Commonwealth Bank of Australia v Gargan

The respondent's opposition to the Creditor's Petition 4 The respondent filed an Amended Notice of Intention to Oppose the Petition on 18 February 2004. That Notice provides: 'Peter Alexander Gargan, Commonwealth Public Officer by Statutory appointment from the Parliament of the Commonwealth under Section 13 Crimes Act 1914 and by definition in the dictionary of the Criminal Code Act 1995, … intends to oppose the Petition on the following grounds: 1. The Petition is premature, and an abuse of process because the condition precedent contained in the Bankruptcy Act 1966, contained in Section 40(g) of the Act, requiring an account of mutual dealings, before an Act of bankruptcy occurs has not been met.

2. The Commonwealth of Australia is a Corporation aggregate, incorporated under the Commonwealth of Australia Constitution Act 1900 (IMP) and Constitution, capable of contracting, and by section 13 Crimes Act 1914 has offered to anyone who will sue for it, an attornment or agency of contract analogous to partnership, to act on their behalf, on contract in equal shares, to recover rewards or liquidated penalties with respect to offences against laws of the Commonwealth of Australia, which the Parliament of the Commonwealth, has provided shall be liquidated to money by reference to Section 4B Crimes Act 1914 and elsewhere in the Crimes Act 1914.

3. The Commonwealth of Australia is equally liable, under the Partnership Act 1892, and the respondent is and must be indemnified by them.

An Affidavit is filed herewith supporting the grounds of opposition.' (emphasis in original) 5 Before continuing, I note that the respondent, in oral submissions, also appeared to place considerable reliance on s 40(1)(g) of the Act (the reference in the passage quoted above to s 40(g) is presumably an error). This section is, however, related to the commission of Acts of Bankruptcy. The respondent has, on evidence adduced by the CBA and not contradicted by the respondent, already committed an Act of Bankruptcy. The section is therefore inapplicable in proceedings in which a sequestration order is sought. The relevant statutory provision is instead s 52 (see par 3 above). 6 The respondent has filed a number of affidavits in support of his opposition to the Petition. The affidavits are both discursive and argumentative in character, and it is difficult to extract from them the elements of the cause of action which the respondent asserts against the CBA, or the matters of fact upon which the respondent relies as establishing his cause of action. 7 However, it appears that the respondent contends that the CBA has accrued treble penalties under the statutes 22 and 23 Car II c 22 (Fines and Forfeitures to the Crown) (1670-1671) in consequence of the CBA's unlawful conduct. The quantum of the penalties accrued is said to be at least $4,000,090 although far larger sums are referred to in different parts of the respondent's affidavits. In oral submissions the respondent submitted that the penalty owed by the CBA has now reached $104,000,000. 8 It is the respondent's contention that these penalties are payable equally to the respondent as a common informer, and to Her Majesty Queen Elizabeth II. It is the respondent's share of those penalties which is referred to in par 1 of the Amended Notice of Opposition. The respondent claims to be entitled to recover the amount of those penalties by means of Qui Tam proceedings. He also claims that he has instituted proceedings in the Supreme Court of New South Wales of that character. 9 The unlawful conduct on which the respondent relies is variously expressed. Reduced to its essentials, it may be summarised as follows: (a) there was a mutuality of dealing between Stephen Glen Heinrich and the CBA as well as between Ann Carolyn Teese and the CBA. The CBA procured sequestration orders to be made in relation to their estates without an account first being taken of those mutual dealings as required by s 86 of the Act; (b) it is a fraud to make a person bankrupt when there are outstanding issues between them requiring a trial to determine whether there is a balance owing from the one to the other. The CBA's conduct in bankrupting Mr Heinrich and Ms Teese constitutes an attempt to obstruct, prevent, divert or defeat the course of justice in relation to the judicial power of the Commonwealth. An obstruction of this kind is punishable by five years imprisonment under s 43 of the Crimes Act 1914 (Cth) ('the Crimes Act'). As the CBA is a corporate entity, pecuniary penalties accrue under s 4B and s 4K of the Crimes Act at the daily rate of $165,000, and have been accruing at that rate for a long time; (c) on 23 September 2002 the CBA again contravened s 43 of the Crimes Act, and thereby incurred penalties, by successfully submitting to Driver FM that he should not order an account to be taken of the mutual dealings between the CBA and Carolyn Teese from 15 December 1987 until 23 September 2002 as required by s 86 of the Act; and (d) on 5 August 2003 the CBA again contravened s 43 of the Crimes Act, and incurred penalties, by successfully submitting to Fryar SM that she should dismiss the summons issued at the behest of the respondent against the CBA upon an information laid by the respondent alleging the commission by the CBA of the offence referred to in (c) above.

The proceedings in the New South Wales Supreme Court 10 The respondent instituted proceedings in the Supreme Court of New South Wales, Common Law Division, against parties including the CBA arising out of the bankruptcy of Stephen Glen Heinrich. In a judgment of Adams J given on 27 October 2003 the substance of the respondent's action was described by his Honour as the recovery by the respondent and/or the Commonwealth or the Queen of penalties said to be payable by virtue of alleged breaches of s 43 of the Crimes Act and s 134.2 of the Criminal Code 1995 ('the Criminal Code'). By virtue of s 4B of the Crimes Act, a Court is given the power, where a person is convicted of an offence against the law of the Commonwealth punishable by imprisonment only (as the alleged offences are here), to impose instead of or in addition to a penalty of imprisonment, a pecuniary penalty calculated as there provided. It is this pecuniary penalty which the present respondent sought to have paid in the proceedings before Adams J following a trial which he claimed to have legitimately commenced in the Supreme Court by the summons and statement of claim which he filed in those proceedings. 11 Adams J dismissed the summons and statement of claim upon the ground that the proceeding was a gross abuse of the process of the Court: Gargan v Scott (unreported, Supreme Court of New South Wales, Adams J, 27 October 2003). His Honour said (at [4]): 'There can be no question but that Mr Gargan is seeking the payment of a penalty which is, by its inherent character, criminal and not civil. The penalty is punishment, not compensation. Although Mr Gargan claims that he is entitled to proceed as a common informer, by virtue of s 14 of the Criminal Procedure Act 1986 (NSW), the power to prosecute or proceed in respect of offences under both the Crimes Act 1914 and the Criminal Code Act 1995 does not reside in a private individual such as Mr Gargan by an action of the kind he is here taking. In all events, there are no matters alleged, either in the summons or in the statement of claim or in Mr Gargan's affidavit, which sufficiently set out any of the allegations necessary to prove offences under the specified section.' 12 The respondent instituted a further proceeding in the Supreme Court of New South Wales Common Law Division against parties including the CBA in which the respondent sought, by statement of claim, the recovery of a liquidated debt being penalties payable by the CBA in consequence of the commission of an offence under s 43 of the Crimes Act and/or s 134.2 of the Criminal Code. This appears to relate to the proceedings before the Magistrate referred to in par 9(d) above. 13 Greg James J held that the proceedings were an abuse of process and ordered that they be dismissed for that reason: Gargan v Woodgate [2004] NSWSC 177. His Honour said (at [26]): 'Not only are all of these proceedings ill commenced, not only are the summons and statement of claim procedure inapt to commence a proceeding by way of criminal prosecution in this Court for a common informer to use to claim penalties, but Mr Gargan does not have the authority required under the Judiciary Act 1903 (Cth) for a prosecutor to commence proceedings on indictment for offences against the laws of the Commonwealth, s 69 of the Judiciary Act 1903 (Cth), nor to commence proceedings on behalf of the Commonwealth or the State of New South Wales by way of a prosecution on indictment in this Court or for recovery of a penalty in this Court.' 14 His Honour also referred to an earlier decision he had given in relation to the respondent (Morriset Mega-Market Pty Ltd v Gargan [2003] NSWCA 1199), where he had held that it is not open to charge an attempt to pervert the course of justice when all that has been done is an ordinary and regular application to the Court: cf Jamison and Brookmans v R (1993) 177 CLR 574.

The Tasmanian proceedings 15 In oral submissions the respondent indicated that on 14 May 2004 - three days prior to the hearing of the Creditor's Petition - he had purportedly commenced proceedings in the Supreme Court of Tasmania on behalf of the State of Tasmania by two documents styled "Notice to the Defendant" and "Information". In oral submissions the respondent indicated that these documents amounted to the bringing of an indictment against the CBA for an offence under s 43 of the Crimes Act. 16 In the Notice to the Defendant, under the heading "Statement of Crime" the respondent asserts that the CBA has: 'Since the 20th day of August 2002, has attempted to pervert to course of justice in respect of the Judicial power of the Commonwealth contrary to Section 43 of [the Crimes Act], by refusing, to comply with section 86 [of the Act], and have taken into account mutual dealings with Ann Carolyn Teese…' 17 The penalty due is alleged to be $104,000,000. 18 This appears to be the same claim as was dismissed by the ACT Magistrate, and held to be an abuse of process by Greg James J. The only significant difference is that the respondent relies additionally on the imperial statute of 4 Henry VII c 20 (Penal Actions) (1488-1489) in claiming that the disposal of these matters has not discharged the indictments he has laid, this only being possible by jury. However, the respondent misconceives the purpose of this statute, which, as its title states, is intended to regulate instances where 'Actions popular, [are] prosecuted by Collusion'. The only section in this statute relating to a jury provides that a court will not hear a claim that a popular (ie Qui Tam) action was brought by collusion where the initial action was disposed of by a jury. 19 The consequence is that, leaving aside the fact that the authority of the respondent to proceed in the Supreme Court of Tasmania in this manner has not been established, the proceedings purportedly commenced on 14 May 2004 may therefore be taken as raising the same issues as the New South Wales proceedings, and may be dealt with in the same way.

The respondent's oral submissions 20 The respondent made a number of oral submissions in addition to the grounds relied upon in the affidavits referred to above. The common thread throughout these submissions was that it was incorrect to say that the Act 'stands alone, and it's not part of a matrix of laws'. The matrix adverted to by the respondent was said to include the Privacy Act 1988 (Cth) ('the Privacy Act') and the International Covenant on Civil and Political Rights 999 UNTS 171, 6 ILM 386 (entered into force 23 March 1976) ('ICCPR') (Australia is a party to the ICCPR, and the full text is set out in Schedule 2 of the Human Rights and Equal Opportunity Commission Act 1986 (Cth)). 21 While it is true that the Privacy Act and, to a more limited extent, the ICCPR form part of Australian law (see Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273; Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 77 ALJR 699 at [65]-[67] (McHugh and Gummow JJ), [120-122] (Hayne J), [145]-[148] (Callinan J)), the respondent has not established that these instruments impact upon what would otherwise be the operation of the Act.

Setting aside the Creditor's Petition 22 The authorities establish that the existence of a genuine and serious claim which the respondent has against the CBA, but which he has not been able to litigate, may provide sufficient cause for the dismissal or adjournment of the CBA's Creditor's Petition. If the costs order made by the ACT Magistrate on 5 August 2003 was obtained by fraud on the part of the CBA, or was a miscarriage of justice, or was made because the CBA knowingly put forward a false case in support of the dismissal of the summons, then this may provide sufficient reason for the dismissal of the Creditor's Petition presented by the CBA. 23 The respondent appealed from the Magistrate's decision dismissing the summons with costs assessed at $2,000.00, but that appeal was struck out by order of Master Hooper of the Supreme Court of the ACT on 5 December 2003. So far as the evidence before me goes, there is no pending appeal from the costs order which is the foundation for the bankruptcy petition. Nor is there any evidence (leaving aside the respondent's unsupported assertion) that the CBA was guilty of fraud or other improper conduct in connection with the making of that order so as to warrant a bankruptcy court going behind the order. 24 Adams J and Greg James J dismissed as an abuse of process the respondent's broader claim against the CBA, and those decisions are a barrier in the way of the respondent's contention that he has a genuine and serious claim against the CBA which is likely to succeed if he is permitted to litigate the claim. 25 The respondent describes his claim against the CBA as a Qui Tam action based on 22 and 23 Car 2 c 22 (Fines and Forfeiture to the Crown) (1670-1671) which he asserts is part of the received Australian law. Alternatively, his claim is based on s 13 of the Crimes Act, or s 122 of the Fines Act 1996 (NSW) ('the Fines Act').

Qui Tam action 26 The 94th Report of the Law Reform Committee of South Australia to the Attorney-General (1985) describes 'Qui Tam' as an abbreviation of 'qui tam pro domino rege quam pro se ipso sequitur' which means 'who as well for our lord the King, as for himself sues'. Qui Tam actions are sometimes called 'popular actions' and the bringer is called a 'common informer'. A common informer has been described as: '…a private person suing for his own benefit to recover a statutory penalty. … the expression "common informer" is only used to distinguish him from a state or official informer such as His Majesty's Attorney-General.' (Tranton v Aster (1917) 33 TLR 383 at 385 per Low J) 27 The type of action brought by a common informer has been described as: '… a penal action, in the form of proceeding invented by Parliament for ensuring that laws should not be a dead letter. In order to provide that laws should not become a dead letter by reason of the circumstances that no prosecutor, official or private, comes forward, Parliament has in these cases enlisted the motive of private greed to ensure that the offender shall be made to smart for his offence, by enabling any person to come forward and claim certain sums of money which, in many cases, as in this, may be large.' (Orpen v Haymarket Capital Ltd (1931) 145 LT 614 at 615-616 per Rowlatt J) 28 Only offences created by statutes which expressly or by necessary implication provide for Qui Tam action may be prosecuted by a common informer: 94th Report of the Law Reform Committee of South Australia to the Attorney-General (1985) at 3. The onus of showing the statute so provides lies on the common informer. In Bradlaugh v Clarke (1883) 8 App Cas 354 at 358 the Earl of Selbourne LC said: 'It was acknowledged, as an incontestable proposition of law, that where a penalty is created by statute, and nothing is said as to who may recover it, and it is not created for the benefit of the part aggrieved, and the offence is not against an individual, it belongs to the Crown and the Crown alone can maintain a suit for it. Lord Justice Branwell referred to Conyns' Digest 'Forfeiture' (C) as correctly laying down that doctrine. If it were necessary, many other authorities to the same effect might be mentioned. It rests on a plain and clear principle. No man can sue for that in which he has no interest; and a common informer can have no interest in a penalty of this nature unless it is expressly, or by some sufficient implication, given to him by statute. The Crown, and the Crown alone, is charged generally with the execution and enforcement of penal laws enacted by public statutes for the public good, and is interested, jure publico, in all penalties imposed by such statute; and therefore may sue for them in due course of law, where no provision is made to the contrary. The onus is upon a common informer to shew that the statute has conferred upon him a right of action to recover the particular penalty which he claims.' 29 In Hawkesbury City Council v Foster (1997) 97 LGERA 12 Mason P cited Ex parte Pierce (1844) 1 Legge 189 as authority for the proposition that the Qui Tam action came to the Australian colonies. In Ex parte Pierce Dowling CJ referred to Fleming q. t. v Bailey (1804) 5 East 313 which he characterised as a case where a common informer had brought a Qui Tam action. In Fleming q. t. v Bailey, Lawrence J had said: 'A common informer cannot sue at common law; therefore he must show some clause in the Act giving him power to sue in this particular case.' (emphasis in original) 30 These authorities support the conclusion drawn by the Law Reform Committee of South Australia referred to above that only offences created by statutes which expressly or by necessary implication provide for a Qui Tam action may be prosecuted by a common informer. The common informer must be able to point to a statutory provision which either 'gives' the penalty to the common informer, or creates a right to demand payment of the penalty. 31 The 1670 statute upon which the respondent relies was a statute of that character. However, on my reading of the statute, it creates no offence upon which the respondent could rely in these proceedings. Given that the respondent did not particularise the manner in which the CBA's behaviour might have constituted an offence under that statute, I conclude that the statute provides for no relevant offence. Since the statute does not create any right of recovery independent from the offences it prescribes, it follows that even if the 1670 statute had not effectively been repealed in New South Wales by subs 8(1) of the Imperial Acts Application Act 1969 (NSW), it would not have provided the respondent with a right of recovery. 32 Further, even if the subject matter of the Tasmanian proceedings had not already been dealt with in New South Wales, the respondent has not pointed to any other statute that would give him a right to recover the penalty in Tasmania.

The capacity of the respondent to institute proceedings under the Crimes Act 33 The offence created by s 43 of the Crimes Act is an indictable offence (s 4G). However, it may be dealt with summarily if both the prosecutor and the defendant consent (s 4J). Section 13 of the Crimes Act enables 'any person' to institute committal proceedings in respect of an indictable offence, or proceedings for summary conviction in respect of offences punishable on summary conviction. The Director of Public Prosecutions may 'take over' any such proceeding: Director of Public Prosecution Act 1983 (Cth) s 9(5). Under s 69 of the Judiciary Act 1903 (Cth) indictable offences against the laws of the Commonwealth are to be prosecuted by indictment in the name of the Attorney-General of the Commonwealth or such other person as the Governor-General appoints in that behalf. 34 Thus, it is at least doubtful whether the respondent could institute or maintain a private prosecution against the CBA in relation to the indictable offences particularised. In any event he has not done so. 35 If a body corporate is convicted of an offence s 4B of the Crimes Act provides the Court with a discretion to impose pecuniary penalties. But no Commonwealth law to which my attention has been drawn awards those penalties to a common informer, or creates a right in a common informer to demand payment of those penalties. 36 Section 122 of the Fines Act 1969 (NSW) provides: '(1) This section applies where: (a) the Act imposing or authorising the imposition of a fine or other penalty does not make any provisions for its application when recovered, and (b) the prosecutor is not a police officer. (1) The Court to which proceedings are taken to recover any such fine or other penalty may direct that such portion of it (not exceeding one half) is to be paid to the prosecutor. (2) For the purposes of this section, fine does not included an amount of the kind referred in section 4(1)(e) or (f).' 37 It may be that this provision is picked up by s 79 of the Judiciary Act. I will assume in the respondent's favour that this is so as no detailed argument was advanced on the question. Even if it be so, s 122 merely creates a discretion in the Court to direct that a portion of a penalty is to be paid to the prosecutor, rather than creating any right in the prosecutor to receive or to recover any particular part of the penalty. 38 Thus, it is also doubtful, that any part of any penalty imposed on the CBA if it were convicted would be payable to the respondent, even if the respondent could institute and maintain a private prosecution against the CBA 39 Finally, the respondent has not established a sufficient evidentiary foundation for a conclusion that the CBA is guilty of the particularised crimes. The respondent's claim has its genesis in an assertion that the CBA procured sequestration orders against the estates of Mr Heinrich and Ms Teese without an account first being taken of mutual dealings between them as required by s 86 of the Act. However, s 86 of the Act has no relevant application prior to bankruptcy. If Mr Heinrich or Ms Teese asserted a counter-claim, set-off or cross-demand against the CBA it could have been set up in the proceedings in which the Bankruptcy Notices were issued against Mr Heinrich and Ms Teese. Alternatively, application could have been made by Mr Heinrich or Ms Teese to set aside the Bankruptcy Notice on a ground of a counter-claim, set-off or cross-demand equal to or exceeding the sum specified in the Bankruptcy Notice which could not have been set up in the original proceedings. None of these events have occurred. Instead, the respondent asserts, but does not establish, that Mr Heinrich and Ms Teese had counter claims against the CBA which exceeded the CBA's claim. The respondent also asserts, but does not establish, fraud on the part of the CBA in the procurement of sequestration orders against those persons.

Decision 40 The CBA is under no existing obligation to the respondent to pay the respondent any sums by way of penalty in relation to the bankruptcy of Mr Heinrich or Ms Teese. The respondent has not established that he has a genuine and serious claim to receive the penalties which he claims from the CBA and which were the subject of the statutory demand under s 459E of the Corporations Act 2001 (Cth) which the respondent issued against the CBA. To the extent to which the claim has been embodied in proceedings taken by the respondent in the Supreme Court of New South Wales to date, the claim has been dismissed on the grounds that it constitutes an abuse of process. 41 The respondent has misconceived his case and has proceeded on an assumption which the authorities referred to above confirm to be false; namely that he is entitled to commence proceedings against the CBA independently of the ordinary criminal process and obtain a moiety of the penalties to which he says the CBA is liable. The decisions of Adams J and Greg James J confirm that the respondent's contentions in this respect are misconceived. If the respondent has any prospect of obtaining any share in any penalties which might be imposed on the CBA, should it ever be convicted of an indictable offence, it is only through the ordinary criminal process augmented, should the statute prove to be applicable, by s 122 of the Fines Act. However, as I have indicated there are substantial doubts as to whether and to what extent the respondent can either undertake or benefit from such a process. At best, such a claim is high speculative, and falls well short of demonstrating sufficient cause for dismissing the Creditor's Petition. 42 Accordingly, I am not satisfied that the respondent has established any sufficient cause why a sequestration order ought not to be made. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Associate: Dated: 4 June 2004 Counsel for the Applicant: J Bartrop