Culleton v Balwyn Nominees Pty Ltd [2018] FCA 313 | Case summary

Federal Court of Australia|2018-03-14|Before: Besanko J

THE APPLICANT's Arguments AND THEIR RESOLUTION 35 The first category of arguments advanced by the applicant relate to the sequestration order, and within that category, the most fundamental argument is that this Court did not have jurisdiction to entertain the creditor's petition because the Constitution (s 47) or Part XXII of the Commonwealth Electoral Act entrusted the Senate with exclusive jurisdiction to determine if the applicant is an undischarged bankrupt or insolvent or, at least, to decide the fact and then whether the issue should be referred to a court pursuant to s 376 of the Commonwealth Electoral Act. The applicant submits that, to the extent that s 7 of the Bankruptcy Act provides otherwise, it is invalid. 36 Section 7(1) of the Bankruptcy Act is in the following terms: This Act extends to debtors being persons who are not Australian citizens and persons who have privilege of Parliament. 37 As part of this argument, the applicant claimed that the former President of the Senate should not have proceeded in the way in which he did. 38 Even if there was merit in this argument and, in my opinion, there is not, this Court would have no jurisdiction to make findings or orders in relation to proceedings in the Senate. I will return to this point. 39 As far as I can see, this argument in relation to the jurisdiction of the Federal Court was not raised in the Single Judge Bankruptcy Proceeding or in the Full Court Bankruptcy Proceeding. In any event, I am of the opinion that there is no merit in the argument. This Court's jurisdiction in bankruptcy is derived from s 27 of the Bankruptcy Act and there is no reason to think that this section or s 7 is invalid or do not operate according to their terms. Members of Parliament are subject to the Bankruptcy Act in the same way as other members of the community are subject to the Act (Leeth v Commonwealth of Australia (1992) 174 CLR 455 at 485 per Deane and Toohey JJ) and I agree with Balwyn that the applicant's argument erroneously conflates bankruptcy with its consequences. In circumstances where the point is not arguable, there is no reason to direct the service of notices under s 78B of the Judiciary Act 1903 (Cth) (Re Culleton [2016] FCA 1193 at [5] per McKerracher J; Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd and Others (1999) 95 FCR 292 at [14] per French J). 40 The second argument relating to the sequestration order is that the order should be annulled (primarily) because the judgment debt upon which the bankruptcy notice was based was flawed and certain pre-conditions to the making of a sequestration order were not satisfied. 41 Balwyn prepared a chronology, which I consider to be accurate, and which sets out, among other things, the cases in which the judgment of the District Court has been considered or has been of relevance. The chronology is as follows: DATE EVENT REFERENCE 16 Dec 2009 Agreement to Lease and Purchase between the Applicant and the First Respondent Dakin Farms Pty Ltd v Elite Grains Pty Ltd (No 2) [2013] WADC 160 at [42] per Curthoys DCJ 21 Oct 2013 District Court Judgment obtained against The Applicant awarding damages of $205,536.50 plus interest and costs and dismissing the Applicant's counter-claim. Dakin Farms Pty Ltd v Elite Grains Pty Ltd (No 2) [2013] WADC 160 at [190] - [200] per Curthoys DCJ Adverse credibility findings were made by the Court against the Applicant. 8 Sept 2015 WA Court of Appeal dismisses the Applicant's appeal against District Court Judgment. Culleton v Dakin Farms Pty Ltd [2015] WASCA 183 at [44]-[47] per Murphy JA (Martin CJ and Newnes JA agreeing) Mrs Culleton then filed an application for special leave to appeal to the High Court of Australia, which was subsequently abandoned, for failure to file a written case (see Culleton v Dakin Farms Pty Ltd [2016] WASCA 152 at [12]). 14 April 2016 Application by Mrs Culleton to suspend enforcement of the District Court Judgment dismissed extemporaneously by Troy DCJ. Referred to in Culleton v Dakin Farms Pty Ltd [2016] WASCA 152 at [3] 29 Aug 2016 WA Court of Appeal dismisses appeal against District Court decision of Troy DCJ as being misconceived and having no reasonable prospects of success. Culleton v Dakin Farms Pty Ltd [2016] WASCA 152 per Newnes and Murphy JJA 5 Oct 2016 Federal Court dismisses urgent application by the applicant to restrain the First Respondent from enforcing the District Court Judgment. Rodney Norman Culleton [2016] FCA 1193 per McKerracher J 20 Oct 2016 Creditor's Petition filed in Federal Court by First Respondent (WAD 492 of 2016). Balwyn Nominees Pty Ltd v Culleton [2016] FCA 1578 at [31] per Barker J 23 Dec 2016 Sequestration Order made by Barker J against the applicant's estate. Balwyn Nominees Pty Ltd v Culleton [2016] FCA 1578 2 Feb 2017 WA Court of Appeal dismisses further appeal from District Court Judgment. Culleton v Dakin Farms Pty Ltd [No 2] [2017] WASCA 29 3 Feb 2017 Full Federal Court dismisses appeal from sequestration order with costs. Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8 per Allsop CJ, Dowsett and Besanko JJ 9 Feb 2017 The Applicant files special leave application and summons to High Court seeking stay of orders of Full Federal Court. Culleton v Balwyn Nominees Pty Ltd [2017] HCATrans 41 per Gageler J 1 Mar 2017 The Applicant's stay application dismissed by Gageler J. Culleton v Balwyn Nominees Pty Ltd [2017] HCATrans 41 per Gageler J 28 Apr 2017 The Applicant discontinues special leave application. Rompotis Affidavit at "AR2" 16 Aug 2017 The Applicant files Information and Summons in the ACT Magistrates Court, alleging Mr Lester (a director of the First Respondent) attempted to pervert the course of justice in respect of the judicial power of the Commonwealth. First Culleton Affidavit at [7] 8 Nov 2017 The Applicant commences fresh proceedings in the Federal Court of Australia against the Respondents Application dated 8 Nov 2017 16 Nov 2017 Information and Summons in the ACT Magistrates Court dismissed by Magistrate Theakston Rompotis Affidavit at [14]

42 The principles are well-known in terms of considering whether a court judgment forming the basis of a bankruptcy notice was flawed or could be impeached (Wren v Mahony (1972) 126 CLR 212 at 224-225 per Barwick CJ; Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332; Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; (2017) 345 ALR 534 at [53]-[64] per Kiefel CJ, Keane and Nettle JJ) and the issue was addressed fully in the Single Judge Bankruptcy Proceeding (at [99]-[128]). It was also addressed by the Full Court of this Court and, although lengthy, I will set out the passage in full because it says all that needs to be said on the issue (at [76]-[88]): These proceedings are based upon the appellant's failure to comply with a bankruptcy notice, the relevant debt being pursuant to a judgment of the District Court of Western Australia after a trial. The plaintiffs were Balwyn and Dakin. The defendants were Elite Grains Pty Ltd, the appellant and Mrs Culleton. The District Court judge found that there had been a breach of a contract made between Balwyn and Dakin on the one hand, and the appellant and Mrs Culleton on the other, awarding damages accordingly. The appellant and Mrs Culleton appealed to the Court of Appeal of Western Australia. Prior to the hearing of that appeal a sequestration order (discussed at [7] above) had been made against the appellant's estate. Whilst Mrs Culleton was represented by counsel at the hearing of the appeal, the appellant did not appear, but was present in Court. See Culleton v Dakin Farms Pty Ltd [2015] WASCA 183 at [4]. The grounds in the notice of appeal to the Court of Appeal were limited to questions as to damages. However, at the beginning of the hearing, Mrs Culleton sought to add a ground of appeal to the effect that any "contract" was void for uncertainty. The Court refused the application on the ground that had the matter been raised at trial, the respondents may have taken certain steps. The Court of Appeal then considered the merits of the grounds raised in the notice of appeal and dismissed Mrs Culleton's appeal. The Court found that as the appellant's trustee had not adopted the appeal, it was deemed to have been abandoned. On that basis, the appellant's appeal was dismissed. Mrs Culleton sought special leave to appeal to the High Court. Such application was abandoned by virtue of her failure to file a written case. Mrs Culleton then applied to the District Court to suspend enforcement of the judgment. The application was unsuccessful. In August 2016, her application for leave to appeal to the Court of Appeal against that decision was dismissed. In Wren v Mahony [1972] HCA 5; 126 CLR 212, the High Court considered the duty of a bankruptcy court where the debtor challenges the judgment upon which a bankruptcy notice is based. Barwick CJ (Windeyer and Owen JJ concurring) pointed out at 218 that, before making a sequestration order, pursuant to s 52, the court must be satisfied that the petitioning creditor's debt is due. After setting out extensive extracts from the cases, his Honour observed at 223-225: I have made these several quotations in order to emphasize the dominant place the mandatory words of s. 52 (1) occupy in relation to the making of a sequestration order and that the resolution of the question whether or not the proof of the petitioning creditor's debt is satisfactory does not concern only the immediate parties to the petition. Also in this case the learned judge in Bankruptcy appeared to have had some reservation as to the existence of the Court's power to examine the consideration for the judgment and seemed to think that whether or not he should consider whether or not there was a debt due to the petitioning creditor rested merely in discretion. Lord Esher in emphasizing that the Bankruptcy Court did not go behind a judgment as a matter of course but only if appropriate circumstances were shown to exist, said ... : "There is no statute which imposes any such obligation on the Court of Bankruptcy. Section 7 [of which s. 52 (1) is a counterpart] does no more than give a discretion." His Lordship, in using this expression, was not intending, in my opinion, to weaken the emphasis he had always placed on the need for the Court of Bankruptcy to be satisfied of the existence of the petitioning creditor's debt. Rather, if one reads all his expressions in the several cases I have cited, he was pointing out that the Bankruptcy Court could in general accept a judgment debt as sufficient proof of that debt particularly where it resulted from a fully heard contest between parties but that it always had the power to go behind the judgment and if the case was a proper one, should do so. The judgment is never conclusive in bankruptcy. It does not always represent itself as the relevant debt of the petitioning creditor, even though under the general law, the prior existing debt has merged in a judgment. But the Bankruptcy Court may accept the judgment as satisfactory proof of the petitioning creditor's debt. In that sense that court has a discretion. It may or may not so accept the judgment. But it has been made quite clear by the decisions of the past that where reason is shown for questioning whether behind the judgment or as it is said, as the consideration for it, there was in truth and reality a debt due to the petitioning creditor, the Court of Bankruptcy can no longer accept the judgment as such satisfactory proof. It must then exercise its power, or if you will, its discretion to look at what is behind the judgment: to what is its consideration. It is not the law, in my opinion, that whether in any case the Court of Bankruptcy will consider whether there is satisfactory proof of the petitioning creditor's debt is a mere matter of its own discretion. Nothing in Corney v. Brien lends support for such a view. Rather the emphasis is upon the paramount need to have satisfactory proof of the petitioning creditor's debt. The Court's discretion in my opinion is a discretion to accept the judgment as satisfactory proof of that debt. That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner. (Footnotes omitted.) In the appellant's grounds of objection, he asserted an entitlement to an account as between himself and Balwyn. We do not understand him to persist in that assertion. His grounds for going behind the judgment appear in paras 4-5 as follows: 4. The alleged agreement between the Petitioning Creditor and the Defendant Company was nothing more than an invitation to treat, not a concluded contract. 5. The evidence does not disclose any dealings with Balwyn Nominees Pty Ltd except an un-concluded invitation to treat which could not found damages for breach of contract. 5. As a consequence the Court is required to go behind the Judgment to determine if there is any amount owing at all. (There are two paragraphs numbered 5 in the grounds of appeal.) At [99], the primary judge identified two bases for the appellant's challenge to the judgment, namely: The respondent debtor submits that the District Court judgment upon which the bankruptcy notice is founded is flawed both as a result of a fact finding error made by the trial judge, and because the trial judge lacked the constitutional status to make a binding decision because he had not taken an oath of allegiance to the Queen when appointed to his office. At [101] his Honour identified the first ground as a challenge to the finding that there was a concluded contract. His Honour noted that in their notice of appeal filed in the Court of Appeal, neither Mr nor Mrs Culleton had appealed against that finding. As we have said, the matter was only raised at the hearing of the appeal. Mrs Culleton unsuccessfully sought to add such a ground of appeal. The primary judge then considered the reasons of the Court of Appeal for upholding the District Court judge's decision. His Honour clearly found no reason to doubt the correctness of that reasoning. His Honour considered the "fresh" evidence which was before him and found no reason to doubt the correctness of the decision of the Court of Appeal. The appellant simply did not identify any issue which would have led the primary judge to go behind the District Court judgment. It would be absurd to suggest he may have succeeded where his wife had failed. The same case was advanced against both of them. We have elsewhere dealt with the other ground advanced before the primary judge. It is not the subject of this appeal. On appeal the appellant now asserts that: The primary judge erred in not giving consideration or due weight to the possibility that the Appellant has a good or arguable answer to the judgment relied on, both under section 52(2)(b) and section 40(1)(g) of the Bankruptcy Act 1966. At para 52 of his outline of submissions counsel for the appellant identified the issue in this way: There is listed before the Court of Appeal of the Supreme Court of Western Australia on [date] an application by the Appellant for leave to re-open his case on the question of the correctness of the underlying judgment of Curthoys DJ of 13 October 2013. The two issues for consideration in that Court are firstly whether the Judge erred in holding that the informal lease contract in that case was with Mr Lester personally or with Balwyn Nominees Pty Ltd, the Appellant believing upon evidence that it was with the former, and secondly whether the acreage representation was made and led the Appellant and his wife into error and loss giving rise to a counterclaim diminishing or exceeding the judgment sum. These matters were not raised in the Court of Appeal and were not raised at first instance in this Court. Further, the appellant no longer asserts that there was no contract. Concerning these matters, at the hearing of the appeal, counsel for the appellant relied on his written submissions. As these matters were not raised before the primary judge we see no reason for allowing them to be raised on appeal. There is, in any event, no real basis for concluding that the assertions made in the outline would have justified the primary judge in going behind the judgment. It is true that the appellant refers to both matters at para 80 of the affidavit filed on 11 January 2017 as follows: I have filed a notice of appeal in the Court of Appeal in the Supreme Court. I have two issues. The first is that the lease of our farm at Williams was not signed for or on behalf of Balwyn Nominees Pty Ltd by Mr Lester but by himself personally as 'Dick Lester'. The second is that I had a good cross-action for damages arising from a misrepresentation as to the carrying capacity and arable [acreage] of the land in question. One of the appellant's affidavits filed on 16 December 2016 deals with the agency/parties point and is otherwise of some interest. At the beginning of the affidavit its "contents" are described thus: Documents supporting an Appeal to the Supreme Court of Appeal to show that "it would be a monstrous thing that a [receiving] order should be made whilst an appeal is pending" Authority 1 Part A. Bayne v Baillieu [1908] HCA39 page 2. (3) Griffith CJ The appellant then swears that: 1. I lodge the documents that will prove that I have a good grounds for an Appeal. 2. These Documents prove that unless you are a farmer and understand the land, a person should not sit as Judge in a dispute between farmers. In the various attached documents, there are references to questions of agency and parties, but we see no reference to any alleged misrepresentation. In any event, nothing is said about the status of these documents. Further, there is no apparent explanation of either alleged ground. Rather, we find only a confused attempt to hide behind misconceived propositions concerning the law of agency. Had these matters been raised before the primary judge, they would not have led him to go behind the District Court judgment. We do not think that the primary judge erred in rejecting the appellant's grounds for challenging the District Court judgment. Shortly prior to delivery of this judgment, we were informed that the Court of Appeal (Martin CJ, Newnes and Murphy JJA) unanimously dismissed the appellant's appeal with costs, giving extempore reasons. 43 The applicant did not put anything that suggested that these conclusions should be revisited under the power to annul the sequestration order. The applicant's claims have no prospect of success and, in any event, the pursuit of them constitutes an abuse of process. 44 I reach the same conclusion about the applicant's claims concerning the service of the bankruptcy notice and creditor's petition, and the affidavit verifying the creditor's petition and the affidavit establishing that the debt was outstanding. Those matters were addressed in the Single Judge Bankruptcy Proceeding (at [51]-[98]) and in the Full Court Bankruptcy Proceeding (at [94]-[109]). The only way those matters could be challenged is through a special leave application to the High Court. An application to annul the sequestration order is not a further avenue of appeal. 45 Throughout the material in this proceeding there are complaints by the applicant about various aspects of the way in which the primary judge dealt with the issues in the Single Judge Bankruptcy Proceeding, such as his Honour's refusal to grant an adjournment and his conclusion about the applicant's ability to pay his debts. Those matters have been the subject of prior decision, or have no substance, or both. Finally, there is no substance in the allegation that Balwyn engaged in criminal conduct in presenting the creditor's petition. 46 These conclusions are sufficient to dispose of this aspect of the Application. I note, however, that in addition, there is a decisive discretionary consideration for refusing to make an order annulling the bankruptcy. 47 This matter arises as a result of evidence adduced by Mr Vince, who, as I said, is the trustee of the applicant's bankrupt estate. He was appointed trustee of the applicant's bankrupt estate in place of the Official Trustee on 8 June 2017. As at 21 November 2017, the applicant had failed to submit a Statement of Affairs as required by s 54 of the Bankruptcy Act and, as a result, an offence referral was made by the Official Trustee and accepted by the Australian Financial Security Authority Enforcement Department. 48 Mr Vince said that he is investigating potential voidable transactions involving the applicant transferring shares in a company called Australian Keg Company Pty Ltd. 49 As at 17 November 2017, Mr Vince had identified creditors of the bankrupt estate whose claims total $3,218,466.46. In addition, the Official Trustee is owed $9,299.41 in remuneration and expenses for work performed in relation to the applicant's estate, including legal fees. Mr Vince calculates his remuneration for work performed by him and his staff in relation to the applicant's estate as at 17 November 2017 to be $20,062 plus GST, and disbursements of $1,545.08 plus GST. 50 The applicant did not present any evidence or plausible evidence of his financial circumstances. 51 The second category of arguments advanced by the applicant relate to paragraphs 2 and 3 of the original orders. I have no power to order that the applicant be "re-instated" as a Senator for Western Australia. The High Court has authoritatively and finally determined the issue of the applicant's eligibility or qualification to be a Senator for Western Australia. Nor has this Court any power or jurisdiction to determine whether the High Court sitting as the Court of Disputed Returns had jurisdiction to entertain the reference proceeding, or made any errors in its consideration of that proceeding. Nor does this Court have any power or jurisdiction to consider whether the former Attorney-General or the former President of the Senate, or the Senate, or the Australian Government Solicitor, or counsel before the High Court committed any errors in the course of the reference proceeding. If that was a matter for a court (and see s 16 of the Parliamentary Privileges Act 1987 (Cth)), it was a matter for the High Court. The request by the applicant that I refer the jurisdiction of the High Court in the reference proceeding to the Full Court of this Court must be refused. 52 The applicant also made a series of complaints about the conduct of the former President of the Senate in connection with the creditor's petition and the sequestration order. Those matters appear to me to be non-justiciable in this Court because of s 16 of the Parliamentary Privileges Act, they do not appear to have any substance and, in any event, they do not appear to support the orders which the applicant seeks. 53 These conclusions apply, not only to the orders sought in the originating application, but also to the November 2017 orders and the December 2017 orders. Insofar as those orders raise new matters or matters I have not addressed, I make the following comments: With respect to the November 2017 orders, I have no power to order that an appeal be heard by the Supreme Court of Western Australia and, in any event, there is no basis for such an order (paragraph 7). With respect to the December 2017 orders, I have no power to refer any matter to the Senate or to order that a Senator stand aside or to make orders either as to subpoenas or costs in the reference proceeding and, in any event, there is no basis for such orders (paragraphs 3, 4, 6 and 7).

CONCLUSION 54 None of the claims or arguments of the applicant have any prospects of success and the pursuit of many of the claims is quite clearly an abuse of process. 55 Judgment will be entered in favour of the respondents against the applicant. I order that the Balwyn's costs of the application dated 1 November 2017, including the costs of the interlocutory application dated 27 November 2017, be paid from the estate of the applicant bankrupt in accordance with s 109(1)(a) of the Bankruptcy Act. 56 I will also order that the parties be heard as to the Commonwealth's costs of the application dated 1 November 2017, including the costs of the interlocutory application dated 27 November 2017. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

Electoral Act 1918(Cth)s 376

(Federal Court (Bankruptcy) Rules 2016(Cth)

Federal Court Rules 2011(Cth)rr 26.01, 39.05

Bankruptcy Act 1966(Cth)ss 7, 27, 37, 47, 54, 109, 153B

[No 2] [2017] HCA 4; (2017) 91 ALJR 311 Rigg v Baker (2006) 155 FCR 531 Spencer v Commonwealth of Australia (2010) 241 CLR 118 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 Walton v Gardiner (1993) 177 CLR 378 Wren v Mahony (1972) 126 CLR 212

BESANKO J: 1 On 1 November 2017, Mr Rodney Culleton issued an Application against Balwyn Nominees Pty Ltd (Balwyn) and the Commonwealth of Australia (the Commonwealth) seeking interim and final relief as follows: INTERIM RELIEF 1. The matter be bought (sic) on as a matter of urgency and in the interest of the public. 2. The Senator on the principles set out in Commissioner for Railways (NSW) V Cavanough [1935] HCA 45; (1935) 53 CLR 220 (20 June 1935) ask for an order to claim immediate reinstatement and back pay as he has not stopped working as a Senator to resolve this Constitutional crisis which must be resolved in the Parliament of the Commonwealth. FINAL RELIEF 1. The Applicant applies for the relief set out in this application to bring an urgent application to hear instanter, seek relief in setting aside and annulling the orders made by Barker J on the 23rd December 2016, at the Federal Court in Perth. WA. 2. An Order following the High Court precedent in "Re Cavanough" reinstating the Applicant to the position he was filling on the 1st December 2016, as Senator for Western Australia because the Commonwealth through President Senator Stephen Parry in acting on the Order of the 23rd December 2016 on the 11th January 2017, acted outside the authority of Chapter I Constitution, the Senator has never had an Order from the Governor General under S 61 Constitution declaring his Royal Commission vacant, or a legitimate Order from a Ch III Constitution court referring him to the Senate to consider his dismissal by reference to S 47 Constitution. 3. Such Order to be made "nunc pro tunc' under authority granted to the Federal Court of Australia by the Parliament of the Commonwealth under S 39B (1A) (b) Judiciary Act 1903 and S 34AB (c) Acts Interpretation Act 1901 which deems the Order of this Honourable Court to be an Order of the Parliament. I will refer to these orders as the original orders. The applicant appeared in person in the proceeding and in the course of it, he filed written submissions in which he identified other orders which he sought. That was done without any application to amend his Application. 2 The orders which the applicant sought on 20 November 2017 are as follows: 1. This Honourable Court has the power delegated to it by the Parliament of the Commonwealth under S 39B(1A) (b) and (c) Judiciary Act 1903 and by S 34AB (c) Acts Interpretation Act 1901 to annul the Bankruptcy made in contempt of the Parliament and order as the Parliament should that the Senate Motion moved and passed on the 1st December 2016, be listed on the Notice Paper and the Senate deal with it, notwithstanding the conduct of former President, former Senator Stephen Parry who acted on the disqualification whilst a Federal Court Order stayed all proceedings for the notice to the WA Governor General in regards to vacancy to be revoked as former Senator parry was in retrospect ultra vires and hence had no standing in Parliament and no administrative power to lawfully remove the Applicant. 2. Set aside the order of the Federal Court of Australia made the 23rd December 2016 by Barker J 3. Set aside the order of the Full Court of the Federal Court of Australia dated the 3rd February 2017; 4. Dismiss the creditor's petition filed 19th October 2016; alternatively 5. Order a new trial of the creditor's petition or 6. apply section S 153 2(A) Bankruptcy Act 1966 7. An order made under section 25(2B (bb) of the Federal Court of Australia Act (the FCA Act) on the 23rd December 2016 to allow the appeal to the primary judgement of Barker J to be heard in the WA Supreme Court. (Originating formatting retained.) I will refer to these orders as the November 2017 orders. 3 The orders which the applicant sought on 11 December 2017 are as follows: 1. The Bankruptcy be annulled with costs, under section 153B (see Butterworth's Bankruptcy Act annotated) annexed in Culletons third affidavit page XXXX 2. The court cannot sit idly by if it becomes aware that judgments both from the High Court sitting as the court of disputed returns (Re Culleton (No 2) 3rd of February 2017 and Barker J December 23rd 2016) is unsafe or it has been procured by fraud or a serious mistake and the court dismiss any attempts by the respondents to raise res-judicata and Anshun estoppel would be deemed unsafe and a breach of Section 43 Crimes Act 1914 (Cth). 3. That all matters be referred back to the Senate to deal with the invoked motion passed on the 1st of December 2016 by a Quorum of the House 4. That Senator Georgiou stand aside until all matters are dealt with by the House, and/or by any court standing under original jurisdiction. 5. Notwithstanding order 3 that the full court sit with 5 judges in special circumstances through section 22 Federal Court of Australia Act 1976 or the court refers the matter to the full bench all 7 Justices of the High Court of Australia under section 75 and 76(i) of the Constitution (original jurisdiction). 6. I am seeking a subpoena of all documents from the Attorney General's Department as well as the Australian Government Solicitor in reference to the referral and reasons for withholding the agreed facts. 7. That the Commonwealth, despite being in breach of former chief justice French's orders of the 21st November 2016 in regards to full payment of Culleton's legal fees which has not get been payed in full or at all and are to be remitted immediately and in full. 8. The Commonwealth is to consent to orders made by the FCA to hear the unsafe High Court order in answer to a question before a full bench in any court under its original jurisdiction (High Court of Australia) 9. Any other order the court deems fit. (Original formatting retained.) I will refer to these orders as the December 2017 orders. 4 At the centre of the applicant's claims is an allegation that a sequestration order made by a judge of this Court should not have been made against his estate and he seeks an order that the sequestration order be set aside or annulled and an allegation that his place as a Senator for the State of Western Australia should not have been declared vacant. 5 In addition to the parties to this proceeding, Mr Peter Vince appeared as an interested party. Mr Vince is a registered trustee and, since 8 June 2017, he has been the trustee of the applicant's estate. Mr Vince was entitled to be given notice of the application, at least insofar as it concerned an application for the annulment of the sequestration order (Federal Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules) r 7.02(2)). 6 On 27 November 2017, the first respondent (Balwyn) issued an interlocutory application in the proceeding in which it seeks an order that the applicant's Application be dismissed pursuant to r 26.01 of the Federal Court Rules 2011 (Cth) and s 31A of the Federal Court of Australia Act 1976 (Cth), or, in the alternative, an order that the applicant's Application be permanently stayed. In the alternative to one or other of those orders, Balwyn seeks an order that the applicant provide security for costs. 7 The second respondent (the Commonwealth) supports Balwyn's application. With respect to the applicant's application to set aside and annul the sequestration order, the Commonwealth supported the submissions made by Balwyn without materially adding to those submissions. With respect to the applicant's Application for an order that he be reinstated to the position of Senator for Western Australia (paragraphs 2 and 3), the Commonwealth made submissions as to why that claim could not succeed. 8 The applicant opposed the application. 9 For the reasons which follow, in my opinion, the Application has no reasonable prospect of success or it discloses no reasonable cause of action. In the alternative, substantial parts of the Application are an abuse of process. The respondents are entitled to judgment in their favour.

The Facts 10 To a significant extent, the facts can be related through decisions of this Court and the High Court. 11 Section 44 of the Constitution relevantly provides as follows: Any person who: … (ii) is attainted of treason, or has been convicted and is under sentence, or subject to be sentenced, for any offence punishable under the law of the Commonwealth or of a State by imprisonment for one year or longer; or (iii) is an undischarged bankrupt or insolvent; or … shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives. 12 On 19 October 2016, Balwyn filed a creditor's petition under the Bankruptcy Act 1966 (Cth) seeking a sequestration order against the applicant's estate. The petition was founded on a final judgment of the District Court of Western Australia for an amount of $271,134.26 dated 24 October 2013 and was preceded by a bankruptcy notice. The judgment was entered by the District Court after a 10 day trial at which the applicant and Mrs Ionna Culleton were represented by solicitors and counsel. The creditor's petition came on for hearing before Barker J of this Court on 19 December 2016. At the time of that hearing, the applicant was a Senator for Western Australia in the Commonwealth Parliament. A summary of the events between the filing of the creditor's petition on 19 October 2016 and the making of the sequestration order on 23 December 2016 is set out in the reasons for judgment of the Full Court of this Court in Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; (2017) 343 ALR 632 (Full Court Bankruptcy Proceeding) at [3]-[30] and I will not repeat what is set out in those reasons. There is a shorter summary in the reasons of the judge at first instance (Balwyn Nominees Pty Ltd v Culleton [2016] FCA 1578 (Single Judge Bankruptcy Proceeding) at [14]-[18]). 13 At the hearing before the primary judge on 19 December 2016, the applicant applied for an adjournment of the hearing, but that application was refused. He also made an application that there be a trial by jury, but that application was also refused. Others matters were then argued, including whether the applicant had been served with the bankruptcy notice, the creditor's petition and related documents. The applicant argued that the judgment of the District Court was flawed, but the primary judge rejected that argument. Further arguments raised by the applicant are dealt with by the primary judge in his reasons at [129]-[160]. The primary judge also addressed the question of whether the applicant had demonstrated his solvency. He concluded that the applicant had not done so. 14 In the result, the primary judge concluded that the applicant had committed the act of bankruptcy alleged in the creditor's petition and he noted that the date of the act of bankruptcy was 30 August 2016. He concluded that none of the various grounds of objection of the applicant (respondent debtor) had been made out. He was satisfied that the matters in s 52(1) of the Bankruptcy Act had been established. He made an order that the estate of the applicant be sequestrated under the Bankruptcy Act. His Honour stayed all proceedings under the sequestration order for a period of 21 days. 15 In reasons delivered on 31 January 2017 in Re Culleton [2017] HCA 3; (2017) 91 ALJR 302 in an application by the applicant in proceedings in the High Court which I will describe below (at [19]), Gageler J conveniently described, with respect, a number of the key events thereafter (at [32]-[37]): … His Honour stayed all proceedings under the sequestration order for a period of 21 days. On 11 January 2017, Senator Culleton filed a Notice of Appeal from the sequestration order to the Full Court of the Federal Court. The appeal was heard by the Full Court of the Federal Court on 27 January 2017 and judgment on the appeal is reserved. Pending the determination of the appeal, all proceedings under the sequestration order have continued to be stayed by successive orders of Dowsett J, Allsop CJ and the Full Court. Section 44(iii) of the Constitution provides that a person who "is an undischarged bankrupt or insolvent ... shall be incapable of being chosen or of sitting as a senator". Section 45 provides that if a Senator becomes subject to such disability, "his place shall thereupon become vacant". Section 21 provides that whenever a vacancy happens in the Senate, the President must notify that vacancy to the Governor of the State in the representation of which the vacancy has happened. Section 15 sets out a mechanism for the filling of a vacancy in the Senate by the Governor of the State or the Houses of Parliament of the State. On 11 January 2017, Senator Parry wrote to Senator Culleton referring to the sequestration order made by Barker J on 23 December 2016 and stating that he was satisfied that the order confirmed Senator Culleton's status as an "undischarged bankrupt" within the meaning of s 44(iii) of the Constitution. He referred to the operation of s 45 and to his obligation under s 21 of the Constitution. On the same day, Senator Parry wrote to the Governor of Western Australia notifying the Governor "that a vacancy has happened in the representation of the State of Western Australia through the disqualification of [Senator Culleton] as a Senator for that State". The letter explained the vacancy as having arisen by operation of ss 44(iii) and 45 of the Constitution. The letter continued: "Notwithstanding the disqualification, I also advise Your Excellency that, on 7 November 2016, the Senate referred to the High Court sitting as the Court of Disputed Returns questions about the eligibility of Rodney Norman Culleton to have been chosen as a senator at the election of 2 July 2016 because of another disability in section 44 (s 44(ii) - subject to be sentenced for an offence punishable by imprisonment for one year or longer). The Senate has also asked the Court to determine, if there is a vacancy on this ground, how the vacancy should be filled. The matter has been heard and judgment is awaited. In view of the questions referred by the Senate to the Court of Disputed Returns, I am unable to advise Your Excellency that the vacancy in the representation of Western Australia is a vacancy to which section 15 of the Constitution applies and which may be filled in accordance with the requirements of that section. The judgment of the Court of Disputed Returns is expected in the near future. I will write again as soon as I am in a position to provide clarification." On 12 January 2017, correspondence was sent to Senator Culleton from Rachel Callinan, Usher of the Black Rod. Ms Callinan referred to advice she had received from Senator Parry that he had notified a vacancy in the representation of Western Australia, and set out the services her office could provide to assist Senator Culleton in "finalising certain aspects of [his] affairs as a senator". On 24 January 2017 a similar letter was sent to Senator Culleton from the Department of Finance regarding "a number of issues surrounding [his] cessation as Senator", including termination of employment for his employees and arrangements to close down his electorate office. On the same day Ms Margaret Menzel, who is on the staff of Senator Culleton, received email correspondence from the Department of Finance regarding the termination of her employment. Around the same time Senator Culleton also received email correspondence from the Information Services Division at Parliament House about information technology services provided to outgoing parliamentarians. By reason of those events, all of which can be inferred to flow from Senator Parry having taken the view that ss 44(iii) and 45 of the Constitution have operated in light of the sequestration order made by Barker J on 23 December 2016 to cause Senator Culleton's place to be vacated notwithstanding that the order is the subject of an appeal to the Full Court of the Federal Court and that all proceedings under the sequestration order have been stayed pending the determination of that appeal, Senator Culleton seeks by the summons a number of orders. … 16 I should mention at this point that I was a member of the Full Court of this Court which heard the applicant's appeal from the sequestration order made against the applicant's estate (i.e., the Full Court Bankruptcy Proceeding). I raised that matter with the applicant in this proceeding, not because I considered it necessarily disqualified me from hearing this proceeding, but because I wanted to avoid a possible disqualification application halfway through a hearing. The applicant indicated that he did not object to me hearing this proceeding. 17 The Full Court of this Court delivered its decision on 3 February 2017. The Court dismissed the appeal. The Full Court rejected challenges to the primary judge's conclusions with respect to the following: whether to grant an adjournment; whether the creditor's petition was an abuse of process; whether the judgment of the District Court was flawed; whether a trial by jury should be ordered; and the applicant's arguments concerning the service of the bankruptcy notice, the creditor's petition and compliance with s 47(1) of the Bankruptcy Act and rr 4.05 and 4.06(4) of the Bankruptcy Rules. 18 The applicant made an application to the High Court for special leave to appeal from the Full Court's decision, but that application was subsequently discontinued. 19 While the bankruptcy proceedings were in train, there were other proceedings involving the applicant and a reference under s 376 of the Commonwealth Electoral Act 1918 (Cth) to the High Court sitting as the Court of Disputed Returns. Those proceedings concerned the applicant's capacity to be chosen or to sit as a Senator, having regard to the fact that he had been convicted in his absence of the offence of larceny in the Local Court of New South Wales. I will refer to this as the "reference proceeding". Again, the course of this proceeding is, with respect, conveniently described by Gageler J in Re Culleton [2017] HCA 3 (at [10], [12], [14] and [15]): Conformably with the approach in In re Wood, the Senate, by resolution dated 7 November 2016, referred a number of questions to the Court of Disputed Returns under Div 2. A statement of the questions on which the determination of the Court was sought was transmitted by the President of the Senate, Senator Parry, in a letter addressed to the Principal Registrar of the High Court on 8 November 2016. In the form in which they were stated in that letter, the questions referred by the Senate were as follows: "(a) whether, by reason of s 44(ii) of the Constitution, or for any other reason, there is a vacancy in the representation of Western Australia in the Senate for the place for which Senator Rodney Norman Culleton was returned; (b) if the answer to Question (a) is 'yes', by what means and in what manner that vacancy should be filled; (c) what directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference; and (d) what, if any, orders should be made as to the costs of these proceedings." On 21 November 2016, French CJ allowed Senator Culleton and the Attorney-General each to be heard on the reference, by reason of which they were deemed to be parties. Having heard from Senator Culleton and the Attorney-General, his Honour ordered that the reference be referred to a Full Court for hearing. His Honour also made orders which included the following: "Question (a) of the questions referred by the Senate to the Court of Disputed Returns on 7 November 2016 shall be read as referring to s 44(ii) only and not any other reason for the vacancy referred to in that paragraph." The reference was heard by a Full Court of five Justices on 7 December 2016. At issue in that hearing was the effect, if any, of s 44(ii) on the election to the place for which Senator Culleton was returned as a Senator for Western Australia on 2 August 2016 as a result of his conviction on 2 March 2016 in the Local Court of New South Wales of an offence for which he was liable when brought before that Court to be sentenced to imprisonment for up to two years, a conviction which the Local Court later annulled by order made on 8 August 2016 under s 8 of the Crimes (Appeal and Review) Act 2001 (NSW). At the conclusion of the hearing, the Full Court reserved its decision. In the ordinary course, it might reasonably be expected that the Full Court would deliver its decision by making an order in open court which answers each of the questions referred, and that the Full Court would endeavour to do so before 7 February 2017, the next date on which the Senate is scheduled to meet. 20 On 3 February 2017, the Full Court of the High Court sitting as the Court of Disputed Returns delivered its decision (Re Culleton [No 2] [2017] HCA 4). The Court answered Questions (a) and (b) as follows: By reason of s 44(ii) of the Constitution, there is a vacancy in the representation of Western Australia in the Senate for the place for which Senator Rodney Norman Culleton was returned. The vacancy should be filled by a special count of the ballot papers. Any directions necessary to give effect to the conduct of the special count should be made by a single Justice.

The LEGISLATIVE Provisions and principles RELEVANT TO THIS APPLICATION 21 The applicant seeks an order setting aside or annulling the sequestration order. The power in the Bankruptcy Act whereby the Court may rescind, vary or discharge orders made under the Act does not extend to sequestration orders (s 37(2)). Assuming the Court has power as part of its general powers to set aside a sequestration order (a matter about which I received no submissions), nothing has been put to suggest that such a power has been engaged in the circumstances of this case (see, for example, r 39.05 of the Federal Court Rules (Cth)). 22 There is power in the Bankruptcy Act to annul a bankruptcy. Section 153B(1) of the Bankruptcy Act relevantly provides: If the Court is satisfied that a sequestration order ought not to have been made … the Court may make an order annulling the bankruptcy. 23 The power to annul a bankruptcy has been considered in a number of authorities. It is sufficient for me to refer to two of those authorities. 24 In Rigg v Baker (2006) 155 FCR 531, French J sitting as a judge of this Court, discussed the relevant principles. His Honour said that the power to annul a bankruptcy involves two elements. First, the Court must be satisfied that the sequestration order ought not have been made. Secondly, the Court must then exercise a discretion in deciding whether to make an order annulling the bankruptcy. 25 His Honour said that, in deciding whether the sequestration order ought to have been made, the Court may consider not only the case as disclosed at the time the order was made, but also as it would have been disclosed had all the true facts been before the Court at that time. However, facts which have come into existence since the making of the order are not relevant to the issue of whether the order ought to have been made. His Honour said that a judge ought not to have made an order within the terms of the subsection only if he or she was bound not to make the order. 26 French J identified five relevant principles by reference to two previous authorities. His Honour said (at [63]): In Pollock v Deputy Federal Commissioner of Taxation (1994) 94 ATC 4148, Carr J set out five propositions relevant to applications for annulment. They were derived from the judgment of Riley J in Re Calderon (unrep Federal Court of Bankruptcy, 31 May 1977, No NSW 573 of 1976) as follows (at 4153-4154): '1. It is for the applicant for annulment who alleges, and it is therefore for him to bring himself within the section and satisfy the Court, that the sequestration order ought not to have been made. 2. The Court to whom the application is made seeks to ascertain the actual state of affairs at the time when the sequestration order is made. 3. In order to ascertain that actual state of affairs the Court hearing the application for annulment looks at the facts that were before the Court which made the sequestration order and at any other facts that were not before that Court but are shown on the hearing of the application for annulment to have been in existence when the sequestration order was made. 4. Having considered all the facts so looked at, the Court determines whether on those facts the applicant has satisfied it that the sequestration order ought not to have been made. 5. If it is so satisfied, the Court is not bound to annul the sequestration order but must consider in all the circumstances of the case whether it ought to be annulled.' 27 His Honour also made the point that the true facts will generally relate to the financial circumstances of the debtor, but may also extend to procedural issues (at [64]). 28 In Bulic v Commonwealth Bank of Australia Limited [2007] FCA 307; (2007) 5 ABC(NS) 122 at [12], Tracey J identified eight propositions which he distilled from the authorities. Relevantly, his Honour identified the following: (1) … (2) An applicant who seeks an annulment of his or her bankruptcy "carries a heavy burden". It is incumbent on an applicant "to place before the Court all relevant material with respect to his or her financial affairs so that the Court may be properly informed and may make a judgment that is based on the actual circumstances of the applicant": Re Papps; Ex parte Tapp (1997) 78 FCR 524 at 531. (3) In determining whether or not a sequestration order "ought not to have been made" the Court is not confined to a consideration of whether the order should have been made on the facts known to the Court at the time at which it was made. The Court must take account of facts, known at the time at which the sequestration order was made and at which it determines an annulment application, even if those facts were not before the Court at the time at which the sequestration order was made: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243; Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426. (4) A sequestration order "ought not to have been made" if, on the facts known at the time of the annulment application, the Court would have been bound not to make the sequestration order: Re Frank; ex parte Piliszky (1987) 16 FCR 396. (5) The Court will be so satisfied if it is established that the debtor was not, at the time the sequestration order was made, indebted to the petitioning creditor: Re Deriu (1970) 16 FLR 420 at 422. (6) If the Court is so satisfied, it is not precluded from annulling the bankruptcy because the bankrupt had not sought to have the default judgment set aside or failed to oppose the creditor's petition or failed to seek a review of the sequestration order: Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426. (7) The power conferred on the Court by s 153B(1) is discretionary in nature. Even if persuaded that the sequestration order ought not to have been made, the Court can, in appropriate circumstances, decline to annul the bankruptcy: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243. (8) Considerations which may have a bearing on the exercise of discretion include unexplained delay in the making of the application, whether or not the applicant is solvent, whether or not the applicant has made full disclosure of his or her financial affairs and a failure by the bankrupt to oppose the creditor's petition and attend the hearing at which the sequestration order was made: Re Williams (1968) 13 FLR 10 at 24-5; Boles at 247; Re Papps; ex parte Tapp (1997) 78 FCR 524 at 531; Rigg v Baker [2006] FCAFC 179 at [79]; Cottrell v Wilcox [2002] FCA 1115 at [7]. Additional considerations are collected in D. A. Hassall, "Annulment of Bankruptcy and Review of Sequestration Orders" (1993) 67 ALJ 761 at 766. 29 Section 31A of the Federal Court of Australia Act 1976 (Cth) provides as follows: (1) … (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. 30 Rule 26.01(1) of the Federal Court Rules 2011 (Cth) provides: (1) A party may apply to the Court for an order that judgment be given against another party because: (a) the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or (b) the proceeding is frivolous or vexatious; or … (d) the proceeding is an abuse of the process of the Court; or … 31 The power to enter summary judgment must always be exercised with caution (Spencer v Commonwealth of Australia (2010) 241 CLR 118 at [24] per French CJ and Gummow J; see also at [60] per Hayne, Crennan JJ, Kiefel J (as her Honour then was) and Bell J). 32 The High Court considered when a proceeding constituted an abuse of process in Walton v Gardiner (1993) 177 CLR 378. Mason CJ, Deane and Dawson JJ said (at 393): … Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail… Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings… (Citations omitted.) 33 With respect to the second and third paragraphs of the original orders (final relief), I know of no power which would enable this Court to make an order reinstating the applicant as a Senator for Western Australia. 34 I should mention that one of Balwyn's arguments was that it was not a proper party to this proceeding as far as the applicant sought an order annulling the bankruptcy. That proposition seems to be correct (Horvath v Pattison [1999] FCA 924 at [12] per Finkelstein J), although I am not sure where the argument goes in view of the other orders sought by the applicant and the other arguments advanced by Balwyn.

Culleton v Balwyn Nominees Pty Ltd

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