Background to the Bankruptcy Proceedings
6 On 15 March 1989 P. Vivante and Co Pty Limited issued a writ against Mrs Yap out of the District Court of Western Australia in action number 1536 of 1989. By its statement of claim the company alleged that it had:
"(a) Performed concreting work at Curtin University at the request of Akibilt Pty Ltd of which company Mrs Yap was a director and shareholder to a value of $25,000; and
(b) Paid the sum of $42,000 to Mrs Yap or at her direction in consideration for her promise to reimburse the company for the sums so paid."
It was further alleged that by a deed between the company and Mrs Yap stamped on 9 September 1988, she:
"(a) Acknowledged and agreed that the sums of $25,000 and $42,000 referred to were due and payable to the company;
(b) Agreed to pay interest to the company at the rate of 14% per annum calculated from 26 May 1988 on the debt or on the outstanding balance thereof from time to time;
(c) Guaranteed payment to the company of the debt due to it by Akibilt and agreed that she would stand as between herself and the company as principal debtor;
(d) Agreed to pay the costs for execution, stamping and registration of any mortgage, of the deed and for any caveats prepared in connection with the deed."
7 The statement of claim went on to assert that on 9 September 1998 payment in the amount of $33,000 was made to the company by Mrs Yap. The balance of $39,034.17 was said to have been demanded by the company by a notice in writing dated 1 March 1989. This represented the balance of the debt plus interest to 1 March 1989.
8 Mrs Yap did not enter an appearance to the writ which was served on her on 29 March 1989. As a result a default judgment was entered on 10 April 1989. A writ of fi fa was issued on 26 April 1989. Property owned by her was seized pursuant to the writ. Mrs Yap approached Melsom Robson & Co, Chartered Accountants for help. The processes of Part X of the Bankruptcy Act 1966 (Cth) were invoked on her behalf and in a statement of affairs annexed to a supporting affidavit she showed a list of unsecured creditors amounting to $758,248. The fifth of those was P. Vivante for an amount of $34,000. The nature of the debt was described as "work done guarantee". The other significant creditor was Esanda Finance Corporation Ltd for an amount of $617,000. The Part X proceedings did not go on. According to Mrs Yap this was because she was concerned that the amounts mentioned in respect of P. Vivante and Co and Esanda Finance were not accurate. Creditors' meetings were held on 23 January 1990 and 18 April 1990 at which it was decided that she should file a debtor's petition in bankruptcy by 25 April 1990. She did not do so. In February 1992 the bailiff called and left his card at Mrs Yap's door informing her that her house would be sold to satisfy the default judgment in the District Court action 1536 of 1989. On 10 April 1992 Mrs Yap, representing herself, made an application to set aside the default judgment obtained against her. Her application to set aside the default judgment was dismissed on 29 May 1992 on the basis of her non-appearance at court. On 29 May 1992 Mrs Yap made a further application to set aside the judgment and swore some four affidavits. The application was heard by Registrar Kingsley on 23 June 1992. He set aside the default judgment which had then been in effect for three years and granted Mrs Yap leave to defend the action. His order however was subject to a condition requiring that she pay $39,000 into court by 7 July 1992. Absent compliance with that condition the company would be able, once again, to enter judgment against her. On the day the default judgment was set aside Mrs Yap engaged Granich & Associates to act on her behalf and dealt with Mr Peter Smallbone of that firm.
9 There were cheques and bank statements from the Akibilt bank account with the ANZ Bank at South Perth which Mrs Yap considered would establish that Akibilt in fact owed no moneys whatever to the company in respect of concreting works it had carried out for the company at Curtin University. Only after she located some missing bank statements at her home was she able to obtain copies of cheques made payable to her company and to P. Vivante which she had been seeking. This information was exhibited to a fifth affidavit that she swore in support of an application for leave to appeal against Registrar Kingsley's order to a judge of the District Court. Two further affidavits were prepared by Granich & Associates and the application for leave to appeal out of time against Registrar Kingsley's order was heard by Judge Viol on 3 August, 10 August and 21 August.
10 Judge Viol observed that the application for leave to appeal was made broadly on two grounds:
1. That Mrs Yap was unrepresented at the time the proceedings originally took place and that had she been represented a different order might have been made.
2. That there was fresh evidence available suggesting an overpayment by her to the company and therefore that the sum originally claimed was not owing and that it would be unfair in the circumstances for the condition imposed by Registrar Kingsley to continue to exist.
11 Judge Viol found little in her affidavit material to justify the delay in the matter generally. Her failure to be represented and to take timely steps were not properly explained and there was no sufficient basis upon which it could be said that her lack of representation had mitigated unfairly against her. His Honour was particularly concerned as to the circumstances in which the missing cheques were said to have been found by Mrs Yap. He found her explanations difficult to accept and the timing of her finding rather suspicious. He took the view that the existence of the cheques confirmed the probable existence of the debt rather than amounting to evidence which might show that there was an overpayment. He also referred to the acknowledgment of debt executed by Mrs Yap on 5 September 1988. In the event his Honour Judge Viol concluded that there was not a sufficient basis for leave to be granted to Mrs Yap to file and serve a notice of appeal out of time against the orders and, in particular, the condition imposed by Registrar Kingsley. Her application was therefore dismissed.
12 In an ex tempore judgment on 10 June 1993 the Full Court of the Supreme Court of Western Australia refused an application for leave to appeal against the decision of Judge Viol.
13 Subsequently Mrs Yap instituted proceedings against Granich & Associates alleging that the firm had been negligent through its employee Mr Smallbone. Her action came on for hearing before Commissioner K. Martin QC in the District Court on 7 May 1996. Commissioner Martin gave an ex tempore judgment in which he dismissed the action against Granich & Associates. As he noted, Mrs Yap represented herself at trial and although a statement of claim had been filed on her behalf her identified grievances against Granich & Associates were as follows:
1. That her arguable defence in relation to overpayment of the company by Akibilt had not been adequately put in the affidavit material submitted to Judge Viol.
2. That the circumstances surrounding her argument that the deed was not to be treated as valid or binding upon her had not been adequately dealt with in the three affidavits prepared on her behalf by Granich & Associates.
3. That Mr Smallbone, on behalf of Granich & Associates, had not used his professional skills to adequately explain her reasons for the time lapse between the obtaining of a default judgment against her on 10 April 1989 and her application precisely three years later to set it aside on 10 April 1992.
4. That the circumstances surrounding Mrs Yap's aborting of the proposed Part X Bankruptcy Act arrangements in early 1990 had not been satisfactorily explained.
5. That the circumstances surrounding the situation under which she had not been able to place the ANZ cheques issued by Akibilt to P. Vivante or to the company having been located but subsequently becoming available at the time of the argument before Judge Viol were not explained in her affidavits.
In the course of the case Mrs Yap abandoned her attack against Granich & Associates based on the arguments 1 and 5. She conceded that the additional cheques obtained from the ANZ Bank had in fact been incorporated by Mr Smallbone into her affidavit of 7 July 1992 on her behalf. Commissioner Martin found there was no other information raising any further defence which she could point to which could have been incorporated in that affidavit.
14 As to the circumstances surrounding the curiously late obtaining of the Akibilt cheques, there could really be no serious argument that her affidavit sworn on 13 August 1992 dealt expressly with those circumstances in par 11. There remained then the allegations 2, 3 and 4 in respect of the alleged breach of duty of care owed by Granich & Associates to Mrs Yap. Commissioner Martin referred to the background circumstances particularly the substantial period of delay in seeking to set aside the default judgment, the fact that she was seeking to resile from the clear terms of a deed acknowledging her indebtedness and that she was seeking to resile from an express acknowledgment in her statement of affairs in the Part X proceedings of the existence of a debt to P. Vivante for $33,000. On the basis of those circumstances, Commissioner Martin concluded that Mrs Yap's defences, accepting that they were arguable, would be regarded by a court with knowledge of the circumstances as "weak and shadowy". She faced "an almost insurmountable task … in persuading a court that a routine protective condition imposed by way of security by Registrar Kingsley in the exercise of his discretion should be removed". Commissioner Martin concluded, having heard what she now said about those matters and given the fact that no amount of explanation in her affidavits could have persuaded a court that her defences were anything other than shadowy, that it was appropriate to remove the protective condition. In the proceedings before Commissioner Martin, Mrs Yap called Mr Vivante the principal of the company who, as he said, "not surprisingly, gave evidence which did nothing to support Mrs Yap's arguments to the effect that Akibilt had overpaid the company". Indeed Commissioner Martin found the evidence established that Vivante had made loans to Mrs Yap in the amount of $112,000. The evidence from Mr Vivante did not lend any support to her contentions alleging misrepresentation or the overbearing of her will in relation to the execution of the acknowledgment of debt stamped 9 September 1988. Commissioner Martin accepted Mr Vivante's evidence on these issues as reliable and consistent with the documents in evidence before him. He also made reference to correspondence including a letter from Esanda Finance to Mrs Yap as secretary of another of her companies, Cheshire Holdings Pty Ltd. In that letter it was said that Esanda would make a payment to P. Vivante & Co of $34,000 leaving a balance of $33,000 under certain conditions. On the fourth page of that letter, Mrs Yap, on behalf of Cheshire Holdings Pty Ltd and on behalf of herself as a guarantor, accepted the terms of that proposal. A second letter to P. Vivante & Co from her as director of Akibilt involved an acknowledgment by Akibilt that it was indebted to the company, that it was unable to pay the moneys owed by it but that Mrs Yap had commenced to sell her personal assets to ensure that all creditors were paid in full. It included an offer to pay $34,000 within ten days and the balance owing within ninety days. According to Commissioner Martin Mrs Yap attempted at trial to explain these letters as attributable to an officer of Esanda Finance and not in accordance with her instructions. He did not accept her evidence in that regard. Indeed the Commissioner came to the conclusion that while it was not necessary for him strictly to finally determine what would have occurred at a trial on the merits in the company's action against Mrs Yap, it was very clear from all the evidence that the case for the company was overwhelming. Commissioner Martin also did not accept her evidence that she had signed the acknowledgment of debt without careful consideration or an appreciation of its contents and that misrepresentations were made to her by a solicitor acting on behalf of the company.
15 Referring to her sworn verification in the statement of affairs in the Part X proceedings in relation to a debt to P. Vivante, Commissioner Martin was of the view that she could not escape the consequences of her oath "in the cavalier fashion she has attempted to advance in her evidence given before me at trial". Moreover in a finding strongly adverse to Mrs Yap's credibility he said:
"In summary, I do not regard Mrs Yap's evidence as reliable, where it is not corroborated independently."
16 The Commissioner referred to the circumstances "as a set of circumstances which cried out for the imposition of the security condition imposed by Registrar Kingsley against Mrs Yap….". He accepted Mr Smallbone's evidence as a witness of the truth and particularly Mr Smallbone's statement in evidence:
"I always acted on your instructions. That's the way I did things and I believe I did the best I could. It was very difficult to deal with at times. Your instructions were very, very confused…"
Having regard to this background, Commissioner Martin found that the three remaining complaints or grievances of Mrs Yap against Mr Smallbone and Granich & Associates were all "completely without merit". The matters raised were not causative of any loss to Mrs Yap and it was inevitable that the prudent security condition imposed by Registrar Kingsley would remain in place.
17 Mrs Yap filed an appeal in the Full Court but on 21 July 1997 that appeal was dismissed for want of prosecution. The appeal had been filed on 17 May 1996 following the judgment given on 7 May 1996. It was served by letter dated 28 June 1996 on the solicitors for Granich & Associates. No further step was taken in prosecution of the appeal until 5 December 1996 when Mrs Yap filed a chamber summons for leave to substitute a fresh notice of appeal for the original. A motion to strike the appeal out was supported by an affidavit from Mr Granich of Granich & Associates saying that his firm had made a claim against Mrs Yap for unpaid legal fees of about $6,000 outstanding since 1992 in the Local Court. It was unable to progress its claim in the Local Court however until the pending appeal was heard and determined.
18 On 16 April 1997 a Full Court adjourned the application by Granich & Associates to strike out the appeal and directed that Mrs Yap apply to the Master for leave to amend the grounds of appeal and application within fourteen days. On 2 May 1997 however, the application to amend the notice of appeal was dismissed on the basis that the minute of substituted notice of appeal was "wholly defective". The application before the Master was then adjourned until 12 May 1997. Mrs Yap saw a solicitor to whom she paid a $1,000 on account to draft a new notice of appeal. The notice was not drafted and filed in time. On 12 May 1997 no new document was before the court and neither Mrs Yap nor her new solicitor attended. As a consequence her application was dismissed by Master Bredmeyer. The matter came on again on 23 May 1997 before Master Bredmeyer with affidavits explaining her delay and non-appearance. He considered the new notice was still defective. Given that, Master Bredmeyer did not propose giving Mrs Yap leave to bring in another minute and dismissed her application.
19 Before the Full Court subsequently, there was an affidavit of 13 June 1997 setting out a form of proposed substituted notice of appeal. After considering the proposed grounds of appeal and after making "every allowance" and giving "every possible indulgence" to Mrs Yap on account of her lack of representation, the Full Court held there were no grounds of appeal which complied with the Rules. Moreover it was impossible to determine from the papers that the appellant had an arguable case by way of appeal. In the reasons for judgment of the Chief Justice, with which Justices Kennedy and Franklyn agreed, it was said:
"In the present case the various attempts which have been made to formulate grounds of appeal in compliance with the Rules have all failed. At the same time there has been inordinate delay which has caused prejudice to the respondent. As a consequence it was inevitable that this appeal should be dismissed and that the appellant be ordered to pay the respondent's costs of the appeal."
20 Mrs Yap brought an application for special leave to appeal to the High Court from the decision of the Full Court. On 22 October 1998 the High Court dismissed the application for special leave. It gave oral reasons for its decision referring to the technical difficulties with her application, namely that she was out of time in bringing the application for special leave and that no affidavit evidence had been filed explaining the reasons for delay. The court also observed that her application was "entirely devoid of merit".