National Australia Bank Ltd v Garrett

Federal Court of Australia|2016-06-16|Before: Beach J

The document titled "Distributor License Purchase Vendor Finance Performance Security Deed" as attached to the email from Mr Andrew Garrett to Mr Simon Illsley dated 24 April 2016 is void and of no effect.
The purported appointment of the First Respondent as "managing controller" of the Applicant is invalid.

Pursuant to section 182(4)(a) of the Personal Property Securities Act 2009 (Cth), the Third Respondent is required to register a financing change statement removing the registration of a purported security interest with registration number 201604240003952 from the Personal Property Securities Register.
Subject to further order, the First and Second Respondents each by themselves, their servants and agents be restrained from registering or causing to be registered on the Personal Property Securities Register any further financing statement in respect of any security interest or purported security interest in personal property of the Applicant.
If a registration is made on the Personal Property Securities Register in breach of order 4, the Third Respondent is required to remove it forthwith.
The First and Second Respondents each by themselves, their servants and agents be restrained from enforcing or taking any further steps to enforce the purported security interest registered on the Personal Property Securities Register with registration number 201604240003952.

BEACH J: 1 By an amended originating application, the applicant (NAB) has sought, inter alia, the following orders: (a) a declaration that the document titled "Distributor License Purchase Vendor Finance Performance Security Deed" which is dated 23 April 2016 (the Security Deed) is void and of no effect; (b) an order under s 182(4)(a) of the Personal Property Securities Act 2009 (Cth) (the PPSA) requiring the third respondent, the Registrar of Personal Property Securities (the Registrar), to register a financing change statement removing the registration of the purported security interest with registration number 201604240003952 (the purported security interest) from the Personal Property Securities Register (the PPSR); (c) an injunction restraining Mr Garrett and the second respondent, OenoViva (UK & Ireland) Pty Ltd of which Mr Garrett purports to be the "managing controller" (OenoViva), from registering or causing to be registered on the PPSR any further financing statement in respect of any security interest or purported security interest in the personal property of NAB; (d) an order that if a registration is made on the PPSR in breach of the above order, the Registrar is required to remove it forthwith; (e) a declaration that the purported appointment of Mr Garrett as "managing controller" of NAB is invalid; and (f) an injunction restraining Mr Garrett and OenoViva from presenting or delivering to NAB documents purporting to be bills of exchange naming Mr Garrett as drawer. 2 Mr Garrett is an undischarged bankrupt and is presently subject to various vexatious litigant orders made by other Justices of this Court. NAB has relied on various affidavits of Simon Illsley, Senior Business Banking Manager of NAB, and Matthew Whittle, a partner of Allens, solicitors for NAB. None of that evidence has been the subject of any serious challenge. 3 For the reasons that follow, I have determined to accede to NAB's application. There is no substance to the assertion of the first and second respondents of any security interest. Moreover, any security interest in which Mr Garrett had a legal or equitable interest has vested in his trustee in bankruptcy; he is not free to deal with the same. Moreover, he is presently disqualified from acting as a "managing controller".

Procedural history 4 At the first return of the originating application on 10 May 2016, interlocutory orders were made restraining Mr Garrett and OenoViva from: (a) enforcing or taking any further steps to enforce the purported security interest; (b) registering or applying to register on the PPSR any further financing statement in respect of any security interest in the personal property of NAB; (c) lodging with the Australian Securities & Investments Commission any notice of the purported appointment of Mr Garrett as managing controller of NAB; (d) representing to any person that Mr Garrett has been appointed as managing controller of NAB; (e) presenting or delivering to NAB any further documents purporting to be bills of exchange naming Mr Garrett as drawer. 5 On 16 May 2016, the Registrar filed a submitting appearance. 6 On 17 May 2016, the orders made on 10 May 2016 were continued until the final hearing of the proceeding. The respondents were also ordered to file and serve any affidavits upon which they intended to rely by 7 June 2016. On 17 May 2016, proceeding VID 404 of 2016 was also made returnable. Since that time, both proceedings have been dealt with together. I set both proceedings down for final hearing on 14 June 2016, being a date that was convenient to Mr Garrett and to accommodate his unavailability at an earlier time, due to his travel to Hong Kong. At no stage did he indicate any difficulty in personally appearing at trial. The business day before the hearing he sought to appear by video link but with the Court bearing the cost thereof. That service was not available to him. He ultimately chose to attend by telephone. 7 It is appropriate to set out some of the further procedural history that applies to both proceedings. 8 I should record at this point the following: (a) In this proceeding and proceeding VID 404 of 2016, a plethora of what has been described as various "interlocutory applications" and affidavits (with voluminous annexures) running to some thousands of pages have been sought to be filed by Mr Garrett. None of them have centrally addressed the merits of the issues raised in this proceeding or proceeding VID 404 of 2016. Rather they have contained a lengthy history and litany of complaints Mr Garrett has in relation to how previous litigation has been handled involving numerous parties and numerous judicial officers. (b) On 17 May 2016, Mr Garrett in this proceeding and proceeding VID 404 of 2016 applied for me to disqualify myself for actual bias or apprehended bias. He also sought to rely on and press a lengthy "interlocutory application" most of which was misconceived. I dismissed such applications (save in minor respects concerning the "interlocutory application") and delivered written reasons for my rulings, which were published to the parties only. (c) Thereafter, Mr Garrett purported to file further "interlocutory applications" and voluminous affidavits. On 9 June 2016, my chambers notified Mr Garrett and the other parties in the following terms: Chambers notes that various documents produced by Mr Garrett have not been accepted for filing being: (a) An "interlocutory application" seeking 24 orders; (b) An "interlocutory application" seeking 27 orders; (c) Three affidavits (one of 154 pages, one of 573 pages and one of 982 pages). First, to the extent that those "interlocutory applications" seek removal of any proceeding to the High Court, they are misconceived. Such an application needs to be made by proceedings filed in the High Court. Second, to the extent that those "interlocutory applications" seek leave to appeal or to appeal from any orders of Beach J, such applications need to be made in a newly filed proceeding and not an existing proceeding. Mr Garrett will need to comply with the vexatious litigant order in that respect; any application for leave to issue needs to be made in a new proceeding, not an existing proceeding. Third, to the extent that those "interlocutory applications" merely repeat matters previously dealt with and dismissed by his Honour, they constitute an abuse of process. If Mr Garrett desires to file an application for an adjournment of the proceedings next week supported by a proper affidavit addressing that question, that will be accepted for filing. Likewise, if Mr Garrett files an affidavit(s) addressing the merits of the issues to be addressed next week, that will also be accepted. (d) In essence, the material filed by Mr Garrett sought to circumvent the vexatious litigant orders, was misconceived to the extent that it sought relief that should have been the subject of separate proceedings (indeed filed in another place in respect of some of the relief sought), was misconceived to the extent that it sought to repeat, without any changed circumstances, the application that I had previously ruled on and, finally, did not address the merits of the principal issues raised in each proceeding, namely, whether the relevant security interests asserted by the respondents in fact existed. Further, he also sought to file lengthy and numerous "notices to admit"; these were rejected as only being required to be served and, if necessary, later tendered. That last step never took place in terms of proper proof of service, proof of the relevant time elapsing prior to 14 June 2016 and generally proof of admission. Moreover, any such "admissions" would not establish any of the security interests asserted. (e) Prior to and over the long weekend before the trial in each proceeding, Mr Garrett filed two sets of written submissions in each proceeding that have been accepted and which I have considered. He has also filed two affidavits in proceeding VID 404 of 2016 which have been accepted and which have been considered; one of them contains the cover sheet "Affidavit of Andrew Morton Garrett 4th November 2015 also filed in SCI-1996-2244 and VID 949 of 2015 and VID 248 of 2014"; the other is an affidavit of Mr Garrett sworn 7 June 2016. I should say now that none of that material, with the voluminous annexures, supports by probative evidence the security interests asserted against NAB or the plaintiffs in VID 404 of 2016. I have also taken into account the "missing" pages from the 7 June 2016 affidavit as attached to an email from Mr Garrett to my chambers of 15 June 2016 at 4.38pm, but as I have said in subparagraph (d), no proper proof of relevant admissions has been given. (f) At this point, I should also note that after the email referred to in sub-paragraph (c) had been sent to Mr Garrett, he attended the South Australian registry of this Court and sought to file the same material that had been rejected. Although that material was "accepted" over the counter in Adelaide, that material has now also been rejected for filing. (g) Over the long weekend Mr Garrett also sought to file an affidavit of 10 June 2016 in support of a purported High Court removal application. The affidavit is of nine pages (but with annexures runs to 1029 pages). Again, it did not deal with the merits of the issues that I need to determine; it has been rejected for filing for reasons similar to those referred to earlier and because no leave was sought to serve it out of time. There were also four further "interlocutory applications" which also suffered from the vices that I have previously identified. They were "supported" by affidavits that Mr Garrett had filed in earlier proceedings. They were also rejected for filing. Let me say, lest there be a doubt, that if in the first instance such material had been accepted for filing, I would have ordered their removal from the Court files as being vexatious, frivolous, misconceived and in breach of the vexatious litigant orders to which Mr Garrett is currently subject. Contrastingly, if they had contained a scintilla of material addressing the merits of the issues that I have to consider, the relevant parts of that material would have been accepted notwithstanding deficiencies in form and lateness. But on my review of such rejected affidavits, there was no such material. Moreover, counsel for the moving parties also confirmed this; such rejected material had also been served on the parties in both proceedings. (h) On 14 June 2016, Mr Garrett pressed an oral application that I should stay the proceedings or adjourn the proceedings so that he could challenge my continuing to deal with these matters. I refused that application. There was no proper basis advanced for the adjournment or the stay. Moreover, to postpone the disposition of both of these proceedings would have caused prejudice to the other parties. Mr Garrett then made an oral application for leave to appeal. Rather than ruling on its merits I decided not to deal with that application given the nature of the issues raised and so that his rights to pursue that application elsewhere were not jeopardised; but if I had been required to deal with that oral application, I would have refused leave. Subject to the terms of the vexatious litigant orders, Mr Garrett will be free to pursue such an application elsewhere if he needs to; further, subject to the vexatious litigant orders, rights of appeal may in any event be invoked. I determined to proceed to deal with the merits of both proceedings. Mr Garrett's further outstanding bias assertion and any challenge to my previous orders did not preclude me from doing so. Any further delay would have prejudiced the moving parties. 9 I should also say that at the hearing on 14 June 2016, NAB applied for leave to file an amended originating application which relevantly (in addition to the relief sought in the originating application dated 6 May 2016) sought a permanent injunction to prevent Mr Garrett from presenting or delivering what purported to be bills of exchange to NAB. I have granted such leave as the application for leave was unopposed; moreover, Mr Garrett filed written submissions addressing the bills of exchange question and was accordingly able to deal with those matters. Further, I should note that in prior email correspondence, Mr Garrett stated his intention to cross-examine various deponents both in this proceeding and proceeding VID 404 of 2016. But he did not press that application before me at the hearing. Finally, I should also say that part way through the hearing on 14 June 2016, Mr Garrett intentionally terminated the telephone link, apparently not desiring to participate further in the hearing.

factual Background 10 On 24 April 2016, the "Trustee for The Andrew Garrett Family Trust No. 4" caused a financing statement to be registered on the PPSR claiming a security interest in respect of the property of NAB and Treasury Wine Estates Vintners Ltd. 11 The collateral described in the financing statement was: "All present and after-acquired property - No exceptions". The financing statement was given registration number 201604240003952. 12 The registration of the financing statement followed NAB's receipt of an email from Mr Garrett on 24 April 2016 in which Mr Garrett stated that he intended to register a charge on the PPSR over NAB's property. Attached to the 24 April 2016 email was a copy of a Security Deed (titled "Distributor License Purchase Vendor Finance Performance Security Deed") which purported to be a charge granted by NAB in favour of OenoViva and Mr Garrett as trustee for the Andrew Garrett Family Trust ABN 78 761 760 976. The Security Deed relevantly stated that: "This Charge is registered pursuant to the undertaking as to loss costs and damage given by the Chargee in SCI-2004-127; Andrew Garrett Wines Resorts Pty Ltd & Anor v National Australia Bank Limited". The Security Deed has not been signed or otherwise executed by NAB. It is a creation of Mr Garrett's and built upon the misconceived foundation that an undertaking as to damages given in a prior proceeding could somehow give rise to a security interest; I will return to the undertaking later. 13 On 28 April 2016, NAB sent an amendment demand to Mr Garrett pursuant to s 178 of the PPSA. It was in the following terms: This is an amendment demand which is provided under section 178 of the Personal Property Securities Act 2009 (Cth). National Australia Bank Limited (NAB) has an interest in the collateral described in the above registration as the purported Grantor of the security interest. NAB hereby demands an amendment to end effective registration (including an amendment to remove the registration) because no collateral described in the registration secures any obligation (including a payment) owed by a debtor to the Secured Party. NAB has never granted a security interest in favour of the Secured Party. In particular, NAB has never agreed to nor executed the document described as "Distributor License Purchase Vendor Finance Performance Security Deed" attached to the email sent by Mr Andrew Garrett of the Secured Party to a number of recipients, including NAB, on 24 and 26 April 2016. Please submit a financing change statement to the Registrar to effect the change requested within five business days of receipt of this letter. Please forward to the address below the verification statement sent by the Registrar confirming that the registration has been amended. 14 Despite receiving the amendment demand, Mr Garrett has refused to submit to the Registrar a financing change statement so as to remove the registration created on 24 April 2016. 15 Further, on 1 May 2016, Mr Garrett sent an email to NAB attaching a document described as a "Deed of Appointment of Controller" and a "Notice of Crystallisation of Charges/Seizure of Assets" pursuant to which Mr Garrett purported to appoint himself as the "managing controller" in respect of all of NAB's property the subject of the purported security interest. 16 Since this date, NAB's lawyers have sent various correspondence to Mr Garrett which has noted that: (a) NAB has never granted a security interest to any of Mr Garrett or OenoViva either in their personal capacities or in their capacities as joint trustees of the Andrew Garrett Family Trust No 4, the Andrew Garrett Family Trust or any other trust; (b) NAB has never agreed to or executed the Security Deed; (c) NAB's undertakings in Supreme Court of Australia proceeding number SCI-2004-127 (the SA Proceeding) were not supported by any security interest granted by NAB in respect of any of its property; and (d) Mr Garrett was not validly appointed as "managing controller" in respect of any of NAB's property. 17 As I have said earlier, the affidavit evidence of NAB supporting such propositions has not been the subject of any serious challenge by the first and second respondents.

the PPSA 18 The PPSA establishes a national law governing security interests in personal property. A "security interest" is defined in s 10 by reference to s 12 which latter section provides: (1) A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property). Note: For the application of this Act to interests, see section 8. (2) For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation: (a) a fixed charge; (b) a floating charge; (c) a chattel mortgage; (d) a conditional sale agreement (including an agreement to sell subject to retention of title); (e) a hire purchase agreement; (f) a pledge; (g) a trust receipt; (h) a consignment (whether or not a commercial consignment; (i) a lease of goods (whether or not a PPS lease); (j) an assignment; (k) a transfer of title; (l) a flawed asset arrangement. (3) A security interest also includes the following interests, whether or not the transaction concerned, in substance, secures payment or performance of an obligation: (a) the interest of a transferee under a transfer of an account or chattel paper; (b) the interest of a consignor who delivers goods to a consignee under a commercial consignment; (c) the interest of a lessor or bailor of goods under a PPS lease. (3A) A person who owes payment or performance of an obligation to another person may take a security interest in the other person's right to require the payment or the performance of the obligation. (4) Without limiting subsection (3A): (a) an account debtor, in relation to an account or chattel paper, may take a security interest in the account or chattel paper; and (b) an ADI may take a security interest in an ADI account that is kept with the ADI. (5) A security interest does not include: (a) a licence; or (b) an interest of a kind prescribed by the regulations for the purposes of this section. (6) A security interest is not created only by an agreement or undertaking to do either of the following: (a) to postpone or subordinate a person's right to payment or performance of all or any part of a debtor's obligation to another person's right to payment or performance of all or any part of another of the debtor's obligations; (b) to postpone or subordinate all or any part of a secured party's rights under a security agreement to all or any part of another secured party's rights under another security agreement with the same grantor. 19 A "secured party" is defined in s 10 as follows: (a) means a person who holds a security interest for the person's own benefit or for the benefit of another person (or both); and (b) if the holders of the obligations issued, guaranteed or provided for under a security agreement are represented by a trustee as the holder of the security interest - includes the trustee; and (c) in relation to a registration with respect to a security interest - includes a person registered as a secured party in the registration. 20 There is also a definition of "collateral" in s 10 in the following terms: collateral: (a) means personal property to which a security interest is attached; and (b) in relation to a registration with respect to a security interest - includes personal property described by the registration (whether or not a security interest is attached to the property). Note: Section 161 authorises the registration of a financing statement that describes personal property before or after a security agreement is made covering the property, or a security interest has attached to the property. 21 The PPSR is maintained online. It is relatively simple to access and to create a registration or to seek an amendment. 22 Section 150(3) provides: (3) The Registrar must register the financing statement or financing change statement in accordance with the application, but only if: (a) the application is in the approved form; and (b) the fee (if any) determined under section 190 has been paid; and (c) the Registrar is not satisfied that the application is: (i) frivolous, vexatious or offensive, or contrary to the public interest; or (ii) made in contravention of section 151 (belief about security interest); and (d) the registration would not be prohibited by the regulations. 23 However, s 151 provides that: (1) A person must not apply to register a financing statement, or a financing change statement, that describes collateral, unless the person believes on reasonable grounds that the person described in the statement as the secured party is, or will become, a secured party in relation to the collateral (otherwise than by virtue of the registration itself). Civil penalty: (a) for an individual - 50 penalty units; (b) for a body corporate - 250 penalty units. … (4) A person who wishes to establish that there were reasonable grounds for the belief mentioned in subsection (1) (at any particular time) bears an evidential burden in relation to the matter. … 24 Part 5.6, which is titled "Part 5.6 - Amendment demands", includes provisions designed to resolve disputes regarding registrations. It provides for a resolution process for disputes regarding registrations where one party considers that: (a) the obligation owed by a debtor to the secured party is not secured by collateral described in the registration; or (b) the registration describes particular collateral in which the person has an interest which does not secure any obligation (including a payment) owed by a debtor to the secured party. 25 Various methods are provided to resolve a dispute. The parties can reach a resolution between themselves, through the service and acceptance of an "amendment demand", to amend the register. An amendment demand is a written demand given to a secured party that may only be made by a person with an interest in the subject collateral (for example, the owner of the collateral or a security interest holder). It relates to a registration in respect of a security interest in the subject collateral and requires the secured party to amend the registration to end the effective registration or omit particular collateral from the description. Section 178 provides: 178 How amendment demands are given (1) A person with an interest (including a security interest) in collateral described in a registration with respect to a security interest may give a demand (an amendment demand), in writing, to the secured party for a financing change statement to be registered to amend the registration as authorised by the following table: Note: If the secured party does not comply with the amendment demand, the demand may be enforced under Subdivision A (administrative process) or Subdivision B (judicial process) of Division 2. Authorised amendments Item When amendment is authorised What amendment is authorised 1 No collateral described in the registration secures any obligation (including a payment) owed by a debtor to the secured party. Amendment to end effective registration (including an amendment to remove the registration). 2 The particular collateral in which the person has an interest does not secure any obligation (including a payment) owed by a debtor to the secured party. Amendment to omit the collateral.

(2) Data removed from the register because of an amendment in compliance with the amendment demand must not be made available for search in the register by reference to any time before (or after) the time of removal, if the Registrar so decides for the purposes of this subsection. Note 1: Application may be made to the Administrative Appeals Tribunal for review of the Registrar's decision that the removed data is not to be made available for search in the register (see section 191). Note 2: Incorrectly removed data may be restored under section 186. (3) A secured party must not require payment for compliance with an amendment demand in relation to collateral that: (a) at the time the security interest attached to the collateral, the grantor intended to use predominantly for personal, domestic or household purposes; or (b) the grantor is using predominantly for personal, domestic or household purposes. 26 If the amendment demand is not accepted, then an administrative "show cause" process can be followed to resolve the dispute (see ss 179 to 181). Alternatively, a judicial process can be followed to resolve the dispute. Such a process allows the affected secured party or the party giving the amendment demand to apply to the court for an order to give effect or otherwise to the amendment demand. Section 182 allows both the secured party and the person who gave the amendment demand to apply to a court for an order relating to the amendment demand. Relevantly, s 182(4) gives the court power to make a wide range of orders in respect of amendment demands and provides: (4) On an application under this section, a court may make the following orders: (a) if the court considers the amendment demanded to be authorised under section 178 - an order requiring the Registrar to register a financing change statement amending the registration (including an amendment to remove the registration); (b) if the court does not consider the amendment demanded to be so authorised - one or more of the following orders: (i) an order restraining the Registrar from registering a financing change statement amending the registration at the Registrar's initiative (under section 181); (ii) an order restraining the person who gave the amendment demand from making such further amendment demands as the court specifies; (iii) an order restraining the Registrar from giving the secured party amendment notices under section 180 in relation to such further amendment demands as the court specifies; (c) any other order that the court thinks fit. 27 It is appropriate to make some brief observations concerning a "security interest". 28 First, s 12(1) stipulates that a "security interest" is one that is "provided for by a transaction". The concept of a "transaction" is exemplified by the instances in s 12(2). One can readily appreciate that a transaction is not for example a remedial constructive trust or remedial equitable charge that may be imposed by a court of equity. Moreover, one can appreciate from the use of the word "transaction", the examples given in s 12(2) and the use of the phrase "provided for …" in s 12(1) that one is in essence dealing with consensual arrangements. But it must be emphasised that the focus in s 12 is on a "transaction" rather than an instrument per se. Accordingly, nothing in s 12 necessarily requires there to be an instrument as such, although each of the paradigm examples of transactions referred to in s 12(2) would normally be constituted by an instrument; other provisions (e.g. s 20(2)) do, for example, make reference to writing. 29 Second, s 12(1) provides that the "security interest" be "… a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property)". So, one considers matters of substance rather than form. The instances set out in s 12(2) would usually satisfy that requirement. The only exceptions, by way of addition, are those set out in s 12(3). 30 Third, the transaction must provide for "an interest in personal property" (s 12(1)); see the broad definitions of "interest" and "personal property" in s 10. But it should be noted that s 8(1) makes specific reference to interests to which the PPSA does not apply (the exceptions provided for in ss 8(2) and (3) are not relevant for present purposes). Relevantly, s 8(1)(c) provides that the PPSA does not apply to: a lien, charge, or any other interest in personal property, that is created, arises or is provided for by operation of the general law. 31 Thus, for example, not only are remedial constructive trusts or remedial equitable charges not "interests" but a broader set of, for example, equitable or common law creations or interests are excluded. 32 The above provisions were pellucidly analysed by Robson J in Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd (2014) 285 FLR 267. Robson J held that a "security interest" for the purposes of the PPSA must arise from a transaction that is consensual ([98] to [99]). A claim based on obtaining equitable relief from a court does not arise from any consensual transaction. It is therefore not a security interest for the purposes of the PPSA and is not registrable ([100] and [106]). Further, he held that a court has jurisdiction to restrain a person from registering a security interest in another's personal property in circumstances where that person has been found to have no such interest ([117]). I agree with his observations. 33 The equivalent provisions of the PPSA have also been the subject of various decisions in New Zealand in which it has been held that the equivalent provisions should be approached in a similar manner to applications to maintain caveats, with the alleged secured party defending its registration being in the same position as a caveator. In Toyota Finance New Zealand Ltd v Christie [2009] NZHC 827 it was held that where an amendment demand is itself properly made, the onus rests on the putative secured party to satisfy the Court that its registration ought to remain (at [16] to [19]). This approach has recently been endorsed in the context of s 182 of the PPSA: see Capital Finance Australia Ltd v Clough [2015] NSWSC 1327 per Rein J at [12]. In my view, caution has to be exercised in aligning the procedure under s 182 with the procedure for removing or maintaining a caveat over real property and the suggestion of some reverse onus mechanism. In my view, NAB has the relevant legal onus under s 182(4) to establish that the amendment demanded is authorised under s 178(1). In terms of evidence, NAB needs to, at the least, adduce prima facie evidence to establish the relevant element of the table referred to in that section. NAB has done that in the present case; moreover, that evidence has not been satisfactorily answered by the first and second respondents.

is there a security interest? 34 The apparent basis of the purported security interest is an undertaking as to damages that was provided by NAB in the course of the SA Proceeding; this is also confirmed by Mr Garrett's written submissions dated 13 June 2016 at [3.1] and following. 35 The SA Proceeding concerned steps taken by NAB to enforce its rights with respect to two registered mortgages granted by Andrew Garrett Wine Resorts Pty Ltd (Resorts) and Mrs Averil Garrett (Mrs Garrett) in respect of three properties (collectively known as Springwood Park) in favour of NAB. In their statement of claim, Resorts and Mrs Garrett challenged the validity of one of the registered mortgages provided to NAB by Mrs Garrett and sought declarations that the total liability of the plaintiffs under the mortgage was less than that claimed by NAB. 36 During the course of the SA Proceeding, Resorts and Mrs Garrett claimed that they were entitled to a "royalty stream" payable by Beringer Blass Wine Estates Ltd (formerly known as Mildara Blass Ltd) (the royalty stream). Resorts and Mrs Garrett proposed to sell the royalty stream to an entity known as Evajade Pty Ltd (Evajade), in its capacity as trustee of the Andrew Garrett Family Trust No 2, in order to generate sufficient funds to pay outstanding interest and future interest payments in respect of the mortgages over Springwood Park. NAB became concerned about the potential transfer of the royalty stream and therefore sought interim relief to prevent various parties, including Evajade and Mrs Garrett, from dealing with the royalty stream. 37 Extracts from the court record that were in evidence before me made the following references to undertakings provided by NAB to the Supreme Court of South Australia during the course of the SA Proceeding: (a) On 26 July 2004, it is recorded that Besanko J stated: "Upon the undertaking of the defendant, National Australia Bank Ltd, by counsel to abide by any order a court or a judge may make as to damages, in case the court or a judge shall hereafter be of the opinion that any person shall have sustained any loss or damage by reason of this order, I order that until further order Evajade Pty Ltd be restrained, whether by itself, its officers, servants or agents from removing from the jurisdiction, disposing of, mortgaging, assigning, charging or otherwise dealing with the right to receive moneys from Mildara Blass Ltd or Beringer Blass Estate Wines Ltd pursuant to a deed dated 26 July 2000 between inter alia Mildara Blass Ltd and the Andrew Garrett Family Trust". This undertaking was given in relation to the interim order restraining Evajade from dealing with the royalty stream. (b) On 28 July 2004, it is recorded that Besanko J stated: "I note the undertaking given by National Australia Bank Ltd, by counsel, to abide by any order a court or a judge may make as to damages in case the court or a judge shall hereafter be of the opinion that any person shall have sustained any loss or damage by reason of these orders and undertakings". This undertaking was given in relation to the interim order restraining Mrs Garrett from dealing with the royalty stream. (c) On 4 August 2004, it is recorded that Besanko J stated: "The defendant, National Australia Bank Ltd, by counsel, undertakes to abide by any order the Court or a Judge may make as to damages in case the Court or a Judge shall hereafter be of the opinion that any person shall have sustained any loss or damage by reason of these orders and undertakings which the defendant ought to pay". This undertaking relates to the continuation of the order made against Mrs Garrett on 28 July 2004. 38 NAB's undertakings in the SA Proceeding were not required to be supported by any security granted by NAB in respect of any of its property. 39 Ultimately, Resorts and Mrs Garrett were unsuccessful in the SA Proceeding. No orders for damages were made against NAB in the SA Proceeding, either in favour of Mr Garrett or any other person. His Honour discharged interlocutory injunctions restraining NAB from enforcing its mortgages, and ordered that the plaintiffs give up possession of Springwood Park to NAB. 40 Further, on 22 January and 17 May 2007, the Supreme Court of South Australia declared that Mr Garrett had persistently issued vexatious proceedings and should be prohibited from instituting any proceedings in any court in South Australia against NAB without leave. 41 Let me now address the legal questions. 42 An undertaking as to damages cannot be a security interest for the purposes of the PPSA. The purported security interest was not registrable. The assertion that Mr Garrett and/or OenoViva (either in their personal capacities or in their capacities as joint trustees of the Andrew Garrett Family Trust No 4, the Andrew Garrett Family Trust or any other trust) hold a security interest within the meaning of s 12 of the PPSA is misconceived. 43 First, the undertakings were provided to the Supreme Court of South Australia (not to Mr Garrett and/or OenoViva). Further, the undertakings were not a chose in action. As explained in Cirillo v Citicorp Australia Ltd (2004) 236 LSJS 24; [2004] SASC 293 (Gray J at [72] to [74]): An undertaking as to damages is given to the court and not to an enjoined party. The termination of an injunction creates no right to damages in favour of an enjoined party. Enforcement and the extent of enforcement are discretionary matters for the court. It is for the court to decide whether an interlocutory injunction should have been granted. Only if it is decided that the interlocutory injunction should not have been granted does any question of an enquiry as to damages arise. An undertaking as to damages does not found or create a cause of action. The right in issue, on which Mr Cirillo's standing depends, is the right to apply to the court to request an exercise of discretion to order an enquiry as to damages. There is no 'right' to an enquiry until the court's discretion is positively exercised in favour of ordering an enquiry. Even where it is determined that an injunction should not have been granted, the court retains a discretion not to enforce an undertaking. The inquiry itself will not be held unless and until the Court exercised its discretion in favour of an applicant. Until such time, an applicant can only be said to have a mere hope, a spes, of being awarded compensation, or a mere right to apply. The right to damages does not come into existence until after an enquiry. A chose in action is an existing right, whether vested or contingent. A mere hope or spes is not a chose in action. (citations omitted) 44 Accordingly, any right or claim attached to the undertakings cannot relevantly be said to arise from a consensual transaction. 45 Second, NAB's undertakings in the SA Proceeding were not supported by any security interest granted by NAB. Moreover, the claims made by the plaintiffs to the SA Proceeding (being Andrew Garrett Wines Resorts Pty Ltd and Mrs Averil Garrett) were dismissed. No order for damages was made against NAB in the SA Proceeding in favour of Mr Garrett or any other person, and the plaintiffs were ordered to give up possession of those properties (known as Springwood Park) the subject of the SA Proceeding. 46 Third, Mr Garrett has no standing to pursue any claims in relation to the purported security interest. Any right to apply to the court pursuant to the undertakings has vested if at all in his bankruptcy trustee. 47 Moreover, any "rights" of Mr Garrett that are said be reflected in the Security Deed have also vested in his trustee. In any event, the Security Deed is a document that has never been agreed to or executed by NAB and NAB is not indebted to Mr Garrett (in any of his capacities) for any amount. 48 Accordingly, NAB is entitled to the relief sought in its amended originating application. 49 Moreover, Mr Garrett's litigious history and the evidence that is relied upon by NAB establishes a real likelihood that unless restrained Mr Garrett will continue to take steps to lodge financing statements with the Registrar and lodge documents with ASIC concerning NAB. 50 NAB is entitled to the injunctive relief sought in the amended originating process: see Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd per Robson J at [108] to [119]; Macquarie Leasing Pty Ltd v DEQMO Pty Ltd [2014] NSWSC 1466 per Rein J at [30]. For completeness, I should make two other points concerning the injunctive relief relating to the purported security interest. First, in my view, Mr Garrett did not hold and could not hold a belief on reasonable grounds of the type identified in s 151(1). In my view, the application to register a financing statement in relation to NAB contravened s 151(1) and would contravene s 151(1) if an application in similar form were to be made. That is an additional and sufficient reason to justify the injunctive relief sought. Second, I accept the evidence on prejudice caused to NAB or that is likely to be caused to NAB by Mr Garrett's conduct as deposed to by Mr Illsley.

"Managing controller" 51 Mr Garrett has purportedly procured himself to be the "managing controller" of NAB or at least in respect of the assets the subject of the so-called security interest. Section 9 of the Corporations Act 2001 (Cth) defines a "managing controller" in relation to property of a corporation to mean either a receiver and manager of that property or any other controller of that property who has functions or powers in connection with managing the corporation. Part 5.2 of that Act deals with receivers and controllers. Mr Garrett has not been validly appointed. First, there is no security interest and hence no foundation for the appointment. Second, Mr Garrett is an undischarged bankrupt. Under s 206B(3) of that Act he is disqualified from managing a corporation. His conduct and appointment, if otherwise valid, in my view infringes or is likely to infringe s 206A(1)(a) and (b) given the width of the assets said to be the subject of the security interest and the powers otherwise given to a "managing controller". His appointment will be declared invalid and I will also grant an injunction in the terms sought.

Bills of exchange 52 Mr Garrett has engaged in the vexatious practice of purportedly drawing bills of exchange on NAB, leaving them at NAB branches and then asserting that they have somehow been accepted by NAB. 53 Mr Garrett has delivered a number of purported "bills of exchange" to NAB branches or NAB representatives since March 2016 including the following: (a) a purported bill of exchange issued on 21 March 2016 in the amount of $100,000 said to be payable to the Georgiadis Lawyers Trust Account; (b) a purported bill of exchange issued on 23 March 2016 in the amount of $5,000,000 said to be payable to the Amity Property Group Sales Trust Account; (c) a purported bill of exchange issued on 27 March 2016 in the amount of $15,000,000 said to be payable to the Georgiadis Lawyers Trust Account; (d) a purported bill of exchange issued on 27 March 2016 in the amount of $5,000,000 said to be payable to the Georgiadis Lawyers Trust Account; (e) a purported bill of exchange issued on 20 April 2016 in the amount of $66,000,000 said to be payable to the Mahoneys Trust Account. 54 On 18 April 2016, Mr Garrett notified NAB that he had commenced drawing bills of exchange. 55 On 20 April 2016, Mr Garrett delivered to the NAB Adelaide office branch a purported bill of exchange for the amount of $5 billion payable to the Georgiadis Lawyers Trust Account. This bill of exchange was drawn by Mr Garrett in his capacity as the trustee of the Andrew Garrett Family Trust No 4 trading as OenoViva Capital Resources. The teller attempted to give this bill of exchange back to Mr Garrett but Mr Garrett would not accept it. 56 An email sent by Mr Garrett to NAB shortly after attached, among other things, a spreadsheet described as a "Registry of Bills of Exchange issued by the Trustee of the Andrew Garrett Family Trust No 4 trading as Dynamic Capital Resources & OenoViva Capital Resources" setting out other bills of exchange that he has purported to draw. 57 On 2 May 2016, Mr Garrett delivered to the NAB Adelaide office branch a "bill of exchange" for the amount of $3,199.77 payable to Deloitte Finance Pty Ltd. This bill of exchange was drawn by Mr Garrett in his capacity as the trustee of the Andrew Garrett Family Trust No 4 trading as OenoViva Capital Resources. 58 On 5 May 2016, NAB's solicitors wrote to Mr Garrett requesting that he desist from this practice. 59 Despite such a request, Mr Garrett has continued to deliver purported bills of exchange to NAB including the following: (a) On 9 May 2016 at approximately 12.30pm Mr Garrett delivered two purported bills of exchange to the NAB Adelaide branch for the amounts of $66,000,000, said to be payable to Mahoneys Trust Account, and $25 billion (surprisingly), said to be payable to the Georgiadis Lawyers Trust Account. Both purported bills of exchange were drawn by Mr Garrett in his capacity as the trustee of the Andrew Garrett Family Trust No 4 trading as OenoViva Capital Resources. (b) On 23 May 2016 at approximately 10.06am Mr Garrett sought to deliver to the company secretary of NAB a "reissued" copy of the purported bill of exchange issued on 9 May 2016 for the amount $25 billion, said to be payable to the Georgiadis Lawyers Trust Account. 60 On 30 May 2016 at approximately 11.21 am, NAB received an email from Christine Ransom of Deloitte stating that Mr Garrett had advised that $3,199.77 was deposited to Deloitte's account through the NAB office in South Australia and requesting additional details with respect to this payment so that the deposit could be located. On the same day at approximately 5.21 pm, NAB was copied on an email response sent by Vanessa Filippin, Senior Consultant and Legal Counsel at NAB, to Ms Ransom which stated (among other things) that: (a) NAB is aware that Mr Garrett purported to lodge a bill of exchange for the sum of $3,199.77 on 3 May 2016 payable to Deloitte; (b) Mr Garrett has purported to lodge documents that he has prepared and described as bills of exchange on a number of occasions in the past and NAB does not accept, and has never accepted, any of these purported bills of exchange; and (c) Mr Garrett does not hold any funds on deposit with NAB upon which the purported bills of exchange could be drawn and therefore no funds have been remitted to Deloitte. 61 It is likely that Mr Garrett will continue to deliver purported bills of exchange to NAB which are invalid and will not be accepted by NAB. The presentation of purported bills of exchange at NAB's offices has caused, and may continue to cause, inconvenience and uncertainty among NAB's staff who receive and deal with these invalid documents. The process of dealing with these purported bills of exchange has been time consuming and costly given that these documents are typically required to be reviewed by internal or external legal counsel. Further, if Mr Garrett delivers further purported bills of exchange to NAB's offices or representatives, it is likely to cause confusion to NAB's commercial counterparties. 62 In all the circumstances, this conduct is vexatious. 63 As to the basis for granting an injunction referable to this conduct, NAB made no specific submissions. Nevertheless there are several foundations. First, this conduct can be considered to be part of the same overall matter such that an ancillary exercise of power under s 23 of the Federal Court of Australia Act 1976 (Cth) is justified. Second, as the drawer of the bills of exchange, Mr Garrett impliedly represented that he could meet the statutory obligations of a drawer including any separate obligations to any drawee or acceptor who paid out thereon. But Mr Garrett is an undischarged bankrupt. Moreover, the face value of many of the bills was at such a level that Mr Garrett could have held no genuine intention to meet such obligations or had no reasonable grounds that he could do so. His conduct is not only fanciful, but it also constituted misrepresentation and misleading or deceptive conduct vis-à-vis NAB and the staff to whom he delivered these bills. I do not doubt that I have adequate power to restrain such conduct. True it is that NAB and its staff may not have been deceived by his behaviour, but that does not entail that no injunction should go. 64 Mr Garrett has filed a document headed "Outline of Submissions of Defendant re Bills of Exchange 13th June 2016" seeking to justify his conduct. The contents thereof are, on the whole, misconceived and do not justify the practice that he has engaged in.

Conclusion 65 In my view, NAB is entitled to the relief that it has sought and I will make orders accordingly. There is also no good reason why costs should not follow the event. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.

Personal Property Securities Act 2009(Cth)ss 10, 12, 150(3), 151, 178, 182

Corporations Act 2001(Cth)ss 9, 206A, 206B(3)

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