National Australia Bank v Freeman

REASONS FOR JUDGMENT 1 By a notice of motion filed on 27 July 2001, Lynton Noel Charles Freeman sought an order that the National Australia Bank produce for inspection documents that were referred to in an affidavit which was attached to that notice of motion. In the affidavit filed 27 July 2001, Mr Freeman referred to correspondence from Mallesons Stephen Jaques including a letter dated 20 June 2001 in relation to this aspect of the matter where Ms Costello referred in the first page to a request by Mr Freeman for nine categories of documents. 2 In respect of each of those categories, the bank responded. On 22 June Mr Freeman wrote to Ms Costello and set out a request for 11 categories of documents. The first category was Business Banking Handbook and other relevant manuals; the second was delegated lending authority of two persons who occupied the position of Rural Finance Manager. Mr Freeman next wanted bank statements of bank accounts that were held and conducted by the National Australia Bank, Red Ink memorandum account (Shadow Ledger), manager's suspense accounts and realisation accounts, schedule of securities, watch lists, National Australia Bank in Queensland (Head Office) and Central Queensland Credit Bureau files in total, the personnel file of a particular named Rural Finance Manager, as well as two other personnel files of other bank officers, and the personnel file of a bank officer who had retired from the National Australia Bank and who was advising Mr Freeman. 3 The request in the notice of motion seeking discovery of documents was heard by Deputy District Registrar Baldwin, and in written reasons dated 26 September 2001, Registrar Baldwin refused to order discovery. By a notice of motion filed 10 October 2001, Mr Freeman has sought, amongst other things, to review Registrar Baldwin's decision concerning discovery: such review is heard by the Court de novo. It is therefore necessary to have regard to the merits in support of the motion, although I have to say that I have derived considerable assistance from the outlining of the issues and the reasons which prompted Registrar Baldwin to decline to order discovery. 4 The primary proceeding in the Federal Court is a contested creditor's petition. The act of bankruptcy relied upon by the bank to support the petition is the return of an enforcement warrant unsatisfied; s 40(1)(d) of the Bankruptcy Act 1966. The creditor's petition is based on a judgment obtained in the Supreme Court by the bank against Mr Freeman after a contested trial at which both parties were legally represented. The bank says that it sued upon a bill facility entered into pursuant to the terms of a mediation agreement between the parties in December 1997. It did not sue upon, and the judgment is not based upon any earlier accounts held by Mr Freeman with the bank. It is only the bill facility that the bank relied upon at the trial. 5 At the trial Mr Freeman did not take issue with the calculation of the quantum of the debt, but it appears that before the Court of Appeal the question of the quantum owed by Mr Freeman was a matter which he raised or sought to raise. The bank on the application for discovery argued, and argues before the Court, that the categories of documents requested by Mr Freeman have no relevance to the issues in the Federal Court proceedings and the request is, at least in many respects, in the nature of a fishing expedition. It seems that there is some substance in that last allegation in that Mr Freeman accepted that he sought discovery of business banking handbooks and other manuals for the purpose of finding out whether or not there had been compliance with the procedures required by those documents. 6 It is plain that documents will not be ordered to be discovered under O 15 of the Federal Court Rules for that purpose. The position is that discovery ought to be made in respect of documents which are relevant to the matters in issue in the Federal Court proceedings. Mr Freeman contends that the moneys described in the petition are "not owing", that being one of the grounds of opposition to the making of a sequestration order. 7 The Court will go behind a judgment only where there is substantial reason given for questioning whether in truth and reality there is a debt owing by the debtor to the petitioning creditor. 8 In circumstances where there had been a contested trial over four days before Ambrose J, and where there has been a contested appeal to the Court of Appeal, it is quite unlikely that a reason can be made out why a Court in bankruptcy should go behind the judgment. In this case, Mr Freeman is seeking to re-litigate the question of whether he owes a debt to the National Australia Bank. That misunderstands the circumstances in which a Court of bankruptcy will exercise its discretion to go behind a judgment. Those circumstances plainly have not been made out in the present case. 9 I am satisfied that the documents sought by Mr Freeman ought not be the subject of an order for discovery under O 15 of the Federal Court Rules in the Federal Court proceedings. The documents that he seeks have not been shown to me to be relevant to any issue in the Federal Court proceedings, apart from the issue of the indebtedness of Mr Freeman to the bank. In reviewing the decision of Registrar Baldwin on 26 September 2001, I do not consider it necessary for the bank to provide Mr Freeman with the documents referred to in the attachments to his affidavit of 27 July 2001. The motion filed by him on 10 October 2001 in that respect should be dismissed with costs. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.