ANOTHER LEGAL INJUSTICE SIMILAR TO DAWN'S

Bashed by the cops and out of pocket by $150,000

Gary Tippet

September 24, 2006

Corinna Horvath's jaw and nose were broken so badly she spent five days in hospital.

When the police crashed through her door one night in 1996, they left Corinna Horvath senseless and with a horribly shattered nose. In a lasting piece of collateral damage, the lawyer who took on — and won — her case was left with a bill of nearly $500,000, a contempt of court charge and a possible jail sentence.

In what may have been a rush of blood during a successful 38-day trial, solicitor Mark Morgan agreed to underwrite Ms Horvath's case in which she was awarded $150,000 damages for assault. But more than a decade after she was bashed, Ms Horvath is yet to receive a cent of that money. Mr Morgan is to front another court after failing to pay $436,877 in legal costs.

More...

COURT DOCUMENTS SEPT-OCT 2007

Dawn has asked that these Court documents be made available to interested friends. Watch this space: I'll post some time a short introduction explaining each of them:

IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
REGISTRY: ADELAIDE ADG 95 of 2007
IN THE MATTER OF: DAWN MARGARET ROWAN
THE COMMONWEALTH OF AUSTRALIA
APPLICANT
DAWN MARGARET ROWAN RESPONDENT
ORDER
REGISTRAR: P CHRISTIE
DATE OF ORDER: 28 SEPTEMBER 2007
WHERE MADE: ADELAIDE
THE COURT ORDERS THAT:
1. A sequestration order be made against the estate of Dawn Margaret Rowan.
2. The applicant creditor's costs, including any reserved costs, be taxed pursuant to the Federal Court Rules and paid from the estate of the respondent in accordance with the Bankruptcy Act 1966.
The Court notes that the date of the act of bankruptcy is 18 October 2006.
Date entry stamped: 28 SEPTEMBER 2007

Note:
Subsection 104 (2) of the Federal Magistrates Court Act 1999 provides that a party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection 102 (2), or under a delegation under subsection 103 (1), of the Act may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power.
Rule 2.03 provides that, subject to any direction by the Court or a Federal Magistrate to the contrary, an application under subsection 104 (2) of the Act for review of the exercise of a power of the Court by a Registrar under subsection 102 (2), or under a delegation under subsection 103 (1), of the Act must be made by application for review within 21 days after the day on which the power was exercised. An applicant seeking a review can apply to a Federal Magistrate to waive the requirement that the application for review under subsection 104 (2) of the Act be made by application for review (see subrule 1.06 (1) of the Federal Magistrates Court Rules 2001).
Prepared in the Adelaide District Registry, Federal Magistrates Court of Australia, Level 5, Commonwealth Law Courts, 3 Angas Street, ADELAIDE SA 5000, Telephone (08) 8219 1000

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FEDERAL MAGISTRATES COURT OF AUSTRALIA
AT ADELAIDE ADG 95 OF 2007
IN THE MATTER OF: DAWN MARGARET ROWAN
BETWEEN: COMMONWEALTH OF AUSTRALIA
APPLICANT
AND: DAWN MARGARET ROWAN
RESPONDENT
REGISTRAR: P CHRISTIE
DATE: 28 SEPTEMBER 2007
PLACE: ADELAIDE
REASONS FOR DECISION
1 A creditor's petition was filed in this matter on 18 April 2007. The creditor's petition
is stated to be founded upon an act of bankruptcy committed by failure to comply with a
bankruptcy notice deemed to have been served on the respondent on 27 September 2006.
The bankruptcy notice claims an amount of $380,000, being costs fixed by the Full Court of
the Supreme Court of South Australia in Action No. 1481 of 1990 ('the Supreme Court
matter') on 13 April 2006. The debt is admitted by the respondent.
2 However on 22 May 2007 the respondent filed a notice setting out two grounds of
opposition to the petition. The first was that she is solvent, and has the capacity to pay the
amount claimed by the applicant. The second was that the applicant has failed to use
appropriate alternate means of recovering the alleged debt from the respondent, such as
judgment debt recovery mechanisms under State law.
3 At the first listing of the matter the respondent made an oral application for transfer of
the proceedings to the Melbourne registry as a result of what she stated to be her impecunious
circumstances and hardship in having to travel to Adelaide arising from those circumstances
and poor health. The petitioning creditor had not had notice of the application and as a result
had no instructions in relation to it. So as not to delay the hearing of the matter unduly, the

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parties agreed to the making of orders for the filing of material in preparation for the hearing of the matter and in relation to the transfer, with a view to the substantive matter being heard on the next occasion, or if it could not, then the issue of transfer being re-agitated at that time. The respondent was advised that a subsequent hearing could be by way of video conference but indicated she would prefer to appear in person.
4 The transfer application was not pursued on the subsequent hearing of the matter, at which time the substantive matter was dealt with, although leave was given for the filing of written submissions by the respondent on or before 14 September 2007. No submissions were filed pursuant to that leave, although on 19 September 2007 the Court received certain documents, other copies of which appear to have been sent to various parties/people involved in the Supreme Court matter. To a large degree the documents appear to reiterate statements made by the respondent at the time of the hearing of this matter regarding her desire to have the proceedings stayed to allow her to enter into private negotiations with the petitioning creditor and other parties, with a view to making "any party who believes they have been damaged in any way whatsoever, commercially whole again and in the right way ". Those statements were taken to be a request for adjournment of the hearing and were dealt with at that time. The documents received by the Court were marked "Strictly Private and Confidential Not for Public Filing" and addressed to me as a "courtesy copy" only. These clearly were not intended to be filed as submissions and were not treated as such. I do not propose to consider them further in these reasons.
5 I turn therefore to the substantive matter, that is, whether or not a sequestration order should be made. A consideration of that issue is governed by s 52 of the Bankruptcy Act 1966 ("the Act").
RELEVANT PROVISIONS
6 Subsection 52(1) of the Act sets out the matters which must be proved before a sequestration order can be made. It provides as follows:
"(1) At the hearing of a creditor's petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of 'the petition; and

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(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
7 However, s 52(2) of the Act goes on to provide that:
"(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition. "
8 The Court must therefore consider whether the matters requiring proof under s 52(1) have been proved and, if so, whether the respondent has satisfied the Court that she is able to pay her debts or that there is some other sufficient cause why a sequestration order ought not be made, hi addition to the matters to be proved pursuant to s 52, r 4.06 of the Federal Magistrates Court (Bankruptcy) Rules 2006 requires that certain affidavit material be filed before the hearing of the creditor's petition. That material has been filed.
9 It has not been argued that the requirements of s 52(1) have not been met and, subject to the further consideration of one issue, I am satisfied on the basis of the affidavit material filed by the petitioning creditor that they have. The issue which I am of the view requires further consideration arises from the existence of an injunction restraining the respondent from dealing with her assets. The respondent is self-represented and although she raised the issue only indirectly, without precisely articulating it as a distinct ground, I believe it should be addressed in my consideration of the application of s 52(1) and s 52(2) of the Act to the facts before me. However, given the fact that the respondent has specifically raised the issue of her ability to pay her debts as a primary ground of opposition to the petition and that a consideration of this question is also of central relevance to the issues surrounding the injunction, I will consider first the question of her solvency.

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SOLVENCY
10 As noted above s 52(2)(a) provides that, where a debtor shows that she is able to pay
her debts, a court may dismiss a petition. A debtor who is in a position to pay all her debts
within a relatively short time generally ought not to be the subject of a sequestration order.
11 The classic statement of the law in this regard is that of Barwick CJ in Sandell v
Porter (1966) 115 CLR 666. His Honour referred to the inability to pay debts as they fell due
but referred not only to the use of cash resources immediately available for this purpose but
also to monies which can be procured by realization by sale, mortgage or pledge of assets
within a relatively short time. He went on to note that:
'The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilising such resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency." (at 670)
12 However, a debtor must not only establish an ability to pay any debts that are
currently due but also those that will fall due in the reasonably immediate future pursuant to
existing obligations (Re Sanders; Knudsen & Yates trading as The Hargreaves Practice v
Sanders [2003] FCA 1079 at [27] ("Knudsen "). It is also not enough for a debtor to establish
merely that he or she has assets exceeding in value the amount of his or her liabilities. The
debtor must establish that the assets are available to be realised and capable of ready
realisation (Stankiewicz v Plata [2000] FCA 1185 at [26]-[32]; Australian & New Zealand
Banking Group v Foyster [2000] FCA 400 at [17]; Knudsen (above)).
13 In addition, a house, furniture and a motor vehicle are generally regarded as assets
necessary for a reasonably comfortable and dignified existence and as such might ordinarily
be excluded when considering the assets of a debtor which could be used to meet his or her
debts (International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 per Katz J at [14]
('International Alpaca ")). Despite this, in my view, where a house has significant value it
might appropriately be taken into account in considering a debtor's ability to pay his or her
debts, at least to the extent that it could be sold and a house of lesser value acquired or to the
extent that it could be used as security for borrowing. However, where new or additional
borrowings are in question it is incumbent upon the debtor to show that he or she has the

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capacity to pay for, secure or otherwise satisfy any new debt so as to establish that he or she is not merely substituting one debt for another (Re Capel; ex parte Caram Finance Australia Z^[1998]FCA372).
14 The respondent has deposed the following in relation to her assets and liabilities:
Assets Value Liability
House - St Andrews Vic 400,000 137,696.53#
Money from the sale of a property in 2005 202,561.89
held in a trust account as a result of a
Mareva injunction
Supreme Court of South Australia fund - 30,000
arising from costs order in her favour in
the original trial in that action*
Shire of Nillumbik 3,000
(rates - approximate figure)
Petitioning creditor's debt 380,000
State of South Australia - costs orders 17,000
arising from an unsuccessful interlocutory 24,000
application in the Supreme Court of South
Australia and an unsuccessful application
for special leave to appeal in the High
Court of Australia
# this is a line of credit and the limit appears to be $298,500, with an additional Visa card limit of $9,000.
* there is no other evidence before the court in relation to this amount.
15 The affidavit evidence filed by the petitioning creditor is that there is a further debt
owing to it of $2,000 arising from additional costs orders made by the Supreme Court of
South Australia at the time of the making of the injunctive orders referred to above. A further
costs order made by the High Court of Australia in favour of the petitioning creditor at the
time of the refusal of an application by the respondent for special leave to appeal from the
decision of the Full Court of the Supreme Court of South Australia has been quantified at
$13,259.97, but has not yet been taxed, and a costs order arising from the application for the

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fixed costs amount founding the bankruptcy notice was also made in favour of the petitioning creditor on 13 April 2006. The latter amount does not yet appear to have been quantified.
16 It appears that the quantum of the two amounts said to be owing to the State of South
Australia is disputed by the respondent and they have not yet been subject to taxation. The
State of South Australia appeared as a supporting creditor in this matter, but did not file any
additional material.
17 Two other potential debts have also been identified by the respondent. They relate to
costs orders made in favour of two other parties in the Supreme Court matter. It appears that
to date these amounts may not have been formally quantified (although there are indications
in the material filed that they would in each case be in the hundreds of thousands of dollars).
There is no evidence that they are being actively pursued, although there is also no evidence
that they have been compromised.
18 No information has been provided by the respondent in relation to her income and
expenditure, although she has deposed that she is "only able to work a few hours each week"
and is "unable to make regular payments to ING in relation to the line of credit they have
provided" and that she is "getting further into debt with each passing week".
19 In addition, in correspondence dated 25 July 2005 between her former legal
representatives and the legal representatives of the petitioning creditor, her legal
representatives noted that the respondent "has no hope of being able to satisfy any of the
claims for costs ".
20 There is no evidence before me to suggest that the respondent could service additional
borrowings or a further draw down of her secured line of credit. In fact the evidence is that
she cannot support her liability in respect of funds already drawn down. I am therefore not
prepared to take into account the possibility of an additional draw down on that line of credit
in the absence of a subsequent forced realisation of the associated security in considering
whether she is able to pay her debts.
21 I turn therefore to consider the respondent's ability to realise assets to pay her debts.
On the evidence before me the only non-cash asset owned by the respondent is her house

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property. The value ascribed by the respondent to her house is her assessment of value, based on results of other property sales in the area. There is no independent evidence of this. However, even if that valuation is accepted, it is not clear that this asset should be taken into account in considering the assets which could be realised by the respondent to pay her debts within any relatively short period of time (International Alpaca (above)). There is also no evidence that, even if the injunctive orders currently in existence were varied or discharged, the respondent has any interest in doing this. She has indicated from the Bar Table that she wishes to make parties that may have been "damaged in any manner" by her actions "commercially -whole", however there is no evidence at all that she is inclined to sell her house in order to do so. I am therefore also not willing to take this asset into account for the purpose of determining whether or not the respondent is able to pay her debts. Even if I did take the possible sale of her house property into account, however, there is no evidence of the likelihood of achieving a sale at her stated value in the reasonably immediate future or of the costs of such a sale. I do not believe that the debtor has established that it has a net readily realisable value such that, together with her cash assets, her readily realisable assets exceed her undisputed debts.
22 The respondent has therefore not satisfied me that she is able to pay her undisputed
debts either immediately or within any relatively short time. In these circumstances I do not
need to consider the extent to which the other unquantified or disputed liabilities should be
taken into account.
INJUNCTION
23 I turn therefore to the issue flagged above, namely the impact, if any, of a Mareva
injunction on my consideration of the proper application of s 52 of the Act. In my view the
impact of the injunction must be considered in two contexts, namely:
(1) whether a valid act of bankruptcy has occurred; and
(2) whether the obtaining of the injunction constitutes other sufficient cause why a sequestration order should not be made.
24 The respondent has deposed that on the application of the petitioning creditor, the
Supreme Court of South Australia granted an injunction in August 2005 restraining her from

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dealing with her assets. Orders were made in October 2005 continuing the injunction, which appears to remain in force. As far as is relevant, the terms of the order made on 20 October 2005 are that:
"1. The injunction granted by the order dated 19 August 2005 and varied on 26 August 2005 whereby the plaintiff was restrained whether by herself, her employees, agents, attorneys or otherwise from:
1.1 from [sic] disposing of or encumbering in any manner whatsoever any of her assets whether such assets be within or outside South Australia; and
1.2 if any such assets be within South Australia, from removing such assets from South Australia;
provided that:
1.3 the plaintiff may use her assets for normal daily living expenses and to that end may dispose of assets not exceeding $500.00 in value per week
continue in full force and effect until further order.
2. ….
3. The parties have liberty to apply on short but reasonable notice. "
25 Section 40(l)(g) of the Act relevantly provides that a debtor commits an act of
bankruptcy where a creditor has obtained a final judgment or order the execution of which
has not been stayed, and has served a debtor with a bankruptcy notice, the requirements of
which are not complied with. If no act of bankruptcy has been committed, because execution
of the judgment relied upon had been stayed, s 52(1) is not satisfied.
26 It is, however, not necessary for there to be in place an express order staying the
execution of the judgment for the judgment to be effectively stayed for the purposes of
s 40(l)(g) of the Act (Re Richards; Ex Parte Sommers (1947) 14 ABC 112). If the creditor is
not in a position to obtain a writ of execution on the judgment, the judgment cannot be used
to found a bankruptcy notice and no act of bankruptcy will be committed as a result of failure
to comply with such a notice (Re Pannowitz; Ex Parte Wilson (1975) 38 FLR 184; Penning v
Steel Tube Supplies Pty Ltd (1988) 18 FCR 568).

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27 There is a large body of authority dealing with what constitutes an effective stay of a
judgment in the context of the existence of an order restraining a debtor from dealing with his
or her assets. Much of it is summarised conveniently by Madgwick J in National Australia
Bank Limited v Pollak [2001] FCA 1408 ("Pollak"). On my understanding the law as it
currently stands can be summarised as follows:
• A Mareva injunction, one of the functions of which is to aid execution, does not impose the same restrictions on execution that the appointment of a receiver or trustee to control the property of a debtor does (Re Ousley; Ex parte Commissioner of Taxation (1994) 48 FCR131 ("Ousley"));
• A petitioning creditor may be disqualified from issuing a bankruptcy notice by reason of a restraint imposed by order of a court on the property of a judgment debtor thereby removing her ability to pay, where the practical reality is that it prevents the debtor from paying the debt (Wiltshire-Smith v Mellor Olsson (1995) 57 FCR 572) ("Wiltshire-Smith ");
• The test is whether in the eyes of ordinary fairness in business it will be said that the order has in a business sense prevented the debtor from paying (Wiltshire-Smith; Boscolo v Botany Council [1996] FCA 897 ("Boscolo "));
• The fact that a court order or a creditor has made it more difficult to comply with the bankruptcy notice as opposed to preventing compliance is not sufficient (Ling v Enrobook Pty Ltd (1997) 74 FCR 19 ("Ling"));
• The debtor bears the onus of proving affirmatively that the claim in respect of which the bankruptcy notice was issued could and would have been paid but for the act or omission of the creditor or order of the court (Wiltshire-Smith (above)).
28 Pollak involved orders in the nature of a Mareva injunction made on an application by
the National Australia Bank over all of the respective respondent's property and assets. The
Bank issued a bankruptcy notice and subsequently a creditor's petition based on non
compliance with that bankruptcy notice.

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29 After considering the body of case law his Honour concluded at [52] - [53] that:
"What was said in Ling, Ousley and Boscolo is to be applied. In my opinion, seen through the eyes of ordinary fairness in business, there is nothing in this order that in a business sense practically prevented Dr Pollakfrom paying the debt he owed to the Bank within 21 days of the bankruptcy notice being served upon him. I do not doubt that the existence of the Mareva injunction would have tended to make compliance with the bankruptcy notice more difficult. However, as the authorities make clear, this in itself does not provide a basis to say that execution of the judgment should be deemed to have been stayed. The mere existence of a Mareva injunction obtained by the judgment creditor is not conduct of such a nature by the Bank that it should be regarded as having prevented Dr Pollakfrom paying the debt he owed.
Further, Dr Pollak has not satisfied the onus he bears of proving that, in fact, in the way matters transpired, the Bank should be deemed by its conduct, in a practical business sense, to have prevented him from, or even to have materially hindered him in, paying the debt. There was no evidence that Dr Pollak had assets which he could have used to satisfy the debt. ... There was also no evidence to suggest that Dr Pollak would have been able to raise funds to meet the debt, subject to his dealing with his property in a certain manner, or that he had approached the Bank with a plan which would allow him to meet the debt, or that he had approached the Court to vary the notice requirement. Accordingly, this challenge to the validity of the bankruptcy notice, and/or to the justice of acceding to the petition founded upon that notice, fails. "
30 On the evidence before me in this matter I am not satisfied that the respondent could
and would have paid the debt in the absence of the injunction.
31 I have dealt with the respondent's ability to pay her debts above and have concluded
that she has not established that, irrespective of the existence of the injunction, she is able to
pay her debts. In considering the more limited question of the possible payment of the debt
founding the bankruptcy notice only, even taking into account a fully drawn line of credit and
the amount held in the solicitors trust account, the funds available to the respondent would
not have been sufficient to pay that debt. Prima facie, however, if the amount held in the

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Supreme Court was also included, the respondent may have had available sufficient funds, although only at the expense of the other creditors. However, the respondent has produced no evidence in relation to the amount said to be held in the Supreme Court, or anything to indicate that it would be available to her to use to pay the debt of the petitioning creditor. I am therefore reluctant to take it into account.
32 Further, as noted above, it seems that the respondent would not have been able to
support any increase in the use of her line of credit and there is no evidence to suggest that in
those circumstances she would have sought to do so. There is no evidence that the
respondent has at any time entered into discussions with the petitioning creditor (or any other
creditor) about variation of the injunctive orders to allow payment of the judgment debt or, at
least since July 2005, in the hope of reaching some arrangement regarding satisfaction of this
debt or other liabilities. She has deposed that in October 2006, just after she was served with
the bankruptcy notice and around the time of the commission of the act of bankruptcy, she
applied for a waiver of her debt to the petitioning creditor but there is no evidence of any
other step being taken by her at any time up to the hearing of the petition.
33 For these reasons I am of the view that the respondent has not established that she
could and would have paid the debt founding the bankruptcy notice in the absence of the
injunction. I am also not convinced that the terms of the injunctive orders in this case
prevented the payment of the debt by the respondent as opposed to making it more difficult.
34 The injunction in Pollak was said to apply until further order and restrained dealing
with assets without at least 19 days notice to the applicant bank. In contrast, in general terms
the effect of the orders in Ling was, until further order, to restrain the debtor from dealing
with, or permitting the dealing with, any of his assets in any way except by making certain
specified payments. The orders in Ling were obtained by a creditor other than the petitioning
creditor but remained in force at the time of the issue of the bankruptcy notice. They also
were found not to create an effective stay of execution of the judgment.
35 In the circumstances of this case, the injunction obtained on the application of the
creditor was more restrictive than that in Pollak, but as far as is relevant, not more restrictive
than in Ling. In addition the orders in this case specifically only apply until further order and
provide the parties with liberty to apply.

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36 There is no evidence before me that the respondent has at any time applied pursuant
to that liberty to apply to vary or discharge the order so as to enable her to pay her debts or
some of her debts (see also comments by Raphael FM in Crown Diagnostic v Sood (No.2)
[2006] FMCA 265 at [12] affirmed on appeal by Gyles J in Sood v Crown Diagnostic
Imaging Pty Ltd [2006] FCA 1721 at [13]). There is also no evidence before me as to why
such an application was not made. (I note that counsel for the petitioning creditor has
indicated that it did not do so because it considered such action would have had no utility
given what it understood to be the financial position of the respondent.)
37 For these reasons, I am of the view that the respondent has not established either that
the injunction prevented her from paying the debt founding the bankruptcy notice or that she
could or would have paid it in the absence of the injunction. On the basis of the evidence
before me it is my view that the Mareva injunction does not operate as a stay of the judgment
and I am therefore satisfied that the requirements of s 52(1) of the Act have been met.
38 For the same reasons, I am also of the view that the actions of the petitioning creditor
in seeking the injunction and then some time later issuing a bankruptcy notice, in the
circumstances described above, do not constitute 'other sufficient cause' why a sequestration
order should not be made pursuant to s 52(2) of the Act.
OTHER ENFORCEMENT METHODS
39 However, in the notice setting out her grounds of opposition to the petition, the
respondent also alleged that a sequestration order should not be made as the petitioning
creditor had failed to use appropriate alternate means of recovery, such as debt recovery
mechanisms under State law. She deposed to her belief that the petitioning creditor was
using bankruptcy proceedings as an alternative method of debt recovery.
40 I am not persuaded that, having obtained a judgment, there is a hierarchy of recovery
proceedings that a creditor must work through before it is permissible to issue a bankruptcy
notice. Speaking generally, a creditor may elect to pursue a judgment by issuing one of the
proceedings available at law or may elect to issue bankruptcy proceedings. The institution of
proceedings is a decision for the creditor and it is not for a debtor to insist that a particular
type of recovery proceeding be pursued in preference to others (Slack v Bottoms English

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Solicitors [2002] FCA 1445). The fact that speedier, cheaper and more effective remedies may be available to a petitioning creditor has been held not to constitute other sufficient cause why a sequestration order should not be made (Re Poulson; Exparte Hempenstall Bros Ltd (1929) 1 ABC 54). Indeed even a prior demand is not a statutory precondition for the issue of a valid bankruptcy notice based on a valid judgement of a court (Cavoli v Etl [2007] FCA 1191 per Heerey J at [18]).
41 It is true that the issue of a bankruptcy notice simply to put pressure on a recalcitrant
debtor who is otherwise solvent to pay a debt, rather than to genuinely invoke the insolvency
jurisdiction of the court may be an abuse of process amounting to other sufficient cause why
a sequestration order should not be made (Killoran v Duncan [1999] FCA 1574). However
there must be a real intention on the part of the petitioning creditor to use the process for
some purpose which is not legitimate (Rozenbes v Kronhill (1956) 95 CLR 407) and if there
is no evidence of this a court will not infer improper motive (Bride v KMG Hungerfords (A
Firm) [1998] FCA 412). There is no evidence before the Court in this case that there was any
such intention on the part of the petitioning creditor. There is also nothing before me to
indicate that at the time of issuing the bankruptcy notice the petitioning creditor knew or
contemplated that the debtor had the financial capacity to pay her debts. In fact counsel for
the petitioning creditor has stated that attempts by the petitioning creditor to obtain
information from the debtor as to her financial position were unsuccessful and, in the face of
what was on the public record as to her liabilities and financial circumstances, it is
unsurprising that a view might have been taken that she was not able to do so; a view this
Court has also reached.
42 On the evidence before me there is nothing to suggest that the bankruptcy
proceedings were issued as an alternative debt recovery proceeding or that there existed an
improper motive on the part of the petitioning creditor.
43 There has been no other suggestion of abuse of process by the petitioning creditor in
pursuing the sequestration order. Although the respondent deposed that she was not formally advised that her request for a waiver of her debt had been refused until after the issue of the creditor's petition (which I note was presented on the last date it could be presented in reliance on the act of bankruptcy committed on 18 October 2006), she did not suggest this

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gave rise to a ground to dismiss the creditor's petition. To the extent that I need to consider it I am not satisfied that this provides 'other sufficient cause' to dismiss the petition.
44 Although I feel some sympathy for the situation in which the respondent now finds
herself, the question which I need to determine is whether or not a sequestration order should
be made pursuant to s 52 of the Act. I have taken into account the fact that the respondent
has represented herself and closely considered the possible relevance of all of the matters
which have been raised by her, but on the evidence before me, there is nothing which to my mind suggests that I should exercise my discretion not to make the sequestration order sought by the petitioning creditor.
45 I am satisfied that the debtor committed the act of bankruptcy alleged in the petition.
I am satisfied of the other matters required by s 52 of the Act. I am not satisfied that the
respondent has established that, pursuant to s 52(2) of the Act, she is able to pay her debts or that there is other sufficient cause why a sequestration order should not be made.

Counsel for the Applicant:
Solicitors for the Applicant:
The respondent appeared in person
Hearing Date:
Date for last submissions:
Date of Reasons for Decision:

N J Parkyn
Australian Government Solicitor
24 August 2007 14 September 2007 28 September 2007

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LETTERS FROM PARLIAMENTARIANS MAL BROUGH, JASON WOOD, JOE LUDWIG, LINDSAY TANNER

(Two constituents wrote to their local Federal Member, Mr Jason Wood, who got identical responses from Mal Brough):

Thank you for your letter of 9 July 2007 on behalf of Mr _ _ _ _ about Ms Dawn Rowan.

Ms Rowan's debt to the Commonwealth arose as a result of her taking legal action against a number of defendants, including the Commonwealth, alleging that she was owed damages because of negligence, defamation, misfeasance and conspiracy. The allegations were made in the context of a joint Commonwealth/State report on women's shelters in South Australia, the details of which were broadcast on television in August 1987.

The matter was dealt with in the first instance by a single judge of the Supreme Court of South Australia. However, the Commonwealth (and other defendants) successfully appealed this decision to the Full Court of the Supreme Court of South Australia, who found that there was no legal basis to support Ms Rowan's allegations. The court made an in-principle decision that costs be awarded against Ms Rowan to compensate the Commonwealth (and other defendants) for reasonable expenses involved in defending the matter.

Ms Rowan then applied for special leave lo appeal that decision to the High Court of Australia. The High Court decided that leave should not be granted on the basis that Ms Rowan's case did not have reasonable prospects of success. The High Court emphasised that its role is to judge on untested general legal principles rather than to reverse a costs judgment in a particular case.

Generally, in circumstances where the Commonwealth considers that an applicant does not have reasonable prospects of success the Commonwealth can, in accordance with the Legal Services Directions 2005, invite the applicant to discontinue the legal proceedings in return for the Commonwealth not secking costs against the applicant. The Commonwealth docs this in the interest of avoiding the inevitable cost to all parties that are associated with the continuance of unjustified litigation. However, as you would understand, an applicant has a right to pursue legal avenues, notwithstanding any views the Commonwealth might offer and this is a decision for the applicant to take. Where an applicant refuses to discontinue legal proceedings, and rejects such an offer, the Commonwealth is left with no alternative but to pursue the recovery of costs.

The issue of costs was, in this case, determined by the Full Court of the Supreme Court of South Australia, in a separate judgment, after Ms Rowan had exhausted her avenues of appeal. The court awarded the Commonwealth $380,000 in costs. In coming to its decision. the court stated:

"We think that there is sufficient information upon which the court can conclude that a figure of $380.000 is logical, fair and reasonable ".

Under the Financial Management and Accountability Act /997, the Commonwealth is required to pursue payment of debts that are due to it, including debts that arise under costs orders of a court. In such circumstances. the Commonwealth must take whatever steps are appropriate to ensure that moneys due to it are paid to the greatest extent possible and returned to the Consolidated Revenue. While the Commonwealth may explore a range of options to obtain payment of a debt, in some situations this can only be done through legal action.

I am aware that Ms Rowan has made a number of public statements, including on her website, in relation to the Commonwealth's handling of this matter. For privacy reasons, I am not able to discuss the particular aspects of Ms Rowan's case which are not on the public record. However, I can say that in dealing with any matter involving the recovery of a debt, the Commonwealth is required to comply with a comprehensive legislative and policy framework, which is designed to treat debtors in a fair and reasonable manner.

In particular, the Commonwealth is required to comply with the principles set out in the Legal Services Directions 1005, including the requirement to behave as a model litigant. In this particular case, the Commonwealth complied with those principles. In accordance with the Legal Services Directions, the Commonwealth will, wherever possible and appropriate, endeavour to settle matters without the need for court proceedings. However, where satisfactory resolution cannot be achieved, it is sometimes necessary to seek the determination of the courts.

Once again, thank you for writing on Mr _ _ _ 's behalf. I trust my comments are of assistance.

Yours sincerely

MAL BROUGH

*****

Here's an informed response from Bob Moles, a legal expert in the area of miscarriages of justice, and author of A State of Injustice reproduced here with his permission:

I find the response by the Minister to be particularly disappointing.

It fails to have regard to the equity, justice and substantial merits of the case which were all in favour of Dawn Rowan.

It is particularly disappointing that the Minister refers to the duty to act as a "model litigant".

If regard had been had to that issue from the outset, this matter would never have occurred, and Ms Rowan's reputation would never have been put in question.

Let me know if you require something more,

Best wishes to all,

Bob

Dr Robert N Moles
Networked Knowledge
http://netk.net.au

****

The Hon. Philip Ruddock
Attorney-General
Parliament House
CANBERRA ACT 2600
14 June 2007
Dear Attorney

I refer to the case of Dawn Rowan, whose plight was recently highlighted in the
Today Tonight on 14 May 2007, and whose case I'm sure of which you have been
made aware.

After the broadcasting of that report, I have been contacted by a number of
constituents who are now concerned about the Commonwealth's role in the case.
As I understand the matter, Ms Rowan as a self-represented litigant joined the
Commonwealth as a defending party in her action against the South Australian
Government.

While the Commonwealth should not reward speculative litigation, I am concerned by
the implication in the reports that Ms Rowan's home is to be seized in lieu of payment of the Commonwealth's costs which were awarded against Ms Rowan.

In order to respond to these concerns, I therefore seek further detail from your office and the Department as to:
Firstly, whether this action is presently subject to further appeal (if so, I note you may not be able to provide advice on the questions following).
Secondly, whether the Commonwealth has, in fact, made a final determination on to
seizure of Ms Rowan's assets, and if so, what that decision is.
Thirdly, whether or not Ms Rowan is entitled to damages from other defendants in the
case, and whether consideration has been given to seizure of these funds.
Finally, whether or not a cost-benefit analysis has been performed on recovery of
costs from Ms Rowan.
I thank you for your consideration of this matter. I look forward to your early
response.
Kind Regards
Senator Joe Ludwig

*From: *"Tanner, Lindsay (MP)" >
*Date: *9 October 2007 9:33:33 AM

*Subject: **Dawn Rowan*

Dear _ _ _ _

Thank you for your email of 2 October 2007 concerning Dawn Rowan.

I have received similar correspondence from another of my constituents earlier this year. I am able to inform you that representations have been made by our Shadow Attorney General Joe Ludwig to the appropriate Ministers (as the parties seeking to recover costs in the case), Attorney General Phillip Ruddock and The Minister for Community Services, Mal Brough. A query to Senator Ludwig’s office yesterday confirmed that there has as yet been no reply. I have attached a copy of the text of this letter for your information.

In addition to this I referred my constituent’s concerns about Ms Rowan’s situation to The Member for McEwen, Fran Bailey who is now Ms Rowan’s local member and hence the other most appropriate Member of Parliament to make representations on her behalf.

Yours truly,

Lindsay Tanner
Shadow Minister for Finance Federal Member for Melbourne

www.lindsaytanner.com

*****

A friend sent this article, from The Australian:

Judges too timid for hard cases: Kirby

October 11, 2007

THE High Court's "great dissenter", Michael Kirby, has taken a swipe at his fellow judges by suggesting they are too timid to make the signature decisions taken by the court in the 1990s.

Delivering the 10th annual Hawke Lecture in Adelaide last night - honouring the former Labor prime minister - Justice Kirby posed the rhetorical question whether today's court would rule the same way on the Mabo and Wik native title cases, among other landmark decisions that tested the limits of judicial activism under then chief justice Sir Anthony Mason.

His answer: "Probably not." More...

LETTERS FROM FEDERAL MPs JOE LUDWIG AND LINDSAY TANNER

The Hon. Philip Ruddock
Attorney-General
Parliament House
CANBERRA ACT 2600

14 June 2007

Dear Attorney

I refer to the case of Dawn Rowan, whose plight was recently highlighted in the
Today Tonight on 14 May 2007, and whose case I'm sure of which you have been
made aware.

After the broadcasting of that report, I have been contacted by a number of
constituents who are now concerned about the Commonwealth's role in the case.
As I understand the matter, Ms Rowan as a self-represented litigant joined the
Commonwealth as a defending party in her action against the South Australian
Government.

While the Commonwealth should not reward speculative litigation, I am concerned by
the implication in the reports that Ms Rowan's home is to be seized in lieu of payment of the Commonwealth's costs which were awarded against Ms Rowan.

In order to respond to these concerns, I therefore seek further detail from your office and the Department as to:

Firstly, whether this action is presently subject to further appeal (if so, I note you may not be able to provide advice on the questions following).

Secondly, whether the Commonwealth has, in fact, made a final determination on to
seizure of Ms Rowans assets, and if so, what that decision is.

Thirdly, whether or not Ms Rowan is entitled to damages from other defendants in the
case, and whether consideration has been given to seizure of these funds.

Finally, whether or not a cost-benefit analysis has been performed on recovery of
costs from Ms Rowan.

I thank you for your consideration of this matter. I look forward to your early
response.

Kind Regards
Senator Joe Ludwig

*****

*From: *"Tanner, Lindsay (MP)"
*Date: *9 October 2007 9:33:33 AM
*To: *
*Subject: **Dawn Rowan*

Dear Reverend Nettleton,

Thank you for your email of 2 October 2007 concerning Dawn Rowan.

I have received similar correspondence from another of my constituents earlier this year. I am able to inform you that representations have been made by our Shadow Attorney General Joe Ludwig to the appropriate Ministers (as the parties seeking to recover costs in the case), Attorney General Phillip Ruddock and The Minister for Community Services, Mal Brough. A query to Senator Ludwig’s office yesterday confirmed that there has as yet been no reply. I have attached a copy of the text of this letter for your information.

In addition to this I referred my constituent’s concerns about Ms Rowan’s situation to The Member for McEwen, Fran Bailey who is now Ms Rowan’s local member and hence the other most appropriate Member of Parliament to make representations on her behalf.

Yours truly,

Lindsay Tanner
Shadow Minister for Finance Federal Member for Melbourne

www.lindsaytanner.com