5.1 Preliminary
83 Orders are also sought by Mr Smith in the proceedings to set aside the bankruptcy notice (NSD 216 of 2014) to restrain Mr Jarvie from commencing proceedings without leave of the Court. In particular, counsel sought orders in the following terms:
"5. Pursuant to rule 6.02 of the Federal Court of Australia Rules, the respondent, Russell Alan Jarvie, must not start or continue any proceeding in the Court against any person without the leave of the Court.
6. Pursuant to sections 30 and 50 of the Bankruptcy Act 1966 the respondent be restrained until the end of 31 December 2015 or until further order, including a sequestration order made against the respondent, whichever first occurs, from commencing or continuing any civil proceedings against anyone."
84 The orders are sought on the basis that that Court should find that Mr Jarvie:
a) invoked Court procedures for an illegitimate purpose;
b) used court procedures to be unjustifiably oppressive to Mr Smith; and
c) brought the administration of justice into disrepute.
85 It is further submitted by Mr Smith and HWY (No. 1) that the orders sought under the Bankruptcy Act are warranted in order to protect and conserve Mr Jarvie's property for the benefit of his creditors pending the making of a sequestration order against him on the ground that the debtor's property is diminished and adversely affected by the accumulation of adverse orders for the payment of legal costs by the debtor to those unsuccessfully sued by him in civil actions.
86 In this regard, notwithstanding that such an order was not opposed by Mr Jarvie if limited to any court in New South Wales for a period of eighteen months, I deemed it appropriate to consider whether the orders should be made at all. First, there was a real question of whether power existed to make the orders sought under ss 30 or 50 of the Bankruptcy Act. Secondly, before the Court's discretion to make an order under s 37AO of the FCA Act is enlivened, the Court must be satisfied that the preconditions to the exercise of the power are met. Thirdly, the orders sought have implications beyond the particular parties to these proceedings, not being limited to proceedings inter se, and are intended to protect the Court's processes against abuse in the public interest and not merely the interests of the particular parties. Fourthly and related to this, the terms of the orders must be appropriate in all of the circumstances. Fifthly, Mr Jarvie did not consent to orders in the terms proposed by Mr Smith and HWY (No. 1), but sought to limit the orders to courts in New South Wales and to a set period. Lastly, as articulated by him, Mr Jarvie is not represented, and his motives in not opposing the orders are questionable and apparently based upon a misunderstanding of the effect of such orders being made by consent.
87 As to the last of these matters, at the close of the hearing on 7 April 2014, the following exchange took place between the Court and Mr Jarvie:
"HER HONOUR: So are there submissions then that you would wish to make?
MR JARVIE: Yes. I will accept if your Honour would want to make vexatious litigant orders against me for any court in New South Wales for a period of 18 months. I know that the Federal Court - by listening to the submissions - is going to find it difficult to make a ruling that someone else will rely on on another matter, or that Mr Marshall is trying to rely on. But I have no issue with accepting those orders if your Honour would make those.
HER HONOUR: Well, I appreciate your frankness on that issue, Mr Jarvie. Again, I think this is an order of such a nature that I have to be satisfied, first of all that I have the power to make the orders that Mr Marshall is asking me to make, and, secondly, that in the circumstances the court ought to be making an protective order of that kind. It's a serious order because ordinarily the courts are open to all to be able to come and litigate their claims. So it is a very exceptional and unusual stand for the court to effectively close its doors to somebody and require them to seek leave before they institute proceedings. So while I appreciate that you're not opposing the making of the order, equally I still feel that it's incumbent on the liquidator to persuade me that that's an appropriate order to be made, and he has made his submissions on that issue.
MR JARVIE: Yes, your Honour. The issue that I see in it is that for maybe an equity order - so like a de facto equity order that I have to come forward then to the Federal Court to make a submission that I would like to issue a summons for equity for my de facto. I don't see any other litigation that I need to proceed with in any court for a period of several years.
HER HONOUR: Well, thank you for that, Mr Jarvie. I will take into account the fact that the order is not opposed, notwithstanding the fact that it's an important matter that I be satisfied for myself is appropriate to be made. It's a matter also, I think, of public interest to maintain the courts as an open place to all litigants, and that's one of the factors I think I take into account in making an order of this kind. Now, I may still make the order, or one of the orders that I'm being urged to make, but I do have to think about whether that's appropriate.
MR JARVIE: Well, I thought that by not opposing it that someone else mightn't use it in a different matter in the future, you know, so that then everyone manipulates the court on a matter that - - -
HER HONOUR: But I hope no one manipulates the court.
MR JARVIE: Well, they use a matter - they're trying to use a matter now to suggest that I become a vexatious litigant on the border of something else, and then if mine becomes along that border then someone else's becomes on that border, and I don't - so by opposing - not opposing it, I just don't want to see - I want to see someone else have that opportunity to fight that where I'm not opposing to fight the matter." (Emphasis added)
88 While the submissions are in general very difficult to decipher, the words that are highlighted in bold in this passage from the transcript seem to indicate that Mr Jarvie had intended to "consent" to orders restraining him from instituting further proceedings because he thought that would mean that the making of the order could not be used in other proceedings against him. Quite apart from questions as to the propriety of that purpose, Mr Jarvie's understanding is misguided. Section 37AO(6) of the FCA Act expressly enables the Court to have regard to orders made by any Australian court or tribunal in determining whether to make a vexatious proceedings order pursuant to subsection 37AO(1). Similar provision is made in the other jurisdictions which have enacted the model law on vexatious proceedings orders: see further below.