Freeman v National Australia Bank

REASONS FOR JUDGMENT 1 This is an application pursuant to s 153B of the Bankruptcy Act 1966 (Cth) to annul a sequestration order against the estate of the applicant, which order was made by Spender J on 12 March 2002. The circumstances in which the order was made appear from pars 1, 2 and 3 of his Honour's reasons as follows: '[1] This is a contested creditor's petition. It is a further chapter in the long history of litigation between National Australia Bank Limited (the Bank) and the judgment debtor (Mr Freeman). The creditor's petition seeks a sequestration order pursuant to s 43 of the Bankruptcy Act 1966 (Cth), (the Act) based on an enforcement warrant being returned unsatisfied in December 2000. The enforcement warrant was based on a judgment debt of the Supreme Court of Queensland. That debt was in turn based on a claimed indebtedness under a bill facility. [2] In brief summary, in May 1998 the bank commenced proceedings against Mr Freeman for recovery of possession of mortgaged land and for a debt said to be owing by Mr Freeman to the bank under an expired bill facility. The trial in the Supreme Court was heard over four days in September 2000. At the trial, Mr Freeman was represented by solicitor and counsel. On 11 October 2000, Ambrose J handed down judgment in favour of the bank for recovery of Mr Freeman's property and for the sum of $1,427,890.08, together with indemnity costs. The bank has since sold the property through receivers which the bank appointed, and the bank has petitioned for Mr Freeman's bankruptcy. The petition is based on the unsatisfied return of an enforcement warrant in February 2001. Mr Freeman appealed to the Queensland Court of Appeal against the judgment of Ambrose J. That appeal was unsuccessful. In the reasons for judgment of White J in the Court of Appeal, her Honour noted: "There is no substance in any of the grounds of appeal raised by the appellant in the extensive written submissions or in his oral submissions." [3] Subsequent to the judgment of the Court of Appeal, Mr Freeman has sought special leave to appeal to the High Court of Australia. The material before me includes a document relevant to that application for special leave. Part 1 of that document is headed "A Concise Statement of the Special Leave Question". Part 2 is "A Brief Statement of the Factual Background of the Application" and part 3 contains the "Statement of the Appellant's Argument". The application for special leave has not yet been heard and one of the submissions which Mr Freeman has put to this court, as a discretionary reason against the making of a sequestration order, is that the making of such an order might prejudice his capacity to pursue that special leave application.' The application for special leave has now been heard and dismissed. 2 Spender J considered various matters raised by the applicant in opposing the sequestration order but nonetheless made such an order. An appeal to the Full Court was, on 26 August 2003, dismissed. The applicant has sought to upset the judgment obtained in the Supreme Court, alleging the availability of fresh evidence. Such application has not so far been successful, perhaps because he is a bankrupt. He now seeks annulment of the bankruptcy on the ground that such evidence, had it been before Spender J, would have led his Honour to decline to make the sequestration order. 3 The first category of evidence is medical evidence. In the proceedings before Ambrose J, the applicant sought to set aside the bill facility pursuant to which the claim was brought, upon the basis that at the time he executed the bill, he was unable to look after his own affairs. He seems to have asserted undue influence or some such similar basis for avoiding liability. The bill facility was, in fact, executed following mediation proceedings between him and the bank. The question of the applicant's state of health was ventilated at great length in the Supreme Court, apparently on the basis that his claimed condition was a psychiatric illness. Ambrose J concluded that at the time of the mediation and execution of the bill, the applicant had not exhibited the various symptoms of which he complained at the trial. At the time of the trial, there was a certificate available to the applicant which suggested that he currently had some sort of infection. It is now suggested that this may have incapacitated him at the time of the mediation and execution of the bill. In an affidavit from Dr Ryan, it is suggested that the applicant may have been suffering from this infection in 1998. However there is no suggestion in the medical evidence that he was suffering from it in 1997 when the mediation occurred and the bill was executed. The applicant asserts that the symptoms which he claims to have been exhibiting at that time indicated that he was so suffering, but of course, his claim to have been exhibiting those symptoms was effectively rejected by Ambrose J. In any event, I cannot see that this marginal evidence could have had any relevance before Spender J, given that the applicant's complaints as to his health at the relevant time were ventilated at such length before Ambrose J. That another medical practitioner may have offered another opinion was really not to the point. 4 The applicant asserts that there is new evidence available as to procedures, 'unknown to the applicant at a mediation'. This rather opaque statement refers to an assertion by the applicant that the bank was required to take certain procedural steps, either prior to entering into mediation with him, or in connection with his advance from the bank, by virtue of the conditions upon which financial assistance was available to him from a government agency. The point has not been explained in any more detail. I am unable to see that it has any relevance for present purposes. 5 The applicant submits that there is 'new evidence as to the bank claim not available at trial'. The applicant asserts that the bank has now disclosed that it keeps different sets of records and that some of them, on his interpretation, suggest a different state of the account from that upon which the bank relied at the trial. He has, however, not been able to demonstrate that to me at this hearing. It remains nothing more than an assertion. Such an argument would require explanation by him of the various documents to which he refers. No such explanation has been forthcoming. 6 He asserts that there is 'evidence as to the applicant's credibility not before the Court of Appeal who made the same mistake as the primary Court'. In his reasons, Ambrose J observed at [89]: 'In spite of all the evidence that was given no contemporaneous sales dockets or other such documentary evidence was led by the defendant to support his oral evidence that he sold the 300 head of cattle or breeders to which the points of claim upon the mediation referred. Indeed, some of the material he relied upon indicated that no breeders whatever were sold in the 12 month period after September 1996.' 7 The applicant is particularly concerned that this finding may have been reflected in his Honour's view as to his credit. He asserts that there was, in fact, evidence before Ambrose J of cattle sales during the relevant period. However such material has not been produced before me. I therefore am quite unable to assess it. In any event, this was a point which could have been raised on appeal. The matter was mentioned in the Court of Appeal, but the applicant asserts that the relevant documents were not included in the appeal record. In the reasons of White J (with which other members of the Court agreed) her Honour said at [18]: 'The appellant gave evidence that he had sold 300 breeders between September and December 1996 (or in the 12 months from September 1996) realising $60,000. The evidence, as his Honour found, was far from clear that that had occurred or for the reason advanced. For example, he told his counsel in a taped conversation that he sold the breeders because he had too many and was vague as to why he did not instead sell steers. None of the money was used to reduce by $30,000, or in any amount, the overdraft as required.' 8 The applicant's assertion is that if the relevant documents, which were in evidence before Ambrose J, had been looked at, these conclusions would have been vitiated. If the applicant considered that such documents showed that Ambrose J had mistaken the evidence, then he should have told the Court of Appeal. If the documents were not in the appeal record, it would have been easy enough to obtain them. The applicant says that this was also one of the bases upon which he sought special leave to appeal to the High Court but that the point was not argued. He was represented at the hearing. Such a simple, and probably persuasive point could have been easily raised. That it was not suggests that counsel thought that there was no substance in it. Whether that is so or not, it is a point which ought to have been dealt with at that time. It would be inappropriate to allow the applicant to rely on it for present purposes. 9 Finally, there is, as is so often the case in bankruptcy proceedings, an assertion that the bank sold the mortgaged property at an under-value. This matter was ventilated at great length, both before Spender J and in the Full Court. It is inconceivable that the applicant should be allowed to re-ventilate it on an application pursuant to s 153B. In any event, so far as I can see, no new evidence going to that issue has been disclosed. 10 The application will be dismissed. I order that the applicant pay the costs of the first and second respondents of and incidental to the application.