Garrett v Macks

REASONS FOR JUDGMENT 1 On 24 September 2004 the applicant, in these proceedings, was made bankrupt by a sequestration order made by Registrar Christie exercising her power pursuant to s 103 of the Federal Magistrates Act 1999 (Cth). The applicant sought a review of that decision, as he was entitled, pursuant to s 104 of the Federal Magistrates Act, which application was dismissed by Federal Magistrate Lindsay on 24 January 2005. 2 On 21 March 2006 the applicant commenced these proceedings against the nine respondents to these proceedings seeking the following final orders: 'Pursuant to section 153B, 252B of the Bankruptcy Act 1966, on the grounds stated in the affidavits in evidence filed in this action, ADG 90 of 2004, ADG 187 of 2004 in the Federal Magistrates Court and in SAD 29 of 2005, SAD 318 of 2005 and SAD 5 of 2006, the applicant seeks the following orders: (1) that the order of sequestration made in action ADG 90 of 2004 on 24 September 2004 by Registrar Christie, be annulled; (2) that the first and ninth respondents pay unspecified costs and damages in respect of this action, ADG 90 of 2004 on an indemnity basis; (3) that the first to ninth respondents be found to have committed fraud, perjury, unconscionable conduct, acting without clean hands, acting with the intention of unjust enrichment, breach trust, breach duty of care, breaches of the Corporations Act 2001, the Bankruptcy Act 1966, the Legal Practitioners Act 1981, the Trade Practices Act 1974 and theft and others; (4) that the first to ninth defendants be committed to trial on criminal charges by the Attorney Generals of Australia and South Australia; (5) such other orders this Honourable Court deems fit.' 3 At the same time as that application was brought in the Federal Magistrates Court, the applicant also sought interim orders. The following interim orders were sought: '(1) that an order be made as to indemnity costs of the applicants against the respondents; (2) that an undertaking as to damages be given jointly and severally by the respondents; (3) that an order be made that the sequestration order against Averil Garrett be stayed until conclusion of this action.' 4 The last reference in the interim orders is to an order made against the applicant's wife by Registrar Christie on 21 December 2004, when the Registrar made a sequestration order against Mrs Garrett. As it happens, after the applicant brought these proceedings on 23 March 2006, Averil Gay Garrett purported to bring a proceeding of exactly the same kind with her husband, the applicant in these proceedings, as second applicant in her proceedings. When those proceedings were called on this morning they were, on her application, dismissed with no order as to costs. 5 Each of the respondents appeared and filed a notice of opposition to the orders sought, in conformity with the rules in the Federal Magistrates Court. However, on 6 April 2006, Federal Magistrate Raphael made an order transferring these proceedings to this Court. The matter first came before me on 3 May 2006 when each of the applicants sought to agitate their notice of opposition to summarily strike out this proceeding. 6 After some discussion, I indicated that I thought Mr Garrett ought to be given time to consider the respondents' applications and to file any evidence that he wished to file in opposition to the applications by the respondents to strike out these proceedings. On that date, I made an order that Mr Garrett file and serve any affidavits in opposition to the respondents' applications to dismiss the originating proceeding by Monday, 8 May 2006 and adjourned this proceeding to be heard today. As it happens, Mr Garrett has not filed any affidavit in opposition to the applications made. 7 Each of the respondents has applied to summarily dismiss the applicant's proceeding; each of them on the grounds stated in their notice stating grounds of opposition. Each of them, however, in due course, relied upon the submissions made by Mr Slattery QC, who appeared for the eighth and ninth respondents. It is probably appropriate to identify who the respondents are before proceeding much further. 8 Mr Macks is a chartered accountant, liquidator and trustee, who is the trustee of the applicant's bankrupt estate. Mr Duncan is a chartered accountant, liquidator and trustee, who is trustee of Averil Garrett's bankrupt estate. International Vintners Australia Pty Limited was the petitioning creditor which led to the sequestration order made in respect of Averil Garrett. Richard John Oliver is a director of International Vintners and Adrian Tisato is a solicitor employed by Griffin Hilditch, solicitors for International Vintners and Mr Oliver. The Deputy Commissioner of Taxation was a petitioning creditor in the proceedings which led to the sequestration order made in the applicant's bankrupt estate. The National Australia Bank was a secured creditor of the applicant and a number of companies and trusts associated with the applicant. The eighth and ninth respondents are solicitors in the firm of Johnson, Winter and Slattery, solicitors for the seventh respondent, the National Australia Bank. 9 Mr Slattery relied upon an affidavit sworn by Scott Alexander Evans, the ninth respondent, in support of the eighth and ninth respondents' applications to summarily dismiss the proceeding. During Mr Slattery's submissions, Mr Garrett indicated that he wished to cross-examine Mr Evans. Mr Evans, who was not present in Court, came immediately to Court and presented himself for cross-examination. 10 During the cross-examination of Mr Evans, Mr Garrett referred to other affidavits sworn by Mr Evans in other proceedings in which Mr Garrett is a party, and in which National Australia Bank is a party in this Court and in the Supreme Court of South Australia. Mr Garrett told me that he wished to refer to those proceedings for the purpose of establishing in his cross-examination that Mr Evans had been guilty of fraud. He said that Mr Evans' fraud was in swearing false affidavits. I think what Mr Garrett meant was that he wished to establish that Mr Evans had been guilty of perjury. 11 I should say immediately that he established nothing of the kind. Mr Evans gave his evidence in a forthright and appropriate manner. I accept Mr Evans' evidence which he gave today. There was nothing put or established that in any way indicated that Mr Evans was guilty of either perjury or fraud or that those claims should have ever been made in this Court today. 12 The proceeding, as I have indicated, is hopelessly inadequate and hopelessly misconceived. First, the applicant seeks to have me exercise a criminal jurisdiction which is not part of the jurisdiction of this Court. For that reason, there needs to be nothing more said in dismissing paragraph 4 of the application. 13 Paragraph 3 of the application alleges fraud, perjury, unconscionable conduct, etcetera. No party is entitled to allege fraud in any Court without giving proper particulars of the fraud which is said to have been committed. It seems to me the same ought to apply to perjury. In that regard, a party ought not to allege that another party has committed perjury without giving particulars of the perjury so that the party against whom the allegation is made is in a position to respond to it. 14 These claims in their bald form should never have been made. They make the most serious allegations against a number of people, three of whom are officers of this Court, two of whom are professional persons who act as liquidators and trustees and are, therefore, responsible in that manner to this Court, and one of whom, of course, is a senior public officer, being the Deputy Commissioner of Taxation. Mr Garrett has made no effort in any way to support the allegations made in the proceeding. It was put by Mr Evans, by way of evidence, but really by way of submission in paragraph 19 of his affidavit, that the allegations are scandalous. I agree. 15 The allegations are scandalous and should never have been made in circumstances where no effort has been made to support the allegations made. Paragraph 3 of the notice is struck out. 16 That leaves a claim that the first to ninth respondents in paragraph 2 ought to pay unspecified costs of damages in respect of this action and AGG 90 of 2004 on an indemnity basis. As can be seen from the application, the applicant has relied generally on other actions in this Court as the basis of the application in this proceeding. I have told the applicant on previous occasions that that is not a permissible way in which to proceed. If the applicant wishes to make a claim of any kind against any party then he must, in the proceeding which he has brought the claim, identify with proper particularity the claim which he seeks to bring and the relief which he seeks if the claim is made out. Again, he has made no effort to do so. For that reason, if for no other reason, paragraph 2 of the application must be struck out. 17 However, there are other reasons why paragraph 2, and therefore, of course, paragraph 3 of the application, cannot be maintained. The applicant, as I have said, was made bankrupt by the sequestration order on 24 September 2004. By virtue of s 58 of the Bankruptcy Act 1966 (Cth) ('Bankruptcy Act 1966'), all of the bankrupt's property vested in his trustee, in this case, Mr Macks. 18 The bankrupt is not entitled, having been adjudged bankrupt, to bring proceedings against his trustee and other parties seeking to maintain a claim for, if it be his claim, as I say it is not particularised, that the trustee and those other parties maliciously procured the bankruptcy or conspired amongst themselves to cause the bankruptcy to occur: Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210. Nor, in my opinion, can the applicant do what the applicant sought to do by seeking to set aside the bankruptcy and have an order for an annulment bring proceedings at the same time against those other parties, if it be the case, for the malicious procurement of the bankruptcy or conspiracy to cause the bankruptcy: Re Coyle and Another (1993) 120 ALR 527. In my opinion, these proceedings are misconceived. The applicant is not entitled in this proceeding to seek damages against the third to ninth respondents whilst at the same time seeking to set aside the order for bankruptcy and seeking an order for an annulment. Whilst he remains a bankrupt he has no right of action of the kind that he seeks to pursue against the third to ninth respondents. 19 The Bankruptcy Act 1966 does provide for the annulment of bankruptcies in two ways. First, under s 153A if the trustee is satisfied that all of the bankrupt's debts have been paid in full and the bankruptcy is thereby annulled by force of s 153A(1) on the date upon which the last payment of the bankrupt's debts is made. That is not the case here, not on the applicant's proceeding at least. 20 Under s 153B, the Bankruptcy Act 1966 provides a procedure where the bankrupt may apply to the Court to satisfy the Court that a sequestration order ought not to have been made by the Court. I think it is under s 153B that Mr Garrett is purporting to proceed. He has given no particulars of the reasons why the order ought not be made on 24 September, except to refer to other proceedings in this Court and in the Federal Magistrates Court generally. I am not satisfied that they give any proper particulars which would enable the first respondent, who has a responsibility of considering this application, to respond to the application at all. 21 Section 31A of the Federal Court Act 1976 (Cth) now provides the test for summary judgment in a proceeding. Section 31A(1) provides that: 'The Court may give judgment for one party against another in relation to the whole or any part of the proceeding if: … (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.' 22 The test is no longer the one propounded in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. The test is now whether there is any reasonable prospect of the party successfully prosecuting the proceeding. 23 In my opinion, there is no prospect at all, let alone a reasonable prospect of the applicant prosecuting the proceeding against the third to ninth respondents for the reasons already advanced. There is no reasonable prospect of the applicant prosecuting the proceedings against the second respondent, who is not the trustee of the applicant's bankrupt estate but the trustee of his wife's bankrupt estate. As I have already mentioned, his wife sought that her application for an annulment be dismissed this morning. I am also satisfied that there is no reasonable prospect that the applicant could prosecute an application for an annulment against the first respondent in the absence of any proper particulars. For all of those reasons, the proceeding is dismissed. 24 Each of the respondents has sought costs against the applicant and on an indemnity basis. In my opinion, this is one of those cases where it would be appropriate to make an order of that kind, having regard to what I have already described as the scandalous allegations in the proceeding which has been brought, and the hopelessness of the proceeding generally. 25 For those reasons I make the following orders: (1) the proceeding be struck out; (2) the applicant to pay each of the respondent's costs on an indemnity basis. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.