant's first affidavit (sworn 26 September 2023) asserts: (a) that the amount claimed in the bankruptcy notice is overstated; (b) that the bankruptcy notice has not been completed correctly or in its entirety; and (c) that the applicant does not owe the debt alleged in the bankruptcy notice. None of these matters is explained or substantiated. 26 The affidavit then asserts that the applicant has a cross-claim, set off or cross demand of the kind referred to in s 40(1)(g) of the Bankruptcy Act. The applicant appears to contend that she has claims: (a) for an account of profits; (b) for "lost opportunities for making of income"; (c) for "lost time in proceeding registration" of Trade Mark No. 1638546; (d) for "(l)iability of lawyer to their client for misconduct"; and (d) for "(t)ax invoice under section 100 of Competition and Consumer Act 2010 from external marketing agencies". None of these matters is explained or substantiated. 27 The applicant then asserts that the respondent's business has been enriched by an increase in income of $2,285 million and provides a calculation to yield the sum of $4,540,630.50. From this sum she then deducts the amount of $122,910.04 (the total amount of the debt claimed in the bankruptcy notice) and claims that the respondent "only has to pay total amount payable $4,417,720.46". The affidavit does not explain how the respondent's business has been enriched or establish any causal connection between the alleged enrichment and any cause of action the applicant claims to have. The calculation is not explained beyond the following nonsensical statement: Applicant prevision per month service of 15 Students and claim for 70 months / multiply 15 Students then multiply currency Australian dollar as above "AK-6" number 27) $4324.41 = total amount $4,540,630.50. 28 The affidavit annexes a large number of documents: (a) the bankruptcy notice; (b) various reasons for judgment and orders; (c) correspondence with the respondent's solicitors, the Court's New South Wales District Registry, and other solicitors in relation to the bankruptcy notice; (d) the applicant's submissions to the New South Wales Court of Appeal; (e) correspondence and other documents in relation to the applicant's application for the trade mark; (f) the respondent's annual report for 2022; (g) the certificate of registration of the applicant's trade mark; (h) the applicant's business plan; (i) a medical certificate; and (j) sundry other documents. 29 The applicant's second affidavit (affirmed 2 November 2023) asserts: (a) that the bankruptcy notice is "incorrect in its entirety"; (b) that no appeal book was required to be filed in respect of the applicant's leave to appeal in this Court but that the respondent nevertheless filed an appeal book; (c) that the respondent's revenue has increased from $217 million, to $968 million, and then to $2,285 million, allegedly because of the respondent's asserted infringing use of the applicant's trade mark; and (d) makes some reference to her husband's "health treatment" (it seems in the context of obtaining a hearing date for her application to set aside the bankruptcy notice). 30 The applicant's third affidavit (sworn 15 November 2023), says: (a) something about the dismissal by the Court of Appeal of her application for leave to appeal and the power to award costs (although it is not clear what the applicant is saying); (b) appears to dispute the bills of costs in respect of the proceeding for damages in this Court, and the application for leave to appeal, because they include items for travelling expenses; and (c) contains a response to the costs sought by the respondent in respect of the applicant's unsuccessful application to set aside the bankruptcy notice. 31 The applicant's fourth affidavit (sworn 27 November 2023) makes various assertions under the heading: "That the debt listed on the Bankruptcy notice was incorrect". One of the assertions is that the respondent used the trade mark "Know more. Do More" after the applicant obtained her registration. The affidavit annexes some documents in which the respondent has used the words "Know More. Do More.", but these documents appear to be dated in the period when the respondent held its own registration for the mark. The respondent's use appears to have been within the scope of its own registered services. 32 The applicant's fifth affidavit (sworn 28 November 2023) seems to do no more than refer to her affidavit of 15 November 2023, without further meaningful elaboration. 33 The respondent relies on two affidavits of Brooke Elise Allcock (sworn 20 October 2023 and 10 November 2023).

The applicant's submissions 34 The applicant addressed me on a variety of matters. Her submissions were not always coherent. None of them squarely addressed the principal basis on which she seeks to set aside the bankruptcy notice—namely, the existence of a "counter-claim, set-off or cross demand" of the kind referred to in s 40(1)(g) of the Bankruptcy Act that exceeds the amount of the debt in the bankruptcy notice. 35 The first matter raised by the applicant is the assessment of the costs that has been awarded against her by the Registrar. The applicant's submission is that, in arriving at the assessment, the Registrar had not taken into account a submission that the applicant made in respect of those costs. 36 I reject that contention. The applicant's submission on costs is recorded in Annexure "AK-1" of her affidavit of 15 November 2023 (see above) under the heading "Response" (the applicant's response). The Registrar's order of 29 November 2023 (which recorded the Registrar's assessment of the amount of the costs) specifically refers to the applicant's affidavit. The order records that the Registrar did not consider that the applicant's affidavit raised any substantive objection to the costs being sought. 37 The Registrar's assessment of costs is supported by Ms Allcock's affidavit sworn on 10 November 2023. Having looked at the applicant's response to the amount of costs claimed by the respondent, I agree with the Registrar's conclusion. The applicant's response does not raise any objection of substance. 38 The second matter raised by the applicant is an argument to the effect that, because the proceeding for damages in this Court was found to be an abuse of process, the costs awarded against her in respect of that proceeding, and in respect of her application for leave to appeal, could not be debts on which a bankruptcy notice can be issued. When I asked the applicant to explain this argument, she said: Because I have read on the internet with a bankruptcy notice – like, if it is an abuse of process, it will be a problem and it cannot be claimed. 39 She also said: Yes, it's about the abuse of process. I have read on the internet what the – what law firms have written online. As to costs, cannot be claimed on a bankruptcy notice. 40 I reject the applicant's contention. It is possible that she has confused the findings in this Court (that her proceeding for damages was an abuse of process) with statements about when the issue of a bankruptcy notice might be an abuse of process. For the avoidance of doubt, I record that there is nothing before me to suggest that the issue of the bankruptcy notice, with which the present application is concerned, is an abuse of process. 41 The third matter raised by the applicant is the assertion that the respondent had stolen her trade mark. There is no evidence to support that assertion. 42 The applicant allied this assertion with another assertion—that the respondent is and was using her registered trade mark. As I have already noted, the documents in evidence that show the respondent's use of the words "Know More. Do More." appear to be dated in the period when the respondent held its own registration for the mark. Further, the respondent's use in those documents appears to have been use within the scope of that registration. I am not satisfied that the evidence on which the applicant relies shows infringement by the respondent of the applicant's registered mark. 43 The fourth matter raised by the applicant is a complaint that the respondent has not provided her with documents to substantiate its claim that its former registered mark "Know More. Do More." was developed by the respondent with external marketing agencies. This contention does not advance the applicant's application to set aside the bankruptcy notice. 44 The fifth matter raised by the applicant is a complaint that, in the proceeding in this Court for damages, the respondent failed to comply with a procedural order made on 11 February 2022 to file and serve submissions in reply by 1 April 2022. If that contention be correct, it does not advance the applicant's application to set aside the bankruptcy notice. 45 The sixth matter raised by the applicant is that, in her application for leave to appeal in this Court, the costs awarded against her should not have included the costs of the respondent filing an appeal book. No jurisdiction has been invoked to review the assessment of costs that has been made in respect of the applicant's unsuccessful application for leave to appeal. 46 The seventh matter raised by the applicant is a complaint about the fairness of the judgment summarily dismissing her proceeding for damages in this Court. The basis for this submission appears to be the applicant's disagreement with certain findings of fact recorded in the reasons for judgment. This complaint does not advance the applicant's application to set aside the bankruptcy notice. 47 The eighth matter raised by the applicant is a disagreement with certain findings of fact in the reasons for judgment given in respect of the application for leave to appeal in this Court. Once again, this complaint does not advance the applicant's application to set aside the bankruptcy notice. 48 The ninth matter raised by the applicant is a general contention that the bankruptcy notice is defective and that everything in it is "not correct".

Consideration 49 The "counter-claim, set-off or cross demand" that the applicant asserts is not a "counter-claim, set-off or cross demand" of the kind referred to in s 40(1)(g) of the Bankruptcy Act (i.e., one that could not have been set up in the proceedings in which the costs orders were obtained). In any event, I am not satisfied that, on the evidence before me, the applicant has any viable claim against the respondent, let alone a claim that would sound in pecuniary relief for $4,515,160.46. 50 Further, I am not satisfied that the bankruptcy notice is defective. 51 The applicant's present application is misconceived insofar as it seeks: (a) final judgment against the respondent for $4,515,160.46; and (b) orders setting aside the costs orders on which the debt in the bankruptcy notice is based. Nothing more need be said on that score. 52 The amount of the costs of the proceeding before the Registrar is supported by Ms Allcock's affidavit sworn on 10 November 2023. Those costs are fair and reasonable. As I have noted, the applicant's response to the amount of costs sought by the respondent does not raise any argument of substance.

Disposition 53 In light of these findings, the application for review will be dismissed, with costs. The orders made by the Registrar on 7 November 2023 and 29 November 2023 will be confirmed. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.

Associate: Dated: 8 March 2024