Garrett v GEL Custodians Pty Ltd

Judgment 1ALLSOP P: The matter before the Court is constituted by two applications. One is by Mr Garrett, who is the applicant on an application for leave to appeal from orders made by the Supreme Court on 23 February 2012. The other is by the respondent to that application, GEL Custodians Pty Ltd for the dismissal of the application for leave to appeal upon a number of rules of the Uniform Civil Procedure Rules, but in substance, relevantly, because of the fact that Mr Garrett has the status effected by the Bankruptcy Act 1966 (Cth) after a sequestration order made thereunder, that is, Mr Garrett is an undischarged bankrupt. 2Mr Garrett's application for leave to appeal is supported by various arguments to the effect that he was denied a jury trial in the Possession List and various other constitutional impediments to the Court acting in the way that it did. Those submissions are contained at pp 9-15 of the White Book under the document titled Summary of Claimant's Argument. 3The matters that Mr Garrett raises in his summary of argument and the draft notice of appeal, which is also in the White Book, raised constitutional issues on one view - reflected in paras 1 and 2 of the notice of appeal - which are in the following terms: "1. No court, established in accordance with Chapter III of the Act to Constitute the Commonwealth of Australia (63 & 64 Victoria. Chapter 12) [9th July 1990], has jurisdiction to deny anyone the legal procedure of Challenging the Jurisdiction of the Court when he or she is denied their legal right to Trial by Jury. 2. No parliament, established in accordance with Chapter I of the Act to Constitute the Commonwealth of Australia (63 & 64 Victoria. Chapter 12) [9th July 1990], has jurisdiction to make laws to deprive anyone of their right to be entitled to the lawful Judgment of his Equals which is a Right that has been guarantied for ever in Constitutional Enactments such as Magna Carta, Petition of Right, Habeas Corpus and Bill of Rights. 'A law in excess of the authority conferred by the Constitution is no law; it is wholly void & inoperative; it confers no rights, it imposes no duties; it affords no protection. To be valid & binding they must be within the domains of jurisdiction mapped out & delimited in express terms, or by necessary implication, in the Constitution itself. What is not so granted to the Parliament of the Commonwealth is denied to it. What is not so granted is either reserved to the States, as expressed in their respective Constitutions, or remains vested but dormant in the people of the Commonwealth.' ('The Annotated Constitution of the Commonwealth of Australia' by Quick & Garran)." 4Conformably with the requirements of the Judiciary Act 1903, s 78B a notice of a constitutional matter was drafted by or on behalf of Mr Garrett and there is evidence before the Court, by an affidavit of service of Mr Garrett of 7 June 2012, that that notice under s 78B has been served on the Attorneys. Thus the prohibition upon this Court proceeding with any matter arising under or involving the interpretation of the Constitution that is contained within s 78B, is lifted. 5The evidence of Mr Paterson and Mr Mathas, who swore affidavits in the proceedings as to uncontroversial matters, is before us. It suffices to say that that evidence reveals that an order was made in the Federal Magistrates Court for the sequestration of the estate of Mr Garrett sometime in late 2010. Mr Garrett has not been discharged. 6The effect of the Bankruptcy Act after the making of a sequestration order is that the property of the bankrupt, subject to certain exceptions which do not apply here, vests in the trustee and all claims to defend that property are to be made by the trustee. The evidence of Mr Paterson and Mr Mathas discloses that the trustee has been apprised of these proceedings and has indicated that he is not interested in pursuing any resistance to the secured creditor's claims, the secured creditor being GEL. 7Before turning to the substance of the matters put by Mr Garrett to the Court this morning, I should say that Mr Garrett indicated today that he would make the same kind of complaint as to lack of constitutionality about the court that made the sequestration order as he makes about the Possession List, that is, that he could not be made bankrupt without the opportunity of a jury trial. Leaving to one side the merits, or lack thereof, of the proposition, any attack upon the exercise of federal jurisdiction by the Federal Magistrates Court in the making of the sequestration order, being part of proceedings in bankruptcy, cannot be pursued in this court and is a matter of exclusive jurisdiction to be pursued in the Court which made the order. We cannot proceed on the basis otherwise than of the existence and validity of the order for sequestration. 8The fundamental character of the order for sequestration, that is, making a person bankrupt, is that it changes the status of the person in the community. One aspect of that change of status is the removal of that person's property, subject to statutory exceptions, and its vesting in the trustee. Those matters are matters of law about which there can be no doubt. Mr Garrett may not appreciate or have appreciated all of them but they are at the foundation of the respondent's application. 9The law in relation to standing concerning applications of this kind was fully and completely set out by Campbell JA with the agreement of Beazley JA and Hodgson JA in Samootin v Shea [2010] NSWCA 371 at [62] and following. There is no doubt that the only person with standing to complain about the secured creditor's actions with the existence of a sequestration order is the trustee. There is property exempt from the reach of a trustee but land owned by the debtor or later bankrupt is not such property. I would have nothing to add to the principles identified by Campbell JA, which lead to the inexorable conclusion that Mr Garrett does not have standing to complain about the position taken by the secured creditor. 10Before dealing with that conclusion, I should say something about the form of the action that Mr Garrett has put forward to the Court. There are two aspects I wish to make some comment on, firstly, its legal form as an application for leave to appeal. The Court has three pages of transcript of the matter before the Judge below on 23 February 2012 as well as the formal orders made by his Honour on that day, which were entered that day. The matter was a summary judgment application by the secured creditor based upon the striking out of the defence. We do not have the pleadings here but his Honour found the defence to be lacking any substance in its form and he has therefore struck it out. He then entered judgment for the plaintiff for possession of the land with leave to issue a writ of possession and an order for costs. 11There is no doubt that an application by a defendant for the dismissal by summary disposal of a claim is a matter which is interlocutory in character. The grounds of those kinds of actions are often that the claim by the plaintiff is frivolous or vexatious or otherwise lacking in substance. On the other hand, an application for summary judgment by the plaintiff striking out the defence is ordinarily characterised as final, thus there may be room to doubt the proposition that leave to appeal was required. Nevertheless, to the extent that it was required, in my view the matters put forward in the claimant's summary of argument are without substance. I do not need to go into that matter in any detail since the matter should be disposed of by reference to the clear lack of standing that Mr Garrett has in relation to the actions of the secured creditor. 12Before concluding, I should say that Mr Garrett today tendered in evidence material that has been in the press in The Australian newspaper and others concerning the results of cases concerning borrowers and lenders in the first decade of this century. In particular, in relation to what have been referred to in the press and cases as "low doc loans" or "low doc lending". These loans are often marketed by providers of funds using commission agents of one kind or another, promoting and selling loans, with one of those agents, or not as the case may be, having lending criteria and an authority to lend up to a certain amount. Mr Garrett's fundamental complaint is that he was dealt a considerable injustice in the way this lending was made to him by the respondent. The reality of his status as an undischarged bankrupt is that those matters, to the extent that they may be justiciable, can either be brought by the trustee or, if there be a proper ground for them, focusing on the validity or otherwise of the order for bankruptcy. I repeat what I earlier said: this Court has no jurisdiction to deal with any attacks on sequestration orders made in exclusive federal jurisdiction of courts of the Commonwealth. 13I make no judgment whatsoever upon whether Mr Garrett has been the subject of an injustice by inappropriate or improper lending. It simply does not arise on the matters today which are bounded by the fact that it cannot be contested in this Court that Mr Garrett is an undischarged bankrupt who has no standing to complain in relation to these proceedings. 14For these reasons the application for leave to appeal should be dismissed pursuant to the motion brought by the applicant. 15MACFARLAN JA: I agree. 16ALLSOP P: The order of the Court is: application for leave to appeal dismissed with costs. [Post-script, not part of reasons: The comments in [10]-[11] as to leave did not take into account the Supreme Court Act 1970 (NSW), s 101(2)(l).] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 June 2012