Nikolic v MGICA Ltd

REASONS FOR JUDGMENT ON MOTION TO SET ASIDE SEQUESTRATION ORDER 1 On 13 April 1999 a sequestration order was made against the estate of Anita Nikolic and Sasha Alexander Nikolic. The order was made on a creditor's petition filed by MGICA Limited. The petition was opposed on the ground that: "Prior to the petition being issued the Applicant agreed to accept the sum of $25000.00 in full and final satisfaction of the judgment debt (inclusive of interest and associated costs) referred to therein. In the aforesaid premises the subject debt was compromised." When the Notice of Opposition to the petition was filed the Nikolics were represented by solicitors. However on 13 April 1999 they filed a notice that their solicitors were no longer acting for them and that they would "be represented in person in these proceedings". 2 On the hearing of the petition the Nikolics sought to raise an additional ground of opposition. The proposed ground involved a contention that the Commonwealth Constitution is a nullity and that laws made under it are therefore invalid. The Nikolics contended that the Registrar could not proceed in the matter. They relied upon s 78B of the Judiciary Act 1903 as requiring a notice of their contentions to be sent to the Attorneys-General of the Commonwealth and the States with a view to possible removal of the proceedings into the High Court under s 40 of the Act. The Registrar declined to entertain their contentions and proceeded to hear and deal with the petition. 3 On 4 May 1999 the Nikolics filed a notice of motion seeking orders in the following terms: "1. That the decision to refuse leave to my person (sic) by the District Registrar, Mr Martin Jan on 13 April 1999, in the matter referred to herein be set aside. 2. That the request for leave to have a number of Constitutional issues determined by the High Court as within their exclusive jurisdiction pursuant to SS75-75 of the Australian Constitution 1900 and S 40 of the Judiciary Act 1903 under the auspices of S 78B of the Judiciary Act be so granted." 4 The motion came on for hearing on 14 June 1999. Mr Nikolic appeared for himself and Anita Nikolic. He accepted at the outset, notwithstanding the wording of the motion, that what he sought was an order setting aside the sequestration order. He characterised his submission as involving basically two arguments. The first was that the District Registrar had erred in law by disallowing his application to remove the case into the High Court which he said he sought to do under s 78B of the Judiciary Act. The second limb of his argument was that there was sufficient merit in his submission to warrant its removal into the High Court. 5 Mr Nikolic's argument about the validity of the Constitution had no merit at all. It was, in the end, self defeating. For if the Constitution were invalid no court created by or under the Constitution could make any valid orders in his case. His argument involved contentions that the Commonwealth of Australia Constitution Act 1900, as imperial legislation, could not survive Australia's transition to sovereign nation status which he regarded as having occurred from the time of the making of the Covenant of the League of Nations in 1920 to which Australia was a party. The subsequent enactment of the Statute of Westminster was not binding because it was never registered with the Secretariat of the League of Nations under Article 18 of the Covenant. This depended upon the characterisation of the Statute of Westminster as a "treaty or international engagement" entered into by Australia as a "Member of the League". He also relied upon the Treaty of Versailles 1918 and the Charter of the United Nations 1945 for such propositions. It is unnecessary to canvass the supporting arguments further. 6 Section 78B of the Judiciary Act 1903 was introduced into the Act by the Judiciary Amendment Act 1976. It formed part of a new Division 1A entitled Provisions Relating to Constitutional Matters. It was subject to some minor amendments by the Statute Law (Miscellaneous Provisions) (No 2) Act 1983. It now reads: "78B(1) Where a cause pending in a federal court including the High Court or in a court of a State or Territory involves a matter arising under the Constitution or involving its interpretation, it is the duty of the court not to proceed in the cause unless and until the court is satisfied that notice of the cause, specifying the nature of the matter has been given to the Attorneys-General of the Commonwealth and of the States, and a reasonable time has elapsed since the giving of the notice for consideration by the Attorneys-General, of the question of intervention in the proceedings or removal of the cause to the High Court. 78B(2) for the purposes of subsection (1), a court in which a cause referred to in that subsection is pending: (a) may adjourn the proceedings in the cause for such time as it thinks necessary and may make such order as to costs in relation to such an adjournment as it thinks fit; (b) may direct a party to give notice in accordance with that subsection; and (c) may continue to hear evidence and argument concerning matters severable from any matter arising under the Constitution or involving its interpretation. 78B(3) For the purposes of subsection (1), a notice in respect of a cause: (a) shall be taken to have been given to an Attorney-General if steps have been taken that, in the opinion of the court, could reasonably be expected to cause the matters to be notified to be brought to the attention of that Attorney-General; and (b) is not required to be given to the Attorney-General of the Commonwealth if he or she or the Commonwealth is a party to the cause and is not required to be given to the Attorney-General of a State if he or she or the State is a party to the cause. 78B(4) The Attorney-General may authorize the payment by the Commonwealth to a party of an amount in respect of costs arising out of the adjournment of a cause by reason of this section. 78B(5) Nothing in subsection (1) prevents a court from proceeding without delay to hear and determine proceedings, so far as they relate to the grant of urgent relief of an interlocutory nature, where the court thinks it necessary in the interests of justice to do so." 7 The purpose of the notice required in s 78B is to allow Attorneys-General an opportunity to intervene in the proceedings (s 78A(1)) and if desired to seek removal of the cause or part of the cause into the High Court (s 40). 8 The section does not impose upon a court a duty not to proceed pending the issue of notice no matter how trivial, unarguable or concluded the constitutional point may be - State Bank of New South Wales v Commonwealth Bank (1986) 66 ALR 129 at 130 (Kirby P). To invoke the application of s 78B it is necessary that there be shown to be a matter arising under the Constitution or involving its interpretation. The meaning of that phrase was expounded in James v South Australia (1927) 40 CLR 1 at 40: "Matters arising under the Constitution or involving its interpretation are those in which the right, title, privilege or immunity is claimed under that instrument, or matters which present necessarily and directly and not incidentally an issue upon its interpretation." See also per McHugh JA in State Bank of New South Wales v Commonwealth Bank (supra) at 144. 9 In my opinion a contention that the Constitution is invalid does not disclose the existence of a matter arising under the Constitution or involving its interpretation. This is simply a question of the proper construction of s 78B which presupposes the validity of the Constitution and indeed depends for its legal effect upon that validity. Further if, as in this case, the asserted constitutional point is frivolous or vexatious or an abuse of process, it will not disclose the existence of a matter in the sense of any real controversy which can attract the operation of s 78B. The section cannot be used absent a real controversy, simply to delay proceedings. 10 In Australian Securities and Investments Commission v White (unrep Fed Court, 16/7/98, Drummond J) arguments similar to those advanced in this case had been advanced before Spender J and in subsequent contempt proceedings pending an appeal against the decision of Spender J, were also advanced before Drummond J. Spender J had made orders without requiring that notices be sent to the Attorneys-General pursuant to s 78B of the Judiciary Act. Drummond J commented: "His Honour's view may well be correct, given that the point that Mr White raises can hardly be said to arise under the Constitution or involve its interpretation, but rather is a point that he relies on to deny the Constitution any effect as a legal foundation for the valid enactment of laws having effect within Australia, at least after 1920." Nevertheless his Honour, Drummond J, had adjourned the hearing of the contempt proceedings to enable s 78B notices to be served. 11 As I have said a contention of this kind does not attract the application of s 78B for two reasons. The first is the content of the contention which does not give rise to a matter "arising under the Constitution or involving its interpretation". The second is that the contention is frivolous and vexatious and does not give rise to a matter. In the circumstances there can be no obligation for the Court to go through the processes required by s 78B. To do so would be to allow that section to be used as an instrument for delaying and frustrating proceedings and incurring unnecessary public expense. 12 That is what Mr Nikolic seeks to do in this case. He should not be allowed to do it. The sequestration order was properly made. The motion will be dismissed with costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.