Rogers v Asset Loan Co Pty Ltd

Rogers v Asset Loan Co Pty Ltd - [2006] FCA 1708 - FCA 2006 case summary — Zoe

[4]

ACCC v Maritime Union of Australia [2001] 114 FCR 472 cited Australian and International Pilots Association v Qantas Airways Limited [2006] FCA 1441 cited Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 cited Australian Competition and Consumer Commission v Fox Symes & Associates Pty Ltd [2005] FCA 1071 applied Banque Commerciale SA (en liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279 cited Barclays Bank v Boulter [1999] 1 WLR 1919 cited Bare v Pulham [1982] 148 CLR 568 cited Blomley v Ryan (1956) 99 CLR 362 cited Campbell v Metway Leasing Ltd (1998) ATPR 41-630 cited Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 cited Commonwealth Bank of Australia v Spira [2002] NSWSC 905 cited Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 cited Cox v Journeaux (No 2) (1935) 52 CLR 713 cited Daemar v Industrial Commission of New South Wales (1988) 79 ALR cited Duncan v Lipscombe Child Care Services Inc [2006] FCA 458 cited Ex parte Vine in re Wilson (1878) 8 Ch D 364 cited Faulkner v Bluett (1981) 52 FLR 115 applied Franklins Selfserve Pty Ltd v Austotel Pty Ltd, unreported, New South Wales Supreme Court, Needham J, 10 November 1988 cited Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 cited Hodges v Webb [1920] 2 Ch 70 cited Holmes v Goodyear Tyre & Rubber Co (Aust) Ltd (1984) 55 ALR 594 cited Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2006] FCAFC 116 applied Kirela Pty Ltd v Westfield Holdings Ltd [2002] FCA 1223 cited Lonrho plc v Fayed (No 5) [1994] 1 All ER 188 cited Lorimer v State Bank of NSW, Court of Appeal, unreported, New South Wales Court of Appeal, Priestley, Handley JJA and Kirby P, 5 July 1991 cited Markisic v Dept of Community Services of New South Wales & Ors [2005] NSWSC 1373 cited Munnings v Australian Government Solicitor (1994) 120 ALR 586 applied Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 cited Pascoe, in the matter of Hudson [2006] FCA 785 cited PFD Food Services Pty Ltd v NAFDA Pty Ltd [2003] FCA 682 cited Pridmore v Magenta Nominees Pty Ltd (1999) 161 ALR 458 applied Ratcliffe v Evans (1892) 2 QB 524 cited Rivkin & Co Ltd v Young (1996) 22 ACSR 589 cited Rogers v Asset Loan Co Pty Ltd & Ors [2006] FCA 434 followed Rose v Buckett [1901] 2 KB 449 considered Trade Practices Commission v Australian Iron and Steel Pty Limited (1989) 22 FCR 305 cited Turner v The Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69 cited Vision Telecommunications Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd [2001] WASC 139 cited Von Risefer v Permanent Trustee Company Pty Ltd [2001] FCA 1052 cited Wearne v Southern Cross University [2006] FCA 1033 cited Wilson v United Counties Bank Ltd [1920] AC 102 cited Wily (as Trustee of the Bankrupt Estate of Fuller) v Fuller [2000] FCA 1512 cited

[14]

Application before Greenwood J 4 The factual background to this matter is set out at some length in the judgment of Greenwood J in Rogers v Asset Loan Co Pty Ltd & Ors [2006] FCA 434 at [8]-[27]. The applicant and the respondents before his Honour were the same parties as are currently before me. Before his Honour, the applicant sought various orders, including interlocutory relief restraining the respondents from exercising a power of sale, and in respect of a number of loan agreements, deeds of settlement, mortgages and other instruments relating to various properties. 5 At that hearing the respondents submitted, and Greenwood J found, that the majority of Mr Rogers' claims for final relief involved claims related to the legal or beneficial interest of the applicant in property which vested in the trustee in bankruptcy, and accordingly in respect of which the applicant had no standing to institute legal proceedings ([2006] FCA 434 at [35]). However his Honour noted that s 116(2) Bankruptcy Act 1966 (Cth) ('Bankruptcy Act') excised categories of property from the interests, rights, capacities and powers divisible among the bankruptcy's creditors, including: '… (g) any right of the bankrupt to recover damages or compensation; (i) for personal injury or wrong done to the bankrupt, the spouse of the bankrupt or a member of the family of the bankrupt; ... And any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong.' 6 Mr Rogers claimed that the matters he sought to agitate before his Honour by way of final relief and interlocutory relief fell within the exemption contemplated by s 116(2)(g) Bankruptcy Act because, properly understood, the claims constituted a claim with respect to a 'wrong done to the bankrupt' and the right to recover damages or compensation for each wrong remained with the applicant. As his Honour summarised: 'In effect, Mr Rogers says a claim based upon conduct on the part of the respondents that bears the statutory character of misleading or deceptive conduct or unconscionable conduct on the part of ALC or ALCPL (or the respondents more generally) in connection with the supply of financial services reflected in the various deeds, is a claim for compensation for a wrong which Mr Rogers is entitled to assert.' ([2006] FCA 434 at [40]) 7 Before Greenwood J the respondents said that, to the extent that such a claim, however it might be formulated, is one with respect to a legal or beneficial interest of the bankrupt in land or involves any right, power or capacity in relation to such an interest, the claim vests in the trustee in bankruptcy. 8 After considering each of the applicant's claims for relief and the meaning of the phrase 'wrong done to the bankrupt' in the context of s 116(2)(g), Greenwood J held that: 'Where the claim for final relief arising out of the conduct of a respondent reflects a claim with respect to both the rights of the bankrupt in property and a claim with respect to a wrong done to the bankrupt characterised as a claim by reference to the anxiety, stress and pain felt by the bankruptcy, the rights of action in respect of the bankrupt's interests in property vest in the trustee and those rights of action where the essential cause is emotional injury done to the bankrupt (in respect of a recognised cause of action) remain with the bankrupt.' (at [47]) 9 His Honour continued: 'It may be that when Mr Rogers or his advisers formulate a statement of claim in the proceeding, a claim might emerge which, in terms of its material facts, reflects a claim within the exemption reliant upon conduct which involves a contravention of ss 52, 51AC or 60 of the Trade Practices Act 1974 (Cth) independently of any of the former rights of the bankrupt in property which have become vested in the trustee. At the moment the material does not establish any such right. The alleged contraventions of the Trade Practices Act 1974 (Cth) which are mere conclusionary assertions are relied upon as the basis for final orders with respect to the interests of the bankrupt in property which interests have become vested in the trustee.' (at [48]) 10 Similarly a claim by the applicant for interlocutory relief in the form of 'an order that the respondents do not harass, intimidate or coerce the applicant, his family or neighbours' was not a claim called in aid of a claim for final relief within the scope of s 116(2)(g) Bankruptcy Act, but rather was in connection with an injunction to restrain an exercise of power of sale in relation to a particular property by a secured creditor in aid of final relief in relation to that property. The applicant's interest in the property was an interest vested in his trustee. However his Honour left open the possibility that the applicant could properly formulate a claim for final relief within the exemption in s 116(2)(g), and a claim for interlocutory relief in respect of relevant conduct, which claim might well be made by the applicant independently of his trustee in bankruptcy (at [48] and [51]).

[18]

RELEVANT ISSUES 21 The parties made extensive oral submissions during the hearings of 29 June 2006 and 4 August 2006. The respondent made global submissions with respect to their application, then both parties made submissions concerning each 'Count'. In delivering my decision in relation to this application, I will similarly address a number of global issues and then each 'Count' of the statement of claim. 22 In the case before me a number of relevant issues are identifiable. They are as follows: 1. the implications of the fact that the applicant is a bankrupt, and the meaning of 'personal injury or wrong' within s 116(2)(g) Bankruptcy Act. 2. whether breach of the statutes upon which the applicant relies - ss 51AA, 52 and 60 Trade Practices Act - can actually result in a person suffering a personal injury or wrong, as distinct from a claim which relates to the person's property and thus is properly to be pursued by the trustee in bankruptcy where the claimant becomes bankrupt. 3. whether the applicant has framed his application in terms that he has pleaded a 'personal injury or wrong' to him within the meaning of s 116(2)(g) BankruptcyAct. A number of related sub-issues arise here: · whether he has pleaded an injury or wrong which is personal to him as distinct from an injury or wrong which is properly to be pursued by the trustee in bankruptcy · whether he has pleaded personal injury or wrong attributable to the conduct of the respondents - in other words whether he has drawn a nexus between the conduct of the respondents and the personal injury or wrong he claims to have suffered · the nature of the personal injury or wrong he has suffered and which founds his cause of action - in other words whether he has articulated the nature of the personal injury or wrong he claims to have suffered. 4. if the applicant has pleaded a personal injury or wrong, whether the personal injury or wrong he has pleaded is such that s 116(2)(g) allows the applicant to pursue that claim in the Federal Court. 5. the appropriate orders the Court should make in light of the claims of the respondents. 23 I propose to address each of these issues in turn.

[19]

BANKRUPTCY OF THE APPLICANT 24 As Greenwood J noted in his judgment ([2006] FCA 434 at [4]) with respect to the claims of the applicant against the respondents, the most immediate difficulty confronting the applicant is the question of whether he has standing in connection with this litigation, on the basis that a sequestration order in respect of the applicant's estate was made on 23 February 2005. His Honour explained: · the effect of s 58 Bankruptcy Act, which vests the property of the bankrupt in the registered trustee (at [36]) · the meaning of 'property of the bankrupt' for the purposes of s 58, which is defined as 'the property divisible among the bankrupt's creditors; and any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt' (at [36]) · the fact that property divisible amongst the creditors for the purposes in s 116 includes 'the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his discharge' (at [37]) · that only the trustee in bankruptcy is entitled to seek remedial orders in respect of property, contractual rights, security interests, and related entitlements (at [43]) · that the exemption in s 116(2)(g) with respect to wrongs done to the bankrupt is limited to those cases where the essential cause of action is the personal injury done to the person or feelings of the bankrupt, as distinct from where the damages or part of them are to be estimated by reference to the bankrupt's rights of property (at [45]-[47]; cf Daemar v Industrial Commission of New South Wales (1988) 79 ALR 591 at 601, Cox v Journeaux (No 2) (1935) 52 CLR 713 at 721, Faulkner v Bluett (1981) 52 FLR 115 at 119) · that a claim with respect to a wrong done to the applicant characterised by reference to the anxiety, stress and pain felt by the bankrupt in respect of a recognised cause of action remains with the applicant under s 116(2)(g) Bankruptcy Act (at [46]) and · that in the case before his Honour the claims were not claims for damages founded upon immediate reference to the distress and anxiety caused to the bankrupt without reference to his rights of property (at [49]); further the applicant's claim for final relief was a consequential claim necessarily connected with the applicant's interests in property (at [50]). 25 It is unnecessary for me to add to the comments of Greenwood J with respect to the consequences of the bankruptcy of the applicant and its impact on his standing in the case before me. Clearly, for the applicant - as distinct from his trustee in bankruptcy - to have standing to maintain a cause of action it is necessary that he not only plead that a personal injury or wrong has been done to him, but that the essential cause of action is that personal injury or wrong has been done to him.

[20]

TRADE PRACTICES ACT 26 Throughout his statement of claim the applicant relies on breaches of ss 51AA, 52 and 60 Trade Practices Act as founding his causes of action. These sections read as follows: '51AA: Unconscionable conduct within the meaning of the unwritten law of the States and Territories (1) A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. (2) This section does not apply to conduct that is prohibited by section 51AB or 51AC. 52: Misleading or deceptive conduct (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1). 60: Harassment and coercion A corporation shall not use physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer.' 27 It is useful to make a number of preliminary points concerning these provisions before examining the substance of the applicant's complaint. 28 Sections 51AA and 52 Trade Practices Act apply to corporations, in trade or commerce, engaging in conduct which is unconscionable (s 51AA) or is misleading or deceptive (s 52). A reference to 'engaging in conduct' for the purposes of the Trade Practices Act means: '…doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant.' (s 4(2)) 29 Plainly, both s 51AA and 52 Trade Practices Act apply to conduct of a corporation in trade or commerce. The enactment of s 51AA introduced into the legislation statutory notions of unconscionable conduct founded in courts of equity (see for example Blomley v Ryan (1956) 99 CLR 362, Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447). As Kirby J said in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 197 ALR 153 at 173 in relation to s 51AA: 'Such equitable categories developed in order to protect the integrity of the contracting process where a party is induced to act or enter a transaction due to weakness or illegitimate pressure, and does so without full information or appreciation of the extent or nature of the transaction or the way it affects that party's interests and choices.' 30 Further, although clearly s 52 Trade Practices Act is of broad application it is not open-ended. As pointed out by the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594: '…the section is not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities. What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.' (Mason CJ, Deane, Dawson & Gaudron JJ at 604) 31 Sections 51AA and 52 Trade Practices Act apply to interactions between corporations and other parties in the commercial context, involving commercial transactions. To the extent that these legislative provisions are relevant in this context (and there are possible issues with respect to their relevance in respect of conduct in relation to financial services, which I need not discuss for the purposes of this judgment), it is difficult to comprehend a case where these sections would be relevant and where, in the event of the bankruptcy of a person complaining about breach of either section, the trustee in bankruptcy of the complainant would not be the appropriate party to institute litigation. 32 Section 60 Trade Practices Act specifically applies to conduct in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer, and therefore is founded in an existing (or possible) contractual relationship between the corporation and the consumer. In the event that the consumer becomes bankrupt, it follows that any legal action arising from the contractual relationship between the consumer and the corporation vests in the trustee in bankruptcy. Although there is little case law interpreting this section: · the word 'undue', which qualifies 'harassment', suggests that what is done must, having regard to the circumstances, extend beyond that which is acceptable or reasonable (ACCC v Maritime Union of Australia [2001] 114 FCR 472 per Hill J at 486). · 'harassment' in this context means persistent disturbance or torment (ACCC v Maritime Union of Australia at 485). 'Undue harassment' therefore means that conduct which amounts to harassment will only amount to a contravention of the section where what is done goes beyond the normal limits which, in the circumstances, society would regard as acceptable or reasonable and not excessive or disproportionate (ACCC v Maritime Union of Australia at 485). Accordingly, it follows that the section contemplates that some harassment of a consumer by a corporation in connection with the supply or possible supply of goods or services or in respect of payment for goods or services by a consumer can be tolerated and is not unlawful. · 'coercion' carries with it the connotation of force or compulsion or threats of force or compulsion negating choice or freedom to act (Hodges v Webb [1920] 2 Ch 70 at 85-87 per Peterson J, ACCC v Maritime Union of Australia at 485-486). 33 An essential ingredient of the cause of action founded upon s 60 is that the undue harassment or coercion occurs 'in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer'. Accordingly, to the extent that any cause of action arose from the use of physical force or intimidation where the requisite connection is not established, it may be that the appropriate cause of action would be in tort, which does not rely on the contractual relationship inherent in the application of s 60. 34 However, despite submissions concerning whether s 60 can give rise to a claim for personal injury or wrong, I note that the respondents have accepted that there can be damages for personal injury under the Trade Practices Act. Accordingly, notwithstanding the views I have expressed in relation to ss 51AA, 52 and 60, it is appropriate that I should consider each 'Count' of the applicant in accordance with its terms and the potential relevance and application of these sections of the Trade Practices Act.

[22]

Count 1 paragraphs 214-218: the respondents breached sections 51AA and 52 Trade Practices Act by misleading the applicant about the honesty and character of the third, fourth and fifth respondents, and as a result the applicant suffered personal injury 37 The applicant particularises this allegation by reference to 'deception and unconscionability of failing to inform the applicant that the third, fourth and fifth respondents are dishonest', and in par 215 that 'the company' had 'a duty to warn the public in general (and the applicant in particular) about the potential for loss and damage that would flow from trusting the director'. 38 In my view, to the extent that this is a cause of action under ss 51AA and 52 (and in my view the relevance of s 51AA is dubious) it is not one in respect of which the applicant has suffered personal injury within the meaning of s 116(2)(g) Bankruptcy Act. This is because, notwithstanding the claim that the applicant has suffered personal injury: a. other than a statement that the applicant suffered personal injury, no injury is particularised or connection drawn between how a failure to warn and advise the applicant caused the applicant to suffer personal injury. A bare allegation that the applicant has suffered personal injury or wrong, without particularising the injury or wrong, or without stating the connection between the conduct complained of and the claimed personal injury or wrong, is not adequate to provide the applicant with standing to pursue litigation in the very limited circumstances of his bankruptcy. Particularising the damage and establishing the nexus would be necessary in any event. As explained in well-known comments of Bowen LJ in Ratcliffe v Evans (1892) 2 QB 524 at 532: 'The necessity of alleging and proving actual temporal loss with certainty and precision in all cases of the sort has been insisted upon for centuries... In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.' (note similar comments by Dillon LJ in Lonrho plc v Fayed (No 5) [1994] 1 All ER 188 at 194, Branson J in Kirela Pty Ltd v Westfield Holdings Ltd [2002] FCA 1223 at [15], Ryan J in PFD Food Services Pty Ltd v NAFDA Pty Ltd [2003] FCA 682 at [18]-[19], and Smart AJ in Markisic v Dept of Community Services of New South Wales & Ors [2005] NSWSC 1373 at [115]) b. The respondents are entitled to know the case they are to meet (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 at 517; Bare v Pulham [1982] 148 CLR 568; Banque Commerciale SA (en liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286, Barclays Bank v Boulter [1999] 1 WLR 1919 at 1923; and note O 12 r 1(1) Federal Court Rules) and the pleadings must be sufficiently clear, so that the case against the respondents is clear. c. if the claim is to be categorised as a claim in negligence which has resulted in financial loss, it properly lies with the trustee in bankruptcy: Faulkner v Bluett. d. if the claim is to be categorised as a breach of fiduciary duty or trust it properly lies with the trustee in bankruptcy. As pointed out by RD Nicholson J in Pridmore v Magenta Nominees Pty Ltd (1999) 161 ALR 458 at 468: 'In relation to s 58(1)(a) 'the property of the bankrupt' as defined in par 116(1)(a) would include any choses in action which the applicants had to enforce equitable rights. Such rights, being property being divisible among the creditors of the bankrupt, would vest in the official trustee. If the equitable rights arose after the sequestration order it would for the same reasons be 'property that is divisible amongst the creditors of the bankrupt' within s 58(6) and thus property to which s 58(1)(b) applies so that again the exercise of the rights would vest in the official trustee...' (note also Wily (as Trustee of the Bankrupt Estate of Fuller) v Fuller [2000] FCA 1512; Pascoe, in the matter of Hudson [2006] FCA 785) e. if the claim is categorised as a breach of ss 51AA or 52, it is claim with respect to a commercial transaction which has now vested in the trustee in bankruptcy. 39 Accordingly, the applicant lacks standing in respect of this claim.

[24]

Count 3: the respondents breached sections 51AA, 52 and 60 Trade Practices Act in that the third respondent informed the applicant that he was the CEO and that the applicant was not required to pay interest or principal on loans. In particular, the applicant claims that as a result of the harassment, coercion and intimidation of the applicant's business and personal finances engaged in by the respondents in breach of section 60 Trade Practices Act, he suffered personal injury 42 In my view the applicant lacks standing in respect of this claim. Any claims in respect of the matters pleaded are vested in the trustee in bankruptcy. My reasons are as follows: a. sections 51AA and 52 Trade Practices Act apply to conduct of corporations. The only conduct referred to in this Count is that of the third respondent, Mr Hare who is obviously an individual. b. The statement of claim does not, in respect of ss 51AA or 52, draw a nexus between the alleged conduct of Mr Hare and the corporate respondents. Unlike in relation to the claim that the applicant was harassed by Mr Hare acting as agent for all respondents in breach of s 60, no responsibility for alleged unconscionable conduct or misleading or deceptive behaviour by Mr Hare is attributed to the corporate respondents. Accordingly, there is no evidence that the corporate respondents acted unconscionably towards the applicant within the meaning of s 51AA in terms of this Count. Similarly, to the extent that the applicant was misled by Mr Hare, this appears to be conduct for which the other respondents were not responsible (note Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 per Gibbs CJ at 199 and Mason J at 211). c. Although the applicant claims that the third respondent, as agent for all of the respondents, coerced him contrary to s 60, the conduct in breach of s 60 is neither pleaded nor particularised. It is not possible to ascertain from the pleading how the respondents allegedly acted in breach of s 60 other than claims by the applicant that he was misled. This does not in my view in any way entail harassment or coercion. d. Similarly to Count 2 the claim of the applicant again is in substance in relation to financial injury. In a somewhat telling statement, the applicant in par 260 claims 'relief from the payment of principal and interest and costs claimed by the respondents due to the deception and unconscionable conduct of the respondents'. Again, this is illustrative of the fact that the applicant seems to fail to appreciate that he is now a bankrupt, and any payments of this nature are now the concern of his trustee in bankruptcy. e. Although the applicant claims compensation for personal injury in par 261, the nature of the personal injury is not particularised, nor is a nexus drawn between the alleged conduct of the respondents and any injury he has suffered. I refer to comments in this regard I made earlier in this judgment in relation to Count 1.

[27]

Count 6 paragraphs 296-315: as a result of being defrauded, tricked and 'the victim of crime' in relation to the Robert Street house subdivision site, which involved breaches by the respondents of sections 51AA, 52 and 60 Trade Practices Act the applicant suffered personal injury 46 Similarly to Count 2, although the applicant claims that he suffered 'personal injury' in respect of this conduct of the respondents, the substance of this complaint is that he suffered financial injury in respect of transactions involving the Robert Street house subdivision site 'as a result of being defrauded, tricked and the victim of crime' (par 315). Claims with respect to financial damage have clearly vested in the applicant's trustee in bankruptcy. 47 Wrongs identified by the applicant in this Count include that the fifth and sixth respondents breached their duty as trustees by denying their obligations to the applicant and defrauding him (par 312); actions of the respondents prevented the applicant paying debts claimed by the respondents (par 313); and the respondents burgled his home and stole files and records. 48 To the extent that the applicant claims compensation on the ground that he was owed a fiduciary duty by the respondents which they breached, or on the ground that the respondents breached trust or contractual obligations by withholding money, the claim vests in his trustee in bankruptcy: Pridmore v Magenta Nominees Pty Ltd. Further, to the extent that a claim exists under ss 51AA and 52 Trade Practices Act in respect of these facts, it clearly belongs with the applicant's trustee in bankruptcy. 49 To the extent that this conduct in allegedly burgling applicant's home and stealing documents constitutes undue harassment in breach of s 60, a connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer must be established. The applicant does not plead how the conduct of the respondents in stealing documents constitutes undue harassment in relation to the supply of goods or services, or payment for goods or services. However rights of action in relation to unlawful access of the respondents to the applicant's home and his possessions are in the realm of tort and potentially relate to a personal injury or wrong to the applicant. In Rose v Buckett [1901] 2 KB 449 the defendants had entered the bankrupt's house on several occasions and seized goods, furniture and effects. The bankrupt alleged damage to premises, damage to goods and 'personal inconvenience and annoyance to himself and family, by being wrongfully deprived of his property and of the quiet enjoyment of his house and premises from time to time by the defendants'. Collins LJ said: 'Where the damages to property by trespass and conversion are merely nominal, the cause of action in respect thereof is not regarded as one affecting the value of the property passing to the trustee, so as to give him a right of action in respect thereof, but rather as a wrong personal to the bankrupt himself, which could not found an action by his trustee. This view is well put by Cresswell J in his opinion delivered to the House of Lords in Beckham v Drake. He says: "In (a number of cases) it was decided that rights of action for trespass to land or goods in the actual possession of a trader do not pass to his assignees if he becomes bankrupt, because those rights of action are given in respect of the immediate and present violation of the possession of the bankrupt, independently of his rights of property, and are an extension of the protection given to his person, and the primary personal injury to the bankrupt is the principal and essential cause of action".' (at 455-456, cf Stirling LJ at 457) 50 The Court of Appeal therefore permitted the bankrupt to maintain the action. This decision was noted in Faulkner v Bluett at 119. 51 To the extent that the applicant has an action in respect of trespass to land and goods (and I make no comment as to this), in the absence of a Trade Practices Act claim or any other matter which enlivens the Court's jurisdiction,the only place it could be pursued would be the State courts. 52 For present purposes however, I also note that the applicant has not particularised the nature of any personal injury he has suffered as a result of the respondents stealing his files and records, or indeed any other wrongs he alleges. He has also not drawn a nexus between the conduct of the respondents and any personal injury or wrong, or between the provisions of the Trade Practices Act and the wrongs he alleges. Although it is possible that the applicant experienced personal injury by being wrongfully deprived of his property and of the quiet enjoyment of his house and premises as was the case in Rose v Buckett, the manner in which the statement of claim is framed in respect of these facts could equally vest the trustee in bankruptcy with the claim, on the basis that any records of the applicant relevant to his financial position vested in the trustee and deprivation of those records gives rise to an action in the trustee. Accordingly, I refer to my comments in respect of Count 1 in this regard. 53 Accordingly, the applicant lacks standing in respect of this claim.

[29]

Count 8 paragraphs 338-362: as a result of being deceived, treated unfairly and/or made a victim of unlawful conduct in relation to the Mal Campbell Drive property in breach of sections 51AA, 52 and 60 Trade Practices Act, the applicant suffered personal injury 59 Similarly to Count 2, although the applicant claims that he suffered 'personal injury' in respect of this conduct of the respondents, the substance of this complaint is that he suffered financial injury in respect of transactions involving the Mal Campbell Drive property. Claims with respect to financial damage have clearly vested in the applicant's trustee in bankruptcy. 60 In any event, although the applicant complains of conduct of the respondents in relation to the property, the only wrongs of which he complains in substance are the burglary of his house and theft of documents in par 379 (which amounted, inter alia, to harassment, intimidation and coercion), and defamation in par 382. 61 A claim in respect of defamation of the injured party so far as it concerns his credit, character and reputation remains with the injured party as it relates to a personal injury: ex parte Vine in re Wilson (1878) 8 Ch D 364, Wilson v United Counties Bank Ltd [1920] AC 102 at 111 and 128, Holmes v Goodyear Tyre & Rubber Co (Aust) Ltd (1984) 55 ALR 594. If this did give rise to a cause of action (and I make no comment as to this), in the absence of a Trade Practices Act claim or any other matter which enlivens the Court's jurisdiction, the only place it could be pursued would be in the State courts. 62 In relation to the balance of this complaint however: a. to the extent that a claim exists under ss 51AA and 52 Trade Practices Act in respect of these facts, it has clearly vested in the applicant's trustee in bankruptcy. b. to the extent that this conduct constitutes undue harassment in breach of s 60, a connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer must be established. The applicant does not plead how the conduct of the respondents in stealing documents constitutes undue harassment in relation to the supply of goods or services, or payment for goods or services. c. If the undue harassment is in relation to the supply of goods or services, it is arguably a cause of action which is vested in the trustee in bankruptcy. d. Although the applicant pleads coercion he does not particularise the nature of the coercion. e. To the extent that the alleged burglary of the applicant's house and theft of his records could raise a cause of action in tort, or could be of interest to the trustee in bankruptcy, I refer to my comments in relation to Count 6. f. In relation to the failure of the applicant to particularise his personal injury I refer to my comments in relation to Count 1. 63 Accordingly, the applicant lacks standing in respect of this claim.

[33]

Count 12 paragraphs 433-454: the applicant was compelled to transfer his profits in respect of the Matthew Court vacant land to the respondents as a result of conduct of the respondents in breach of sections 51AA, 52 and 60 Trade Practices Act. The stress and strain of being defrauded, coerced, manipulated and deceived caused personal injury to the applicant 77 Similarly to Count 2, although the applicant claims that he suffered 'personal injury' in respect of this conduct of the respondents, the substance of this complaint is that he suffered financial injury in respect of transactions involving the Matthew Court vacant land. Claims with respect to financial damage have clearly vested in the applicant's trustee in bankruptcy. 78 To the extent that a claim exists under ss 51AA and 52 Trade Practices Act in respect of these facts, it clearly vests in the applicant's trustee in bankruptcy. 79 Although the applicant claims that he was 'compelled' to transfer his profits in respect of this transaction to the respondents as a result of being 'threatened...with loss of other benefits and profits and or property if he failed to give them their "cut"' (pars 447 and 449) this claim is not in any way particularised. The applicant does not plead how the alleged conduct of the respondents constitutes undue harassment or coercion in relation to the supply of goods or services, or payment for goods or services in the meaning of s 60, or is otherwise in breach of the Trade Practices Act. In any event, if the undue harassment or coercion is in relation to the supply of goods or services, it is a cause of action which is vested in the applicant's trustee in bankruptcy. 80 Further, although the applicant complains of being 'starved' of working capital he needed for personal use, business use and expansion (par 450): (a) in the absence of contractual obligations of the respondents to provide the applicant with funds (as discussed earlier in relation to Count 10), they are not obliged to do so. The applicant has not, for example, pleaded that the only source of funding for his activities was the respondents and that accordingly the situation was such that their refusal to advance funds was unconscionable (cf Franklins Selfserve Pty Ltd v Austotel Pty Ltd, unreported, New South Wales Supreme Court, Needham J, 10 November 1988) or that the respondents had promised to advance the funding and then had not (cf Lorimer v State Bank of NSW, unreported, New South Wales Court of Appeal, Priestley, Handley JJA and Kirby P, 5 July 1991, and Commonwealth Bank of Australia v Spira [2002] NSWSC 905). (b) irrespective of any contractual obligation, any right of action in relation to the provision of working capital to the bankrupt is now a matter for the applicant's trustee in bankruptcy. 81 Finally, although at par 451 the applicant claims 'the stress and strain of being defrauded, coerced, manipulated and deceived caused personal injury to the applicant', again he does not plead or particularise the nature of his personal injuries. I refer to comments I made earlier in relation to Count 1. 82 Accordingly, the applicant lacks standing in respect of this claim.

[34]

Count 13 paragraphs 455-475: the respondents intentionally caused the applicant to become a bankrupt by "starving" him of cash and property in breach of sections 51AA, 52 and 60 Trade Practices Act, as a result of which the applicant suffered personal injury 83 In relation to the applicant's allegation that the respondents starved the applicant of cash and property (pars 458, 469, 474), I refer to my comments in relation to Counts 10 and 12. 84 In relation to the applicant's allegation that the respondents intentionally caused the applicant to become a bankrupt (par 456), it is clear from the statement of claim that the applicant bitterly resents conduct in which he alleges the respondents engaged which he believes caused his bankruptcy, and indeed bitterly resents the fact of his bankruptcy. However the applicant has become a bankrupt through lawful process in the Federal Court and has throughout that process had opportunities to challenge the circumstances leading to his bankruptcy. I respectfully adopt comments of McInerney J in Campbell v Metway Leasing Ltd (1998) ATPR 41-630. In that case the appellants pleaded undue harassment or coercion by the respondents in relation to, inter alia, issuing two bankruptcy notices where there were allegedly no debts due. His Honour said at 40,916-7: 'In my opinion, however, the institution of legal proceedings which are not themselves vexatious, frivolous or an abuse of process, and therefore liable to be summarily dismissed under Part 13 rule 5 of the Supreme Court Rules 1970 (NSW), cannot constitute "undue" harassment or coercion for the purposes of section 55 (Fair Trading Act 1987 (NSW), being the NSW equivalent of section 60 Trade Practices Act) as a plaintiff, within these bounds, has a legitimate right of recourse to the Courts for the determination of their claim or grievance.' 85 To the extent that the third respondent allegedly threatened the applicant with 'a life long vendetta' (par 461), and in relation to the applicant's allegations concerning the alleged theft of files by the third and fourth respondents (par 470), the applicant has not pleaded: a. how the third and fourth respondents, who are individuals, are liable under s 60 Trade Practices Act (assuming that it this section the applicant is relying on in relation to this allegation). b. whether the applicant claims that the corporate respondents are liable in relation to this claim. c. if s 60 is relied on, how the conduct in question is relevant to the provision of goods and services or payment for goods and services as required by the legislation. 86 Further, in relation to the alleged theft of the applicant's files claimed in par 470, I repeat my comments earlier in relation to Count 6 concerning: a. whether this conduct constitutes undue harassment in breach of s 60 and b. the fact that unlawful access of the respondents to the applicant's home and his possessions potentially gives rise to cause of action in the State courts in tort. 87 Conduct by the respondents in the sense of 'stalking' the applicant, while in my view potentially amounting to undue harassment, does not as pleaded by the applicant indicate the connection between the conduct and the supply of goods or services by the respondents as required by s 60 Trade Practices Act. 88 Finally, although the applicant has pleaded that: a. the respondents intentionally coerced, harassed and intimidated him to ensure that he was harmed or suffered personal injury and b. the respondents stole his papers during the burglary to intentionally cause hardship, stress and pain, it is difficult in the absence of clear particulars as to the nature of the personal injury (other than normal distress) to identify the nature of the personal injury the applicant is claiming, and whether it founds a cause of action. I refer again to my comments in this regard in Count 1. 89 In my view the applicant lacks standing in relation to this count.

[52]

SUMMARY 131 It is clear that the applicant has undertaken the task of preparing the statement of claim with personal diligence. However it is difficult to sort through what is essentially a written tirade by the applicant accompanied by extensive repetition and a large volume of irrelevant information, to find anything of substance or relevance which the Court can properly consider. 132 This is surprising in light of the finding of Greenwood J that, in view of his bankruptcy, the applicant lacked standing to pursue claims other than those which were clearly in respect of a personal injury or wrong done to the bankrupt or his family. Unfortunately, in my view the preponderance of the statement of claim appears to revisit a great deal of the material which was before Greenwood J, which his Honour held did not give rise to causes of action in respect of which the applicant had standing. 133 Recently the Full Court in Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2006] FCAFC 116 observed that the Court will assume jurisdiction and adjudicate a dispute where: the jurisdiction of the Federal Court is engaged by an action in respect of subject-matter with which the Court can deal, and the action is instituted by an applicant who has standing, and the action is not oppressive, vexatious or otherwise an abuse of process… (per Black CJ and Finkelstein JJ at [10]) 134 In my view, the case before me exhibits none of these attributes. To the extent that the statement of claim pleads causes of action at all: · the applicant lacks standing in almost all counts on account of his bankruptcy · even if the applicant did have standing under s 116(2)(g) Bankruptcy Act because he had rights to recover damages or compensation in respect of personal injuries or wrongs, throughout the statement of claim he has consistently failed to particularise the personal injury or wrong done to him and failed to draw a nexus between the conduct of the respondents and any personal injury or wrong done to him · such causes of action as the applicant retains personally - including potentially damages for defamation and trespass - are, in my view, pursuable only in the State Courts, not the Federal Court.

[53]

SHOULD THE APPLICANT BE GIVEN ANOTHER OPPORTUNITY TO REPLEAD? 135 As I noted earlier in this judgment, the function of pleadings is to state with sufficient clarity the case that must be met. 136 This is not a case where parts of the pleadings could simply be struck out and the action remain on foot. As Lander J observed in Australian Competition and Consumer Commission v Fox Symes & Associates Pty Ltd [2005] FCA 1071: 'If a Statement of Claim is shown to disclose no reasonable cause of action, then it will be appropriate, rather than to strike out individual paragraphs of the Statement of Claim, to strike out the whole of the Statement of Claim.' (at [107]) 137 The case before me is indeed a case where the observations of Lockhart J in Trade Practices Commission v Australian Iron and Steel Pty Limited (1989) 22 FCR 305resonate: '[The Statement of Claim] fails to plead material facts, it contains confusing and irrelevant material, it uses ambiguous terms, pleads particulars rather than material facts and asserts conclusions or opinions.' (at 323) 138 To the extent that there is anything in the applicant's statement of claim which pleads a valid cause of action, in respect of which he has standing, then as Lockhart J also observed in Australian Iron and Steel: '...the defective partsare so inextricably intertwined with offending material that an oppressive burden is cast upon the respondents to spell out the alleged cause or causes of action. The whole pleading must be struck out.' 139 Although ordinarily a party should be given an opportunity to replead in accordance with the rules (Turner v The Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69 per Barwick CJ (Mason J agreeing) at 81; cf Fox Symes at [95]) in my view it would be unjust to the respondents to allow the applicant yet another opportunity to re-plead. In particular I note: · Greenwood J had earlier dismissed an application by the applicant for interlocutory relief in this matter on the basis that, inter alia, the applicant lacked standing to bring the application, but noted that it was possible that the applicant could formulate a statement of claim involving rights which had not vested in the trustee in bankruptcy (Rogers v Asset Loan Co Pty Ltd & Ors [2006] FCA 434 at [48]) · on 15 June 2006 the applicant filed a Statement of Claim · on 19 June 2006 the applicant filed an Amended Statement of Claim, although this amended statement of claim was not provided to the respondents until 29 June 2006 when the parties appeared in Court · when this matter came before me for the notice of motion to be heard on 29 June 2006, it became apparent that the applicant would in fact need to file a further amended statement of claim. I ordered that the applicant be given 21 days in which to file a further amended statement of claim · the applicant did so in compliance with this order, but then also filed a second further amended statement of claim 10 days later. 140 As Mason CJ and Brennan and Toohey JJ observed in Munnings v Australian Government Solicitor (1994) 120 ALR 586 at 589: '… Although a plaintiff is often granted leave to replead if a statement of claim is struck out, there are some cases where the plaintiff so misconceives the cause of action that the action ought to be brought to an end.' (cf Fox Symes at [109]). 141 This is such a case.

[55]

144 Section 31A of the Federal Court Act provides: '(1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section.' 145 Order 20 r 2 Federal Court Rules provides: '(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding - (a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (c) the proceeding is an abuse of the process of the Court, the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1).' 146 Section 31A was inserted in the Federal Court Act by the Migration Litigation Reform Act 2005 (Cth) and applies to all cases commenced on or after 1 December 2005. This matter was commenced by application filed 7 April 2006 and as such s 31A is applicable. 147 A view has been expressed that the purpose of s 31A is to introduce a lower standard for summary dismissal and strikeouts under O 20 r 2 and O 11 r 6: cf Duncan v Lipscombe Child Care Services Inc [2006] FCA 458 at [5-8]; Wearne v Southern Cross University [2006] FCA 1033 at [13] and Australian and International Pilots Association v Qantas Airways Limited [2006] FCA 1441 at [23]. It is unnecessary for me to decide this issue in the context of this matter. In my view the application of the applicant filed 7 April 2006 can be dismissed in accordance with either s 31A Federal Court Act or O 20 r 2 Federal Court Rules, and I should so order.

At a glance

Court

Decision date

Before

Source

Judgment (57 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (29)