Freeman v National Australia Bank Ltd

REASONS FOR JUDGMENT SUNDBERG AND KENNY JJ THE ORDERS APPEALED FROM 1 On the application of the respondents under Order 21 rule 2 of the Federal Court Rules Spender J made the following orders, amongst others, affecting the appellant, from which he now appeals:

"1. Mr Freeman shall not, without the leave of the Court, commence in this Court any proceeding against the National Australia Bank Ltd ('the Bank') or against Matthew Leslie Joiner and Philip Gregory Jefferson, the respondent's Trustees in Bankruptcy ('the Trustees'), or against both the Bank and the Trustees, or any of their servants, officers, agents or employees, other than an appeal against this order. 2. Any proceeding initiated by Mr Freeman in the Federal Court of Australia against the Bank or the Trustees prior to the making of this order shall not be continued by Mr Freeman without the leave of the Court, other than an appeal against these orders." See National Australia Bank Ltd v Freeman [2005] FCA 1895. Spender J features in earlier stages of the appellant's curial history. In order to avoid confusion we will refer to his Honour as "the primary judge" in relation to his involvement in the judgment under appeal, and as Spender J in other contexts. BACKGROUND 2 The following account of the events upon which the respondents based their application, and which founded the primary judge's orders, is taken from his Honour's reasons. The appellant disputed the completeness of the primary judge's recital of some of the background facts. However, as will appear, the essential facts are not in dispute. 3 In December 1997 a mediation took place between the appellant and the first respondent (the Bank), at which the appellant was represented by counsel and solicitors. As a result of the mediation the parties executed an agreement (the mediation agreement). The mediation agreement led to the establishment by the Bank of a bill facility of $1,020,000 in favour of the appellant which was due for repayment on 6 April 1998. By the mediation agreement the appellant agreed to use his best endeavours to refinance the Bank's debt or to sell the property "Glassford Vale", which was mortgaged to the Bank, by 4 March 1998. Settlement of any sale or refinancing was to be effected by 6 April 1998. The mediation agreement contained a provision by which the appellant released the Bank from claims which he had or might have had against the Bank in respect of a wide range of matters. 4 The appellant was unable to refinance the Bank's debt or sell Glassford Vale. On 14 May 1998 the Bank commenced proceedings (No 4013 of 1998) in the Queensland Supreme Court for possession of Glassford Vale, and for moneys owing under the expired bill facility. The appellant was represented by counsel at the hearing before Ambrose J. On 11 October 2000 his Honour gave judgment for the Bank for possession of Glassford Vale, and for $1,427,890.08, and awarded indemnity costs against the appellant. He rejected the appellant's claim that he was mentally incompetent when the mediation agreement was entered into, found that the release was effective to protect the Bank from all the claims made by the appellant in his counter claim in the proceeding, and held that in any event the appellant had no real prospect of establishing those claims. 5 The appellant unsuccessfully appealed to the Court of Appeal (No 9718 of 2000). White J, with whom Davies and Thomas JJA agreed, said there was no substance in any of the grounds of appeal raised in the appellant's extensive written and oral submissions: National Australia Bank v Freeman [2001] QCA 473. 6 The High Court refused the appellant special leave to appeal from the Court of Appeal's decision on the ground that no arguable error had been shown by the courts below. The appellant was represented by counsel on the leave application. 7 On 11 March 2002 the appellant commenced proceedings against the Bank in the Supreme Court of Queensland (No 2339 of 2002) for damages arising out of the sale of Glassford Vale at an alleged undervalue. The property had been sold by Receivers appointed by the Bank in July 2001, and one of the issues in the proceeding was whether the Bank was responsible for any default on the part of the Receivers who were deemed by the mortgage documents to be the agents of the Bank. 8 On 18 January 2001 the Bank filed a Creditor's Petition in the Federal Court against the appellant based on his failure to comply with a warrant of execution issued by the Supreme Court of Queensland. In dismissing a notice of motion filed in the proceeding by the appellant, Spender J said the appellant was seeking to relitigate whether he owed a debt to the Bank. On 12 March 2002 Spender J made a sequestration order in relation to the appellant's estate. His Honour held that a prima facie case of fraud, collusion or miscarriage of justice, such as to impeach the judgment of Ambrose J, had not been made out. He found that any claim by the appellant asserting a sale of Glassford Vale at an undervalue was a claim against the Receivers, and not against the Bank. 9 On 7 May 2002 Muir J dismissed an application by the Bank for summary judgment in proceeding No 2339 of 2002, on the basis that there was a triable issue as to whether the Bank had intermeddled in the Receivers' sale so as to render it liable for any default on their part. 10 On 26 August 2003 a Full Court of this Court dismissed the appellant's appeal from the making of the sequestration order. 11 On 27 August 2003 the appellant commenced further proceedings in the Queensland Supreme Court under rule 668 of the Uniform Civil Procedure Rules 1999 seeking orders setting aside the judgment of Ambrose J referred to at [4] on the basis of fresh evidence. (Rule 668 codifies the circumstances in which a person may seek a stay of an order against him or her on the basis of facts arising after the making of the order, or facts discovered after the order which, if discovered in time, would have entitled the person to a different order.) de Jersey CJ dismissed the application on the ground that the appellant did not have standing to pursue it because of his bankruptcy. 12 On 14 October 2003 the second respondent (the Trustees) elected not to adopt the appellant's proceedings against the Bank. On 31 October 2003 the appellant filed a notice of motion seeking to compel the Trustees to commence actions against the Bank. Spender J declined to make any orders on the motion. His Honour said: "While this court has, on the present motions, been subjected to a considerable volume of material, most of it is directed at issues which are not central to the applications which Mr Freeman wishes the court to consider today or the orders he wishes the court to make. Much of the material seeks to re-canvass the question of whether the judgment of Ambrose J was correct, and whether the consequential proceedings in the Court of Appeal, in the High Court, the making of a sequestration order, and the unsuccessful appeal from the making of that order are consequently tainted." 13 The appellant's appeal to the Full Court was dismissed. The Court said: "The appellant placed a large volume of material before us which was primarily directed towards establishing that the decision of Ambrose J was wrong, … there was little focus on the issues …." 14 On 6 February 2004 Dowsett J rejected the appellant's application under s 153B of the Bankruptcy Act 1966 for the annulment of the sequestration order of 12 March 2002. His appeal to the Full Court from that decision was stayed on 7 March 2004 pending payment of $5,000 as security for the Bank's costs. In imposing the stay, Spender J said: "In my judgment there is no question of legal principle involved in the appeal from the judgment of Dowsett J. … As the submissions by Mr Freeman on his own behalf … confirm, what he is seeking to do is to demonstrate what he has been unsuccessful in demonstrating thus far in many proceedings, namely that decisions in favour of the National Australia Bank from the time of the first trial before Ambrose J and in successive proceedings, have been erroneously determined in favour of the bank and adversely to Mr Freeman." 15 An application for leave to appeal against the security for costs order was dismissed by Tamberlin J on 7 July 2005. 16 On 11 March 2005 the appellant filed an application for an order that the Trustees assign to him two actions he had commenced in the Supreme Court prior to his bankruptcy. The application was dismissed by Tamberlin J on 6 May 2005. An appeal to the Full Court was dismissed on 8 August 2005. THE PRIMARY JUDGE'S REASONS 17 After setting out Order 21 rule 2 and considering the meaning of the word "proceeding", the primary judge said: "Mr Freeman has commenced ten such proceedings in this Court concerning the [Bank] and at least six such proceedings concerning the [Trustees]. They have all been dismissed with costs, except one against the Bank which was stayed and except what Mr Freeman describes as a Cross Claim in this proceeding, to which reference will be later made." 18 The primary judge referred to authorities holding that while "court" in Order 21 rule 2 means the Federal Court, in considering whether proceedings brought in this Court are vexatious, regard may be had to proceedings in other courts which have involved the authoritative determination of an issue sought to be revisited in this Court. In this connection his Honour noted the institution by the appellant of numerous other proceedings in the Magistrates Court, District Court, Supreme Court, Court of Appeal and High Court. 19 Having examined the meaning of "habitually and persistently" and "vexatious" in Order 21 rule 2, the primary judge said: "The question of whether the legal proceedings are in fact 'vexatious' or 'instituted without reasonable cause' is also an objective one. It is immaterial whether Mr Freeman believes in the justice of his argument or whether he understands that the argument has been authoritatively rejected. Continual attempts to re-litigate matters raised and rejected on previous occasions constitutes an abuse of process and have been found to satisfy the tests of 'vexatious' or 'instituted without reasonable cause' within the meaning of O 21 …. The material before the Court demonstrates that Mr Freeman has made, and continues to make, strenuous efforts to re-ventilate in this Court the matters which have been determined against him on a number of occasions, both in this Court and in the Supreme Court of Queensland. This is nowhere more plainly demonstrated than by the 'Defence and Cross Claim' filed on 8 August 2005 in this proceeding." 20 His Honour then set out parts of the Defence relevant to the Cross Claim and the whole of the latter. It occupies seven pages of his Honour's reasons, and we will not set it out ourselves. However, it can be summarized as follows: · the respondents rely on misleading statements that have tainted the whole proceedings · the appellant has discovered fresh evidence since the trial before Ambrose J and the hearing of the creditor's petition in February 2002 · the Bank is acting dishonestly in the Order 21 rule 2 application · the Trustees have unconscionably taken advantage of the Bank's dishonesty · in order to support the Order 21 rule 2 application, the Bank and the Trustees have